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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.

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 report(3) 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.

      Promote the production of protein crops (peas, beans, sweet lupins): byincreasing the crop specific aid by 6 €/t to 78,49 €/t.

  • 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 220-230 €/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.

      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 set-aside 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.

      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.

  • 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.

(1) 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.

(2) 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.

(3) Based on simulations carried out by the Commission services

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