Sector holds steady

Germany is one of the four largest agricultural producers in the European Union (EU) and despite its high population density, half of the national territory is used for agribusiness purposes, according to the country’s Federal Ministry of Food and Agriculture (BMEL).

The country’s gross production value in agriculture is projected to total US$37.88bn in 2022 and an annual growth rate of 0.10% is expected (CAGR 2022-2025), according to a report by Statista.

As one of the EU’s leading grain and oilseed producing/processing nations, Germany is also Europe’s top rapeseed producer and an important supplier of soyabeans, sunflowerseeds and flaxseed.

Oilseeds are used in the domestic and commercial food and feed sectors; in the personal care, chemical, pharmaceutical and technology sectors; and as a biodiesel feedstock.

The most important buyers of oilseeds in Germany are the compound feed industry and farmers as self-mixers, according to German trade association OVID, which represents the interests of oilseed processing and vegetable oil refining companies in the country.

Germany’s total 2022/23 grain crop was 42.5M tonnes, according to the International Grains Council (IGC)’s Grain Market Report on 18 August, which was up on the previous year’s figure of 42.3M tonnes. Rapeseed production in 2022/23 totalled 4M tonnes, according to the IGC, an increase on the previous year’s total of 3.5M tonnes.

However, the country’s oilseeds sector – along with other major industries – is facing the effects of the energy crisis following Russia’s invasion of Ukraine on 24 February, along with other challenges.

Challenges

The German oilseeds sector is currently facing a range of challenges, according to OVID.

“Already in 2021, low harvests, the impact of COVID-19 on supply chains, faltering logistics and steadily rising energy costs were putting a massive strain on the oil milling industry,” OVID president Jaana Kleinschmit von Lengefeld says.

The situation deteriorated further with the Russian invasion of Ukraine, impacting global availability of sunflowerseeds, oil and meal.

In addition, “bottlenecks disrupted flows of goods and volatile prices created uncertainty in 2022. Major challenges also arise in logistics, which continues to face massive problems,” Kleinschmit von Lengefeld says. Historically low river levels in Europe have only allowed transport with small loads.

“Under these conditions, German locations are increasingly in danger –together with other energy-intensive industries in Germany such as the chemical industry.”

Against this backdrop, although Germany has the largest economy in the EU, its GDP this year is forecast to be the third worst in the G20 countries (–0.3%) behind Russia and the UK, according to the Organisation for Economic Cooperation and Development. 

Production conditions in Germany are also a concern, Kleinschmit von Lengefeld adds. “This is due to unfavourable public policies and an increase in the cost of processing oil crops as a result

Total: 4.8 million tonnes

Total: 5.1 million tonnes of historically high energy prices. The rapidly rising costs of gas and electricity are particularly hard on German oil mills and are increasingly endangering the local production of vegetable oils and protein animal feeds.”

The association is calling for Germany and Europe to make major investments in renewable energies to secure the competitiveness of the industry, while in the short term, increasing the energy supply of conventional energy sources.

Oilseed production

Germany processed a total of 13.1M tonnes of oilseeds in 2021, comprising 9.5M tonnes of canola and 3.4M tonnes of soyabeans, according to OVID statistics, although that total was expected to be lower in 2022.

“In 2022, it is estimated that German oil mills will have processed about 1M tonnes less oilseeds than in the previous year. This means that total processing is expected to fall to around 12M tonnes,” OVID president Kleinschmit von Lengefeld says. “The most significant decline is in rapeseed, by around 800,000 tonnes.

“The volume of protein feed from domestic processing to supply farm animals will also be correspondingly lower.”

The forecast decline in oilseed processing was due to a range of factors, Kleinschmit von Lengefeld says, including high energy prices, availability of energy and bureaucracy.

Oilseed imports

The increasing demand in Germany for high-quality agricultural products and their limited supply in the country has resulted in increased imports, according to a Global Monitor report.

Some major product categories, including soyabeans and dairy foods, have

Total: 2 million tonnes been heavily dependent on imports for many year, the report says.

For example, a total of 33% of the protein contained in animal feed in Germany is imported, mostly as soyabeans from Argentina, Brazil and the USA, according to a BMEL report ‘Understanding Germany’, published in November 2020.

A large proportion of the oilseeds processed in German oil mills are also imported from North and South America, Southeast Asia, Western and Eastern Europe, OVID says.

According to OVID data, Germany imported a total of 9.4M tonnes of oilseeds in 2021, including 3.6M tonnes of soyabeans, 5.2M tonnes of rapeseed and 0.3M tonnes of sunflowerseeds.

For soyabeans, 1.5M tonnes were imported from Brazil, with 0.1M tonnes, 0.4M tonnes and 1.4M tonnes from Canada, the EU-27 and the USA respectively.

Rapeseed imports totalled 5.2M tonnes, with 1.1M tonnes from Australia and 0.8M tonnes, 0.2M tonnes, 0.8M tonnes, 0.3M tonnes, 0.2M tonnes and 0.5M tonnes from France, Hungary, Netherlands, Poland, Romania and Ukraine respectively.

Oil and fats

In 2021, German edible oil production totalled 4.8M tonnes, which included 4M tonnes of rapeseed oil and 0.6M tonnes of soyabean oil (see Figure 1, above).

Imports of oils and fats totalled 2.7M tonnes, with 0.2M tonnes of coconut oil, 0.4M tonnes of palm kernel oil, 0.7M tonnes of palm oil, 0.3M tonnes of rapeseed oil and 0.5M tonnes of sunflower oil.

Edible oil consumption in Germany totalled 5.1M tonnes, with rapeseed oil making up 59.7% of that volume (see Figure 2, above).

Germany exported a total of 2M tonnes of vegetable oils and fats in 2021, including 0.3M tonnes, 1.2M tonnes and 0.2M tonnes of palm oil, rapeseed oil and soyabean oil respectively, according to OVID data (see Figure 3, above). 

Meal production and imports

Germany produced 8.5M tonnes of oilseed meal in 2021, including 5.4M tonnes of rapeseed meal and 2.7M tonnes of soyabean meal.

Imports of oilseed meal totalled 4M tonnes, including 2.3M tonnes of soyabeans, 0.7M tonnes of rapeseed meal, 0.4M tonnes of sunflower meal and 0.2M tonnes of palm kernel meal.

Meanwhile, exports of oilseed meals from Germany totalled 4.3M tonnes in 2021, including 2M tonnes of rapeseed meal and 1.8M tonnes of soyabean meal.

Crop-based feedstocks

In Germany, rapeseed is the most important raw material in biodiesel production (see Figure 4, right).

According to figures from BMEL, biofuels consumption in Germany totalled 3.7M tonnes in 2021 and 493,000ha of farmland were used for rapeseed production for use as a biodiesel feedstock.

The percentage of biofuels from rapeseed, palm oil and waste/residual materials marketed in Germany in 2021 totalled 26%, 34% and 34% respectively, according to BMEL data.

The use of biofuels in Germany saved 11.1M tonnes of CO2 in 2021, according to a report by the country’s Union for the Promotion of Oil and Protein Plants (UFOP) on 7 December.

According to UFOP, which published a status report ‘Biodiesel & Co 2021/2022’ providing an overview of the current legal framework in Germany and initiatives for legal changes, sustainably certified biofuels remain the most important option for decarbonising the transport sector.

“The oilseed and grain crop sectors make an indispensable contribution to both the human food and animal feed supply chain, and also to the supply of climate-friendly biofuels,” the report says.

“The current energy crisis demonstrates in no uncertain terms that Germany’s reliance on fossil gas and crude oil supplies has to be drastically reduced.”

In 2020, bioethanol and biodiesel contributed around 4.5M tonnes of fuel to Germany’s transport sector supply, the UFOP report says.

However, against a backdrop of rising food costs and declining supplies of agricultural products caused by the disruption of exports from main suppliers Ukraine and Russia following the latter’s invasion of Ukraine and the ongoing conflict, the German government has proposed phasing out the use of biofuels produced from food and feed crops by 2030.

A working paper released by the ministry proposed lowering the use of crop-based biofuels to comply with Germany’s greenhouse gas (GHG) emission reduction quota to 2.5% in 2023, from 4.4% in 2022, according to an Argus Media report on 17 May last year.

The cap would subsequently fall to 2.3% in 2024, 2.1% in 2025, 1.9% in 2026/27, 1.2% in 2028/29 and then to zero the following year.

To offset the reduction, the working paper suggested increasing the multiplier for electricity used to charge e-cars to four, from three currently, and the multiplier for the use of green hydrogen and PtX-fuels to three, from two.

In addition, the cap for waste-based biodiesel produced from used cooking oils (UCO) and animal fats could be lifted slightly, but no numbers were given in the working paper.

Since the initial working paper was released, Germany’s federal environment minister Steffi Lemke, who is a member of the Green Party in the country’s centre-left three-party coalition with the Social Democrats and Free Democrats, announced on 17 January that the country would go ahead with proposals to introduce a stricter cap on the use of crop-based biofuels.

If the proposals go ahead, the curb would be stricter than those defined in the EU’s updated Renewable Energy Directive (RED) II, which caps food-based biofuels at a maximum of up to 1% higher than member states’ 2020 levels.

The government’s proposals would have a serious impact on the biofuels sector, while putting the climate goals of Berlin and Brussels at stake, according to OVID.

“In Germany, climate protection in road transport has so far been achieved almost exclusively with biofuels. They reduce annual greenhouse gas emissions by more than 11M tonnes. That is the footprint of a large city like Hamburg,” Kleinschmit von Lengefeld says.

“A phase-out would also be a huge setback for Germany’s energy sovereignty, because we would have to compensate for the loss of fossil fuels, making us all the more dependent on problematic countries of origin.”

Any such move would also affect domestic food security, she adds.

For example, biodiesel production using agricultural feedstocks produces the natural emulsifier lecithin, glycerine and protein, which is used as domestic protein animal feed and could be used in human nutrition in the future. This protein is an alternative to imported soyabean meal and is used to feed cows, chickens and pigs.

Outlook

The oilseeds sector is “cautiously optimistic” about the future, according to OVID.

“Last year has taught us that forecasts for the future are difficult and surprises are always possible,” Kleinschmit von Lengefeld says. “Shipments from Ukraine have returned to 2020 levels, while the new rapeseed sowings in Germany give cause for optimism. The area under cultivation has increased by 50,000ha to about 1.1M ha and is now rising for the fourth consecutive year.”

Supply is also supported by good harvests in Europe, Canada, Australia and probably also in South America.

However, even with good yields in Germany, Kleinschmit von Lengefeld says German oil mills remain dependent on rapeseed imports. ●

Gill Langham is the assistant editor of OFI

Selective adsorbents based on powdered clays.

Designed for the pretreatment of biofuel feedstocks.

• Enhanced performance on the removal of metal traces and contaminants.

• Specially designed to provide the greatest filtration rates.

• Avoid clogging issues and excessive pressure increases.

• Reduction of feedstock retention.

Indonesia is set to increase its blending rate of palm oil in diesel to 35% in February.

What will be the impact on the global vegetable oils market of the B35 mandate by the world's largest producer and exporter of palm oil? And what are the policies driving and supporting the country's biofuels programme? OFI

As the world’s largest producer and exporter of palm oil, Indonesia – and its biodiesel policy – has a wide impact on global oils and fats supply and prices.

The country is set to increase its blending of palm oil in diesel fuel to 35% (B35), effective 1 February. This is up from B30 – which has been in place since January 2020 – but not the B40 target it had been planning, after the government considered availability of crude palm oil, according to Reuters

Indonesia is also likely to be the driving force for the global biodiesel market over the next decade, according to the FAO and OECD Agricultural Outlook Report for 2022-2031.

Global biodiesel consumption is likely to increase by 7% over the period, with Indonesia responsible for two-thirds of this increase. The country’s vegetable oil production is forecast to grow some 23% or roughly 8M tonnes over the decade to achieve this increase in biodiesel production, according to the outlook.

Policies

Indonesia began adopting national-level biofuel policies in 2006 to alleviate poverty and unemployment; drive domestic palm oil production; and reduce domestic fossil fuel consumption, according to the US Department of Agriculture (USDA) Global Agricultural Information Network (GAIN)’s Biofuels

Annual report on Indonesia, published in July 2022.

The National Energy Policy (KEN) is now the key basis for the country’s biofuels programme.

KEN targets 23% renewable energy use economy-wide by 2025 and 31% by 2050. The contribution of biofuels towards meeting these goals roughly translates to 13.9bn litres and 52.3bn litres of biofuel use, respectively.