Belgium has decided to unilaterally phase out both palm oil and soy-based biofuels from its renewable programs in 2022, well ahead of the EU’s phase out date of 2030 for crop-based biodiesel.
The timing of the decision could not have been worse for the EU. Just two weeks ago, the EU Ambassador to Indonesia, Vincent Piket, stated “there is no ban on the import of palm oil biofuels into the EU, there isn’t any ban now, not in 2023, and also not in 2030. I keep on reading that such a thing exists but I want to state that this is not so.”
As we said last week, this is patently false. The decision by the Belgian government only serves to underscore how misleading has been the rhetoric of Ambassador Piket, the European Commission and Member States.
The reasoning behind the sooner-than-expected ban needs to be examined closely. The headline statement for many news outlets was that Belgian environment minister Zakia Khattabi was doing this purely for environmental reasons.
However, Khattabi’s statement on the new policy indicates a stark fact: palm-based biofuel use in Belgium has risen ten-fold in the past year.
So, what were the reasons for this increase?
Why Minister Khattabi banned palm oil
Last year, rapeseed output in the EU hit a 14-year low; this was driven by a new ban on certain pesticides in the EU, leaving the bloc’s rapeseed crop vulnerable to insect infestation.
This was followed by poor weather in Ukraine, which further reduced European output and global supply.
This resulted in several winners: palm oil and soybean oil, followed by canola/rapeseed growers in Canada and Australia.
One of the bigger problems comes from poor weather in Ukraine last year, which led to losses and bankruptcies, prompting some farmers to fold or switch crops altogether. The result is that the European planted area – including Ukraine – is at a very low level. Total output of rapeseed in the EU has plunged by almost 25 per cent over the past five years. Europe’s inability to meet its own demand for rapeseed will prompt further imports from Australia and Canada.
These dynamics are well understood in global vegetable oil markets.
An inferior oilseed that causes grave environmental damage
Here are some of the scientific facts Brussels doesn’t want you to know:
- Oil palm also requires less fertilizer and pesticide compared to rapeseed and sunflower.
- The Oxford Handbook of Food, Politics, and Society clearly sets out the inefficiency and environmental footprint of rapeseed and sunflower.
- A report issued in by the European Environmental Agency (EEA) found that as a result of high-level of pesticide and fertilizer use, “surface water got polluted due to nutrient enrichment from agricultural activities, poor wastewater treatment and habitat degradation.”
- The European Union also noted that “Agricultural pressures on water quality are still increasing in some areas, as some agricultural practices are heavily dependent on fertilisers that can cause local water quality to deteriorate.”
The inefficiency of rapeseed also leads to unnecessarily large land use, to produce only a small amount of oil. The United Nations Food & Agriculture Organisation (UNFAO) Global Forests Assessment report highlights that forest area in Indonesia – the world’s major palm oil producing country is 50% of land area. In the rapeseed-producing nation of Belgium, forest area is a miserly 23%. The European Union as a whole has forest area of only 39%.
Even WWF supports this view noting that “Palm oil is an incredibly efficient crop, producing more oil per land area than any other equivalent vegetable oil crop.”
The EU Commission’s own research states in clear terms how rapeseed (and other competing crops) are inferior to oil palm:
- “The high yield of oil palm per hectare means that the area requirement is lower than that of competing crops. To increase vegetable oil production by the same amount, therefore, by relying on competing oilseeds … instead of oil palm will require 5-8 times larger areas of land.”
Is Belgium about to be awarded a Nobel Prize in oilseed economics?
Certainly not. Vegetable oil prices are at some of their highest prices in more than a decade. This should – in theory – be a boon for rapeseed growers across Europe – but they are unlikely to be able to capitalise on the price boom. It’s just not as good as palm oil.
This underlines a broader point about EU policies on both vegetable oils and biofuels: it would appear that no amount of protectionism can actually help the EU’s inefficient approach to agriculture, and their misguided approach to market dynamics.
Moreover, the Belgian ban may end up being nothing more than symbolic. If prices continue their bull run – and this is considered highly likely by numerous commentators – this will prompt new plantings by smaller operators selling to markets that have zero commitment to certification.
There’s a reason that any number of credible development economists and groups have moved against palm oil boycotts: they may actually increase deforestation.
Apparently Belgium’s government didn’t get the memo.
Worse, it seems to be following the ‘King Leopold’ rulebook for public relations and diplomacy. Following their decision to ban palm oil biofuels, Belgium Ambassador to Malaysia Pascal Grégoire has asked to meet with Malaysia’s Plantation Minister Khairuddin Aman Razali, and likely to push the same line as Ambassador Piket: there is no ban on palm oil.
Despite this, there are rumblings – in Jakarta at least – that Indonesia should respond in kind. Belgium’s biggest export to Indonesia is milk products, where its largest competitors are Australia, New Zealand and the US. That won’t go down too well in Flanders where the vast majority of the over 500,000 dairy cows are located. In the meantime, the trade-minded Australians, in particular, are looking to diversify further into ASEAN, and Belgium just may find its market drying up.