A recent report issued by the European Commission&rsquo;s Agricultural and Rural Development department predicts that the medium-term outlook for arable crops in the European Union is relatively positive due to solid world demand and firm prices. Demand for food and feed are expected to increase only marginally in the E.U. through 2023. The biofuels market is described as the most dynamic demand factor.
The report, titled &ldquo;Prospects for Agricultural Markets and Income in the EU 2013-2023,&rdquo; assumes that progress towards meeting the 10 percent target set in the Renewable Energy Directive will continue, and by 2020 biofuels will comprise 8.5 percent of liquid transportation fuels.
The report indicates that medium-term prospects for the E.U. cereals market are characterized by tight market conditions, low stocks and above average prices. Annual yield growth rates are expected to average 0.6 percent, with total supply reaching 316 million metric tons by 2023. Growing demand for ethanol is expected to increase domestic use of cereals in the E.U. The shares of corn and common wheat are expected to increase, reaching 18 percent and 41 percent of cereals, respectively.
According to the report, the medium-term outlook for sugar beets and sugar are mixed. The abolition of the quota scheme in 2017, along with growing demand from ethanol and world price expectations is expected to result in expanded sugar beet production over the next decade.
The analysis predicts that Europe&rsquo;s ethanol industry will develop more dynamically, but that biodiesel will continue to dominate the biofuel sector in absolute terms. The primary ethanol feedstocks identified by the report include cereals, such as wheat and corn, and sugar beets. According to the analysis, sugar beet has remained at less than 10 percent of ethanol feedstock over the past decade. Its use is not expected to increase significantly over the next ten years. The use of cereal feedstock in Europe has increased over the past decade. While that increase is expected to continue, the report predicts that ethanol production will not account for more than 10 percent of overall cereal demand over the medium-term.
Total E.U. biofuel production is expected to increase from 11.3 million metric tons of oil equivalent (Mtoe) in 2013 to 18.3 Mtoe in 2023, with ethanol production increasing from 3.3 Mtoe in 2013 to 6.1 Mteo in 2023. In 2013, an estimated 0.8 Mtoe of wheat ethanol was produced, along with 1.2 Mtoe from other cereals and 0.7 Mtoe from sugarbeets. In 2023, 1.4 Mtoe of wheat ethanol is expected to be produced, along with 3 Mtoe of ethanol from other cereals, 0.7 Mtoe from sugar beets and 0.2 Mtoe from second-generation feedstocks.
European biofuel consumption is expected to grow from 13.3 Mtoe in 2013 to 21.9 Mtoe in 2023. The report indicates that 2.7 Mtoe of fuel ethanol was consumed in 2013, along with 1.2 Mtoe of ethanol for non-fuel uses. In 2023, ethanol consumption in the fuel market is expected to grow to 6 Mtoe, with 1.1 Mtoe of ethanol consumed for non-fuel uses.
Europe is expected to continue to be a net importer of biofuels. In 2013, the E.U. imported an estimated 0.6 Mtoe of ethanol and exported 0.1 Mtoe. In 2023, ethanol imports are expected to reach 1.1 Mtoe, with exports maintained at approximately 0.1 Mtoe.
A full copy of the report can be downloaded from the European Commission <a href="http://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook/2013/fullrep_en.pdf" target="_blank">website</a>.
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A report issued by the European Commission's Agricultural and Rural Development department predicts that the medium-term outlook for arable crops in the European Union is relatively positive. The biofuels market is the most dynamic demand factor. 

EU agriculture report predicts increased ethanol production

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