European feed manufacturers certainly have no shortage of challenges to contend with these days. Whether it’s the effect the European Union’s (E.U.) zero-tolerance policy on GM products is having on the feed supply or the rising cost of feed materials, due in part to the E.U. policy on renewable fuels, members of the European feed industry have plenty of concerns.
As it has for nearly 50 years, the European Feed Manufacturer’s Federation (FEFAC) is looking for solutions to these and other problems facing the industry. FEFAC represents the interests of the European Compound Feed Industry at the level of the European governmental institutions.
Pedro Corrêa de Barros, who took over as FEFAC president in June, said maintaining competitiveness and sustainability of feed and livestock production in the E.U., improving feed and food safety; and maintaining access to imported feed materials (the E.U. is set to become a net importer of cereals for the first time in decades) are among the key issues FEFAC will be focusing on over the next three years.
In a recent interview with World Grain, Corrêa de Barros, CEO of Portugal-based Grupo Nutroton SGPS SA, talked about the steps FEFAC is taking to address the many issues facing European feed manufacturers.
WG: How has the E.U. approach on safety standards affected the European feed industry?
Corrêa de Barros: The E.U. White Paper on food safety in 2000 identified about 15 specific feed-sector-related measures, all of which have been implemented as of the beginning of 2006. The most important change came through the feed hygiene regulation, which requires feed business operators to apply a HACCP-based safety assurance system. This has meant significant investment in the feed industry at both the human resources and technical level. However, most companies would state today that there has been a significant return on investment through reduction of customer complaints and higher production efficiencies. Furthermore, it was also perceived as the price to pay to restore customers and consumer confidence in feed safety. However, some E.U. legal measures went "over the top" as far as feed safety objectives are concerned.
The obligation to list percentage inclusion rates on the label has been attacked by the feed industry at the national and European court levels as a violation of intellectual property rights and offering no public health benefits. In general, the feed-safety-related changes, which were based on scientific risk assessment, have been supported by the feed industry, but it is generally recognized that this has led to an increase of regulatory costs, which are not borne by importers of livestock products.
WG: How is the E.U.’s stance on GM products affecting the industry? Do you anticipate the E.U. softening their stance in the foreseeable future?
Corrêa de Barros: The effect of the E.U.’s GM policy on the E.U. feed supply is dramatic and could jeopardize the future of its livestock sector. The enforcement of a strict zero-tolerance policy on GM events which are not yet approved in the E.U. means that the E.U. already lost supplies of U.S. corn gluten feed and DDGS and may, as early as 2008, lose the supply of soybean meal from the U.S. and six months later from South America. DG AGRI has estimated that this realistic worst-case scenario could lead to a loss of up to 44% of the pig and poultry production in Europe. We believe that at least the European Commission is fully conscious about the urgency to address this issue, but the main political challenge will be to convince certain Member States to support a practical solution.
WG: In what ways has the European feed industry been impacted by the increase in demand for biofuels?
Corrêa de Barros: The demand for biofuels produced from cereals and oilseeds "fueled" by political decisions at the national and E.U. level has led to increased competition for these raw materials, especially nearby biofuel production units, and driving up land prices, both of which could marginalize livestock production not able to compete with subsidized biofuel production. There also will be a strong energy deficit on animal feed due to the intense use of grains in ethanol production.
On the other hand, any increase of biofuel production could reduce the E.U.’s protein deficit through increased availability of co-products such as rape meal or DDGS. However, they cannot fully substitute soybean meal due to their different nutritional profiles. They also present new feed safety hazards, which need to be rapidly fixed by the producers.
WG: How is the recent outbreak of foot-and-mouth disease (FMD) impacting the industry? To what extent has the industry recovered from the Avian Flu crisis of 2006?
Corrêa de Barros: While it is worrying to see that failures in own-control and official control systems at the laboratory level could lead to a new FMD outbreak, the incidence of the new cases on the meat sector is minimal. However, the incident provides a strong reminder for the need for active animal disease surveillance and strict biosecurity measures. Poultry consumption improved markedly in the second half of 2006 and producers have been able to recover from the sharp downturn in the first half of 2006, although the total E.U. feed tonnage for poultry feed remained depressed in 2006.
WG: In what ways is FEFAC working to develop closer cooperation with the livestock sector and the raw material suppliers?
Corrêa de Barros: The shortage of feed grains, aggravated artificially by the E.U.’s GM policy, have led to close interaction and cooperation between the raw materials suppliers, FEFAC and the European livestock producers and the meat processing sector. There is a clear recognition and willingness from all parties of the value chain that joint action on issues such as cereal market management, feed and food safety standards and the CAP Health Check is the way forward to ensure the competitiveness of the European livestock sector.
WG: What is the estimated outlook for compound feed production in the E.U. for 2007? Are there any projections yet for 2008?
Corrêa de Barros: We would expect an increase of production of approximately 1% in 2007, with some recovery in the poultry sector, but also due to continued growth in the pig sector. However, total growth may suffer depending on the extent that rocketing raw material prices in the second half of 2007 take their toll on feed production, as pig and poultry find it hard to pass on the extra cost for feed to the final consumer. Most expect a further increase and stabilization of feed material prices at high levels in 2008. This could lead to stagnation, or the reduction of compound feed volumes, unless livestock producers are able to recover the increase of up to 50% of their feed costs from the market.
WG: Please explain the significance of the adoption of the European Feed Manufacturers Guide (EFMC) and the role it is having on the European feed and food sectors. Is it being successfully implemented?
Corrêa de Barros: The EFMC is probably the most significant success story of the European feed industry of the past five to 10 years. The FEFAC feed safety action plan launched in 1998 was sanctioned by feed manufacturers and the competent authorities in 2007 with the successful assessment by the E.U.’s Standing Committee of the Food Chain of the EFMC as the first European guide for compound feed and premix manufacturing, together with guides for petfood and feed additives. Nineteen member associations have adopted and implemented national feed safety codes based on the EFMC. FEFAC estimates that more than 85% of all industrial compound feed and premixes are produced in line with EFMC requirements. FEFAC has set up an EFMC committee, which will regularly review and upgrade the EFMC in line with new results from feed safety risk assessments. The EFMC has provided FEFAC with an effective communication tool to rebuild confidence of chain partners in feed safety assurance. Positive results of EFMC implementation can be verified, to a certain extent, by following alert notifications in the E.U. RASFF system where numbers for safety alerts on compound feed and premixes have been at very low levels since 2002. In addition, national control reports and reports by the E.U. Food and Veterinary Office provide information on satisfactory implementation of voluntary feed safety assurance systems in all Member States.
WG: Has there been any recent progress in the attempt to simplify E.U.’s feed labeling rules?
Corrêa de Barros: Following a series of intensive stakeholder consultations, conducted by the European Commission since 2003, we expect a new Commission proposal on simplification and modernization of feed labeling rules covering the whole feed sector in a single regulation before the end of 2007. The last administrative hurdle in form of an economic impact assessment was taken in June 2007, when the competent services received a positive evaluation report on the potential economic benefits of its approach towards "better regulation" for feed labeling. The European Commission is expected to encourage the industry to participate more actively in co-regulation of its activities by drawing up codes of practices or codes of conduct on issues such as listing feed materials and product claims.
WG: FEFAC has stated in the past that E.U. risk management policy must move away from the "zero-tolerance principle" and adopt the ALARA principle instead? What are the organization’s reasons for taking this stance?
Corrêa de Barros: The zero-tolerance policy on residues of animal proteins introduced with the feed ban has led to the destruction of thousands of tons of feed materials, including corn gluten feed and sugar beet pulp where control samples showed the presence of a single microscopic bone fragment. It took FEFAC five years to convince the E.U. legislators in the Commission, the European Parliament and the Council to grant a legal basis for a tolerance for technically unavoidable presence of animal protein residues resulting from environmental contamination (topsoil contains bone material). Currently, the E.U. runs the risk of destroying its entire feed, livestock and food industry by sticking to a strict zero-tolerance policy on the presence of GM events which are not yet approved in the E.U. Interestingly, the E.U. diffused such a scenario years ago for imports of products of animal origin by setting Reference Points of actions for residues of veterinary drugs and has set maximum limits for pesticides in feeds that are not approved in the E.U. The current approach demonstrates that the E.U. still has a long way to go to implement a risk-based approach on official controls for feed and food safety. This is why FEFAC supports internationally recognized principles such as ALARA in official feed and food control systems, allowing global feed and food trade to continue while providing a high level of feed and food safety.
WG: Is progress being made toward developing international harmonization of feed safety standards and certifiable food and feed safety assurance systems?
Corrêa de Barros: FEFAC supports International Feed Industry Federation (IFIF) activities in its working group on harmonization of feed safety standards. In a first step, IFIF will seek to finalize its joint IFIF/FAO feed manual by translating the CODEX code of practice on good animal feeding in a document carrying additional information that may be of assistance for feed producers in developing countries who want to set up their own national feed safety assurance system. In a second step, IFIF will start to compare existing national safety assurance systems to identify commonalities and differences in their respective working approaches. While FEFAC holds no mandate or competence on certification systems, it will continue to facilitate dialogue between feed producers and such systems operators to seek the most efficient and costeffective solutions in order to respond to market requirements on third-party verification of feed safety assurance.
WG: It’s our understanding that the need to re-establish a CODEX Task Force for on Animal Feed will be one of the issues discussed at the CODEX Alimentarius Commission next July. Do you support the development of such a task force?
Corrêa de Barros: FEFAC fully supports the setting up of a dedicated CODEX Task Force on animal feed in the absence of a global feed regulatory forum which could deal with emerging feed safety hazards such as melamine. The current division of tasks between CODEX on food safety and the World Organization for Animal Health on animal health and zoonoses is quite unsatisfactory, as feed producers must seek to ensure animal health and food safety objectives simultaneously. The new working group should address the existing important methodological gaps on feed safety risk assessments. This, together with widely varying feed safety objectives between countries, leads to very diverse regulatory frameworks on feed safety at a time when feed production must rapidly increase at a global scale in order to meet rising demand for foodstuffs of animal origin. The notion that there can be no safe food without safe feed should be translated into a proactive attitude of competent authorities and industry to facilitate the development of meaningful, robust, feed safety standards based on scientific risk assessment for the benefit of our farmer customer and the final consumer.