A report prepared for a consortium of trade associations including FEFAC, COCERAL and UECBV by Cardy-Brown & Co Ltd. entitled Impacts of EU Unauthorised GM’s on the feed & livestock sectors focuses primarily on one of the most critical issues facing today's European livestock and feed sectors - the consequences of a loss of soybeans and soybean meal (SBM) due to the release of the much anticipated herbicide-tolerant genetically modified (GM) seed technology marketed under the brand name, RoundUp Ready 2 Yield (RR2Y).

It is a well-known fact that the new technology bears significance to all sectors, including dairy, egg production and aquaculture. However, the gravity of the situation can be best illustrated by taking into account the pig and poultry industries.

The EU is the largest importer of soybean meal. However, when China stepped into the limelight as the world's most significant importer of whole beans and soybean oil, Europe's market leverage has dwindled to a certain degree.

The United States, Argentina and Brazil constitute over 90 per cent of global soybean exports. With GM soybeans as the dominant type of seed planted, separating non-GM SBM from GM SBM is fast becoming a pressing issue, and an expensive one too. According to the report, the Argentine Trade Association says, "It would cost around $40 per tonne of SBM or maize to keep non-GM separate (0.9 per cent labelling threshold) from products containing GM."

Percentage of Soybean Acreage planted with GM seeds (Image: Cardy-Brown Co. Ltd.)

Brazil, formerly the largest supplier of non-GM SBM, has crossed over to the GM technology. Since the percentage of acreage devoted solely to GM soybeans is 65 per cent, it is progressively becoming harder and more expensive to keep non-GM SBM and GM SBM isolated in the marketing and processing chains. In the US, non-GM SBM has become a niche market and commands a 60 per cent price premium.

It is believed that Brazil and Argentina will be faced with the impossible task of guaranteeing the absence of non-approved GM-products once the new stacked GM soybeans have been planted for field trials.

The EU supply chain has endeavoured to manage soybean and SBM supplies to certify that unapproved GM products are excluded. However so stringent is the zero-tolerance policy that complete exclusion has been deemed impossible.

Zero Tolerance Policy: Impact on Meat and Feed Sectors

Ever since 2006, when Herculex (maize seed technology) was taken up by the US, there has been a marked decline in imports of DDGs and maize by-products. A year later, concerns about Bayer/Syngenta’s GA21 trait led to tight restrictions on maize imports from Argentina, further restricting supplies.

The seriousness of the situation was heightened when maize exports from the Ukraine to Europe were stopped and Brazil became the remaining importer of maize into Europe. The price of Brazilian maize is about €50-70 higher than that of Argentine maize, thereby increasing the cost of feed, followed by the expenses involved in meat production and ultimately, a reduced competitiveness in meat production in Europe.

The Maize and SBM Situation: A Quick Glance

Europe, in terms of cereal and maize supplies, strongly represents a source of raw materials. However, DDGS from the US corn-based ethanol industry offer a much cheaper and practical option. Therefore, lack of access to this raw material has has a huge impact on meat production in the EU.

Europe is highly dependent on soybean imports for the feed's high protein content, as proteins lay the foundation for meat production. 90 per cent of the EU-27 feed comes in from Brazil and Argentina. Unfortunately, even if these two countries were able to double their production, they would still constitute only 13 per cent of the EU's soybean meal demand.

Soybean and Soybean Meal equivalent production possibilities in Europe & CEEC (1,000MT) (Image: Cardy-Brown Co. Ltd.)

Vulnerability of Pork and Poultry Sectors

Pork production margins in the EU are low, as are poultry production margins. Producers are at a disadvantage due to high feed prices. As a result, many of them have been forced to give up the industry.

The report says that meanwhile, "Brazil's strategy for shifting the percentage of Brazilian exports more in favour of higher value meat instead of feed materials is developing well. Europe’s restrictive import policy on GM feed imports and crippling impact on its domestic meat production is an excellent signal for Brazilian meat exports."

Conclusion

According to the report, "The political inability of the EU to fix a workable LLP threshold for not-yet-approved GM products will move Europe one step closer to worst-case scenario during the current marketing year 2008/09." If authorisation is not granted in time, Europe may lose an estimated 25 per cent of its soybean meal from the US.

Insecurity caused by the loss of feed will, in all likelihood, lead to a major downfall of Europe's meat and feed industry. Should this occur, imports of meat are sure to increase. Isn't it ironic how, if this were to happen, the imported meat would have been fed the very same feed that Europe was unable to afford for its own industry?

Further Reading

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You can view the report Impacts of EU Unauthorised GM’s on the feed & livestock sectors by clicking here.