KIEV (Commodity Online) : Low temperatures hit winter rapeseed harvest in Ukraine this season, according to US Department of Agriculture's Kiev bureau.

In a report, it said country’s rapeseed exports are set to decline for a second successive year of decline, and may fall significantly more if biofuels regulations in Europe prove as damaging as some critics fear.



Low temperatures have already left production on track for a small drop to 1.80m tonnes this year, with exports in 2010-11 expected to fall by 6%, the report added.

However, the drop in exports, for which Ukraine relies on the European Union buyers for some 80% of trade, could prove substantially more if a Brussels directive aimed at promoting renewable fuels puts some Ukrainian supplies out of bounds.

The directive, which requires biofuels groups to prove supplies meet so-called sustainability standards to be eligible for tax exemptions, could present a significant barrier to exports to the EU.

If so domestic prices are likely to fall, prompting growers to make "some changes in planting decisions" for next year's harvest, the report added.

The bureau said it was still determining the implications of the European measures, which have provoked fierce opposition from some organisations, such as European Centre for International Political Economy think tank, which has termed them environmental protectionism.

Ukraine's domestic industry for manufacturing bio diesel from rapeseed is in its infancy. The country's crushers are expected to process only 150,000 tonnes of rapeseed in 2009-10, 8.0% of the nation's crop.

However, the country in January introduced biofuels subsidies which have helped attract many organisations into the sector.

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