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

Shyam Kumar Basnet (), Ranjan Kumar Ghosh, Mattias Eriksson and Carl-Johan Lagerkvist
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Shyam Kumar Basnet: Stockholm University
Ranjan Kumar Ghosh: Indian Institute of Management Ahmedabad (IIMA)
Mattias Eriksson: Swedish University of Agricultural Sciences

Agricultural and Food Economics, 2023, vol. 11, issue 1, 1-26

Abstract: Abstract Feed importers in some EU member states face constraints on imports of genetically modified (GM) soy, a practice that may compromise the interests of EU livestock farmers. 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 significant asymmetric effects in how positive and negative price changes are absorbed within the feed industry. Notably, increases in the cost of Brazilian soy swiftly affect the prices for EU farmers, while cost reductions fail to trigger corresponding price decreases. Consequently, stronger constraints on GM soy imports are likely to exacerbate the competitiveness challenges faced by livestock farmers, primarily 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 modified (search for similar items in EconPapers)
JEL-codes: C53 Q02 Q16 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1186/s40100-023-00290-7

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