European consumers have long had an aversion to genetically modified organisms (GMO), be it in their food or in the feed used to rear their meat. But this anti-GMO preference will soon have an impact on what's available on their supermarket shelves and may open up an opportunity for U.S. beef producers to export more to Europe.
The European Union (EU) has had a de-facto ban on GMOs since the 1980s, something that's caused political strife between the EU and U.S. — as well as other GMO producers like Argentina and Brazil — because the EU refuses to import GMO cereals. In exchange for non-GMO feed, Europe has had to pay a premium for its feed to make sure what they got was “clean.”
But now countries like China are importing more cereals, and they don't care if it's got GMOs or not. This simple fact is making cereal producers less willing to follow the strict guidelines the EU requires and instead are going for simpler markets. That's leaving EU livestock producers with fewer options and higher costs because Europe only produces about 25% of its feed protein needs.
Europe's feed industry is now sounding the alarm that the situation with corn gluten, which brought imports from an estimated 2.9 million metric tons in 2006 to zero by October 2007, will be worsened by a similar situation with soy. And this time it won't be just the Atlantic states like Ireland, the United Kingdom, Spain and the Netherlands that will suffer from a shortage in soy availability, but all of Europe's livestock industries, says Alexander Doring, Secretary General of the European Association of Animal Feed Compounders.
“Everyone's using soybean meal. There are no alternatives,” Doring says.
The reason for the sudden panic is a recent spate of approvals for new GMO soy in the U.S., Argentina and Brazil that are set to hit the market after the 2009 harvest, the biggest culprit being Monsanto's Roundup Ready 2 soybean. Yet Doring says the danger will come earlier, as soon as the 2008 harvest, as seed companies build up their seed supplies during multiplication in time for the 2009 planting season.
According to a recent report produced by the EU's Directorate General for Agriculture (DGA), that situation is likely to come to a head in the next 12-18 months because of the delays inherent in the EU's arduous approval system.
Poultry and pork suffer
In the short term, under the scenarios laid out by the DGA's report, the pig sector would face slightly lower production levels under the medium-impact scenario. But under the worst case, that sector would see production fall 29% in 2009 and 34% in 2010 with overall consumption dropping 24% in 2009. Pork imports would kick in by 2010, it said.
The situation is just as grim for poultry producers. Again, there would be limited impacts under the medium-impact scenario; however, the worst-case scenario would see production drop 29% in 2009, but as much as 44% in 2010 that would be covered by imports.
Because Europe's beef industry relies very little on soy, it would be hardly effected under the medium scenario and would actually benefit from increased demand and higher consumption under the worse-case scenario as consumers look to find replacements for expensive or imported pork and poultry.
“An increase in beef consumption replacing pork and poultry consumption would happen in the real worst-case scenario. If that happened, there would be big agricultural chaos in Europe,” says Frans van Dongen, director of international affairs for the PVE, the Netherlands' Product Boards for Livestock, Meat and Eggs. “The processing industry, retail, everywhere. Any weakening of the pork and poultry sector will be better for the beef sector. I don't think it will lead to higher production levels, as that can only come after a year or half a year.”
The simple fact that Europe's beef industry couldn't pick up the pace in time opens up opportunities for U.S. beef producers participating in Non-Hormone Treated Cattle (NHTC) programs. At the moment, the EU only imports a few thousand tons of U.S. beef/year, but it currently has a ban on Brazilian beef — its preferred importer — due to food-safety reasons. So if there's a somewhat sudden increase in beef demand, Europe can only reasonably look to the U.S.
Like Europe, the U.S. would need time to ramp up its NHTC herd in order to take advantage of potential new export opportunities, notes Shayle Shagam, senior analyst for livestock, dairy, and poultry with USDA's World Agricultural Outlook Board.
But, she says, “it is possible for product within the current production stream of hormone-free beef to be shifted from the domestic to export market.”
And that's some good news.
Meghan Sapp is a U.S. journalist based in Brussels, Belgium.