Effects on French Soyabean Demand of an Import Duty Imposed by the European Community

Policies affecting agricultural trade are a source of uncertamty for participants m international markets. Soyabeans and soyabean products are currently imported without duties by the European Community and are used extensively m livestock feed. Some have suggested that import leVIes or duties on soyabeans in Europe would encourage the use of domestically-produced feedstuffs and contribute to reducmg excess supplies of hvestock products. To analyze the implications of such a policy change, least-cost feed rations were developed for broilers, laying hens, pigs, and dairy cattle in France. Those hnear programmmg models can be used to estimate the changes m both the pnce and composltton of feed rations by varying the price of soya bean meal to reflect an import levy. Input demand equations are estimated and the elasticities derived from those equations are used to examine the adjustments m feed use and output resultmg from the higher compound feed price. The total effect of a higher soyabean meal pnce ts shown to be composed of the change m ration composition and the adjustment of livestock producers to the higher price of compound feed. The results indicate that import duties would have to raise the price of soyabean meal by 40 percent or more substantially to reduce its use in French hvestock rations. Preliminary results also suggest that the impact of a higher soyabean meal pnce on French livestock productmn and the use of domestically-produced feed grains and oilseeds would be relatively small