In the period up to and including 2030, the price of protein-rich animal feed will rise faster than the price of less protein-rich animal feed raw materials. This is shown by estimates by the European Commission. A quick transition to 100% GMO-free feed does not have to have major consequences for milk production and ...
The report 'EU Agri Outlook 2019, markets and income' estimates developments in the agricultural economy in Europe and the world up to and including the year 2030. Due to rising oil prices, the price of livestock feed will rise accordingly. However, the increase in less protein-rich raw materials is moderate at a few percent per year, compared to the price increase of protein-rich animal feed raw materials such as soy meal. This is partly due to the difference in the level of EU self-sufficiency between protein-rich and less protein-rich feed.
The calculated significant price increase of soya in the longer term is also the result of increasing demand in the European Union for dairy produced on a ration that is free of genetically modified organisms. Called VLOG milk in the Netherlands and Germany. Outside the European Union, the supply of GMO-free animal feed is extremely scarce. In the European Union, the area of GMO-free animal feed raw materials is growing year on year, but compared to the volume of animal feed imported annually, it remains limited to less than 5% of the total animal feed consumption in the European Union.
Scenario 100% GMO free feed in the EU
To assess the consequences of an increasing demand for GM-free products for the agricultural EU markets, a hypothetical scenario was investigated in which the EU fully transitions to 4% GMO-free milk production within 100 years.
According to the EU Feed Protein Balance Sheet for 2018/2019, 77% of the total feed consumption in the EU is produced by the EU member states themselves. Oilseeds, which contribute around a quarter of total EU feed use, are largely imported and only 26% are produced in the EU itself. More specifically, soy contributes 16% of total EU feed use and only 3% is produced in EU Member States. The main exporters of soybeans and soybean meal to the EU are Brazil, the US, Argentina and Ukraine. With the exception of Ukraine, almost all soybeans in these countries are of genetically modified varieties.
Scenario assumptions
To simulate the transition, it is assumed that in 2020 the GMO-free feed supply will mainly be intended for the drinking milk market and organic production in countries that are already GMO milk free. This is approximately 25% of EU milk production. In the following years, GMO-free milk production in the EU will gradually increase 100% in the hypothetical scenario examined. No account has been taken of the shift of imported soya for cows to other livestock farming sectors and vice versa for other feed materials (e.g. rapeseed meal). Additional costs resulting from the need to separate/keep GMO-free and other feed flows separate are also not included.
Effects on crop areas
By becoming 100% GMO-free, the composition of the dairy cattle ration appears to change as follows: 13% less soy meal, 9% more other oilseeds (particularly rapeseed and sunflower) and 5% less grains. The EU soybean area increases by 51% (+0,6 million hectares) and the grassland and forage area by 2,8 million hectares. 100% GMO-free milk production therefore not only means a decrease in soy imports from outside the EU and an increase in EU soybean production, but above all a change towards production systems with more grassland and forage crops and less grain and other oilseeds. In response to rising demand, the EU soybean price is rising by as much as 53% while rapeseed and wheat prices are rising more moderately, by 8% and 3% respectively.
Limited effect on milk and meat prices
These important changes in feed rations lead to a modest decrease in milk production of 0,5% or 886.000 tons and the impact on milk production is minor (minus 0,2%). Beef production, closely linked to milk production, decreases by 1,3% due to a reduction in the cattle population (-0,9%). Production loss is mainly caused by an increase in feed costs (+3,1%). The price of milk and beef increased by 0,7% and 3,8% respectively.
The outcome of the scenario is consistent with the literature suggesting that a switch to GMO-free feed in the dairy sector would have significant land use impacts, while the impacts on the milk and beef markets could be quite modest.