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Research article - Peer-reviewed, 2023

The distortion in the EU feed market due to import constraints on genetically modifed soy

Basnet, Shyam Kumar; Ghosh, Ranjan Kumar; Eriksson, Mattias; Lagerkvist, Carl-Johan

Abstract

Feed importers in some EU member states face constraints on imports of genetically modifed (GM) soy, a practice that may compromise the interests of EU livestock farm‑ ers. Using the cases of Sweden and Austria, we analyzed price transmission in the soy supply chain originating from Brazil, applying an asymmetric non-linear auto-regressive distributed lag (ARDL) model to identify short-run and long-run asymmetries. The results revealed signifcant asymmetric efects in how positive and negative price changes are absorbed within the feed industry. Notably, increases in the cost of Brazil‑ ian soy swiftly afect the prices for EU farmers, while cost reductions fail to trigger cor‑ responding price decreases. Consequently, stronger constraints on GM soy imports are likely to exacerbate the competitiveness challenges faced by livestock farmers, primar‑ ily due to their reliance on non-GM soy. This implies that the restrictions on GM imports need to be relaxed or that low-cost local protein alternatives need to be developed.

Keywords

Soy supply; Price transmission; ARDL model; Genetically modifed

Published in

Agricultural and Food Economics
2023, Volume: 11, number: 1, article number: 50