IP/01/412
Brussels, 19 March 2001
Commission presents report on plant proteins in the
light of the meat and bone meal ban
The European Commission today presented its report on the supply of plant
proteins to satisfy the additional demand for plant protein in animal feed. The
demand mainly stems from the ban on uses of processed animal proteins
(PAP)1 in farmed livestock feed adopted by the Council in December 2000 to
reinforce guarantees to consumers on the safety of their food. Its analysis of
a number of key options to promote the cultivation of plant proteins in the EU
leads to the conclusion that they are either excessively costly, have
particular WTO implications or are not well suited to replace PAP. Moreover,
the relatively limited quantities of soya meal needed to satisfy this additional
demand for protein (1-1.5 Mio t) 2 can easily be imported, according to the
Communication adopted today, adding only some 5% to our current imports
of soya meal. (As a result of the MBM ban, the shortage of protein is
expected to be covered by a combination of domestic cereals, imported soya
meal and improved efficiency in feed use). Soya meal is the best suited to
replace PAP and there is no problem in terms of its availability on the world
market.
Context of the Communication
The Council agreed in December to extend to non-ruminants the ban on the use of
processed animal proteins in animal feed to reinforce guarantees to consumers on
the safety of their food. Given the important role of PAPs in animal production, the
Council called on the Commission to analyse the supply and demand for protein-rich
plants and to draw the consequences for the policy currently being pursued in this
sector and for set-aside.
PAP means “meat-and-bone meal, meat meal, bone meal, blood meal, dried plasma and
other blood products, hydrolised proteins, hoof meal, horn meal, poultry and offal meal,
feather meal, dry greaves, fishmeal, dicalcium phosphate, gelatine and any other similar
products including mixtures, feedingstuffs, feed additives and premixtures containing these
products”.
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For the pig and poultry sectors, two main factors are influencing (in fact increasing) the
feed demand; firstly, the ban on PAP decided in December; secondly, a switch in
consumption from beef to pig and poultry meat, following the BSE crisis (hence increased
production and feed demand in these sectors). For the beef sector feed demand is being
influenced by the fact that animals are being held back on farms. The expected response of
the animal feed sector to the PAP ban is: that the feeding of protein-rich ingredients will be
reduced nearer to the minimum zoo-technical requirements, leading to a slight overall
reduction of the use of crude protein in animal feed and that the uptake of cereals in animal
feed will be increased. Taking account of all of the above, the additional quantities of soya
meal needed would appear to be 1-1.5 Mio t.
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In response, the Commission is presenting two documents to the Council and the
European Parliament, firstly a working document on the “Supply and demand of
protein-rich crops in the EU following the BSE crisis”. This paper analyses the use of
protein within the EU and includes a first assessment of possible changes in feed
use following the current BSE crisis and the ban on PAP in feed decided in
December. The second document is a communication to the Council and the
European Parliament on options to promote the cultivation of plant proteins in the
EU, which is based on the working document.
According to the Communication, there is no major problem to replace protein from
animal meal by protein from plants. In the immediate future, the main substitutes for
PAP will be cereals and soya meal. The ban on PAP in feed will not lead to any
shortage of protein in the EU or on the world markets. Should the markets become
short because of other reasons in the longer run (e.g. unexpected increases in world
demand or reductions of supply) prices would increase and set strong incentives to
increase production of oilseeds and protein crops, in the EU and elsewhere.
However, for the near future oil meals will be widely available on the market and it is
probable that prices will decrease rather than increase. Therefore, the ban should
not give rise to the introduction of new or more costly support schemes for plant
proteins in the EU.
Options to promote the cultivation of plant proteins in the EU
All the options analysed in this report3 to increase plant protein production in the EU
in the short and medium run (next 2-5 years) appear problematic:
- Promote the production of oilseeds: by maintaining the crop specific oilseeds
aid scheme and to fix the aid at a level sufficiently attractive to increase the area
cultivated with oilseeds.
- This solution would be relatively costly - the additional cost of introducing an
oilseeds specific aid of about 75 €/t would amount to some 474 Mio € per year.
Relating this to the additional quantities produced in terms of soya meal
equivalent (some 370 000 t), the opportunity cost would be some 1 270 € per
additional ton of soya meal equivalent. This figure compares to an import price
of some 220-230 €/t of imported soya meal.
- The oilseeds area would be limited by the Blair House agreement to some 4,93
Mio hectares. The Blair House limit could rapidly become a limiting factor if
market prices for oilseeds increase, in the long run, following demand increases.
- This solution would de facto dismantle a key element of the Agenda 2000
reform towards more market orientation, whereby the oilseed aid is to be
aligned to that of cereals as of 1 July 2002, i.e. 63 €/t.
- Most of the additional aid would benefit the area, which would also be sown
under Agenda 2000 conditions. In other words: it would give additional
economic support to oilseed producers for what they already produce.
1. Promote the production of protein crops (peas, beans, sweet lupins): by
increasing the crop specific aid by 6 €/t to 78,49 €/t.
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Based on simulations carried out by the Commission services
2
- The main disadvantage of an increase in the aid for protein crops is its limited
efficiency (relatively high cost and very modest increase in protein supply). The
effect of a 6 €/t aid increase on production would appear to be quite limited about 10 000-20 000 ha. Any increase in aid beyond this figure could remove
this aid from the protection afforded by the peace clause. In any case, an
increase to 100 €/t would only add some 30 000 to 50 000 ha. The additional
expenditure would amount to some 47 Mio € in the case of an increase of the
aid by 6 €/t (equalling about 990 € for each additional ton of soya meal
equivalent) and to more than 220 Mio € in the case of an increase by 27,5 €/t to
reach an aid level of 100 €/t (equalling about 1.840 € for each additional ton of
soya meal equivalent). These figures compare to an import price of some 220230 €/t of imported soya meal.
- Most of the additional aid would benefit the area which would also be sown
under Agenda 2000 conditions. As in the case of oilseeds above, it would give
an additional economic advantage to protein crop producers for what they
already produce.
- Protein crop growing may leadto increased nitrate leaching from agricultural
fields under certain conditions, with consequent water pollution unless particular
environmental precautions are taken.
2. Authorise the production of protein rich crops on set-aside land.
- Set aside was introduced as a market regulation instrument (market regulation
through production limitation, primarily for cereals) that could be reduced or
increased in the light of market perspectives. Allowing growers to fulfil their setaside obligations by growing protein crops would seriously weaken set-aside as
a tool for regulating the supply of cereals. ,There is a risk that farmers will
reduce the normal production of protein crops (and grow instead more profitable
cereals), replacing it by production on set aside land (in order to continue to
have the agronomic benefits of these crops in crop rotation).
- Set aside plays an important role in terms of limiting production within the EU’s
arable regime. By growing a crop on set aside land, the EU would diminish its
effectiveness in this regard. This would not be a step to be taken lightly in view
of the importance the EU attaches to the Blue Box as a contribution to the
process of agricultural reform. A basic requirement of Blue Box payments is that
they are given under production limiting programmes.
- If the cultivation of protein rich fodder crops was allowed on both compulsory
and voluntary set aside land, the large margin farmers have to enter into
voluntary set aside would lead to a de facto introduction of these crops into the
arable crop regime.
3. Promote the production of dried fodder: by increasing the maximum
guaranteed quantity, for example, by 10% or some 440 000 t and decreasing the
aid slightly, for example by 5%.
- Dried fodder is mainly fed to ruminants for which animal meal is already
forbidden since a number of years. It is not suited for pig and poultry feed.
- Dried fodder production is currently overshooting the maximum guaranteed
quantity by about 200 000 t in 1999/2000 and an estimated 600 000 t in
2000/01. It is therefore not certain that an increase in the maximum guaranteed
quantity will really lead to the same increase in production. It could in fact be
used simply to cover the already exceeding quantities.
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- There are discussions about the environmental friendliness of dried fodder
production. In the Southern Member States the areas are often irrigated and in
all Member States the process of dehydration needs energy (usually fuel), with
the exception of sun dried fodder the production of which is, however, declining.
Mr Fischler, presenting the report, said that the Commission was open to any
alternative feasible option, provided that such an option avoided the disadvantages
that characterised the options analysed by the Commission.
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