GMO Crop market dynamics
part 2 (part 1)

Future demand for non GM derived products

As indicated above, the existence of real markets and demand for non GM products is limited to a minority of uses in the soybean and maize sectors.   

However, anti GM groups also often claim that there is generally little or no demand for GM products in the EU (ie, that there is strong demand for non GM products).  This perception does, however fail to take into consideration several factors that suggest otherwise.  These include:

• In relation to soybeans and maize, total usage is mostly found in the animal feed sector and/or for industrial uses.  In these markets, most users have not required their raw materials to be certified as non GM and hence the level of positive demand for non GM crops and derivatives has been limited.  For example, in the soybean and derivative markets, where the market for non GM is widely perceived to be the most developed, demand for non GM material accounts for about 27% of total consumption across the EU (see section 3) and is found mostly where ingredients are used directly in human food and as feed ingredients in the poultry sector;
   

• where markets have actively required the use of non GM crops and their derivatives to be used, these have, to date been relatively easily obtained at prices that are similar to, or trade at only a small positive differential relative to their GM alternative.  Any additional cost associated with this supply (relative to a cheaper GM-derived alternative) has largely been absorbed by the supply chain upstream of retailers, with no impact on consumer prices.  When the supply chain has been able to demonstrate difficulty in absorbing even small additional costs involved in using only non GM ingredients (eg, in some of the livestock product sectors) to their customers in the retail sector, the non GM requirement has tended to be dropped or made less demanding (eg, applying only to premium ranges of products rather than all produce) rather than the additional cost being accepted by retail chains and/or passed on to final consumers.  This behaviour suggests that the level of demand amongst end consumers for non GM products is highly price sensitive and would fall substantially if a consumer price level differential were to develop between GM and non GM derived products;
   

• in some markets GM crops trade at a price premium relative to conventionally produced crops.  Examples include GM soybeans in Romania and GM canola in Canada, where reduced levels of impurities in the oilseeds arriving at crushing plants have resulted in quality premia being paid to the supplying farmers of anywhere between +1% and +3%[6].  Also in some markets, notably China, consumer market research suggests a willingness amongst consumers to pay higher prices for GM crops because of the perceived benefits of the technology (primarily the reduction in pesticide use)[7];
   

• consumer market research studies that have examined factors of importance to consumers when buying food[8] (eg, Institute of Grocery Distribution in the UK in 2003) suggest that for a significant majority of people, the issue of whether their food is derived from GM crops is not important.  For example, the IGD research found that 74% of respondents ‘are not sufficiently concerned about GM food to actively look to avoid it’ and it is not seen as a priority.  An additional 13% of respondents indicated that they would welcome GM products on supermarket shelves. 

Important article links:

Nottingham University: critic of the GM Nation Debate

IGD Research: www.igd.com

Independent evaluation of the GM Nation debate and public perceptions of GM foods and crops and the GM nation debate - download pdf file -  www.uea.ac.uk/env/pur/latest_news.html

[1] Brookes G (2001)

[2] This refers to all non food industrial uses and does refer to industrial uses where the raw materials are destined for human food use (eg, maize starch used in food products)

[3] And more recently 0.9% in line with the new legal threshold

[4] With interests in the supply of non GM soybeans

[5] The balance is accounted for by seed

[6] Sources: Brookes G (2003) and Canola Council (2001)

[7] Source: Quan L (2002)

[8] We draw an important distinction here between consumer market research that examines factors affecting actual food buying habits/factors of influence and more simplistic surveys of consumer views on GMOs.  Most of the latter form of research has been of very limited value because findings have been biased by the language used in questions, the existing (poor) knowledge of respondents and failure to explore and verify actual buying behaviour relative to views expressed

Return to Part 1 - What is the real demand for non GM products in the EU?

GMO Crop Market Dyanamics: the example of soya beans

What is the real demand for non GM products in the EU?

Flaws undermine results of the UK biotech debate

Public Perceptions of Genetically Modified Food and Crops, and the GM Nation? Public Debate on the Commercialisation of Agricultural Biotechnology in the UK. Main Findings of a British Survey

A Deliberative Future? An Independent Evaluation of the GM Nation? Public Debate about the Possible Commercialisation of Transgenic Crops in Britain, 2003