London (21 September 2005) –New for old is a characteristic of technology. Nobody seems to make 78 rpm records any more, getting horses shod is quite a problem in large cities and the glory of gas lighting, much hailed in its day, is for most a distant memory.

So it is with agriculture. For all its denigration by people and organisations out to further their various political and commercial nests, modern agricultural biotechnology is expanding by leaps and bounds: this very year, the billionth acre of GM crops was planted. More and more countries round the world are adopting it for one or more of their crops while foodstuffs, labelled as containing ingredients derived from GM crops, are making their appearance in supermarkets, even in Europe.

With much of the world using more and more GM every day, yet some people remaining scrupulously anxious to avoid all contact with it, what happens to the global market for “non-GM” crops? In the eyes of those wishing to avoid GM, that is not just a matter of growing the two sorts separately. They must be so separate that not a scintilla of the transgenic material may be present in their food. That has now become an impossible objective yet a demand for non-GM supplies obviously remains.

What are the economic implications of being sure a product (say, soya) contains no material of GM origin when a very high percentage of the world’s commodity supply is indeed transgenic? According to new research on the global GM market by three leading European agricultural and food experts, delivering and maintaining non-GM policies in the EU food and feed sector is set to become more challenging in the coming year.

An analysis of labelling requirements, market dynamics and cost implications, identifies numerous food and feed ingredients in the food chain derived using genetic modification. It concludes that the availability of non GM soybeans & derivatives from Brazil (the largest supplier) is likely to decline in the next 12 months, resulting in an increase in the price differential between non GM and GM soy – possibly reaching as much as 25%.

For the meat, milk and dairy industries, the widening price differential for a primary feed ingredient could result in feed costs rising by between 6% and 10% in the next 1-3 years, and lead to a decrease in profitability of between 9%-29%. This level of loss is likely to be unsustainable.

Manufacturers of products such as cooking oils and margarines switching away from using GM derived ingredients has also been adding significantly (over 16%) to raw material costs. This level of additional cost is also set to continue for the next 1-3 years.

The report suggests that these additional costs and feasibility problems (currently largely absorbed by the supply chain) may be unsustainable and cause many businesses to re-think their of “GM-avoidance” policies.

According to Graham Brookes, one of the co-authors of the report, “this is the first time that a serious attempt has been made to quantify the economic impact and feasibility of ‘GM-avoidance’ policies. Many European food businesses which have chosen to apply these policies to their products are likely to be unaware of the extent to which many common food and feed ingredients are obtained from GMOs. These businesses should find the report thought provoking”.

Source:

Brookes West & Neville Craddock Associates (21.9.05). GM food avoidance policies to become more expensive, according to new report. PG Economics – Agricultural and Food Economists(http://www.pgeconomics.co.uk/GM_food_avoidance.htm)

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