BRUSSELS (DTN) -- Europe's animal feed industry is pinning its hopes on proposed new rules due later this year that should allow traces of unauthorized biotech material in crop-based food imports, which would likely allow leading suppliers such as Argentina, Brazil and the United States to ramp up their soy shipments to EU countries -- primarily of beans and meal.

Before the end of 2010, the European Commission's food safety chief, Malta's John Dalli, will present a long-awaited 'technical solution' to replace Europe's current zero-tolerance policy on the presence of unauthorized GE events in grain and other crop-based imports with a small percentage threshold below which they could be allowed to enter EU territory. While that threshold is still being drafted, industry officials forecast anything between 0.1 and 0.3 percent, saying it would most likely not be crop-specific.

At present, U.S. suppliers face huge problems in getting GE-free crops to Europe. While current U.S. soybean GE traits are approved for feed shipments, some "stacked" trait versions of many corn hybrid, and newer corn traits themselves are not.

Even if shippers could guarantee their vessels as biotech-free, there is high potential for minute contamination of the crops loaded into them. If a shipment of soybeans arrives at an EU port and is found to contain the tiniest amount of non-approved GE material, even corn dust from a truck or grain bin somewhere in the shipping process, that shipment runs the risk of being slapped with a costly rejection order to be borne by the exporter. This has happened several times in the recent past.

Dalli's proposal, assuming it gains the approval of EU governments and the European Parliament, should help to ease the pain for Europe's feedstuff manufacturers. They have long complained about problems in sourcing high-protein material from mainstream suppliers because of higher rates of approval and cultivation in supplier countries of GE soy and maize varieties. Europe's GE approvals system has been particularly thorough, or -- as biotech companies see it -- frustratingly slow.

Tolerance of non-authorized GE events, so-called 'low-level presence,' has been urgently requested for several years by the EU's feed manufacturers as well as by the oilseed and protein meal industry. Just this month, EU feedmakers issued a collective statement saying that "the lack of acceptance of a practical low-level presence along the entire food and feed chain is jeopardizing vital seed, food and feed supplies to the EU and the competitiveness of EU food and feed business operators."

Europe's livestock and feed manufacturing industries have a keen interest in seeing more GE soybean imports approved since they depend heavily on soy products as a source of protein-rich and high-quality feed. For climatic reasons, EU countries produce only a minimal amount of soybeans in terms of overall EU consumption, so imports are crucial. Italy is the main producer, followed by France and Romania, but given the limitations on how much more can be grown, there is no potential to bridge the supply gap. So in terms of high-protein availability for compound feed manufacture, Europe is a deficit region. Soybean meal is the primary protein source for the animal feed market, representing over 60 percent of vegetable protein.

Until now, Latin American countries had tended to mirror the sluggish authorization procedure in the EU, fearful of losing out on the lucrative European export market. That attitude has changed: Brazil, the world's second-largest soybean grower after the United States, is a case in point. While South America's farming powerhouse has an advantage as a soybean exporter to Europe because its exporters can still provide 'identity-preserved' i.e. non-biotech production, some two thirds of its soybeans are genetically engineered -- a seismic shift from 10 years ago when biotech approvals were in their infancy. Several of Brazil's more recent GE approvals, including soybean and cotton types, are unlikely to gain EU approval for some time.

With China emerging as a major soybean importer, Argentina and Brazil are fast becoming less reliant on 'difficult' European markets to place their soybean production. European importers are starting to feel left out in the cold, unsure of where to turn in order to guarantee their supply stream of protein material.

"China has become the main importer. The development of the Chinese market has supported the trend in Brazil: 'Why should we avoid biotech when others don't care about it?' they (Brazilians) ask. There is a real concern from all exporting countries," one EU industry official said.

And there is steady European demand. Each year, EU countries buy some 35 million metric tons of soybean meal equivalent (beans and meal) to meet livestock requirements. The EU livestock sector depends on the global market for 75 percent of its supply of proteins. The only sustainable source of protein available in sufficient quantity to meet the EU requirements is soybean meal, bolstered by imports of feed cereals such as corn gluten feed, maize germ meal and dried distillers grains with solubles (DDGS).

Jeremy Smith can be reached at jeremy.smith@telventdtn.com

(GH/SK/KM)

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