Chapter 11 Summary, conclusions and recommendations
Long term competitiveness is critical to the grain industry. Access to new technologies, such as improved plant varieties, is essential for enabling Victorian growers to maintain profitability. The Victorian Government delayed access to new technology for the canola industry by more than four years in response to concerns about the potential effects on markets and trade from growing genetically modified (GM) canola.
The terms of reference for this Review directed the Panel to identify the impacts of the current moratorium and any potential moratoria on the Victorian economy. The Panel carefully examined two scenarios: first, the effect of allowing the moratorium to expire at the end of February 2008, and second, the effect of continuing the moratorium until 2016. The Panel also studied the economic impacts on markets, farm businesses, the grain supply chain, non-grain industries, science and research and development, and consumers. It also examined the adequacy of current legislative tools to address any disputes in the use of this new technology. It drew on public submissions, published studies and a cost–benefit analysis commissioned by the Department of Primary Industries, to assist in its deliberations.
The Panel finds no compelling market or price advantage that can be attributed to Australia's non-GM status as a bulk canola exporter over the past four years. It is confident that Victorian bulk canola will continue to have access to most international markets in the future, whether GM or non-GM.
Under average rainfall conditions, GM canola varieties are expected to provide net benefits on-farm, providing an average gross margin benefit of around $45 per hectare compared with non-GM varieties. Key benefits of the approved varieties of GM canola include weed management and yield benefits in subsequent rotations of cereal and pulse crops. Further, investment in the oilseed industry in Victoria will depend on expectations of future international competitiveness. Without access to GM technology, Victorian canola production will continue to become less internationally competitive.
With little prospect of price premiums for bulk non-GM canola, and with net on-farm benefits from GM canola varieties, GM canola has advantages. By forgoing these, the current moratorium (from 2004) is estimated to impose a net cost of $60–65 million. Extending the moratorium to 2016 is estimated to impose a further $110–115 million net cost on the Victorian economy. These results are based on what can be directly measured. They exclude benefits from further GM technology (such as environmental stress tolerance) and other on-farm and post-farm factors.
The Panel concludes that the costs of the current moratorium outweigh its benefits. It expects that extending the moratorium would impose even greater net costs on the Victorian economy.
The Panel recommends the Victorian Government allow the moratorium on genetically modified canola to expire.
The moratorium, while costly, did provide time to better prepare for introducing GM canola into the supply chain. The Panel notes the significant coordinated effort undertaken by grain supply chain participants and downstream industries (such as the dairy and food industries), which have come to a common view and agreed on protocols to manage the grain supply chain and to provide for segregations as the market dictates. The Panel is confident that industry can effectively separate GM and non-GM crops in the grain supply chain, to meet market requirements.
Defined and agreed tolerances for unintended presence of GM canola in non-GM canola and other bulk grains are critical for achieving smooth and efficient grain trade in a coexistence environment. The Panel notes that the Victorian Government has established a tolerance level of 0.9 per cent for the low level presence of GM canola in non-GM canola shipments. However, the Panel finds no reason for government to specify who should pay segregation costs. Some grain characteristics are more valued by some customers. These are likely to be profitably provided when customers are willing to pay the costs of producing these characteristics, including any segregation and information costs. This already occurs, because there are premiums for specialty grain products, including canola. As GM and other new technologies are adopted and consumer preferences evolve, the bulk and premium components of the canola market will change accordingly. The Panel perceives no advantage in intervening in this.
The Panel recommends the Victorian Government allow the market to determine whether segregation of non-genetically modified canola from genetically modified canola in the grain supply chain is required.
National adoption of systems to manage GM crops in the grain supply chain following the introduction of GM canola would minimise business costs. The grain industries' proposal for national self-regulation (the Single Vision Grains Australia initiative) was developed and endorsed by key grain industry representative bodies, and has been designed for national application.
The Panel recommends the Victorian Government support the national adoption of the Single Vision Grains Australia initiative, to ensure any industry self-regulatory approach to coexistence is national in scope.
The moratorium and the Control of Genetically Modified Crops Act 2004 (Vic.) have had an undesirable impact on innovation in Victoria. They have reduced investment in canola research and development and broader agricultural science, contributed to a loss of scientific capabilities, and delayed application of new technologies in pursuit of economic advantage.
The Panel recommends the Control of Genetically Modified Crops Act 2004 (Vic.) be reviewed to assess its ongoing impact on investment in plant breeding.
While segregation can achieve a range of low level presence levels, the lower these levels, the more segregation costs. The organic food certification bodies currently prohibit known GM inputs in organic food production. The Panel acknowledges the organics sector's concerns about the ability to market organic foods if the moratorium is allowed to expire. However, tolerances for adventitious presence in organic food production vary across markets. Notably, the European Union has agreed to a tolerance level of 0.9 per cent throughout its organic food supply chain. Further, the Panel notes the growth of the organic sector both in this country and overseas, including in countries where GM crops have been extensively grown. The organic food sector provides choice for consumers who prefer not to consume food that has been produced using certain farming methods, including GM technologies. The Panel considers that organic and GM crop production systems can coexist and the introduction of GM food crops into Australia may stimulate consumer demand for organically produced products.
The Panel recommends the Victorian Government work with the organics sector to identify barriers to and opportunities for growth.
The Panel investigated whether GM canola would present unique legal risk compared with the introduction of any other new crop varieties. With thresholds for low level presence of GM canola in place, standard contractual arrangements should be sufficient to meet customer requirements, as they are throughout the rest of the supply chain. The outcomes are unclear for some potential courses of legal action, although there is little evidence that problems posed require any additional legal mechanisms.
The Panel acknowledges that there are some ongoing community concerns about the introduction of GM canola and the perceived health and environmental risks associated with GM foods more broadly. Although outside the terms of reference of this Review, the Panel approached the Office of the Gene Technology Regulator (OGTR) for an assessment of whether the licences granted for GM canola in 2003 remain valid today. The Panel notes the OGTR advice that ongoing assessments relating to InVigor® and Roundup Ready® canola do not reveal any information that would justify varying, suspending or cancelling the commercial release licences.
The Panel has examined suggestions for complementary policies in the event that the Victorian Government allows the moratorium to expire. It concludes that most regulatory approaches (such as mandatory segregation) - with the exception of establishing tolerances for low level presence of OGTR approved GM material - would restrict market function and impose costs that outweigh the benefits. The Panel does, however, perceive merit in government providing information to aid private decision making and public policy development. This could include information about the economic impacts of GM canola and the potential impacts on herbicide resistance and broader cropping systems.
The Panel recommends the Victorian Government work with governments to ensure there is appropriate monitoring and in particular:
- encourage the Office of the Gene Technology Regulator to monitor the impact of genetically modified canola on health and environmental safety, and ABARE and the Australian Bureau of Statistics to monitor the extent and impact of genetically modified canola on the Australian and Victorian economies.
- encourage the Primary Industries Ministerial Council to facilitate a coordinated approach to the monitoring and management of herbicide resistance nationally and regionally to ensure ongoing diversity in cropping systems.
Beyond information roles, eastern state governments could minimise the regulatory burden by having consistent regulatory regimes. Grain is collected and distributed according to business imperatives, not state boundaries, and complying with different regulations in each state would be costly
The Panel recommends the Victorian Government work with the governments of South Australia and New South Wales to harmonise regulatory arrangements for genetically modified crops, particularly to achieve a consistent approach to deregulating the moratoria on the cultivation of genetically modified canola.