As the European Commission launches its investigation into biodiesel imports from Indonesia and Argentina, local biodiesel producers have again demanded the government step in to help them defend accusations by the European Union (EU) of dumping.
Biofuel Producers Association (Aprobi) secretary-general Paulus Cakrawan said on Sunday that the government should provide sufficient and clear data and an explanation of the operation of the biodiesel industry in Indonesia, the world’s largest producer of palm oil — the crop used to make the fuel.
“It’s certain that local producers sell biodiesel at competitive prices and do not dump the fuel on
Europe,” he said.
Paulus said that Indonesian producers sold biodiesel according to monthly reference export prices set by the government, which was the average of the international price in the previous month, and this might lead to a price gap.
In September, for example, Indonesian biodiesel fuel was priced at US$1,020 per ton, lower than the average price of $1,200 per ton on the international market, according to the association’s data.
The biodiesel case started in August when the European Biodiesel Board, which represents 75 producers and almost 80 percent of European biofuel output, lodged a formal complaint with the European Commission, saying that the surge in the two countries’ imports had already led to several bankruptcies, forcing the businesses to sell below production costs and reduce production.
According to the biodiesel board and EU statistics agency Eurostat, imports from both countries significantly increased from very low levels in 2008 to around 2.5 million tons in 2011, representing more than 90 percent of the bloc’s imports.
Referring to market sources, the board also said that imported biodiesel from Indonesia and Argentina had been sold for between $60 and $110 lower than biodiesel produced in the EU.
Following the complaint, dozens of local firms working in the biodiesel business, including producers, retailers and exporters, responded to questionnaires proposed by the commission in September.
The government also sent a letter to the EU, denying the dumping allegation and explaining the operation of the country’s biodiesel business.
As a follow up to the preliminary information gathering, the EU recently started its probe into the dumping accusations. The commission had already found sufficient initial evidence to show import prices damaged the industry’s viability as Indonesia and Argentina, the world’s top biodiesel exporters, shored up their imports and market share, it said on Saturday as quoted by Reuters.
“It is alleged that the producers have benefitted from subsidies granted by the governments of Argentina and Indonesia,” the commission said in its official journal about the investigation that will be complete within 13 months and which could result in provisional antidumping duties within nine months.
Paulus rejected the initial finding, saying that local producers benefitted from the lower price of palm oil, compared to rapeseed, a crop commonly used for biodiesel production in Europe.
Indonesia’s exports of biofuel have surged rapidly in recent years due to new initiatives in certain parts of the world to promote renewable energy sources. In 2010, for example, exports rose by 187.93 percent to 544,679 tons from a year earlier.