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Delivering and maintaining ?non GM? policies in the EU food and feed sector
is set to become more challenging in the coming year. This is according to
new research on the global GM market by three leading European agricultural
and food experts, September 2005.

The report, entitled ?The Global GM Market: Implications for the European
Food Chain. An analysis of labelling requirements, market dynamics and cost
implications?, identifies numerous food and feed ingredients in the food
chain derived using genetic modification. It also concludes that the
availability of non GM soybeans & derivatives from Brazil (the largest
supplier) is likely to decline in the next 12 months, resulting in an
increase in the price differential between non GM and GM soy - possibly
reaching as much as 25%2.

For livestock product producers (producing meat, milk and dairy products),
this widening price differential, for a primary feed ingredient, could
result in feed costs rising by between 6% and 10% in the next 1-3 years, and
lead to a decrease in profitability of between 9%-29%. This level of loss is
likely to be unsustainable.

For manufacturers of products such as cooking oils and margarines, their
switch away from using GM derived ingredients has also been adding
significantly (over 16%) to raw material costs. This level of additional
cost is also set to continue for the next 1-3 years.

The report suggests that these additional costs and feasibility problems
(currently largely absorbed by the supply chain), may be unsustainable and
may cause many businesses to re-think their ?GM-avoidance? policies.

?This is the first time that a serious attempt has been made to quantify the
economic impact and feasibility of ?GM-avoidance? policies. Many European
food businesses which have chosen to apply these policies to their products
are likely to be unaware of the extent to which many common food and feed
ingredients are obtained from GMOs. These businesses should find the report
thought provoking?; according to Graham Brookes, one of the co-authors of
the report.

A full copy of the report can be accessed on: www.pgeconomics.co.uk

References

1. Graham Brookes (Brookes West, UK), Neville Craddock (Neville Craddock
Associates, UK) and Professor Bärbel Kniel (Biotask AG, Germany)

2. This relates to the soybean price differential for ?hard IP? soybeans
which may rise from about 10% to 25% - ?Hard Identity Preservation?:
supplies that have strict IP systems from point of production through the
supply chain and which may operate to stricter threshold levels for
adventitious presence of GM derived material (eg, 0.1%). Regular testing
through the supply chain occurs to ensure that supplies meet buyer
specifications.

[www.pgeconomics.co.uk]

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