Price responsiveness of supply and acreage in the EU vegetable oil markets: Policy implications

Vegetable oil market is becoming of increasing interest in the global biofuel industry. This phenomenon has also interested European Union (EU), where growing expansion production affected by political interventions promoting fuel security and environmental goals. Yet, empirical evidence on impacts that changes price one commodity may have supply another are rather scant. We investigate these dynamics for major sources biodiesel EU conclude cross-commodity linkages palm, rapeseed, soy, sunflower oils. examine acreage response domestically produced feedstocks to prices vegetable Our findings suggest strong diversified path dependencies among oils should be considered planning sustainable policies. In particular, analysis reveals great relevance soy oils, which show a high responsiveness, competition end uses (i.e. oils), tend net substitutes supply. terms land use effects, we find an increase imported palm results displacement effect devoted rapeseed cultivation, whereas surge decreases rapeseed. Land effects would relevant northern countries most intense. A policy measure EU, incentivising renewable environmental-friendly from feedstocks, positive domestic extent it stimulates (soy oils) with highest direct indirect emissions saving. However, plantations extra-EU producing imports determine important change due increased transports.