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LATEST NEWS UPDATES | GM Crops and Global Agri Trade -Sukhpal Singh

GM Crops and Global Agri Trade -Sukhpal Singh

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published Published on Oct 19, 2014   modified Modified on Oct 19, 2014
-Economic and Political Weekly

The cultivation of geneticallymodified crops, especially food crops, is not just a domestic issue; it has an impact on global food trade as well.

Sukhpal Singh (sukhpal@iimahd.ernet.in) is at the Centre for Management in Agriculture, IIM, Ahmedabad.

There is no doubt that the application of biotechnology can lead to yield improvement, cost cutting and lower crop losses, besides providing more processable raw materials and designer products. That is why it is said that the food processing industry may become the "chemical constituent of food industry" in the future and the pharmaceutical industry may be turned into the "pharming industry" due to the agricultural or biological production of pharmaceutical ingredients. It is estimated that a 1% increase in solids (5%) content of tomato can add value to processing that is worth millions of dollars.

The emergence of biotechnology as an important factor in agriculture and the food sector has led to wide-ranging debates on four major aspects: food safety, environmental or biosafety, equity and social concerns, and ethics. Given the power of biotechnology to bring about major changes in the way primary production, and processing and value addition take place through "appropriationism" and "substitutionism" (Goodman et al 1987), there is the possibility of a very major restructuring of the food and fibre sectors.

Appropriationism is concerned with various natural, mechanical, biochemical and genetic changes in raw material production as seen in the green revolution technology in farm production, cross-breeding, artificial insemination, breeding and hybridisation in poultry, and tissue culture in agroforestry. Substitutionism becomes applicable on the output side of the food and fibre chains in terms of mechanical, chemical and biochemical changes which reduce direct and linear dependence of this sector on agriculture as seen in the use of enzymes, fats, microorganisms and vitamins being sourced from various sources including wild plants and forests. This leads to the possibility of production of a value added item like bread without being dependent on wheat for its production.

One major aspect of genetically modified (GM) crop technology in the agribusiness sector which has not received sufficient attention is the impact of this technology on agro-trade in terms of a ban on GM foods (trade loss), restrictions on food and fibre trade in terms of segregation and labelling and testing (filtered trade), trade diversion, and higher cost of trade due to compliance costs. Already, more than 50 countries have food labelling requirements for GM-based products. Filtered trade also leads to a higher cost of exports. For example, in the case of US wheat, where two-thirds of US durum wheat exports were to the European Union (EU) in 2004-05, the higher cost due to such restrictions or requirements like segregation and labelling was estimated to be about $10/tonne (Wisner 2003). This is important in the context of the discovery in 2013 and 2014 of GM wheat in the US which in 2013 led South Korea and Japan to temporarily halt purchases of wheat due to fears of contamination (Gillam 2014). All this leads to a decline in the profitability of trade in a particular commodity. For example, the 2013 GM wheat discovery in US led to a food price decline globally, including in the US and rice and wheat prices in Europe. This has happened as well in the case of GM soya in the US wherein soyabean prices declined by 22% over three to five years (between 1997-98 and 2002-03) after the introduction of GM soyabean.

Though there are studies and arguments that introduction of GM crops in India will not have any adverse impact on India's grain trade (Narayanan 2013; Gruere et al 2007), but from an export perspective the evidence is to the contrary in other contexts. In 2013 the US restricted and withheld Indian shipments of basmati rice due to traces of a herbicide which could be GM related. Though the EU takes in only 3% of India's basmati exports, since it does not permit most GM crops, the introduction of GM in rice because of poor segregation facilities (Sahai nd) and labelling laws may have an impact in this important and premium market. Similarly, the introduction of GM wheat may have implications for wheat exports though it is argued that Indian wheat mostly goes as feed in non-EU countries and, therefore, may not be affected. But it is important to note that a few years ago, the Australian Department of Agriculture, Fisheries and Forestry (DAFF) carried out an assessment of the impact of the introduction of GM crops in the emerging economies of India, China, Brazil and Argentina on its food exports as these are important markets for the country. It was assessed that higher production of wheat in these countries due to GM seeds may replace Australia's exports to these countries (DAFF 2008).

India is toying with the idea of introduction of GM technology in rice, maize, sorghum, groundnut and wheat crops wherein the Genetic Engineering Approval Committee (GEAC) has now permitted the field trials of these crops. India has also been debating the Biotechnology Regulatory Authority of India bill to supposedly regulate various technologies, especially genetically- modified organisms (GMOs). The Food Safety Standards Authority of India (FSSAI) is already in place to regulate food safety within the country. All this is possible as the Sanitary and Phyto-sanitary Measures (SPSM) Agreement of the World Trade Organization (WTO) permits countries to regulate imports of products into their markets on grounds of human, animal and plant safety or a potential risk to them.

Already 30 GM crops have been commercialised globally. These are estimated to go up to 120 by 2015 further though, at present, these crops are mostly concentrated in the US and the European region. By 2015, 50% of GM crop area will be in Asia (Stein and Rodriguez-Cerezo 2010). The trade impact of GM technology also needs to be seen in the context of increasing levels of concentration in agricultural R&D and input trade. For example, one company controls two-thirds of banana germ plasm of the world, four companies have 30% global market of seeds, and just six multinationals account for 77% of the pesticide market. Added to this is the fact of limited biodiversity where only 30 crops account for 95% of world food production. Further, wheat, corn and rice account for more than 50% of global cereal production and three vegetables - potato, tomato, and cabbage-cauliflower - account for 50% of global vegetable production. In this context, technology is not neutral to its control and commodification.

References

DAFF (2008): "GM Crops in Emerging Economies: Impacts on Australian Agriculture", Department of Agriculture, Fisheries and Forestry, Government of Australia, available at:www.daff.gov.au.

Gillam, C (2014): "US Says Unapproved Genetically Modified Wheat Found in Montana", 26 September, accessed from: http://www.reuters.com/article/2014/09/26/us-usa-monsanto-wheat-id

Goodman, D, B Sorj and J Wilkinson (1987): From Farming to Biotechnology - A Theory of Agro-industrial Development (Oxford and New York: Basil Blackwell).

Gruere, G, A Bouet and S Mevel (2007): "Genetically Modified Food and International Trade", IFPRI Discussion Paper 00740, December, IFPRI, Washington.

Narayanan (2013): "GM crops and India's Grain Exports", Livemint, 2 June.

Sahai, S (nd): "Can GM and Non-GM Crops Be Segregated in India? - Is Coexistence Possible? Gene Campaign", New Delhi. Downloaded from: www.cbd.int/doc/external/cop-09/gc-coexist-en.pdf on 12 June 2012.

Stein, A J and E Rodriguez-Cerezo (2010): "Low-Level Presence of New GM Crops: An Issue on the Rise for Countries Where They Lack Approval", AgBioForum, 13(2), 173-82.

Wisner, R N (2003): "Round-Up ® Ready Spring Wheat: Its Potential Short-term Impacts on US Wheat Export Markets and Prices", Working Paper # 04025. Downloaded from; www.econbiz.de on 10 July 2013.

Economic and Political Weekly, Vol-XLIX, No. 42, October 18, 2014, http://www.epw.in/commentary/gm-crops-and-global-agri-trade.html


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