Grains Research and Development

Date: 01.09.2001

GM crops: the market report

The report Genetically Modified Grains: Market implications for Australian graingrowers, released recently by the Australian Bureau of Agricultural and Resource Economics (ABARE), fills a long-standing information gap.

The study identifies possible consequences for Australia’s farmers and the general community of growing GM crops, and not growing them.

It provides insights into what our competitors on world markets are doing and consumer attitudes towards GM products. It also examines agronomic and environmental issues and marketplace realities.

It stresses that, while Australia has a significant capability in the area of gene technology with grain crops, it has tended to lag behind three of its main competitors in world agricultural markets — the USA, Argentina and Canada.

The ABARE report confirms that GM crops seem to have been widely accepted in the United States and Canada but are meeting strong consumer resistance in some other countries, particularly in Europe. This has led to a few governments banning some GM products and to a variety of national labelling regimes for products containing GM material.

Importantly for growers, the report addresses the economic implications of crop segregation (‘identity preservation’).

‘Identity preservation’, that is, being confident that a grain is what it is claimed to be, has emerged as a key element in the GM debate.

Says the report “it is generally agreed that, in a mixed production system of GM and conventional grain, identity preservation requirements add 5-15 per cent to the offer price of certified non-GM grain. Because some adventitious mixing of grain is always possible in mixed production systems, a pragmatic solution has been to allow maximum tolerance levels for GM content in GM-free grain. As a general rule, the lower the tolerance level, the higher the identity preservation costs are likely to be”.

Markets show consumers buying GM grain

“Market evidence casts some doubt on the extent of consumer concerns,” the report says. “GM products have made very substantial inroads into world food markets; for example, soybeans and corn products are being consumed in undiminished quantities, despite the GM status of a large part of the world’s supplies, even in Europe where the consumer concerns are the greatest.

“A second indication is that there is only patchy evidence of premiums for non-GM grain and oilseeds in world markets. These premiums have not been sufficiently large to offset the agronomic benefits of GM crops. At this stage, the worldwide market for certified non-GM products is only a niche one.”

GRDC Managing Director, John Lovett, sees messages for growers and researchers in the study.

For growers, uncertainties about consumer acceptance are likely to encourage an approach o f ‘hastening slowly’ in planting GM crops. Flexibility will be required in responding to changing circumstances, including the design of any necessary segregation or ‘identity preservation’ arrangements.

On the research side, the GRDC is addressing the perceived lag behind our export competitors by committing significant resources to projects investigating techniques and processes in the field of gene technology for breeding.

“Not to do so,” Professor Lovett said, “would be to risk widening the research gap which ABARE’s study identifies, to weaken the future viability prospects of our graingrower stakeholders, and to ignore the environmental and health benefits which these technologies have the potential to offer.”

In addition to the prospect of improvements in grain quality and yield, investing in gene technology research produced How-on benefits for the environment, including the potential for large reductions in the amount of chemicals used and the use of modified plants to help deal with natural resource problems such as dryland salinity.

“The GRDC takes the view that it needs to invest now in basic and applied gene technology research in order that Australian graingrowers can remain internationally competitive and prepared for future changes in world grain trade and consumer demands.”

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