Back GM or see our agriculture markets wilt, conference told

Australia runs the risk of being left behind if it does not adopt the production of GM crops, according to two recent reports presented at this week's Ag-Biotech Forum in Melbourne.

Both reports, by commonwealth agencies the Productivity Commission and the Australian Bureau of Agricultural Resource Economics (ABARE), look at the impact of global markets for GM crops versus non-GM crops.

"The aim of our research was very simple. We just wanted to determine the possible implications for Australia's trade position," said Productivity Commission research manager Dr Susan Stone.

The commission used three scenarios reflecting potential productivity gains and the possible consumer and regulatory responses of Australia and its major trading partners to look at trade in non-wheat grains and oilseeds.

They found that GM-induced productivity gains would result in expanded markets for GM crops in both Australia and its trading partners, with contraction in non-GM markets. But the influence of regulation costs and consumer resistance would shrink GM crop market gains and potentially cause some decline in downstream commodities markets such as meat and dairy.

But if Australia continued to produce only low levels of GM crops while other countries expanded their adoption of GM crops, Australia would lose some opportunities to expand or even maintain its market shares in both primary crop markets and downstream commodity markets.

Stone noted that the crops examined in the study were ones already adopted by GM crop producing countries, and included corn as a non-wheat grain and canola, soybean and cottonseed among the oilseeds. As GM wheat is not yet commercially produced by any countries including Australia, it was not included in the study.

"If we put wheat in the picture we would expect it to be a big difference as Australia is a world leader in that market," she said.

The second study, produced by ABARE economist Max Foster, examined the impact of adoption of GM canola by Australian growers.

Foster said that if 50 per cent of Australia's canola crops were GM, production would be 17 per cent higher and exports would increase by more than 20 per cent.

"Considering the agronomic benefits in isolation, there is a substantial impact," he said.

But costs associated with keeping GM and non-GM crops separate through the entire production and marketing chain would add around 10 per cent to the delivery costs of the grain, and subsequently would reduce production increases to around six percent and exports to seven per cent, he said.

However, Foster also noted that there was scant evidence that non-GM canola would attract price premiums. "Any price premiums on non-GM grains would not be larger enough to outweigh the agronomic benefits of GM grains," he said.

Copies of both reports are available online.

• The Productivity Commission paper, 'Modelling Possible Impacts of GM Crops on Australian Trade', is at www.pc.gov.au/research/staffres/gmcrops/gmcrops.pdf
• The ABARE report, 'Australian Grains Industry 2003 -- GM Canola. What are its economics under Australian conditions?', can be downloaded from www.abareonlineshop.com/product.asp?prodid=12526