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April 8, 2021

Blair House Agreement Oilseeds

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Among countries with a protein and cereal deficit in the EU, imported oleatic seeds are essential for processing into flour as protein ingredients in animal feed and as oil for food use. Following the emergence of epidemics in the European cattle sector, demand for pork and poultry products has necessitated more protein-rich foods. The protein of choice was cheap, the soybeans imported — mainly from the United States and Brazil. However, in recent years, imports from other countries, including Canada, Paraguay and Ukraine, have increased. The 1992 Blair House Agreement (BHA), a Memorandum of Understanding between the United States and the EU, limited the planting of olive seeds on historic land and compensated farmers with direct payments for the production of pipelines for food and feed. The agreement also limited the production of oleatates on fallow land to the equivalent of one million tonnes of soybean flour, and this production could not be used for human or animal feed. The allocated fallow surfaces were immediately used by France and Germany for the planting of rapeseed in order to launch their biodiesel production programmes. (Note: protein-based, one tonne of soy flour is equivalent to about 1.4 tonnes of rapeseed flour, or 2.5 tonnes of rapeseed). In 2003, the reform of the EU`s Common Agricultural Policy brought payments for oleatic seeds back to the same level as cereals. This would in fact have rendered BHA obligations obsolete, thus lifting the limit on the production of olive seeds.

In the face of declining EU soybean imports, Russia and Ukraine have sharply increased production and processing of oleo-ol seeds Sunflower seed production has almost tripled, while grinding has quadrupled. Exports to the EU of sunflower-eating sunflower seeds have increased seven-fold as a non-biotechnical source of protein and have partially supplanted demand for soy flour in the feed sector. The increase in sunflower oil exports has also taken advantage of opportunities in the food oil market, where rapeseed oil has been diverted for the use of biodiesel. Ten years ago, the European Union was the world`s largest buyer of soybeans, and the United States supplied nearly 40% of this market. As a result of regulatory and market changes, demand for imports into the EU has declined considerably. However, the net impact of trade losses on U.S. exports has been small, as U.S. industry has adapted to growing demand in other parts of the world.