In the context of an extraordinary meeting of its Central Works Council on Friday 6 October in Paris, SAIPOL’s management presented its plans for recourse to part-time activity that will affect in 2018 its biodiesel production (esterification) and crushing activities in France.
These plans should allow SAIPOL to temporarily adjust its production to a markedly deteriorated market situation threatened by massive imports of Argentine biodiesel into Europe, while protecting jobs. Presentation of these plans marks the opening discussions with staff representatives and the initiation of an information-consultation procedure.
Counted from February 2018, this marked drop in production would affect all five of SAIPOL’s esterification plants in France: Grand-Couronne (Seine Maritime), Bassens (Gironde), Le Mériot (Aube), Montoir-de-Bretagne (Loire Atlantique) and Sète (Hérault), as well as crushing activities at several of these sites.
- An insuperable threat from Argentine biodiesel -
While SAIPOL and the French biofuels market have been suffering from a sustained deterioration of the economic and regulatory conditions in this market since 2015, the application by the European Commission since 28 September of a drastic reduction1 in EU antidumping duties on Argentine biodiesel has considerably worsened the situation. Especially since at the same time, the United States – in accordance with antisubsidy rules – has introduced dissuasive customs duties against Argentine biodiesel, making it impossible to export to the US.
This context means that SAIPOL must adapt its production immediately to the marked drop in orders and the market destabilization already caused by reopening of the European market to Argentine biodiesel. These measures are necessary in order to preserve the competitiveness and future of crushing and esterification activities and the sale of biodiesel sourced from French agriculture, and the employment associated with them.
As it stands, the Commission's decision, combined with the differential duties imposed by Argentina on its biodiesel exports – which are equivalent to a subsidy of these exports by nearly 27%2 – removes all barriers to massive imports into Europe of Argentine biodiesel. It offers the latter a competitive advantage to which the French biodiesel sector, and SAIPOL in particular, has no response. Argentinian biodiesel is already being sold on the European market at a price that is much lower than that of the soybean oil used to produce it (with a difference of up to $60), and one that is equivalent to, or even slightly lower than, the price of raw rapeseed oil used to produce biodiesel in France.
This decision, which comes on top of an over-capacity of production and under-activity of SAIPOL’s biodiesel production and crushing units, has led to a significant drop in its biodiesel sales since the end of August and could cause a drop to half of its production volume in 2018 (by comparison with 2017).
If the EU does not adopt any effective countermeasures, about 1.75 million tonnes of soybean biodiesel (soy methyl ester) could be imported each year into Europe, including (in a full year) 1 million tonnes into France alone, to the detriment of European rapeseed biodiesel (rapeseed methyl ester). This will take effect as from today, as the first Argentine cargo ships are already docking in European ports.
The consequences for SAIPOL would be irrevocable:
- The production of rapeseed methyl ester could only reach 700,000 tonnes in 2018, as opposed to 1.3 million tonnes in 2017, or around 60% less activity;
- Crushing units would also be impacted, processing a volume of 2.5 million tonnes of grain in 2018 as opposed to 3.5 million tonnes in 2017, or around a 1 million tonne reduction, implying around 30% less activity.
If no effective countermeasures are implemented, the French sector will not be able to deal with this unfair competition, particularly since:
- EU antidumping duties on Indonesian biodiesel (palm oil) might also be reduced, thus removing any obstacle to the massive imports of biodiesel from Indonesia;
- The growth in the European market of hydtrotreated vegetable oils (HVO) for the production of biodiesel is accelerating, favored by the development of less expensive palm oil imports and the imminent opening of an HVO biodiesel production site in La Mède (Bouches-du-Rhône);
- In the context of plans to revise the European Directive on renewable energies (RED II), which should to be adopted by early 2018, the European Commission is expecting to halve the share of 1st generation biofuels used for transport between 2020 and 2030. That share would then be fixed at a maximum of 3.8% in 2030, while in France it reaches up to 8%.
In no case does this plan for recourse to part-time operation affect the determination of the AVRIL Group and its subsidiary SAIPOL to pursue the production of biodiesel, a renewable energy that contributes to energy transition and to preserving and developing this market for French oilseed production.
1 These duties are now between 4.5% and 8.1%, as opposed to the rates of 22% to 25.7% introduced in November 2013.
2 Argentina has introduced differential export duties on its biodiesel production ; the country applies a 27% tax rate on exports of soybean oil but of only 0.13% on those of the resulting ester, which is equivalent to a 26.87% subsidy for exports of this ester.
*** Press contact:
Tom Doron +33 (0)1 78 14 80 09 / +33 (0)6 26 28 39 94 email@example.com
An AVRIL subsidiary, SAIPOL produces and sells in France refined vegetable oils for human foods, protein-rich oilseed meals for livestock feeds, biodiesel under its brand Diester® which is incorporated at a rate of 7-8% in the fuel for diesel vehicles in France, and vegetable glycerin which has numerous industrial applications.
About the Avril Group:
Avril is the industrial and finance actor of the French oilseeds and proteins sectors.
Set up in 1983 at the initiative of French farmers in order to assure long-term markets for French products, Avril has become a major industrial and financial group that is developing in France and internationally.
It is present in sectors as diverse as human foods, animal feeds and expertise, renewable energies and chemistry, and owns a portfolio of strong brands that are leaders in their markets: Diester®, Sanders, Lesieur, Puget, Matines, Bunica, Taous, etc.
In nearly 35 years, the Group has changed in size but its purpose has remained the same: to create sustainable value in the vegetable oils and proteins sector while contributing to better foods for humans and preservation of the planet.
To fulfil its mission, Avril draws strength from its industrial activities organized around plant production and livestock sectors, and from its financial arm which operates through Sofiprotéol, its finance and development company.
In 2016, the Avril Group achieved turnover worth €5.9 billion. It counts 7200 employees working in 21 countries.
For more information: www.groupeavril.com | Twitter: @Avril.