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Technology costs
GM technology is largely charged for via seed price premia (as
applies to new conventional seed). The level of premia charged will vary
according to a number of commercial factors and market conditions. The
price paid by farmers may also vary according to the margin added to seed
by their supplier (eg, local merchant) and farmer ability to negotiate
discounts on list/recommended prices. This is important to recognise when
examining literature on the impact of GM technology because the higher the
assumed cost of the technology, the lower the benefit and vice versa.
Co-existence
Co-existence relates to the economic consequences of adventitious
presence of material from one crop in another and the principle that
farmers should be able to cultivate freely the agricultural crops they
choose, be it GM crops, conventional or organic crops (EU Commission
2003).
The issue of adventitious presence of (unwanted) material from one crop in
another is not a new issue and almost all agricultural commodities are
traded in recognition of some degree of adventitious presence of unwanted
material occurring. Tolerances are invariably set for the presence of
unwanted material because of the impossibility, in any practical
agricultural crop product and food processing/handling chain, of ensuring
absolute purity of products.
Some types of agricultural production are also based on practices and
principles to maintain purity levels and minimise adventitious presence of
impurities (eg, requiring maintenance of separation distances, segregation
of crops at/after harvest, cleaning of equipment). These include seed
production systems and speciality crops like high erucic oilseed rape.
Adventitious presence of GM crops in non GM crops has become an issue
because of the development of distinct markets for non GM derived products
(see above). Some non GM producers, particularly in the organic sector,
raise the issue of possible negative economic consequences on their sector
from co-existence with GM crops (ie, where an organic producer finds
adventitious presence of GM crops in his/her crop above a given threshold
and, as a result, may lose an organic price premia or incurs additional
costs on-farm to minimise the risks of adventitious presence).
The key findings relating to co-existence, tolerance-related costs for GM
crops are:
- There is an underlying principle that
the tighter the tolerance, the higher the cost involved in meeting that
tolerance. Within the GM market context, this principle is clearly
evident in respect of the current non GM market premia for soybeans and
soymeal (see section 3.1), where the average premium for non GM soybeans
and meal to a tolerance of 1% (presence of GM material), over the last
year has been in the range of 2% to 5%, whilst the average non GM
premium to a tolerance of 0.1% has been 7% to 10%.
- There is limited evidence available on
the possible incidence of adventitious contamination of non GM crops
with GM material, of changes in farm practices that might be required to
minimise adventitious presence and the feasibility of meeting possible
threshold levels for adventitious presence (including associated costs).
Where studies have examined these issues, the data presented should be
treated with caution. In particular, costs cited for meeting tolerances
of GMOs in non GM material are probably overstated because many of the
activities suggested (for minimising adventitious presence) are already
part of good agricultural practice and/or part of requirements for
farmers who are members of quality assurance schemes . Therefore the
additional cost involved for many farmers could be fairly low (or none
at all) and in line with the fees paid for membership of quality
assurance schemes.
- If GM crop growers were required to
comply with specific conditions (eg, SCIMAC guidelines), there could be
additional cost involved associated with compliance audit requirements.
The current audit charges for the Farm Scale Evaluations (£800/site)
represent one benchmark cost, although if this independent auditing
activity were to be opened to wider competition, the level of audit fees
paid might reasonably be expected to fall to levels in line with
membership of quality assurance schemes (£0.44/ha to £1.4/ha).
- The incentive for any non GM producing
farmer to implement measures to minimise adventitious presence of GM
material in non GM crops will be directly influenced by the relative
costs involved compared to the consequences (eg, possible loss of non GM
price premia, inability to sell the non GM crop in a given market).
Where the consequence of not minimising adventitious presence is
significant (eg, a significant non GM price premia, a significant
organic premia or where a retailer insists on a tolerance of 0.1% as a
condition of supply), then it is likely that farmers will be prepared to
change farming practices and incur the associated costs. However, where
the non GM price premia is low (eg, 1%-3%) or criteria for downgrading
produce (eg, organic to non organic) are based on adherence to
principles rather than regular testing, it is probable that many farmers
will not feel it necessary to incur costs of monitoring or changing.
- The same principles apply to any farmers
faced with possible liability ‘claims’ from other producers (these could
be GM producers facing possible liability claims from non GM producers
who have lost non GM price premia or non GM producers facing liability
claims from GM producers of crops containing quality traits that have
lost quality trait-related premia). The underlying willingness to take
actions (eg, changing farming practices, siting of crops, taking out
insurance) to minimise adventitious presence of their crop in someone
else’s will be directly related to their perception of the risk of
adventitious presence occurring and the level of liability that might be
incurred.
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