GMO’s, Biotech Food and Tra de Policy Lecture 16 AHEED “International Agricultural Trade and Policy” Taught by Alex F. McCalla, Professor Emeritus, UC.

GMO’s, Biotech Food and Trade Policy

Lecture 16 AHEED “International Agricultural Trade and Policy”Taught by Alex F. McCalla, Professor Emeritus, UC Davis.April 8, 2010, University of Tirana, AlbaniaLecture Courtesy of Professor Colin A. Carter, UC -Davis

Readings

•FAO “Agric Biotechnology”

•Jonathan Rauch “Will Frankenfood Save the Planet?” •Economist “Monsanto”

• "Biotech" is genetic modification: the selective transfer of genes from one organism to another. Ordinary breeding can cross related varieties, but it cannot take a gene from a bacterium, for instance, and transfer it to a wheat plant.

• e.g., “golden rice” developed by inserting a daffodil gene into rice; GM rice contains betacarotene, which humans convert to vitamin A. (WTO: vitamin A deficiency causes 250-500 thousand children to go blind each year).

Genetically Modified Crops

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UN estimates the population will grow by 40%, from 6.3B to 8.9B in 2050.

Feeding those people, & their pets & providing increasingly protein-rich diets that an increasingly wealthy world will expect—will require food output to at least double, & possibly triple.

Rauch

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GM technologies differ from previous crop innovations because:

• GM crop development & commercialization are driven by the private sector—mostly rich country multinationals.

• Intellectual property rights (IPRs) have gained in importance (e.g.,)

• GM crops are associated with new environmental & health risks, entailing new regulatory procedures.

• Uncertainty & risk aversion have also led to limited public acceptance & precautious policy approaches.

• Modern biotechnology separates developing a specific crop trait & the breeding of locally adapted germplasm.

Qaim, AJAE, 2005

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Strong Views on All Sides6

“The campaign of fear now being waged against genetic modification is based largely on fantasy & a complete lack of respect for science & logic. Genetic modification can reduce the chemical load in the environment, & reduce the amount of land required for food crops.”

Dr. Patrick Moore, ecologist & co-founder of Greenpeace, March 2001.

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“California is the state with the highest potential economic impact associated with adoption of GM crops.”

National Center for Food and Agricultural Policy

• Starlink Corn contamination in US (2000)

• Zambia rejected food aid (GM corn). “It is better for Zambians to starve than eating harmful food.” (2002)

Oregon vote on mandatory GMO labeling (2002) GM Wheat shelved in N. America (2004) Ventria’s pharma rice (2004) Brazil “legalized” GM soy/cotton in 2005 County GM crop bans (e.g. Sonoma) in Calif. 2005;

defeated 57 to 43% WTO ruled EU’s de facto ban on GMO approval was

not based on scientific concerns (2006). Liberty Link Rice contamination in US (2006) US Judge halts sale of GM alfalfa seeds (2007) Bt cotton accused of being main reason for a

resurgence of farmer suicides in India (2008). US Judge overturned USDA approval of GM sugar

beets (‘09)

Policy Issues

US FDA deals with pre-market approval of GMOs & foods containing GM ingredients

USDA’s APHIS regulates small-scale field testing of GM plants before commercialization.

US EPA regulates GM plants that express pesticides such as Bt corn.

C Carter

US Regulatory Approach

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FDA’s ’92 position was very clear: labeling of GM foods is not required.

FDA approach is based on scientific risk based assessment of GMOs & concept of substantial equivalence: objective of such an approach is not to establish absolute safety, but to consider whether/not GM foods are as safe as conventional foods.

Alternatively, EU follows the precautionary principle

C Carter

Food Labeling: US Regulatory Approach

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Source: USDA, ERS

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Source: Fernandez Cornejo & Caswell USDA, ERS, April 2006

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GMO Importance in Developing Countries: e.g.China

> 75% of China's cotton now biotech. Bollworm resistance to pesticides was a big

problem in China before Bt. Cotton fields were sprayed up to 40 times. With Bt cotton, China’s farmers have saved

20% in production costs. China’s pesticide use has fallen sharply

with Bt cotton (C. Pray). Bt cotton has potential to eliminate the

need for 40% of global pesticide use (Clive James, ISAAA).

Organic farming, uses no artificial fertilizer, but it does use manure, which can pollute water and contaminate food.

Traditional farmers may use less herbicide, but they also do more ploughing, with environmental complications.

Low-input agriculture uses fewer chemicals but more land.

Technology vs Chemicals

Are Transgenic Rice/Wheat Different from other GMOs?

GM rice & wheat are not commercially grown.

Rice/wheat are food grains, whereas corn, & soybeans are mainly used for feed.

Soybean, corn, & canola oil largely exempt from labeling regulations in Japan.

Plenty of GM food now eaten in EU, Japan, & China.

EU versus GM Technology

In WTO case, US alleged violation of Sanitary & Phytosanitary (SPS) Agreement.

From Oct. ’98 no new GMOs authorized in the EU until 2006.

EU response to WTO case: “lack of consumer demand accounts for low sales of GMOs in the EU” (EU trade directorate).

EU adopted new rules on labeling & traceability. EU trade directorate says the EU system is “science based” & not driven by economic considerations.

EU’s Approach

Labeling at 0.9% tolerance.

EU influences other countries (Isaac; Paarlberg) e.g.: Zambia, Zimbabwe, Russia & China

Lowering of adventitious presence of unapproved transgenic material to 0.5% from 0.9%? Including soy & corn oil & corn gluten (whether or not DNA is detectable).

EU Maize Importsmt

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Series1 Series2 Series3

BZ

US

Arg

EU Soybean Importsmt

US

Arg

BZ

International Rules

UN food code (Codex Alimentarius) unable to reach an agreement on GM labeling.

Cartagena Biosafety Protocol: uses a "precautionary approach“& allows importers to block GM imports if they are not satisfied with information supplied by exporters.

Protocol promotes idea of letting each country decide on its own labeling policy.

US has opposed the Cartagena Protocol.

Labeling

Mandatory labeling encourages food processors to switch away from GM ingredients & avoid labels, especially for highly processed products.

In the EU, tolerant consumers suffer economic loss due to lack of choice at retail level.

US food industry asked US govt to file a WTO complaint against the EU's new biotech traceability and labeling rules, from Apr. 2004.

Harmonization of Labeling Policies

Kirchoff & Zago (2001) & Jackson (2002) find that harmonization is not a good idea for the US & EU.

Labeling policies may not have a large effect on soybeans & corn (Gruère & Carter); animal feed is (currently) exempt from labeling.

Transgenic food crops (wheat & rice) is a different story & labeling will have significant economic effect.

Starlink Corn

Sep. 18, 2000, Washington Post reported genetic material from StarLink corn was found in taco shells.

StarLink was approved by US EPA for animal feed but not for human consumption (i.e., a split license).

StarLink was co-mingled with non-StarLink corn & this led to recalls of hundreds of food products domestically and overseas.

StarLink corn was not approved for food or feed use in Japan or S. Korea.

Aventis settled a class action lawsuit for $112 m.

LL601 Rice Contamination

GM rice not commercially grown in US or elsewhere.

Bayer trials on LL Rice contaminated seed supply of US Long Grain rice; reported in 2006.

US produces 160 million cwt of long grain rice each year & exports 50%

EU stopped importing US long grain following the Aug 18th 2006 contamination announcement.

Resulted in a 10 to 20% drop in US long grain exports in 2006/07 & subsequent years.

Another lawsuit is underway; farmers v. Bayer.

Liberty Link Rice Contamination: Impact on November rice futures

8.58.78.9

9.19.39.59.7

9.910.110.3

5/1/2006

5/15/2006

5/29/2006

6/12/2006

6/26/2006

7/10/2006

7/24/2006

8/7/2006

8/21/2006

9/4/2006

9/18/2006

10/2/2006

10/16/2006

10/30/2006

11/13/2006

LL601 Contamination announcement

$/cwt

U.S. Long-Grain Rice Exports to European Union (million cwt)

Note: August-July crop year & figures are “rough” equivalent. Compiled fromU.S. Department of Commerce and USDA FAS trade data.

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