Europe's battle over genetically modified organisms (GMOs) gets hotter by the day. The tense political and social battle could have long-term repercussions for U.S. agricultural products in this key market.
"The system is extremely difficult here. Parliament and the commissioners are heavily influenced by data they receive on consumers' beliefs about GMOs,” says Mark Andersen, American Soybean Association and United Soybean Board regional director of international marketing based in Amsterdam. "The last time the European Union [EU] approved a soybean trait was in 1998. A couple of years ago, they got a million signatures against GMOs.”
"We have somewhat reduced optimism on GMOs. We've been told that if there's a technical solution, it will be for feed only, not for food use. Our enthusiasm has been dampened somewhat,” says Geert Vanmarcke, international market adviser for Brussels-based FEDIOL, which represents the EU vegetable oil and protein meal industry.
Anti-GMO pressure remains intense, Vanmarcke says. "Greenpeace would like to have GMOs banned in the EU. The [European] Commission is very sensitive to everything coming out of that corner. Public perception is important. In an election, everybody is careful not to be seen as pro-GMO. Being pro-GMO more or less is considered to be political suicide.”
"The public perception is that GMOs are dangerous and there have not been long-term studies of them,” adds Pierre Tardieu, FEDIOL's assistant manager of trade affairs, who says politicians are handcuffed by the issue. "Certain EU member states are still very opposed to GMOs. This is a political climate rather hard to change.”
"A number of scientific research studies show there's no danger in GMOs. But if they [consumers] don't want to eat them, what can we do? The introduction to the market was mishandled in the 1990s; it was done without proper discussion,” says Pekka Pesonen, secretary- general of COPA-COGECA, an umbrella organization for European farm groups and ag cooperatives.
"Farmers don't decide whether or not GMO is right. We listen to consumers. We want legal certainty and freedom of choice,” he notes. "We are not happy that we don't have either. Effectively, the current policy of zero GMO tolerance closes trade.”
For U.S. farmers, the Europeans' quibbling about GMOs means lost market opportunities. "The U.S. used to export a million tons of dried distillers' grains to Europe. Because they [the EU] didn't approve corn traits, they nixed that,” Andersen says. "Prices have nothing to do with it anymore. It's all about approved traits.”
Europe might have to rethink its anti-GMO stance if soybean-producing nations grow ever more GMO varieties, however. Vanmarcke explains why: "If we get more growing of GMO varieties in the U.S. and South America, varieties with traits not authorized in the EU, it would mean imports of soybeans and soymeal would have to stop. Those products would be illegal in the EU. The question then might be, why not use more European proteins? The answer is, there are simply not enough.”
Combine the anti-GMO fervor with farmers reducing livestock numbers due to higher-priced and ever-scarcer feed, and it leaves Europeans facing reduced meat supplies, some observers believe.
"We are looking at the collapse of the livestock industry in Europe. There is sheer panic that we may be shut off on soybeans,” says Alexander Doring, secretary-general of the European Feed Manufacturers' Federation. "We're between the hammer and the anvil, and there is no strategy for what to do about it.”
Vanmarcke agrees: "If we don't import soybeans, we will have to reduce livestock. We'll be looking at the import of meat, all from animals fed with the same GMOs banned in the EU. Is that Greenpeace's goal? No, but they're closing their minds on the GMO issue.”
Somehow opening that EU wall on GMOs could eventually be vital to U.S. farmers. "Europe is the largest market in the world for soybean meal,” Andersen says. "It's larger than the U.S. and larger than China.”
Biofuels under fire.
Europeans remain fired up about other ag-related issues, such as increased food prices that many associate with biofuels production. That likely won't stop anytime soon, Pesonen says. "Higher food prices only reflect higher production costs. This is a phenomenon that's going to continue, particularly with meat being in higher demand in China and India.
"We at COPA-COGECA believe biofuels don't have a significant impact on food prices. On the international level, we've seen only 4.4% of total land area used for biofuels, and in the EU, only 3%. Europe used to have a mandatory setaside of 10% of land area above 75 acres. This means that for 2008, we have 5% to 6% more arable land available for ag commodities, at least. We actually have more ag land in 2008 than 2007.”
U.S. biofuels should not be blamed for higher food prices, either, Pesonen says. "American exports of maize actually increased last year. American use of maize in biofuels is not the cause of higher food prices.”
That's a tough sell in Europe these days, however, says Amandine Lacourt, project manager for the European Biodiesel Board (EBB), another group based in Brussels. After recent booming years for biodiesel in Europe, consumer concern about food prices, among other issues, may put the brakes on further expansion.
A few years ago, the EU set a bio-fuels target of 10% of its market by 2020. EBB's 66 member companies have been hoping their product would fill 10% of the diesel market by 2010 and 15% by 2015. In the current climate, those numbers may be unreachable. Lacourt says. "Many groups want to lower the 10% mandatory level. It will be an interesting debate. If the target is dropped, it will be very bad. Our industry needs to supply those targets.”
More than half of Europe's cars and trucks now run on diesel, and that's increasing. Europe's diesel demand stands at 200 million tons, up from about 150 million tons in 2000.
"We are importing a lot of diesel, mainly from Russia. It is an incentive for biodiesel,” Lacourt says. "The big issue is sustainability. The perception of sustainability is something we need to address, all of us—Europe and the U.S. But how sustainable is buying diesel from Russia? No one mentions the sustainability of importing from an unstable region.”
Biofuels should not take the brunt of the sustainability focus, Lacourt adds. "Let's apply sustainability to all biomass, to all food and feed. Let's look at the big picture and not only concentrate on biofuels. Everything is interrelated.”
In addition, European biodiesel producers complain that they're getting hammered by B99 imported from the U.S., with a $1/gal. subsidy. "This has created major problems and has disrupted our industry,” Lacourt says.
"We have companies going bankrupt because of the U.S. subsidy,” she says. "We think it hurts the U.S. bio-diesel industry too, because it means U.S. manufacturers produce for the EU market. The U.S. needs to create a domestic market for its biodiesel.
"It's also a ‘splash-and-dash' issue,” she adds. "South American biodiesel is shipped to the U.S. to blend, it gets the credit, then it is shipped to Europe. We are not against imports. What we question is subsidization. We hope to find a rapid solution to this problem. Our industry can't wait longer for it.”
To contact Charles Johnson, e-mail CJohnson@farmjournal.com.
Top Producer, November 2008