German biodiesel firm cuts output as sales fall

HAMBURG, March 26 (Reuters) - German biodiesel producer Biodiesel GmbH Kyritz said on Wednesday it had cut production because of falling sales and the high cost of raw materials.

The company cut output at its 85,000 tonne plant in Kyritz but its chief executive, Helmut Harms-Ensink, declined to say by how much.

"We have been hit by tax increases and high prices for our raw materials and we have cut production," Harms-Ensink said.

At a time when the European Union wants to increase biofuel use to help combat global warming, Germany has started taxing biodiesel because the government said it could not afford to lose the large tax revenue from fossil diesel.

A new round of tax increases was imposed on Jan. 1 this year and biodiesel now costs almost the same as fossil diesel.

"The B100 biodiesel (petrol station) market is almost dead," he said. "Some sales are continuing to the farming industry which still has a tax exemption for biodiesel. But biodiesel orders from trucking firms have dropped greatly."

Biodiesel has a lower energy content than fossil diesel so vehicles burn more of it. Biofuel producers argue it must be cheaper to achieve sales.

Biodiesel to be blended with fossil diesel at oil refineries was largely being imported, he said.

The current high level of global oilseed prices has also pushed up prices for the company's major raw material, rapeseed oil. "The German industry is being squeezed from all sides at the moment," he said.