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30th Jul 2016

Global maize price hike impacting EU livestock

  • Global price increase of maize is having an impact on EU livestock farmers. (Photo: caese)

The United Nation's agency for Food and Agriculture (FAO) says the recent spike in the price of maize and soja is causing problems for the EU's animal feed sector.

"We already see that the prices of the feed sector is rising and in fact there are a lot of problems already with the livestock sector. Some of them are already speaking about erecting some kind of assistance in the dairy sector," Concepcion Calpe, an economist at FAO, told this website from Rome on Tuesday (14 August).

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The agency noted earlier this month that a "severe deterioration of maize crop prospects in the United States" caused by drought has increased prices by almost 23 percent in July.

The US Department of Agriculture (USDA) said the crop conditions for maize and soybean are the worst in 24 years.

Calpe said it was too early to evaluate the price impact on every day consumers in the EU but any cost increase would eventually be passed through the food production chain and reflected at the supermarket.

She also noted that while price hikes are a cause for a concern they could not be qualified as a "crisis" on the scale that ravaged food supplies and caused riots in some developing countries in 2007 and 2008.

"The price can go higher if there are further supply shortages but a lot of the spike that we saw in 2007 and 2008 was also the making of the politicians and of the press that really generated some of the panic," said Calpe.

The impact of any future price increase on globally traded food stuffs should also be mitigated by government "safety nets" put in place since the last crisis, according to the FAO.

Calpe noted that indigenous foods such as cassavas and maniocs consumed in developing countries are vital to their food security. Such foods are not necessarily affected by steep price fluctuations of maize.

For its part, the European Commission told reporters in Brussels on Tuesday that the increase of prices, aside from maize and soja, has not occurred in other cash crops like rice.

"As far as households are concerned, at this stage there should not be any real impact. If any impact were to be noticed, it would be delayed, mainly because those two crops represent a very small percentage of what European households buy in the supermarket. Most of it is used for an ingredient in other food products," said European Commission spokesperson Patrizio Fiorilli.

Fiorilli told reporters that a meeting among the G20 rapid response forum is already scheduled for October. The forum is tasked to instigate discussions among decisions makers whenever abnormal fluctuations in global food prices occur.

The Financial Times reported on Monday that the G20 leaders are planning a conference call before the end of the month to coordinate a meeting in response to the soaring prices.

The EU animal feed sector is highly dependent on agricultural commodities imports. The EU imported 33 million tonnes of soja and 4 million tonnes of maize in the 2008 and 2009 season.

Most of the feed is imported from Brazil, Argentina, and the United States.

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