US says India, Vietnam, Argentina food export shutdowns disrupting global supply, prices

In Washington, the USDA said that export controls imposed in India, Vietnam and Argentina on rice, wheat, soy and beef are causing supply disruptions and spiking prices. India and Vietnam have eliminated most rice export activity, while soy prices are reflective of high taxes that have been imposed by the Argentine government on soy exports.

In Argentina, the increase in the export tax levy on biodiesel from 5 to 20 percent has not yet slowed biodiesel shipments, but it has halted new project development activity. “The problem is with new projects … there are foreign investors who have decided to put the brakes on a move to Argentina,” Claudio Molina, head of the Argentine Biofuels Association, told Reuters.

In France, the president of the European Biodiesel Board said that low-cost Argentine exports were a major concern for the European producers, noting that Argentina exported 300,000 tons of biodiesel in 2007. Bernard Nicol, also the president of Diester Industrie, a French biodiesel producer, said that Argentine B100 exports received favorable tax treatment in Argentina, received a $1 “splash-and-dash” credit per gallon in the United States by blending it to B99, and then received subsidies in Europe upon arrival. Nicol predicted that Argentine exports would increase in 2008.

Under US regulations, biodiesel is subsidized $0.999 per gallon for a “B99.9” blend. The B99.9 can then be exported to Europe where it is eligible for European subsidies.

Last month, the EBB said “biodiesel producers are experiencing dumping competition from [American] B99 blends. This competition is…putting out of business most EU producers.” At that time, the EBB first threatened an anti-dumping complaint to the European Commission.
The Board estimated that 800,000 tons of biodiesel have been imported from the United States by Europeans in 2007 to date, up from 100,000 tons for the whole of 2006. The Board points out that biodiesel producers in the US receive a subsidy of up to $300 per ton, and that as a result, US producers can export to Europe for less than the cost that Europeans pay for raw materials.

To confirm the trend, Petrotec announced last month it was halting biodiesel production temporarily because market prices do not allow the company to cover production costs. The company produces about 30 Mgy of biodiesel at Borken using waste oils. The company also announced that its new 40 Mgy plant at Emden, on the North Sea, would not go into production at the end of the year unless market conditions improved.

Exacerbating the European producer problems, the German government began taxing the biodiesel business in August 2006, and indicated it will raise taxes in 2008. The German renewable fuels association, BBK, estimates that biodiesel production plants are operating at 40 to 50 percent capacity following the governments decision to tax the industry. Also, European governments have declined to deny subsidy credits to imported biodiesel.

The EBB represents 60 European producers and more than 80 percent of European biodiesel pr

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