27 August 2002

US FOOD INDUSTRY HAS LOST BILLIONS FROM GM CROPS

"...the US food industry has lost billions of dollars in exports since introducing GM crops."
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http://www.nzherald.co.nz/storydisplay.cfm?storyID=2351302&thesection=news&thesubsection=dialogue
US farmers reap heavy penalty for sowing GM crops
New Zealand Herald, 27 August 2002
By GUY HATCHARD*

Since the election, a number of scientists have claimed that methods of genetic testing are inaccurate, and that New Zealand will isolate itself from world trade unless it relaxes seed-testing requirements and embraces genetic modification technology.

Many of the claims are inaccurate and misleading.  GM crops have, in fact, had a disastrous impact on United States farm economies.

Howard Bezar, of Crop and Food Research, Lincoln, has suggested that zero tolerance for GM contamination is unworkable.  He maintains that "under 1 per cent (one part in 100), it is almost impossible to get confidence in your results".

In fact, commercial GM testing labs can accurately detect up to one part in 10,000.  Millions of dollars worth of trades in food commodities are made every day certified by such test results.

Moreover for many unapproved GM varieties, such as StarLink® maize, there is zero tolerance.  If any trace is found, shipments are rejected on arrival in the European Union or Japan.

GM testing requirements must be exacting to avoid such costly product recalls.  For example, the tolerance levels for certified GM-free commercial seed transactions is less than 0.01 per cent contamination, not the 1 per cent advocated by Bezar.

Tony Conner, also of Crop and Food Research, pointed to the current EU (1 per cent) and Japanese (5 per cent) GM labelling thresholds and said "to export ... we only have to comply with the designated thresholds".

Wrong again. These figures are only government thresholds for food labelling.  In practice, most large food companies in the EU and Japan have zero tolerance for GM ingredients.  That is due to consumer preference and the real-life conservative conditions of international food trading.

In June last year, traces of GM potato were found in snacks exported to Japan.  Japanese importers instituted strict testing protocols and the US lost 37 per cent of its huge Japanese potato market.  In response, the US Potato Board has had to institute a costly programme to remove GM potatoes entirely.

All around, the US food industry has lost billions of dollars in exports since introducing GM crops.  US maize prices are at their lowest for 30 years - down from US$3 ($6.43) to $1.30 ($2.79) a bushel.

In 1996, before GM crops were introduced, US maize farmers made a profit of US$1.4 billion. Last year, they lost US$12 billion.  The US Government picked up a third of this through farm subsidies.  Our Government could never afford to protect farmers this way.

The key strategy helping US companies recapture lost export markets is a GM contamination tolerance of less than 0.1 per cent for approved varieties and zero tolerance for unapproved varieties.

Francis Weavers, of the Life Sciences Network, assures us that many countries are proceeding to commercialisation of GM crops, and that New Zealand will miss out unless it follows suit.

In fact, four countries grow 98 per cent of GM crops - the US, Canada, Argentina and China.  All are busy backtracking. China and Argentina are facing commercial realities and implementing plans to reverse their commitment to GM crops.

The gates to Europe and Japan for North American GM commodities have all but closed. Canadian canola exports to the EU were worth $180 million in 1996 but zero in 1997 and since.  US corn exports to the EU have, similarly, fallen from millions of metric tonnes to almost zero since GM Bt corn was introduced.

Canada is implementing voluntary labelling laws and calling for restrictions on GM planting of new varieties. Even the US Department of Agriculture is committed to a voluntary GM segregation scheme.

Others try to tell us that the wide-scale adoption of GM technology in North America implies that US farmers have embraced GM technology because it is more profitable.  In reality, the marketing of GM seed in North America and elsewhere is achieved through a loss-leader policy designed to capture market share rapidly and create an irreversible shift to GM seeds.

Since 1996, the traditional customer-oriented market practices of the US agrifood sector have been overturned by an aggressive agrichemical-biotech sector that has acquired almost the entire seed sector.

Monsanto-Du Pont now controls more than 70 per cent of the US seed market. Following acquisitions, it introduced artificial price relations in the food chain. Formerly profit-making family seed companies with long-standing relationships with the farm sector became loss-making companies looking for increased market share.

The market drive was to sell herbicides paired with GM crops, such as the Roundup Ready soybean.  Between 1998 and 2000, Monsanto lost US$1.7 billion in its seed and genomics division, gained nearly 70 per cent of the soy seed market, and sold US$7.5 billion worth of related Roundup herbicide. Meanwhile US farm gate soy prices fell by more than US$2 a bushel and soy farmers are losing billions.

In effect, a $3 billion international biotech-herbicide company has worked out how to manipulate the trillion-dollar US agrifood industry.  This practice has made no financial sense for farmers.

In addition to the huge impact of GM on farm gate prices because of lost export markets, the 2000 US Department of Agriculture cost-and-return farm survey of 350 Iowa farms reported data on yields, and fertiliser, herbicide and seed costs.  A University of Iowa analysis of these figures showed there had been no economic on-farm benefit of GM crops to counter massive falls in prices.

The upshot is that the US farm sector has become unstable, with record levels of farm bankruptcies.

The same strategy is being applied overseas.  The real battle is whether pharmaceutical-biotech alliances can capture world food markets with patented seeds and paired herbicides.  The marketing strategy is "Promise everything.  Spend big on public relations, farmer advertising and government lobbying.  Give away seeds".

In Argentina, Monsanto captured 90 per cent of the soy seed market this way. Belatedly, the cash-hit Argentine Government will this year spend US$200 million to help farmers to switch from GM crops.

Farmers here should take note.  The sheer dollar size of the US agribiotech alliances dwarfs our economy.  They have the capacity to manipulate our agricultural sector.

The question for the Government is not green versus conventional but should we expose the mainstay of our economy, the farm sector, to the market strategies of giant US agribiotech companies which do not have our interest at heart?

There are no proven market models for either farmers or food companies to gain benefits from GM crops.  To date, only herbicide companies have reaped profits.

Much of the world is already awake to the danger.  Over 50 countries have restrictions on GM crops.  If we followed the advice of New Zealand biotech lobbyists, our farming industry would ultimately have to face export bans and undertake costly, if not impossible, clean-ups to protect markets.

The financial independence of farmers would also be put at risk.  The Government must ensure our seed and agribusiness sector is protected from undue foreign influence and ownership.

More positively, there are other, more profitable, ways to develop our agricultural economy that are free of unacceptable risk.  New Zealand has profited from its isolation from BSE.  We can, in the same way, profit from our isolation from GM crops.

We can set up export markets for uncontaminated seed and GM-free agricultural products rather than import contaminated seed.  There are also growing markets for specialty grains, organic and natural produce.

These trends are now well established and set to grow further.  To take advantage, we need real market intelligence and effective education for farmers.

The Government and the education sector must offer more courses in farm-scale organic growing, hands-on international food business, regulatory regimes and internet-based food commodity trading.

New Zealand should also update its GM testing procedures in line with commercial realities.  The Ministry of Agriculture needs a contract with a testing laboratory that is both independent of the biotech agenda and has sufficient commercial and scientific knowledge to police a non-GM certification system.

That would win us a significant share of the higher-priced non-GM markets in Europe, Japan, North America and Asia.

 * Dr Guy Hatchard, of Christchurch, was until June the director of economic, regulatory and market analysis at US company Genetic ID, a leading tester of crops for genetic traits.