Thursday, May 29, 2003, AMSTERDAM - New stricter European Union rules onanimal feed are due to virtually halt Asian shipments to Europe of copraproducts and might also curb imports of palm kernel expellers, industrysources said on Tuesday.

The sources say producers in Malaysia and the Philippines might not beable to meet more rigorous toxic limits for traces of arsenic in palmkernels and aflatoxin in copra.

Animal feed makers shrug off a lack of copra expeller and extractionpellets since they only make up a limited fraction of cattle feed. But theEuropean Union imports around 2.3 million tons each year of palm kernelexpeller pellets, which would be difficult to replace.

The restrictions could also harm small farmers in the two nations sincethe EU is the main buyer of the two products.

In the Netherlands, copra pellets make up less than five percent of cattlefeed, but palm kernel expellers are used for around 15 percent of cattleand pig rations, traders said.

It would be virtually impossible to find a similar product because palmkernel is so cheap, said one industry source.

Dilution

The EU is due to tighten toxicity rules on August 1, eliminating a specialdilution provision for the animal feed industry, the European animal feedindustry group FEFAC told Reuters.

The feed industry has been allowed higher limits of certain toxins inindividual products that are put into feed mixtures since the toxicsubstances are greatly diluted once they are mixed with other ingredientsin the final mixture.

The main focus has been to ensure the end product did not contain too muchtoxin, but officials moved to tighten rules after a string ofheadline-grabbing debacles involving contamination of feed withcancer-causing dioxin.

The new directive slashes the limit for aflatoxin, which is produced fromcertain strains of fungi, in animal feed ingredients to 20 parts perbillion (PPB) from 200 PPB.

Aflotoxin, which infects copra when it is not dried properly, is apotential cancer-causing substance.

My feeling is that almost the total import of copra into the EU will stop.It is impossible for the Philippines to export with that new limit, atrader said.

Traders have stopped quoting prices for the product.

In 2001, the EU imported 611,000 tons of copra, but levels have fallen inrecent years.

Palm kernels

The situation with arsenic contamination in palm kernel expellers, whichare produced mainly by Indonesia and Malaysia, was less clear.

Supplies from Malaysia were thought to be the most problematic, accordingto an official at the Royal Dutch Grain and Feed Trade Association.

Previously, there have been no limits for arsenic for products that gointo animal feed, but the new EU directive imposes a two part per millionlimit on palm kernel expellers, the official said.

There is great uncertainty about this, but I doubt Malaysia will be ableto meet that limit, an industry source said.

Alexander Doering, secretary general of FEFAC, said EU officials werestill tinkering with the numbers and could still change them before theAugust implementation date.

An EU standing committee on the food chain is due to meet on Wednesday toreview the issue, he added.