Issue: Does the Export Market Affect Decisions by Farmers to Grow Genetically Engineered Crops?Response:Strict rules regarding GE presence in seeds and foods for international markets are a key driver for the need to segregate crops, but a lack of standardized, internationally accepted marketing standards, testing methods, and protocols poses significant challenges to the smooth operation of the domestic and international agricultural marketplace (1). By the same token, this situation provides a marketing opportunity for those who can successfully navigate the tangle of regulations and deliver acceptable products. The United States must work toward internationally accepted, science-based standards for trade in GE products that include sampling and testing methods and tolerance levels that result in fair trade practices and that lead to unrestricted shipment of products in international markets. The United States exported ~ $137billion in agricultural products in 2011 (2). The European Union and the United States are each other’s major trading partners, resulting in the largest bilateral trade relationship in the world, with combined economies accounting for 37% of world trade (3). Presently the European Union has approved only a few GE maize varieties for cultivation in member states (see “Why Do Farmers Plant Genetically Engineered Crops and Who Profits From Them? “). Imported foods, however, can contain GE ingredients that have been approved for food and feed and can be labeled non-GMO in the European Union if they contain less than 0.9% GE content; for Japan, the tolerance is <5% and the tolerance is <1% for Australia and New Zealand (4-7). In the European Union there is zero tolerance for food imports containing unapproved GE ingredients. To aid U.S. farmers in choosing corn hybrids that are acceptable for international trade, the National Corn Growers Association has a database of all GE varieties approved in the United States, indicating their approval status for import into Japan as either food or feed or import into the European Union (8). Despite restrictions on export of GE varieties to certain countries, corn, soybean, and cotton are all grown in the United States for export. A 2006 study reported that 30% of global soybean production is exported and most exports come from countries growing GE soybeans (table 26 in Reference 9). On the basis of size estimates of non-GE soybean markets in the largest non-GE markets of the European Union and Southeast Asia, 10% of global trade in soybeans is estimated to satisfy that market. The reluctance to import GE crops and products into the European Union relates to a moratorium enacted in late 1998 to prevent U.S. GE corn, cotton, and soybean products from entering European Union markets (10). This moratorium led the U.S. government to file a formal complaint with the World Trade Organization (WTO). The WTO ruled that 24 of the 27 approval procedures for GE crops imposed undue delays in the European Union (10). Europe now faces increased pressure to allow planting of GE crops. The European Union did not appeal the WTO’s decision that the de facto moratorium and product-specific approval policies were inconsistent with “sufficient scientific evidence” and “risk assessment requirements” dictated by the SPS (Sanitary and Phytosanitary) Agreement (11). In a 2008 background paper, the German food and feed industry associations expressed industries’ concerns about the negative implications of the European Union biotechnology policy of zero tolerance for GE varieties that are not yet approved in the European Union (12). The stated industry view was that “adhering to a zero-tolerance rule is not possible in international trade with agricultural commodities” and further that “the German and European food and feed industry will no longer be in the position to obtain input materials on the world market.” They called for establishing a tolerance for marginal content of GE varieties not yet approved in the European Union, a stance also supported by the European Union Agricultural Commissioner. The need to establish tolerances might be driven by rising food and feed prices and also the possible needs for bioenergy production (13). What is the current situation with regard to exports? In 2006 the United States, which is the largest producer of corn, provided 42% of the world’s supply of maize; of the 56 million metric tons produced, ∼20%, was exported (14). Thirty million metric tons of soybean and 260 thousand metric tons of cottonmeal were exported (15). Agricultural exports in 2009 will be worth an estimated $113 billion, with corn representing $12.8 billion (16). In fact, the leading exporters of corn, i.e., United States, Argentina, South Africa, and Canada, responsible for 80% of the trade, are all growing GE corn (9). There is a limited non-GE market for corn, mainly in the European Union and to a lesser extent Japan and South Korea, which necessitates segregation of exports for these countries. Approximately 26% of global cotton production was traded, but there appears little effort to segregate GE and non-GE cotton (9). In agreement with these analyses, another 2006 study concluded that export markets for identity-preserved non-GE crop varieties are fairly small worldwide (17). Also, price differences at the farm gate for non-GE corn, soybean, cotton, and canola are not common and are in general not enough to compensate farmers for growing non-GE varieties. Despite what appears to be a relatively minor impact on exports, the potential for such impacts was given as a reason to rescind deregulation of Roundup Ready® alfalfa (see “Can Federal Regulatory Agencies Stop Planting of Genetically Engineered Crops That Pose Environmental Risks?“), likely because 75% of exported U.S. alfalfa goes to Japan, which banned GE alfalfa (18). Japan is the largest importer of corn, 16.5 M tons per year for food and animal feed, most from the United States (14). In 2000 legislation was introduced in Japan to prevent imports of food products that contain GE varieties not yet approved in Japan (19). Testing for GE presence is focused on GE products approved for commercialization in other countries, but not in Japan; if found, such products are rejected, destroyed, or diverted to nonfood uses (20). One repercussion of such regulation is that farmers in developing countries resist growing GE crops because of the fear that consumers in high-income importing regions, such as the European Union and Japan, will reject imports from any country that plants GE varieties (21). The segregation and traceability required to assure compliance further discourage such plantings. In summary, although there has been limited loss of export revenue from some markets that were closed to GE products, the actual revenue loss is far less than what was predicted because of product substitutions that occur in international markets (22). As long as there is another market for the goods produced and they can be adequately segregated, farmers will be able to sell their commodities. Although acceptance of GE products varies among countries, globalization facilitates market substitutions and this minimizes market acceptance issues for new products. GE crops have realized market fluctuations, but the international commodity market market is complex and the impact has been minimal compared with the natural volatility in these marketplaces (22). References: 1. Pew Initiat. Food Biotechnol. 2006. Peaceful Coexistence Among Growers of Genetically Engineered, Conventional and Organic Crops. The Natl. Assoc. State Dep. Agric. The Pew Initiat. Food Biotechnol. Boulder, CO. http://www.pewtrusts.org/news_room_detail.aspx?id=18004. Last accessed 2011-11-26. PDF 2. USDA For. Agric. Serv. 2011. FY2011 & FY 2012 U.S. Agricultural Trade Forecasts http://www.fas.usda.gov/cmp/outlook/2011/August-11/Aug2011.pdf. Last accessed 2011-11-26. PDF 9. Brookes G, Barfoot P. 2006. GM Crops: The First Ten Years – Global Socio-Economic and Environmental Impacts, pp. 49–50. Dorchester, UK: PG. Econ. 10. World Trade Organ. 2008. European Communities-Measures Affecting the Approval and Marketing of Biotech Products. Dispute Settlement DS293. http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds293_e.htm. Last accessed 2011-11-26. PDF 11. World Trade Organ. 2008. Sanitary and phytosanitary measures. http://www.wto.org/english/tratop_e/sps_e/sps_e.htm. Last accessed 2011-11-26. PDF 12. Achilles D. 2008. Discuss. Pap. German Ag-Industry EU Biotech Policy Implications. GAIN Rep. No. GM8022. USDA For. Agric. Serv. Glob. Agric. Inf. Netw. (GAIN) 13. Trostle R. 2008. Global agricultural supply and demand: Factors contributing to the recent increase in food commodity prices. Econ. Res. Serv., Outlook Rep. No. WRS-0801, July 14. U.S. Grains Counc. 2008. Corn: Zea Mays, family poaceae, commonly known as Maize. http://www.grains.org/corn. Last accessed 2011-12-12. PDF 15. USDA Econ. Res. Serv. 2008. FASonline: Exports by marketing year. http://www.fas.usda.gov/esrquery/esrqg.aspx. Last accessed 2011-12-12. PDF 16. USDA Econ. Res. Serv. For. Agric. Serv. 2008. Outlook for U.S. Agricultural Trade. AES-59, Aug. 28. http://www.fas.usda.gov/cmp/outlook/2008/Aug-08/AES-08-28-2008.pdf. Last accessed 2011-12-12. PDF 17. Gómez-Barbero M, Rodríguez-Cerezo E. 2006. Economic impact of dominant GM crops Worldwide: A Review. Eur. Comm. DG JRC-IPTS. EUR 22547 EN http://www.eurosfaire.prd.fr/7pc/doc/1172656607 ipts ogmeur22547en.pdf. Last accessed 2011-11-26. PDF 18. Jones P. 2007. Federal courts disapprove APHIS approval procedures. ISB News Rep. April:4–6 19. USDA For. Agric. Serv. Glob. Agric. Inf. Netw. (GAIN). 2003. Japan biotechnology update on Japan’s biotechnology safety approval and labeling policies. GAIN Rep. No. JA3002. http://www.fas.usda.gov/gainfiles/200302/145884801.pdf. Last accessed 2011-12-12. PDF 20. Marchant MA, Fang C, Song B. 2002. Issues on adoption, import regulations and policies for biotech commodities in China with a focus on soybeans. AgBioForum 5:167–74 21. Paarlberg RL. 2002. The real threat to GM crops in poor countries: consumer and policy resistance to GM foods in rich countries. Food Policy 27:247–50 22. Smyth S, KerrWA, Davey KA. 2006. Closing markets to biotechnology: does it pose an economic risk if markets are globalised? Int. J. Technol. Globilisation 2:377–89
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