EU: A revolution in agricultural markets

There has been a trend since years to grow less barley in favour of wheat, maize and oilseeds in the EU. The latest developments, however, may almost be called a revolution in agricultural markets, analysts commented.

The rising energy demand and high prices for crude oil and natural gas have created a huge market for bio-energy, diesel, ethanol and gas. Diesel is produced from vegetable oil, its production is forecast to rise to 4.5 million tonnes next season.

In 2005 20 million tonnes of oilseeds were harvested in the EU-25 versus 250 million tonnes of grains. Bio-ethanol is produced from sugar, maize, wheat, rye and barley, barley being the least productive raw material. Two million tonnes of grains are used in the EU for ethanol production in the crop year 2005/06. Now ethanol factories are rising like mushrooms all over the EU.

Germany has prepared a regulation, by which bio-ethanol must be added to gasoline at a rate of 5.75 %. It will also be subject to tax. There is the possibility that Brussels may adopt the German regulation EU-wide. If that happens, grain use for bio-ethanol would increase to 28 - 30 million tonnes by 2010/11, i.e. about 10 % of the total grain production of the then larger EU-28.

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