February 14, 2008

Carl Mortished, World Business Editor

Europe is facing a crisis in the supply of meat because of delays and political resistance in Brussels to the use of genetically modified protein in animal feed.

Shortages in grain for animal feed and soaring prices are wreaking havoc in the livestock sector, causing pig and poultry farmers to reduce their output, according to animal feed compounders and livestock associations.

The problem has been identified in an internal European Union report on the effect of EU policy towards the use of GM products in animal feed. A failure by the EU to speed up the approval of GM soya imports will significantly raise meat prices, an outcome that is directly attributable to European policies, the report concludes.

Europe is struggling to find enough vegetable protein to feed its livestock, causing feed prices to rise. The EU imports 80 per cent of its feed protein needs - mainly new traits of GM soya and corn.

Outside Europe, farmers increasingly are turning to GM crop varieties to get better yields, but the speed of the transition is leaving Europe stranded with fewer sources of supply, the European Feed Manufacturers Association (Fefa) said.

The problem is acute and is forcing farmers to cut back on the number of animals they rear, raising the threat of reduced meat supply. “We are looking at the collapse of the livestock industry,” Alexander Doring, the association's secretary-general, said.

The emerging crisis over animal feed and meat supply is creating conflict within the European Commission, setting the directorate-general of agriculture against the health and environment directorates, which are responsible for the approval of GM foods.

The row erupted last year when economists in the Commission's agriculture directorate-general produced a report predicting a catastrophic surge in the cost of animal feed if Europe continued to delay the approval of new traits of genetically modified grain. The imported protein feed, mainly soya and corn, is sourced from the United States, Argentina and Brazil. New GM varieties are being developed rapidly, but EU policies have imposed delays of 2 years in the approval of the new GM grains for consumption. Moreover, the EU has adopted a zero-tolerance policy on GM, meaning that a single grain of non-approved GMO in a shipment can render it unfit for use.

A shift by American, Argentinian and Brazilian soya growers to non-EU approved crops would lead to soaring feed prices. On a worst-case scenario, the cost of feed would rise 600 per cent, according to the report Economic impact of unapproved GMOs on EU feed imports and livestock production.

“The short-term impacts in the pig meat and poultry sectors would be a substantial reduction in production, exports and consumption, and a very significant increase in imports,” the report said. The cost burden would affect employment and incomes in agriculture and would lead to “significant increases in meat prices for consumers”. The threat emerges at a time when demand for grain is acute. Feed prices have doubled in the past year, Tony Bell, of BOCM Pauls, Britain's largest feed compounder, said. But the delays in approving GM traits will worsen the tight cereal market.

The introduction of new GM maize traits in America means that the EU can no longer import it. The extra cost burden on EU farmers is expected to be €3.6billion (£2.6billion) for 2007-08. Poultry producers are facing a separate dilemma in the UK because supermarkets refuse to accept chickens reared on GM feed. “The position of the retailers is unsustainable,” Peter Bradnock, chief executive of the British Poultry Council, said.

“Initially, non-GM fed chickens will become much more expensive. They will become scarcer, but eventually they won't be available. We will not be able to supply them,” he said.

The risk facing Europe is that its own livestock production will dwindle, Mr Doring said, and it will be forced to import more meat from Latin America and the United States.

The irony, he added, is that these imported animals will have been fed almost exclusively on GM feed: “We are strangling our livestock industry and the EU is increasing imports. The Brazilians are happy, they can sell us chicken fed on GM.”