Unveiling the economic and environmental impact of policies to promote animal feed for a circular food system

Feeding animals with low-opportunity-cost feed (LCF) such as agricultural residues and by-products, and better use of local feed resources are discussed as strategies for transitioning towards more circular food systems. This study incorporates technical characteristics of livestock production into a global economic model to investigate the economic and environmental effects of these circular food system transitions in the European Union (EU27) in relation to the policies used to reach them. We compare the impact of LCF stimulating subsidies, budget-neutrality and import tariffs stimulating domestic sourcing. Providing only subsidies increases circularity and agricultural wages (0.1 to 0.3%), but also animal production (0.1 to 1.5%) with negative indirect effects on land use (0.3 to 1.1%) and emissions (1.3 to 8.0%). Promoting the use of LCF through budget-neutral subsidies and domestic feed sourcing through import tariffs, decreases animal production (-0.1 to -1.6%) and GHG emissions in agriculture (-0.4 to -6.0%). Synergy effects from subsidising DDGS, a biofuel by-product used as feed, increase biofuel production, positively contributing to lower GHG emissions (-0.3 to -0.6%) in 2030. However, budget-neutrality drives land use up (0.1 to 0.5%) while decreasing agricultural wages (-0.1 to -0.3%). This calls for complementary policies to mitigate drawbacks and enhance benefits of a more circular agri-food system in the EU27 in 2030.