December 11, 2001

EU Rapeseed Area
May Rise in 2002/03

Summary

Early indications are that EU rapeseed planting levels in 2002/03 may be higher than in 2001/02, despite reduced area aid payments, and a short-term declining trend.  Other factors, namely increased demand for rapeseed for food use, increased demand for bio-fuels, and lower world supplies, likely encouraged farmers to plant more rapeseed this fall.   

Area Aid Payments Reduced

For the 2002/03 crop, most of which is already planted and will be harvested in the summer or autumn of 2002, area aid payments will be reduced. Payment levels will be set at EUR 63 per ton, down from EUR 72.37 per ton in 2001/02 and EUR 81.74 per ton in 2000/01.  Per ton rates are multipled by a region's historic yields to determine per hectare area-aid payment levels to farmers.  Starting in 2002/03 oilseed area aid payments will be aligned with grains area-aid payments, and the option of using historic oilseed yields as a basis will no longer exist. 

Despite the decline in area aid payments, area sown to rapeseed (excluding set-aside land) increased by 15.7 percent in the United Kingdom, according to informal survey figures published by the Home Grown Cereal Authority.  On the other hand, the USDA agricultural office in London estimates planted area will be little changed to a little up from last year, perhaps only by 1 percent.  The United Kingdom is the European Union’s third largest producer of rapeseed (see table below), and it harvested an estimated 1.2 million tons of rapeseed from 440,000 hectares in 2001/02.

In Germany, Europe’s largest and the world’s fourth leading rapeseed producer, one source estimates rapeseed plantings up 13.2 percent from 2001/02.  Food rapeseed area was estimated up 15.8 percent, whereas non-food rapeseed was estimated up 6.1 percent.  Non-food rapeseed is grown on set-aside land and must be used for industrial purposes such as bio-diesel.

Higher Demand Spurred by GMO Concerns and Bio-fuel

One reason for increased rapeseed plantings is a higher demand from the food industry for rapeseed oil as a substitute for soybean oil.  Some manufacturers avoid soybean oil because of the genetically modified organism (GMO) issue. GMO-free commodities are preferred to commodities which might contain some genetically modified material.  Manufacturers try to be on the safe side and ask for "GMO-free" certificates, but these are difficult to issue because the question of how much GMO contamination might be allowed in material that is certified "non-GMO" remains unresolved.

There is a higher demand for rapeseed from bio-fuel processors.  High crude oil prices this fall during the planting of winter rapeseed encouraged bio-diesel processors to sign more contracts to have farmers produce rapeseed, and the growing demand for industrial consumption can no longer be met by production on set-aside land alone.  Farmers questioned in Germany felt that plantings of food rapeseed rose because of the belief that prices will remain firm in the new season.  They also felt that rapeseed would be profitable on set-aside land because of growing demand from Germany’s expanding rapeseed diesel industry.  While a draft proposal by the Directorate-General for Transport and Energy of the European Commission to require a minimum share of bio-fuels of 2 percent by 2005 and 5.75 percent by 2010 is not likely to affect rapeseed plantings for the 2002/03 crop, the drafts existence is an indication that the political and policy environment is favorable for bio-diesel in Europe. 

A final incentive to boosted plantings is the low rapeseed supply on the world market.  Total world production for 2001/02 is estimated at 36.4 million tons, down 3 percent from 2000/01 and 14 percent lower than the record 42.4 million produced in 1999/2000.  The largest declines came in Canada which was down 33 percent to 4.8 million tons in 2001/02 and France which was down 19 percent to 2.9 million.

For more information, contact Paul Provance
  with the Production Estimates and Crop Assessment Division, FAS, USDA at (202) 720-0881.