1. Institute of Farm Economics International Comparison of Oilseed Pruduction Prof. Dr. Folkhard Isermeyer & Dr. Yelto Zimmer GCIRC Technical Meeting, New Delhi, February 2009

2. Isermeyer Content 1The global network agri benchmark: goal and concept 2Selected results 2.1 Sector developments 2.2 Production systems, cost of production 3Summary

3. Isermeyer Content 1The global network agri benchmark: goal and concept 2Selected results 2.1 Sector developments 2.2 Production systems, cost of production 3Summary

4. Isermeyer Everything under Control ? agri benchmark is part of a global navigation system for the agricultural sector For typical farms we provide information about: Production systemsCost of productionFramework conditions 020001000 World Population Before take-off we should have a good navigation tool

5. Isermeyer Components of agri benchmark Typical Farms & farmers & advisors DairyBeefArable Crops The Networks Quantitative Analysis

6. Isermeyer Analysing international trade flows (e.g. FAO and OECD data bank) Compiling regional information on a global level (commodity prices, legal framework conditions, potential for expansion of agricultural land) Forecasting regional farm development („Snapshot“: farmers compare their future with others) Typical farms are the backbone, but agri benchmark is much more …

7. Isermeyer Partners in agri benchmark cash crop (I) Countries in agri benchmark Cash Crop Priorities for new countries

8. Isermeyer Canada USA/ Iowa USA / N. Dakota Brazil Argentina South Africa Partners in agri benchmark cash crop (II) UK Italy France Sweden Denmark Ukraine Hungary Czech Rep. Russia Poland Romania China Malaysia Australia

9. Isermeyer Partners in agri benchmark cash crop (III) 4 th agri benchmark Cash Crop Conference, Canada, July 6-1, 2008

10. Isermeyer Content 1The global network agri benchmark: goal and concept 2Selected results 2.1 Sector developments 2.2 Production systems, cost of production 3Summary

11. Isermeyer Impact of Bioenergy Policy: Evolution of Global Ethanol Production Quelle: FO Licht, Impact of Biofuels on Commodity Markets (2007).

12. Isermeyer Stocks shrinked by 50% (from 112 to < 60 days) Accumulated deficit (till 2007/08): -148 Mio. t -100 -50 0 50 100 150 Impact of US Ethanol Production on the World Markets for Grains 1) April-Projection of USDA-WAOB. 2) Estimated 3) World production and/or consumption of coarse grains, in mio. t. Surplus+ 33- 4- 25- 17- 63- 64+ 57- 16- 48- 1 Production 3) Consumption 3) 1.481 1.448 1998/99 1.463 1.467 1999/00 1.444 1.468 2000/01 1.475 1.492 2001/02 1.443 1.506 2002/03 1.471 1.534 2003/04 1.644 1.587 2004/05 1.588 1.604 2005/06 1.585 1.633 2006/07 1.687 1.688 2007/08 1) Corn Use for US-Ethanol (Mio. t)1618252934415476 Quelle: USDA, ACTI, eigene Berechnungen. US-Corn – DDGS (Mio. t)1113182024293853 Accumulated deficit, if US-ethanol would not have expan- ded since 2000 (till 2007/08): -30 Mio. t -100 -50 0 50 100 150 +17 1.760 1.743 2008/09 2) 104 73

13. Isermeyer Interim Conclusions Is it possible, that bioenergy crops on less than 2% of the global acerage have caused such a price increase?  Short term: „yes“, because 60 mio. t represent ¼ of the world grain trade.  Long term: „no“, because 60 mio. t require 10 mio. ha, and there are more than 100 mio. ha unused.  Besides: High commodity prices lead to intensification and yield increases on cultivated acreage.  Bioenergy can be produced on much more than 2% of global agricultural land.  Challenge: Find the appropriate pathway for expansion (best product mix and no „overburdening“ of global agriculture)  And: We should not pretend that bioenergy can fuel the world (500 mio. ha a 80 GJ/ha = 40 EJ = <10% of global energy consumption)

14. Isermeyer Conclusions re. future commodity prices In principal two alternative szenarios are possible: I. Global economy takes off again and policies to promote biofuels are pursued aggressively (high mandatory blending rates).  In a few years commodity prices will be very high again II. Global economy takes off again but policies to promote biofuel are put on hold.  Commodity prices will be driven by crude oil prices: –40 $/bbl: „old“ price levels (pre 2006) will prevail –100 $/bbl: prices go up in the medium and long run („long run“, because first investments in plants are needed for the bushel-barrel correlation to be realized)

15. Isermeyer Development of vegetable oil prices (USD/t) Source: FAO, own calculations; (1) Crude, cif North West Europe, (2) Dutch, fob ex-mill, (3) fob North West European port

16. Isermeyer Development of price premium for rapeseed vs. soybean oil (USD/t & in %)

17. Isermeyer Content 1The global network agri benchmark: goal and concept 2Selected results 2.1 Sector developments 2.2 Production systems, cost of production 3Summary

18. Isermeyer Oilseed yields agri benchmark farms 2007 (t/ha) Rapeseed: EU yields twice as high as in overseas. Strong position of soybeans

19. Isermeyer Vegetable oil production (t/ha) 0.7 0.8 0.6

20. Isermeyer Total cost of oilseed production (USD/t) Major issue for European producers: high land cost (will decrease with decreasing direct payments) and high operating cost

21. Isermeyer Operating cost: Major differences between Europe and Overseas (3 Example, 2006) France 150 ha, rapeseed following barley, reduced tillage Tillage etc. 1) Plant protection Fertilization Canada 2,430 ha, rapeseed following fallow, no tillage Argentina 1,800 ha, Soybean following Soybean (DC with wheat), no-till 1) incl. seeding & harvest Tillage etc. 1) Plant protection Fertilization Tillage etc. 1) Plant protection Fertilization

22. Isermeyer Crop establishment cost (USD/ha) Per hectare: EU cost 3 - 4 times higher, yields just 2 times higher

23. Isermeyer Summary (I)  Global commodity prices will go up again when global economy recovers.  All somewhat suitable arable land will be in use in order to cope with global demand.  Even with higher prices entrepreneurial challenge remains the same: Do things right, and do right things.  agri benchmark: global comparison of production systems, framework conditions and competitiveness

24. Isermeyer Summary (II)  Rapeseed is facing major challenges, especially from an EU perspective.  Western European rapeseed production has higher cost than Overseas or Eastern rapeseed production.  Some cost components will be reduced, if policy support for EU agriculture is reduced (land cost) and/or EU farms get bigger (operating costs, partly).  Other disadvantages may even increase (better quality and higher yields through GMO in America and Asia, both in soy and rapeseed?)  Compared to soybean production, fertilizer and plant protection cost of rapeseed production are considerably higher.  Remember: Until now, we only have “first results”, with many open questions remaining  Interested to participate? Please contact www.agribenchmark.org

25. Isermeyer Thanks a lot for your attention