The lack of clear GMO regulation: its impact on researchers and farmers in Brazil

Int. J. Biotechnology, Vol. X, No. X, 2004 1

Copyright © 2004 Inderscience Enterprises Ltd.

The lack of clear GMO regulation: its impact on researchers and farmers in Brazil1

Elisio Contini, Maria José Amstalden Sampaio and Antonio Flavio Dias Avila Embrapa Labex France, Avenue Agropolis 34394, Montpellier – Cedex 5, France Fax: +33(0)4 67 04 75 90 E-mail: [email protected] ??PL. SUPPLY Affiliations & E-mail IDs OF ALL AUTHORS??

Abstract: This paper discusses the current regulation of genetically modified organisms and derivatives used in Brazil, where GM-plants are on the verge of being approved for commercial use. The paper further uses a simulation model to assess the potential economic benefits resulting from unrestricted commercial approval of herbicide-tolerant soybeans and some other crops on the Brazilian economy. Only soybean has been specially approved in the last two seasons (2002/03 and 2003/04). As there is no consistent information about the benefits of using transgenic seeds in Brazil, the authors made simulations on the basis of the experiences reported by Argentina and the USA. The paper concludes that Brazil could do much better if government had taken the lead to clarify the legal requirements for research and commercial release of genetically modified crops which are still contradictory and unlikely to control any future environmental impact in Brazil.

Keywords: GM-crops; transgenic plants; GMO; biotechnology; soybean; Bt-corn; Bt-cotton; glyphosate; biosafety regulations.

Reference to this paper should be made as follows: Contini, E., Sampaio, M.J. A. and Avila, A.F.D. (2004) ‘The lack of clear GMO regulation: its impact on researchers and farmers in Brazil’, Int. J. Biotechnology, Vol. X, No. Y, pp.000–000.

Biographical notes: Elisio Contini is an Agricultural Economist. He has written five books on agricultural development and research and many scientific papers in technical and academic journals in Brazil. He is coordinating the project Embrapa Labex France, in Montpellier, France.

Maria José Amstalden Sampaio is a Brazilian Scientist. She works for the Brazilian Agriculture Research Corporation (Embrapa), linked to the Ministry of Agriculture, since 1976.

Antonio Flavio Dias Avila is a specialist in the development of methodologies on economic impact of agricultural research and priority setting, management information system and the development of benefit-cost and priority setting software.

2 E. Contini, M.J.A. Sampaio and A.F.D. Avila

1 Introduction

The use of biotechnology in agriculture offers important benefits including the potential of enhanced agronomic, nutritional, and marketing qualities. It is an important tool to improve the productivity of food and cash crops and, consequently, to increase the livelihood of the rural poor, who depend primarily on agriculture for income generation. Yet, political polarisation has emerged concerning the potential impact of Genetically Modified Organisms (GMO) on public health, equity and the environment. Since this global debate on the possible risks and benefits of GMO was largely framed by stakeholders from the developed world, developing country governments have been slow in promoting the adoption of this technology for their agricultural systems. Moreover, conflicting interests within the political arenas in developing countries make it increasingly difficult to design effective and responsible GMO regulation that can strike a balance between safety and competitiveness.

The case of Brazil is exemplary to highlight the increasing regulatory conflicts between different government agencies. The prospect of increasing profits in major agricultural commodity markets such as South America, prompted multinational companies to invest heavily in the acquisition of seed companies located in large Latin US countries such as Brazil. As a consequence, all major genes of economic importance developed during the first biotechnology wave in the USA and Europe, are being transferred to Brazilian tropical varieties and have been experimentally tested in the country according to the biosafety regulations in place since 1995.

2 An entangled legislation: requirements for research and commercial release of genetically modified crops as regulated by different laws, decrees, resolutions and regulations

The question how the developing world will meet food security, cannot just be addressed by producing and distributing more food but requires significant investments in making agriculture in developing countries more productive. Even though the successof the ‘Green Revolution’ has demonstrated the importance of technology to increase agricultural productivity, the world still faces continuing vulnerability to food shortages. Nevertheless, given the necessary funding, it seems likely that conventional crop breeding combined with the emerging technologies based on molecular biology, genetic engineering and natural resource management, will help boost productivity in the coming decades (Huang, Pray and Rozelle, 2002). These thoughts are also in accordance with the scientific development and breakthroughs of the genomic and post-genomic era, which are indicating tremendous possibilities for further, and more specific and controlled applications of modern genetic engineering of plants, animals and microorganisms.

However, in the last decade, which coincided with the launching of agricultural biotechnology products, people around the world also witnessed disasters in the area of food contamination unrelated to GMO2, and the appearance of mad cow disease that somehow became an extra negative icon against agricultural biotechnology.

On the other hand, millions of dollars and euros have been spent on the evaluation of potential food/health and environmental risk of the ‘present generation’ of GM plants, without finding any evidence of possible harm to human or animal health.

The lack of clear GMO regulation 3

There are quite a few research papers and reviews done by highly respected associations and international institutes that have been published in specialised literature or biosafety databases (e.g., Belgian Biosafety Server (http://biosafety.ihe.be), ICGEB Biosafety Web Pages (http://www.icgeb.org/~bsafesrv/bsfdata1.htm), AGBIOS (http://www.agbios.com/main.php), Information Systems for Biotechnology (http://www.nbiap .vt.edu/othersites/indexlinksdblevel1.cfm), BINAS online (http://binas.unido.org/binas/); they all point into the same direction. The latest data on the GM Crop Farm Scale Evaluation (www.pubs.royalsoc.ac.uk; DEFRA) has brought much more controversy to the environmental impact discussions than a clarification to the many questions posed by environmentalists and scientists in designing workable risk analysis protocols.

Brazil has a Biosafety law in place since 1995 (Law No.8.974/95), which provides for a horizontal type of regulation that interfaces with other existing regulatory frameworks in the areas of agriculture, health and environment. Several ministries and federal regulatory departments and agencies are involved in the implementation of biosafety regulations. The National Technical Biosafety Committee (CTNBio), linked to the Ministry of Science and Technology is, until this moment3, the lead agency to analyse petitions and produce legal documents, which are supposed to be binding for the three Ministries – Environment, Agriculture and Health – which authorise laboratory, green house and field experimental releases in areas such as forestry, bioremediation, agriculture and medical applications, respectively. The Committee is formed by twelve scientific experts in different fields of biotechnology, representatives of four regulatory Ministries and other members chosen to represent civil society. After analysing the data presented to them according to predetermined rules which include questions on environmental impact, human health, substantial equivalence, and others, the Committee approves or rejects experimental field releases, on a case-by-case approach.

Risk assessments for commercial releases end with a final report by CTNBio, which is also binding for the same Ministries. If the transgenic plants or its products will enter the human food chain, they also have to be examined according to the food safety regulations implemented by ANVISA, the National Health and Surveillance Agency linked to the Ministry of Health (ANVISA Resolution 19/99).

The Pesticide Law No. 7.802/1989 (www.planalto.gov.br) applies in case of pest-resistant Bt plants or other plants containing any bio-pesticide characteristics. Under this law, authorisation for laboratory, green house and field studies must be obtained from the SDA (Plant Protection Secretariat – Ministry of Agriculture), IBAMA (Brazilian Institute of Environment – Ministry of Environment) and ANVISA (National Health Agency – Ministry of Health). The applicant for laboratory, greenhouse and field research must obtain a Special Temporary Registration (RET). These agencies also have to give approval for final registration of any commercial product. Each agency is acting on its own specific area but the rules and regulations they will require applicants to fulfill, have still to be published.

Another very recent set of regulations are described in Resolution 305, approved in June 2002, which applies to genetically modified crops in general, including pest or herbicide-resistant varieties. It was developed by CONAMA (www.conama.gov.br) – National Environmental Council – a body that makes the regulations and resolutions under the auspices of the Environmental Law No. 6,938 (1981). The resolution obliges the environmental impact assessment to be done in every case and prior to any field

4 E. Contini, M.J.A. Sampaio and A.F.D. Avila

release. It determines the criteria and procedures to be observed for the environmental licensing of activities and declares that ‘the use of GMO, or products thereof, is (even before experimental data has been collected) an effective or potential pollutant activity’. Therefore, for the Ministry of Environment and IBAMA authorities, all and every GMO must go through an elaborate battery of tests for environmental impact. This approach of treating GMO as a sort of toxic substance ignores all the previous risk assessments conducted with the GMO, and could continue to force research into a de facto moratorium. To date, only one small experimental plot has been approved to be planted in Bahia, where Embrapa is testing some GM-papaya ring spot resistant plants.

The increase of illegal GM – soybean planting and the delays of juridical decisions before the 2003/2004 and 2004/2005 – planting/harvest and export seasons have prompted government to edit two Provisional Laws4 to specifically legalise the planting and commercialisation of seeds kept from the previous harvest. An advancement of the latest PL is that it also allows for the owners of the major breeding programmes both in the private and public systems to register the cultivars in the National Registration System/Ministry of Agriculture, a step needed to increase the amount of legally bred seeds in the hope that when the use of transgenic glyphosate tolerant soybean is entirely legalised there will be enough legalised seeds to substitute for the illegally obtained ones which lack quality and phytosanitary control. Brazilian researchers and Congressmen that have elaborated the first drafts of the Brazilian Biosafety Law in 1993 and saw it approved by Congress in 1995 are rather unhappy about these more complicated and inscrutable provisions created by all the disputes between pro and anti-GMO campaigners, while the use of illegal seeds continues to grow (Bonalume Neto, 2003).

Every private company, university or Embrapa’s laboratories in particular, are negatively affected by this arcane regulation. Many of them were forced to stop running research projects with GM bio-pesticide plants since 2000 when IDEC (Institute of Economic and Social Development), a Brazilian NGO, and Greenpeace, made an appeal to a federal court alleging that regulations for the Pesticide Law No. 7.802/1989 – specific for GMO – were not in place. The judges approved the petition and it took government officials until November 2002, to draw up the required regulations after many public meetings and extensive consultations. Between September 2001 and early 2002, quite a few interested institutions had already submitted their petition to re-start field research. First ‘RET’ licences were approved in 2003.

Embrapa has lost three years in its project to produce a common bean variety resistant to golden mosaic virus. As this is the first time beans are used for gene expression, every food safety test has to be done in Brazil but if researchers can not even multiply the lines to select for the best event, and then multiply the genetic seed to produce some basic seed to distribute for analyses in the laboratories which participate in Embrapa’s Biosafety Network5, progress in GMO biotech research is likely to slow down significantly. As a consequence, there is increasing frustration among skilled scientists who are looking for other opportunities outside GMO research to apply their knowledge to, or to find some other country that will allow their research to be developed. Quite a few are already applying for post-doc training in the USA until the Brazilian Government decides what it will do about the matter. Farmers are beginning to make pro-technology public demonstrations even more vibrant than Greenpeace and other environmental NGO’s that fiercely oppose the use of GMO in Brazil.

As most of the farmers are used to keep their own seeds for 3 to 4 years, they cannot understand why planting GM-soybeans is legal for some months and then goes back to

The lack of clear GMO regulation 5

being illegal (2002/2003), and again legal (2003/2004). This permanent regulatory uncertainty makes investors and farmers reluctant to embrace the technology. The basic obstacle is therefore, not related to genuine environmental or health concerns but, to politics.

To add another complication, government issued a labelling Decree6 in April, 2003 which demands labelling of animals that have been fed with transgenic grains, and the products prepared from those animals. This Decree will be almost impossible to implement in Brazil in such a short term due to its huge size, very different planting conditions, and the lack of specialised infrastructure of harvest, segregation and transport to the port of embarkation, or to the intermediary silos. A Labelling Decree approved two years ago and never implemented, allowed for up to 4% of unintentional presence of GMO in a ‘GMO-free’ lot but was not accepted by the Consumers NGO’s IDEC that tries its best to make Brazil a GM-free country. The present Decree rules for a maximum of 1% of adventitious mixture.

The billions of dollars spent all around the world in compliance and enforcement of redundant biosafety rules, regulations and laws, might be better used in developing countries to invest in lives by improving education and access to food (Brody, 2002). There is a danger that the global GM debate gets to a point where short-term interest politics may erase the prospect of equally shared benefits derived from this new technology. Therefore, it is time for an international body to set clear and reliable standards for biosafety as the Codex Alimentarius7 has done for food safety. That would at least harmonise the requirements for similar cases and develop a better understanding of the real risks of GMO compared to existing environmental risks caused by conventional technology.

To further comment on another related matter, the implementation of the Cartagena Protocol which entered into force on September 11, 2003, gained momentum after the first meeting of the parties (COP/MOP I) that took place in Malaysia, at the end of February, 2004. An ex ante analyses is showing that developing countries are not yet in a situation to develop risk analysis on a case-by-case, and country-by-country basis respectively, which are required for the first trans-boundary movement of living modified organisms. Brazil adhered to the Protocol on November, 2003 and therefore according to the rules, it entered into force for the country on February 22, 2004. The country still needs to choose its focal point to deal with the paper work required for the export and import of GM-products as soybean exports began in March/April 2004. Certainly, government and the private sector will have only a short period to internalise whatever new regulations derive from the COP/MOP I meeting.

3 Latest developments

As a last effort to try to solve the complicated internal picture, eight ministers met for more than six months in 2003, to achieve a hard consensus on a new biosafety law proposal that once approved, was to supersede all the other legal instruments approved so far. The proposal (PL No. 2401/2003) was sent to Congress (Lower Chamber), in the beginning of December to be discussed and voted with the urgency required by the matter. By the end of January 2004, researchers and advisors seemed to have managed to convince Congressmen that it was time for Brazil to speak out its own will to the world

6 E. Contini, M.J.A. Sampaio and A.F.D. Avila

welcoming the development of technology with all the safety guarantees, but giving freedom to researchers by removing the excessive red tape in place so far. Unfortunately, in a historical turn around, government and the Left Party (Worker’s Party – PT), used its voting power to modify the text and approve a proposal that does not improve very much on the present legislation described above. The proposal also adds another layer of decision above the National Biosafety Committee – a Council formed by 15 State Ministers who will take decisions on the commercialisation step after consultations with the National Biosafety Committee and the Ministries of Agriculture, Health and Environment. No time frame has been set for such decisions to take place and therefore, the new framework gives the different institutions involved, the power to filibuster any application submitted to them. There are many other problems in the text and therefore scientists have already started their via crucis asking Senators to help to correct them. But it will not be a surprise if they will just be bypassed by the powerful environmentalists and NGO’s who are behind the recent decisions taken by the Lower Chamber Congressmen.

Meanwhile, reality is that glyphosate tolerant soybean has been illegally planted for more than five years. In 2002 and 2003, the harvested crops were made legal by two specific laws. This moved Brazil to the list of countries that export GM-soybean. It is a trend that has no turning back. It is feared that if the new Law becomes too restrictive, Bt-cotton, Bt-corn, canola and other commodities may follow the same path. As a side track consequence, the conventional soybean seed certification system has suffered a very negative blow and the respect for the intellectual property rights of the variety owners is quickly fading away. These facts and also the general trend of changes around the world, should be suggesting to government and Congress that it is time to review Brazil’s GMO policy but the truth maybe that the country is not yet prepared to take such an important step towards the future.

4 Actual and potential economic impact

4.l General considerations

When transgenic products started to have an impact on the agricultural production, economic studies began to be undertaken as regards their effects on the production costs, productivity and additional profits. The areas of studies on biotechnology’s economic impact were presented in seminares, workshops and conferences (www.agr.kuleuven.ac.bc/aee/clo/EUWAB).

Papers on economic impact of biotechnology have been presented in various sessions of the conferences organised by the International Consortium on Agricultural Biotechnology Research (ICABR) (http://www.economia.uniroma2.it/conferenze /icabr2004/previous_conferences.asp). The International Food Policy Research Institute (http://www.ifpri.org), a member of Consultative Group of International Agricultural Research (CGIAR) network, has conducted a significant amount of economic research on the impact of agricultural biotechnology (Pardey and Koo, 2003). In November 2002, OECD (http:// www.oecd.org – Global forum: knowledge economy – biotechnology) initiated a Forum on Knowledge Economy – Biotechnology, which focuses on modern agricultural biotechnology in underdeveloped and emerging economies. Although the

The lack of clear GMO regulation 7

focus was institutional, representatives of countries such as China, India, Brazil, South Africa and Russia, presented some elements of actual and potential economic benefits.

Avila et al. (2001) have conducted an ex-ante study of the potential economic and social benefits of transgenic products developed at Embrapa in Brazil. The examined products were: cotton, beans, potato, soybeans and papaya. Potential benefits estimated for each one of these five products showed that the amount spent by the Brazilian government through the Embrapa biotechnology programme (around US$14.4 millions up to 2000) will have high returns. The economic impact of the new transgenic varieties to be released in the coming years, are expected to be more than enough to compensate these investments. In the same way the social and environmental impacts of these products are expected to be positive for consumers and small producers, when compared with the conventional crops.

Roessing (2002) presented three scenarios for the sowing of transgenic soybeans and estimated the potential benefits for each one. Barcewicz et al. (2002) conducted a comparative study of production costs of traditional and transgenic soybeans for Brazil and the USA. The results of these studies will be quoted in the analysis of the economic benefits in the present study, even though they do not follow similar methodology.

4.2 Methodological aspects

Economic benefits of the transgenic crops result from the reduction of production costs (labour, chemical inputs, machinery and others) and/or productivity increase; this is reflected in higher profits for the producer. As the transgenic varieties are not yet officially authorised for commercial release in Brazil, we do not have reliable information to do estimations on the real economic impacts on the producers’ revenues. This fact does not prevent the use of a simple simulation model to do these estimations. In this paper, we based our simulations on available data from other countries with some similarities such as China, Argentina and South Africa (dynamic of adoption of technological innovations, climate, soil, etc.), and compared it to the Brazilian region where the transgenic varieties are to be cultivated.

The results of these calculations are useful for comparison purposes but they may also be subject to errors due to the constraints of an ex-ante estimation. At least for soybeans, we think the quality of the available data allows us to do reasonable simulations and, the results are therefore more reliable and can be used by policy makers.

To quantify the potential profits for the producers, the following procedures have been adopted:

• the base year considered for quantifying benefits will be the year when technology was availability for use

• rates of adoption applied are taken from other countries and the world’s appropriate averages; the base adopted is the cultivated area with the respective crop, for each year

• benefits are computed in US$ per hectare / year for each crop.

In the case of soybeans, studies report instances of clandestine sowing in Brazil, particularly in the south. Because of the extensive frontier between the two countries and similar climatic conditions, the illegal importation of transgenic seeds is expected to have

8 E. Contini, M.J.A. Sampaio and A.F.D. Avila

an impact on productivity. But the productivity of the clandestine soybeans in the ‘cerrados’8 region is negatively affected, because it is a region with distinctive agro-climatic characteristics existent in the south, that is close to Argentina.

Reliable data on the sowing of transgenic soybeans in Brazil is absent and the estimates vary between 5% to 60% of the cultivated area (Stamps, 2003). The percentage tends to increase, for the seeds are re-utilised by the producers in subsequent years (Pedroso, 2003).

The question is whether this clandestine sowing must be deducted from the potential benefits considering the fact that farmers practice it. In the face of the two following objections, the actual output of transgenic soybeans in Brazil will not be considered in this study:

• The farmer, cultivating illegal transgenic soybeans, incurs the risk of having his crop destroyed, and being imprisoned in the process.

• Seeds imported from Argentina or seeds reproduced by farmers themselves do not have the same quality and control as compared to seeds produced legally and under control, in Brazil. So, the productivity’s potential is not the same, with losses for the producers.

4.2.1 Soybeans

Soybean is one of the main crops cultivated in Brazil, with a sowing area of 18.5 million hectares and a production in 2003 of an estimated 52.1 million tonnes, and with a productivity of 2.8 tonnes per hectares (CONAB, 2003). Brazil is the second largest producer of soybeans in the world, after the USA, with a production of nearly 70 million tonnes. Introduced on a commercial scale in the years 1960–1970, the crop has adapted well to temperate southern regions of the country. Agronomic research conducted by Embrapa and other institutes, has also managed to make soybeans varieties more suitable to low latitudes, which allow for its sowing in the cerrados, an agro ecological zone, located in the centre of the country. There is a large potential for the expansion of this crop in this region, 80 million hectares are estimated to be possible to grow with soybeans in the cerrados (Macedo, 1996).

Since 1998, appropriate technologies are available in Brazil for the sowing of ‘Roundup-Ready’ soybeans, with five varieties patented by Monsanto. This was the beginning of the commercial cultivation of transgenic soybeans in Brazil. 1998 will therefore be taken as the point of departure in this study for the calculation of potential benefits.

The adoption rate estimated from ISAAA (James, 2002) will be used. According to this organisation’s report, the percentage of the transgenic soybean area, relatively to the total sown area of this crop in 2002, was 51% on a global scale. Excluding the area cultivated with soybeans in Brazil, the percentage of transgenic soybeans will reach about 65% of the total cultivated area. Argentina, an important competitor of Brazil in the world market, has 99% of the area sowed with soybeans using transgenic varieties; in case of the USA, the share is 75%.

For the calculations of the adoption rate, two scenarios were adopted:

• world average – 51%

• a rate of 99% for Argentina.

The lack of clear GMO regulation 9

These rates were expected to have been reached in 2003, based on linear rates since 1998, the year of availability of the technology. The world average is consistent with the one adopted by Roessing 9, of 50% in 9 years, in the intermediate scenario.

The potential benefits have been calculated in terms of the reduction in production costs by cultivated area in hectares. A study conducted by the National Centre for Food and Agricultural Policy (Gianessi et al., 2002), based on data from 31 US states, estimated a reduction of US$20 per acre resulting from the adoption of transgenic soybeans. The net economic revenues obtained per hectare cultivated, amounted to US$47.6. This value was adopted for the calculation of potential benefits, in the Brazilian simulation using the world average adoption rate.

The reduction of the production costs for transgenic soybeans in Brazil10 is estimated to be about R$60,00 (US$17.58)11, with declining tendency in the later years. According to the testimony of technicians in the southern producer region, the reduction in costs is around R$200,00 (or US$66,6)12.

In our simulation model, it is assumed that production costs of soybeans are similar between USA and Brazil because of the use of very similar production systems, improved seeds, fertilisers, machinery and other modern inputs in both countries. During recent years, the productivity of this crop was not significantly different between the two countries. In 2002, the average productivity of the Brazilian soybeans had surpassed that of the USA.

Based on the highly positive experience with herbicide-resistant soybean in the producer regions and listening to the producer leadership, it is evident that there is considerable economic interest for rural producers in adopting transgenic soybeans. On the other hand, these producers will put up a strong fight for its approval and a considerable number of them may sow it, even if illegally, risking sanctions provided for by the law.

For the simulation presented in this paper two scenarios are tested based on adoption rates, estimated for the sown area:

• Scenario A: the world average

• Scenario B: adoption rate in Argentina.

The final adoption rate for each of the two scenarios was attained only in 2003. For the other years, the estimations were based on a linear growth rate, beginning in 1998. For each scenario, the benefits were calculated on the basis of US$47.6/ha (A and B). The results of this estimation are presented in Table 1.

As it can be observed from Table 1, benefits accruing from the reduction in the production costs are considerable, with benefits increasing in the last years, due to a large adoption rate and because of increase in the sown area of soybeans, mainly since 2002. Our projections show that these trends are likely to be maintained over the next years. The expansion of the cultivated area is attributable to the favourable prices in the international market, and especially to the large decrease in exchange rate.

In economic terms, the total benefits for the soybean producers during the first six years of the period of analysis (1998 to 2003) could reach US$1.3 billion, considering the worldwide average adoption rate and a cost reduction of US$47.6/ha (scenario A). Considering a sown area of 17.7 million hectares in 2004, with a reduction of production costs of US$47.6/ha and an adoption rate of 60%, the benefits for the producers could reach more than US$500 million. Considering the adoption rate of Argentina and benefits

10 E. Contini, M.J.A. Sampaio and A.F.D. Avila

of US$47.6 per hectare in terms of cost reduction, the benefits for the producers could reach US$838.1 million in 2003. The estimated loss of the Brazilian producers resulting from non-adoption of transgenic soybean over a period of six years, from 1998 to 2003, would be about US$2.5 billion, considering this scenario.

Table 1 Estimation of potential benefits of the transgenic soybeans – Brazil

Specification 1998 1999 2000 2001 2002 2003 2004

Sown area

(thousand ha)

13304 13061 13640 23931 16324 17785 17785

%Adoption

Scenario A

Scenario B

8.5

16.5

17.0

33.0

25.5

49.5

34.0

66.0

42.5

82.5

51.0

99.0

59.5

99.0

GMO area (ton. ha)

Scenario A

Scenario B

1131

2195

2220

4310

3478

6752

4876

9194

6938

13467

9070

17607

10582

17607

Benefits(million US$)

Scenario A

Scenario B

53.8

104.5

105.7

205.2

165.6

321.4

232.1

437.6

330.2

641.0

431.7

838.1

503.7

838.1

However, the advantage for the producers and the Brazilian society are not only in economic terms. The non-economic benefits are:

• Clean ploughing: the herbicide is applied only in places where there is infestation by weeds and this reduces the overall use of herbicide.

• Reduction in harvest losses: as there is less problem with the grain harvester which generally arises with the presence of weeds, the harvest losses are reduced and less weeds are transported.

• Risk reduction: requirements for machines and equipments to apply herbicide are reduced. By allowing use of herbicide in appropriate time, the risks can be substantially reduced.

• Saving of labour costs (more leisure and time for education of the employees).

The acceptability or not of the transgenic soybeans by main importing countries, particularly Japan, Europe and China, could lead to a situation where the traditional soybeans obtain a better price (premium) from the importers, which is capable of compensating for the difference in production costs. Actually, there are small loadings of soybeans used as human food, for which the Japanese used to pay more than they did for transgenic soybeans. However, there is no evidence that large loadings have experienced substantial price difference in favour of the traditional soybeans.

Data from Oil World (www.oilworld.biz) shows that Europe and Japan continue to import soybeans and derive products from the USA and Argentina, countries where the majority of the soybeans are transgenic. The Figures 1 and 2 illustrate this fact.

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Figure 1 Exports of Soybeans to Europe (grain and cake), thousand of tonnes

Figure 2 Exports of Soybeans to Japan (grain and cake), thousand of tonnes

4.2.2 Other transgenic crops

The prohibition of the release of GMO varieties and its commercialisation in Brazil does not affect only the soybeans sector. Actually the Brazilian producers could be cultivating other transgenic crops mainly cotton, corn, potatoes, beans and papaya. Below we will make some comments about the potential benefits for cotton and corn.

12 E. Contini, M.J.A. Sampaio and A.F.D. Avila

In case of cotton, its production has tended to vary depending on prices, incentives, international market situation and pests such as ‘bicudo’ (Cotton Boll Weevil). In the past, cotton was cultivated by small farmers, mainly in the North East, but more recently it migrated to the cerrados region and transformed itself into the predominant crop cultivated by the medium and large-scale producers. According to the scientists, the transgenic cotton technology was ready for commercialisation since the year 2000. But there are some technical questions about the efficiency of the transgenic cotton varieties in pest control in Brazil, particularly in the case of ‘bicudo’. For example, the variety Bogard II is efficient for Spodoptera but not for ‘bicudo’. The research that Embrapa is doing now, is taking care of this problem as researchers are looking for a new variety resistant to these two pests.

The adoption rates of the transgenic technology in agriculture, on global scale, have reached 20% of the total area in the last seven years (1996–2002), according to ISAAA (Peng, 2002). This indicates a growth rate of around 3% per year. China has a faster adoption rate, reaching 31% of the area in five years, mainly by small producers. Peng13,14 estimated the benefits for the Chinese producers, in the provinces of Shandong and Shanxi, to be US$250.00 per ha. These benefits arise from labour costs, reduction of the labour and, the incremental benefits from the use of insecticides. Pray et al.,15 estimated, for the period 1999 to 2001, a net benefit of US$277 per ha for the Bt cotton, when for the non-Bt cotton there was a negative income.

The importance of corn in the Brazilian agribusiness sector comes from its use as animal feed, mainly, for the nourishment of swine. The use of corn to feed swine is gaining increasing importance in the international market. In case of corn, Brazil was a marginal participant in the international market, both as an exporter and an importer. Unlike soybeans, whose farming was initiated in a modern way, with high technology, corn experienced a dual situation – modernisation and high productivity in some regions (South), and low productivity in others, mainly in the Northeast (Alves, Souza and Garagorry, 1998; Alves, Souza and Garagorry, 1999).

The technology of Bt corn was available in Brazil since the year 2000, thanks to products from SYNGENTA. Despite the availability of the transgenic technology since 1996 and a worldwide-cultivated area of 140 million ha, only 9%, or 12.4 million hectares were cultivated with transgenic corn worldwide. The crop came under criticism for eventual negative impacts on the environment (death of butterflies); and mistakes, like it was the case with Starlink, developed by Aventis, causing prejudices to firms, producers and US exportations (Lin, Price and Allen, 2002); subsequently, it was put under market restrictions because of the possibility of direct use in human food.

5 Final considerations

The rapid advances in modern biotechnology will shape the coming decades of economic development. As more transgenic products will be field tested and eventually approved for commercialisation, scientists will also learn more about how to deal best with the risks and the socioeconomic implications. In addition, a full new array of possibilities is emerging from data obtained from functional genomics. Its impact on the sustainability of agricultural production could indeed be enormous. As more developing countries begin to experiment and see the benefits of the in-house applications of the technology, society may begin to accept genetically modified varieties as those simply obtained

The lack of clear GMO regulation 13

through a different biological process, as it has happened with many of the biotechnology-based medicines available in the market.

For the last fifteen years, a diversity of other issues such as proprietary matters, the build-up of gigantic transnational companies with focused influence around the world, unresolved ethical issues, intelligently combined protest campaigns against the initial products, the influence of extreme precautionary measures (taken by rich nations whose populations are largely over-fed), and overarching political issues, got entangled with the use of biotechnology in such a way that a sober scientific discussion can seldom take place.

As observed in several fora and demonstrated in this article on the particular case of Brazil, the biosafety regulatory systems around the world are getting more and more complex and contradictory. Costs of compliance are rising because of the incremental requirements for data that in some cases do not add anything in terms of extra safety to the consumer or to the environment. It is simply a new way that anti-GMO campaigners found to influence policy makers to slow down the adoption process.

The coming years will be a challenging period for developing countries as they address issues such as the need for better training of scientists (including in the areas of risk assessment and monitoring of GM-experiments) and in-house investments needed to continue the development of their capacity in the area of biotechnology, regardless of the negative campaigns. This is not an easy decision for any government to implement.

Careful strategic development plans are already drawn up by some of the developing countries and will hopefully be followed by others. One can expect that the coming years will also give scientists a higher confidence in terms of developing the appropriate methods to predict the possible negative environmental impacts on a case-by-case basis. We hope that with such efforts it will be possible to address the apprehensions and the doubts about the beneficial use of transgenic plants and other genetically modified products and derivatives.

The economic advantages for the rural producers in sowing certain transgenic products can be quite phenomenal and they are well documented in the economic literature. For Brazil, the simulations carried out in this study have allowed us to quantify the presumed losses caused by the continued legal prohibition of its commercial use. Due to the huge area under cultivation, the most affected product is soybean, a crop to which transgenic technology has been available in Brazil since 1998 and cultivation of which is unfortunately undergoing a fast ‘illegal’ expansion in the country. The cost of the prejudice has been estimated to be around US$500 million per year without taking into consideration other parallel effects such as the possible spread of new diseases, lack of investment in the development of new certified cultivators and indeed, decreased investment in basic research as such.

For cotton and corn the benefits are expected to be much lower. However, as this technology reduces the production costs, its adoption could prove to be important for the Brazilian economy. As a consequence of the reduction in production costs, with transgenic seeds the Brazilian competitiveness in cotton production could rise substantially, allowing Brazil to have considerable strength in the global market posing itself to compete with other cotton exporters such as China, where the technology is being widely used.

Besides the economic benefits, this herbicide tolerant technology also allows for the maintenance of clean ploughing and limited application of herbicide to areas highly

14 E. Contini, M.J.A. Sampaio and A.F.D. Avila

infested by weeds. It also facilitates the reduction of losses during the harvesting time because of the absence of weeds, lowers costs related to the use of machinery and labour, and allows for a reduction in the use of herbicides which in turn, reduces the possible negative environmental impact arising from the use of the direct sowing (minimum tillage) technology.

It is important to note that the amount of annual economic losses for the Brazilian producers is bigger than that calculated in this paper. If we add other crops, where the transgenic varieties are already available, such as beans, papaya, potato, rice and sugarcane, the total amount of economic losses would be much higher.

Finally, some comments on the profitability of Embrapa’s investments and the prohibition of the commercialisation of GM-crops in Brazil: according to Avila et al. (2002) the organisation has been spending around 10 million dollars annually on agricultural biotechnology research over the last ten years. It already has some transgenic soybean varieties ready for marketing, and potatoes, papaya and beans lines under biosafety evaluation. This means that the prohibition to develop field research for the last three years, and to commercialise transgenic soybean seeds after approval of its safety by the National Biosafety Committee, is also affecting the profitability of the investments in the public sector, as Embrapa stands out as one of the major examples.

In the long run, the technology-driven part of the Brazilian economy may be undermined as a result of the ‘prohibitive’ or precautionary policy pursued by government. If one factors-in the negative effects of the limits put at present on GM-research and field trials, the losses in terms of development of Brazilian science and the Brazilian economy as a whole are likely to turn up to be higher by several orders of magnitude.

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Avila, A.F.D., Quirino, T., Contini, E. and Rech, E.L. (2001) ‘Social and economic impact ex-ante evaluation of embrapa’s biotechnology research products’, in Evenson, R.E., Santaniello,V., Zilberman, D. (Eds.), Economic and Social Issues in Agricultural Biotechnology, CABI Publishing, Wallingford, UK. Chapter 16, pp.287–308.

Barcewicz, L.C., Karly, R. and Ribaski, S.G. et al. (2002) ‘Estudo comparativo de custos de produção entre a cultura de soja (Glicyne Ma L. Merril) tradicional e a soja transgênica no Brasil e nos Estados Unidos da América’, XL Congresso Brasileiro de Economia e Sociologia Rural, Passo Fundo (RS), p.11.

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The lack of clear GMO regulation 15

Gianessi, L., Silvas, C., Saukula, S. and Carpenter, J. (2002) Plant Biotechnology: Current and Potential Impact for Improving Pest Management in USA Agriculture, p.23.

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??AUTHOR, PL. PROVIDE TEXT CITATIONS FOR THE BELOW MENTIONED REFERENCES OR DELETE THEM??

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16 E. Contini, M.J.A. Sampaio and A.F.D. Avila

Notes

1 The opinions expressed in this paper are the authors’ personal views on the matter.

2 Another problem to think about is that surveys such as the Ipsos-Reid Study developed by Ipsos-Reid, an organisation which accumulates more than 20 years of experience in surveying public opinion, showed that 19 out of 34 countries surveyed feel that their food is less safe now than it was ten years ago. Extremes go from Singapore (47% say it is safer now) to Colombia where 82% of residents believe their food supply has worsened. (IPSOS-REID. Food Safety, a major concern in most of the world, 2001. Available at www.ipsod-pa.com). These data show how insecure people feel about their food supply but it should not be wrongly associated with the potential risk of GM plants and hence the low acceptance of GM food.vv.

3 The legal capacity of the National Biosafety Committee in deciding about the requirements for environmental risk assessment has been challenged in 1998 in the glyphosate soybeans case and has yet to be judicially accepted or clarified by a new law.

4 A Provisional Law is a legal entity used by government when it needs any given law to go into force before it is submitted to Congress. It survives for 90 days and has to be voted and approved within this period, otherwise it looses its value as a law. Enforcement law. PL no.131, transformed in Law no. 10.814, Dec. 2003, [8] regulates only the 2003/2004 planting and commercial phases. It differs from the Biosafety Law because in this case, GM-soybean only was subject to the judicial impediment and the PL was edit to overrule that particular impediment.

5 Embrapa’s Biosafety Network – a new project to develop protocols for the safety assessment of GMO, supported by the Ministry of Science and Technology/FINEP and by Embrapa, which counts on the multidisciplinary approach of 130 researchers from Embrapa and several Universities.

6 Decree is a legal instrument prepared by any minister alone or in conjunction with others if the subject relates to several ministries. It is submitted to the President for approval and signature. In this case it serves the purpose of establishing the rules for GMO labelling and permissible threshold.

7 Codex Alimentarius – Foods Derived From Biotechnology: Guidelines for the Conduct of Food Safety Assessment of Foods derived from Recombinant-DNA Plants (CAC/GL 45-2003) ftp://ftp.fao.org/es/esn/food/guide_plants_en.pdf.

8 ‘Cerrados’ is a central region in Brazil covering an area of 207 million hectares where the vegetation is dominated by crooked, small trees, distributed on a grass carpet. It is a new agricultural frontier for the Brazilian economy.

9 op. cit. (Roessing, 2002).

10 op. cit. (Roessing, 2002).

11 The exchange rate (dollar x real) used in this paper was R$3.00 per US$1.00.

12 op. cit. (Pedroso, 2003).

13 Representing China in OECD conference at the Forum on Modern Biotechnology in countries not members, realised in Paris in November 2002.

14 op. cit. (Pedroso, 2003).

15 op. cit. (Pray et al., 2002).

16 op. cit. (Avila, 2001).

17 Leopold Matrix – developed by Dr. Luna Leopold and others of the USA Geological Survey.

18 Labelling Decree no. 4.680/2003 issued by the Ministry of Justice is available at www.mj.gov.br or www.idec.org.br, if a certain number of ministries back up the decision. It can be suspended at any time by the President.

The lack of clear GMO regulation 17

Abbreviations

GMO: Genetic Modified Organism

NGO: Non-Governmental Organization

TRIPS: Trade Related Intellectual Property

PIP: National Environmental Council

CONAMA: National Council for Environment

EMBRAPA: Brazilian Agricultural Research Corporation

IBAMA: Brazilian Institute for Environment

CNTBio: National Technical Committee on Biosafety

ANVISA: National Health and Surveillance Agency

DAS: Plant Protection Secretariat

IDEC: Institute of Economic and Social Development

GM: Genetic Modified

IFPRI: International Food Policy Research Institute

CGIAR: Consultative Group of International Agricultural Research

OECD: European Organization for Cooperation and Development

CONAB: Brazilian Company for Food Supply (?)

ISAAA: International Service for the Acquisition of Agri-biotech Applications.