Chapter 4 Impacts on markets
The impact of cultivating genetically modified (GM) canola in Victoria on the grain industry's ability to meet market requirements is central to determining whether removing the state's moratorium on GM canola would pose trade risks. Segregation helps meet specific market requirements, but can increase supply chain costs. Consumer preferences and perceptions are also important factors when considering the market effects of GM canola.
This chapter looks at the factors influencing consumer choice, including global and national community perceptions about gene technology. It examines whether a price premium exists for non-GM canola. It also examines the potential impact of the cultivation of GM canola on Victoria's reputation. Finally, it discusses the ability to segregate GM canola and manage coexistence of GM and non-GM canola in the supply chain.
4.1 Factors influencing consumer choice
Consumers' purchasing decisions are likely to reflect a number of factors, including purchasing power, the range of complementary and substitute products available, knowledge and beliefs about a product, and perceived benefits and costs. Key issues underpinning many of the public concerns regarding GM products are:
- risk and uncertainty
- distribution of benefits
- ethical, cultural and social preferences.
4.1.1 Risk and uncertainty
A number of factors are likely to increase consumers' perceptions of risk or uncertainty in the context of GM products. Broad social, cultural and personal influences as well as scientific facts shape consumers' risk perceptions (Deane 1999). In particular, perceptions of risk and uncertainty are likely to vary according to the ability of consumers to exercise choice or control over their decisions. Perceived risk is likely to be higher, for example, for consumers who cannot distinguish between food with characteristics that they do not want from food they consider acceptable (other things being equal). Any uncertainty surrounding possible long term consequences of genetic modification may contribute to some consumers' feelings of loss of control (Dolling and Peterson 2000).
Risk preferences also affect purchasing decisions. Highly risk averse consumers, for example, may prefer to eliminate the chances of a particular unfavourable outcome. Dolling and Peterson (2000) noted that consumers who are highly concerned about perceived health risks from GM products may choose to avoid all products with GM ingredients even if the probabilities of adverse outcomes are very low and the potential benefits from GM products are significant. Such consumers may be unwilling to trade off some product attributes for others. They may strongly desire information to identify the products they wish to avoid, and they will want information that is easily accessible at a low cost to them. Other consumers may be willing to purchase a product with greater perceived risk if the product has some potential health benefits and/or price advantage (for example, see MacPherson et al. 2000).
More information may help these consumers identify the type and size of potential trade-offs.
4.1.2 Distribution of benefits
Consumers may display weak preferences for products that do not directly confer benefits upon them. Some review participants expressed frustration that the benefits of the current herbicide-tolerant and insect resistant GM crop varieties go to farmers and the technology developers and do not confer direct consumer benefits (see, for example, Milawa Mustards, sub. 24).
Others argued that the benefits of gene technology reside largely with the technology developers: 'Much of the economic benefit in GM crops is going to multi‑national companies in royalties on seed, and not to the whole community in any cheaper food' (Yarra Ranges Shire Council, sub. 62, p. 3). The Panel notes that the development of new crop technologies by large companies provoked a broader response in some members of the public: 'GE is about lining the pockets of big companies' (Kerry Dawborn, sub. 143, p. 1); 'The beneficiaries are the companies selling the seeds and the chemicals. Food production is too important to put in the hands of a few multinationals' (Vanessa Errol, sub. 226, p. 1); 'Farmers have become increasingly dependent on high‑tech seeds and chemicals. The knowledge and power has shifted from the farmers to giant agri‑business corporations such as Bayer and Monsanto. And as the power has shifted, so have the profits' (Greenpeace, sub. 103, p. 4); and 'All substantial profits, in the end, are going to be only made by Monsanto and Bayer anyway … All they want to do is control our food' (Lucy Naylor, sub. 163, p. 1). Other submissions stated a more general frustration — for example, Mothers Against Genetic Engineering commented that 'GM food has not been shown to improve anyone's health' (sub. 50, p. 10).
The Panel notes however, that the on-farm benefits (as outlined in chapter 5) may lead to community-wide benefits such as decreased use of toxic farm chemicals, and that other benefits are to be delivered by research and development, including foods with specialty ingredients desired by consumers (such as enhanced health promoting micronutrients or vitamins) (Anderson and Jackson 2005; Holtzapffel et al. 2007; McHughen 2007). In addition, on-farm productivity gains may benefit consumers by leading to lower food prices. To the extent that there are significant unrecognised benefits salient to consumers, the producers and suppliers of GM crops may have a marketing opportunity.
4.1.3 Ethical, cultural and social preferences
The consumption of many products can involve ethical, cultural and social questions for some consumers. Biotechnology and genetic modification can particularly challenge some firmly held preferences. Issues raised in submissions include:
- religious concerns (see, for example, Sunni Overend, sub. 239)
- ethical concerns (see, for example, Glenn Bain, sub. 147)
- other cultural or social perspectives (see, for example, Leneen Forde, sub. 146).
4.2 Changes to consumer attitudes
Numerous surveys conducted around the world since the introduction of GM crops have attempted to understand public attitudes to the new technology - see, for example, the analysis by the US Department of Agriculture (2006) of the first decade of GM crops. The attitudes in countries that adopted GM crops early differ significantly from those in countries yet to allow their introduction. Li (2002) for example, highlighted strong historical consumer support for GM foods in China, while Grimsrud (2004) outlined European preferences for bans on growing GM crops.
In Australia, the 2007 Biotechnology Australia survey of consumer attitudes recorded a significant decrease in the number of consumers who perceive risks associated with the use of GM crops, compared with the 2005 results. In 2007, 54 per cent said GM crops were risky, compared with 71 per cent in 2005 (sub. 29). Biotechnology Australia attributed the decrease in concern to increased 'familiarity' with gene technology in general terms. Its survey found 48 per cent of respondents were aware and had positive perceptions of GM foods in 2005, yet 73 per cent reflected those sentiments in 2007. Despite methodological limitations to the survey, its results nevertheless indicate a substantial shift in public opinion. The interpretation is consistent with Foster's (2001) suggestion that concerns grow as consumers become aware of the prevalence of GM products in the food chain, but then diminish as knowledge about gene technology increases. A survey conducted in Ireland and the United States by McGarry et al. (2002), in which consumers expressed greater willingness to consume GM food as they became more familiar with the technology, supports this argument.
Despite the apparent rise in public support for GM foods and crops, the Panel considers further research may be warranted. The increase in public support, for example, may be a transitory response to difficult drought circumstances and publicity for climate change, which are both compelling events for eliciting public approval to search for new technological solutions.
There has been a substantial shift in attitudes to genetically modified canola within the farming community and user industries, as well as in the wider community.
4.3 Is there a price premium for Australian non-GM canola?
Foster and French's (2007) analysis of market acceptance of GM canola found that the vast majority of GM canola is sold at prices similar to those for non-GM canola in most major canola markets. They concluded that there is unlikely to be a disadvantage from marketing GM canola (and livestock products fed on GM canola) produced in Australia. They further stated that 'despite perceptions of consumer resistance and the range of market access conditions, GM producing countries dominate world trade in maize, soybeans, cottonseed and canola' (Foster and French 2007, p. 2).
Nonetheless, the Network of Concerned Farmers presented data showing that Australian canola has commanded a higher price than that for Canadian canola (the major world producer) in recent years (sub. 41). It said the premium is attributable specifically to Australia's non-GM status. Canadian and Australian domestic canola prices between 2001 and 2007 are shown in figure 4.1.
Foster and French (2007) explained that domestic supply and demand dynamics in the two countries make it difficult to isolate any purchasing preferences for non-GM canola despite the occasionally significant price difference between Australia and Canada. In drought years, for example, the pricing of canola moves from an export parity base (led by Canada) to import parity, as a result of the production shortfall and the need of domestic crushers (such as Cargill and Riverland Oilseeds) to maintain the efficient use of their crushing plants.
The Panel notes that the recent price inflation was apparent also for other grain crops (such as wheat and barley, pulses and cottonseed) following the 2006 drought (Auscott, sub. 33; Louise Staley, sub. 87). In addition, Andrew Broad indicated that Australian canola enjoys a freight rate advantage relative to Canada in Asian markets. So while Canadian exports at the world price, Australia has been able to extract some of the freight advantage in the form of higher prices (sub. 4). The shifts in pricing are complex to assess and should not be confused with a premium being paid for non-GM status.
Source: Max Foster, ABARE, pers. comm., 15 October 2007
Figure 4.1 Canadian and Australian domestic canola prices
Many submissions from parties involved in the primary production of grain and farm input services expressed confidence that no price premiums are gained from remaining GM free (Roslyn Corporation, sub. 23; Auscott, sub. 33; Heather Baldock, sub. 44; IHD, sub. 99). They wanted access to the possible on-farm benefits from GM canola (as outlined in the next chapter) to retain a competitive position in the global market:
Australian farmers are being forced to compete on a global market using inferior genetics without receiving any extra market access or price advantage by maintaining non-GM. (Andrew Broad, sub. 4, p. 30)
4.4 Is there a marketing advantage for being 'GM free'?
A number of submissions questioned the potential loss of reputation as a 'clean, green and safe' producer if GM canola were to be introduced. Les Dalton noted 'the reputation built by Australia as a source of quality food products should not be gambled for the questionable rewards of genetic modification of canola' (sub. 117, p. 1). The Yarra Ranges Shire Council stated that 'there would be expected losses from a downgrading of Australia's status as a "clean, green, safe" food supplier, domestically and abroad' (sub. 62, p. 2). Andrea Buckley also expressed the view that 'Australia will lose … its reputation for "clean, green and safe" agriculture' (sub. 27, p. 1), while Don Stokes was of the view that 'we should keep our competitive advantage' (sub. 118, p. 2). Greg Pell suggested that calf meat exports for baby food could come under threat if Victoria loses its 'clean green' reputation (sub. 11). Similarly, Graham Connell from Black Hill Apiaries was concerned about the loss of reputation and markets for Australian conventionally produced 'clean and green' honey (sub. 57). The Gene Ethics submission, quoting from Westen et al. (2006), outlined a further possible cost associated with loss of reputation:
Another real social cost, but one that is difficult to quantify, is the health costs of emotional and psychological stress from impaired trust in the healthiness and cleanliness of food … loss of trust may be seen as a 'daily hassle' or chronic stressor that results in negative health consequences for many people. (sub. 234, p. 25)
The Panel also received a large number of campaign letter submissions from Japanese citizens that stated:
The introduction of GE [genetically engineered] canola to Australia would result in unacceptable risks to Australia's key export markets, such as Japan, to say nothing of the risk to consumer health and the environment. (sub. 252, p. 1)
The Panel is mindful that the concerns expressed are general in nature - that is, the introduction of GM canola may affect the reputation of the broader food industry.
While a price or marketing advantage attributed to a 'clean and green' image may be true for some Victorian products, it is not currently represented in pricing on the global bulk canola market, where prices received for non-GM canola generally align with those for GM canola (Foster and French 2007).
In fact, the key buyers of Australian canola products (namely, Japan, Germany, Mexico, China and Pakistan) routinely source GM canola (and oil derived from GM canola) from other oilseed producing countries. As discussed in section 3.1, the European Union's biodiesel policy has led to increased demand for canola oil and the certification on a case-by-case basis for the import of GM canola lines from Canada. This canola market appears unlikely to continue to discriminate between GM and non-GM canola for meeting its biodiesel demand. Moreover, Weidemann Pastoral Company indicated that the introduction of GM canola may help Victoria retain a 'clean and green image' given Japan's scrutiny of some of Australia's chemical maximum residue limits and the European Union's likely prohibition on the use of triazine herbicides, which are important for managing weeds in current canola varieties (sub. 71). The Panel concurs with the Foster and French (2007) finding that there is little evidence to suggest Victoria will experience a competitive advantage in maintaining a moratorium on GM canola.
There is no evidence to suggest a market or price advantage for Australian canola (as a bulk commodity) that is attributable to its non-genetically modified status.
4.5 Trends in grain handling
Market pressure for more accurate identity preservation and improved traceability is occurring for all types of food (including grain) in Australia, independently of the commercial release of GM crops. Product segregation and identity preservation are now routine business for participants in the grain supply chain (McMullen 2003; Sonka 2003). Virtually all grain types delivered to the Victorian bulk handling system have multiple quality segregations to meet market demands for differentiated grain products (see box 4.1). By contrast, canola is largely a bulk commodity in Victoria. Canola is not yet a differentiated product, but small amounts of canola seed may be downgraded as a result of adverse seasonal conditions. (GrainCorp, sub. 104).
As new traits and varieties are developed, specialty markets for canola can also be expected to emerge. Specialty oilseeds, for example, are increasingly being segregated in most oilseed producing countries (ACIL Tasman 2007b). The Panel notes the grower contract arrangements for the Dow AgroSciences non-GM Nexera™ canola commercialised in Canada. The marketing of this variety (with higher levels of oleic acid making healthier oil) involves a highly managed supply chain to preserve its identity and, therefore, the higher value of the crop (Dow AgroSciences, sub. 82). The Canadian industry experience shows that several factors (such as oil quality) drive canola segregation, of which GM status is only one.
Participants in the supply chain will have an incentive to segregate canola as long as the benefits cover the costs of differentiation. The following section discusses drivers of segregation, as well as how costs are distributed across participants in the supply chain.
Box 4.1 Examples of product differentiation in the Australian grain supply chain
GrainCorp handles over 50 segregations throughout its network to meet market requirements. These include multiple segregations of wheat for milling and feed, barley for malting quality and feed, pulses such as chickpeas, lentils and faba beans, and oilseeds such as canola, sunflower, soybean and cotton.
More than 50 different wheat products are exported each year, for example, with each targeted to a specific flour end-product use, such as noodles, breads, other bakery products and the premium durum varieties for semolina. Several of Australia's major wheat markets (for example, Japan and the Republic of Korea) require pesticide residue free (PRF) grainwith organophosphate levels of less than 0.1 milligram per kilogram. To accommodate this demand, 1 million tonnes of grain (including canola) are tested and graded as PRF and kept in designated storages at bulk handling centres, and the identity is preserved through the export terminal. GrainCorp charges an extra $1 per tonne above standard costs to handle PRF grain.
The export of polished white rice to the highly sensitive Japanese market also requires special segregation procedures to ensure the rice is virtually free from impurities. This process includes agreed cleaning procedures for the entire grain supply chain. Other specialist segregations include significant quantities of organic wheat, specialist malting barley for premium niche markets (such as for use in the Japanese fermented spirit Shochu) and, more recently, importsof GM canola when domestic supply was scarce. Approximately 2 per centof the Australian cotton crop is marketed as GM free and managed according to customer requirements, including regular testing for GM content. Other examples of segregation management include a 0.5 per cent threshold of canola seed in wheat exports and the segregation of organic products from conventionally grown products.
Sources: ACIL Tasman and Farm Horizons 2003; Auscott sub. 33; GrainCorp sub. 104; AWB Limited website, retrieved 9 October 2007, www.awb.com.au
4.6.1 What drives segregation activities?
The customer's willingness to pay for particular specifications is a major factor influencing grain handling practices. However, other factors, such as long term market relationships, and the need to respond to market access or other customer-driven requirements, may also influence suppliers' behaviour.Nevertheless, given there is scant evidence to suggest that most bulk canola markets are seeking non-GM canola, bulk handling companies might co-mingle GM and non-GM canola at the receiving silo. For this crop technology and any other, segregation costs should be borne only as far as the customer requires segregation and is prepared to pay for it.
Some respondents to the Review felt the attribution of most segregation costs to non-GM growers over time would be unreasonable (Samantha Dunn, sub. 35; Network of Concerned Farmers, sub. 41; Caduceus Health, sub. 43; Bexley Pastoral Co., sub. 56; Don Lazzaro, sub. 116). Some sought government intervention to resolve the perceived inequity. In particular, the Panel notes an expectation that segregation of GM from non-GM canola would (or should) accompany expiry of the moratorium. For example, Gene Ethics stated that:
Even if systems were implemented, the successful segregation of GM and GM-free canola depends on the goodwill and vigilance of supply chain managers. There appears to be a lack of intention to segregate and identity preserve GM and GM-free. (sub. 234, p. 11)
Louise Staley's submission stated, however, that:
… the core of this submission is a belief that GM crops, once approved by the OGTR [Office of the Gene Technology Regulator], should be treated like any other variety. Market acceptance must be determined by consumers through price rather than through the heavy hand of government intervention. Additional protocols, buffer zones and restrictions should not be put on farmers growing GM crops because they are not the ones chasing higher prices by doing so. (sub. 87, p. 1)
As markets require further varietal identity preservation (including the possibility of price premiums for specialty GM and non-GM crops), the Single Vision Grains Australia industry strategy (discussed in the section 4.7) willenable efficient implementation of specific requirements. The Panel cautionsagainst any expectation that the bulk supply chain would be segregated simply because GM canola were introduced. That would create distortions unless a market advantage for doing so were apparent. As the Birchip Cropping Group noted, 'the release of GM canola should not be dependent on co-segregation of GM and non GM canola' (sub. 55, p. 3).
Foster (2006) summed up the Panel's view:
In terms of economic efficiency, an additional segregation aimed at protecting price premiums and market access for non-GM canola is only justified if the additional value it creates in the form of higher value grain is greater than the cost of segregation. While it is evident that there are additional costs associated with the segregation of GM canola, in general terms it does not appear at this stage that there is a price premium in domestic and world markets for certified non-GM canola that is sufficient to offset the additional costs of segregation. (p. 4)
4.6.2 What does segregation cost and how is that cost distributed?
Foster (2006) and ACIL Tasman (2007b) analysed the costs of keeping GM and non-GM canola separate, should markets require segregation. If GM canola is introduced and less GM than non-GM canola is produced, GM canola will likely be segregated through dedicated facilities. Such facilities will either be small or their use will be suboptimal, so handling costs are likely to be higher. Additionally, there are likely to be just a few receival sites, so transport costs for the GM grower will also be higher. However, if the adoption of GM canola exceeds non-GM canola, the bulk commodity crop will comprise largely GM material. Non-GM canola producers, pursuing a price advantage for ensuring non-GM status, are likely to incur the segregation costs (ACIL Tasman 2007b).
According to Foster (2006), additional costs may arise both on-farm and in the central receival system. The on-farm costs for segregation include the purchase of certified seed, additional labour costs for cleaning machinery and extra queuing time at the grain receival site. Additional costs in the central receival system include the extra time taken to switch between grains throughout the logistics chain and the possible requirement to test the grain for GM content.
In his Western Australian study, Foster (2006) concluded that most of the extra cost would be borne on-farm (85 per cent) and that a non-GM grower, to cover costs, would require an additional 4–6 per cent of the farmgate canola price in a typical year, assuming a tolerance of 0.3 per cent of unintended presence of GM canola in the planting seed. ACIL Tasman (2007a) supported this finding, asserting that a non-GM grower would need to secure a price advantage of approximately $14 per tonne to justify the segregation and identity preservation costs. It noted, however, some on-farm costs may offset the benefits arising from the use of certified seed. These benefits could include maintaining the genetic purity of the crop, reducing the weed burden from year to year, and improving general farm management as a result of fewer weed and disease problems.
Costs incurred for segregation in the bulk handling system are around a few dollars per tonne, according to GrainCorp (sub. 104). This amount is consistent with the Foster (2006) estimate of approximately $2 per tonne. Some parties have asserted, however, that the non-GM grower would not necessarily incur these central receival system costs. The pricing policies of the bulk handlers, competing for market share, may distribute the costs variously (Foster 2006).
Further, extra segregation costs are not particular to GM crops. Rather, they are incurred for any grain segregation that requires management at receival sites to meet customer specifications. Given the wide range of grain segregations already accommodated, care should be taken when considering what costs to allocate to GM canola.
Segregation costs increase as tolerance for the unintended presence of other material decreases (ACIL Tasman 2007b; Hurburgh 2003). This adventitious material may include other grains, weed seeds, soil and so on. Griffiths et al. (2003) reviewed the various technologies available for detecting GM materials. Foster (2006) examined the issue of GM and non-GM grain separation and concluded that it was manageable; he highlighted the modest additional costs involved in testing for the presence of GM materials should it be required.
The establishment of tolerances (also known as 'low level unintended presence', 'admixture', 'adventitious presence', 'trace levels' or, as in some submissions, 'contamination') underpins the grain industry's ability to achieve coexistence of GM and non-GM crops, and it is a normal part of seed and grain trade globally (Demeke et al. 2006; CropLife, sub. 85). A separate Order under the Control of Genetically Modified Crops Act 2004 (Vic.) has been gazetted to establish adventitious presence levels for GM canola in non-GM canola shipments (see appendix 5).
Foster and French (2007) stated that it is difficult to avoid low level presence of GM materials in the grain handling system. There is no evidence, however, that low level presence of GM canola has caused market acceptance problems overseas as exemplified by Canadian wheat and barley exports. Foster's (2006) analysis suggested the unintended presence of GM canola in other grains would be almost negligible in Australia. The ACIL Tasman and Farm Horizons (2003) study examined current segregation practices (including at the farm level, where good agricultural practices and crop management plans were followed) and found the level of adventitious presence is likely to be within the industry standard of 0.9 per cent.
ABB Grain stated that it will market non-GM grain ('which implies the grain is within existing Adventitious Presence (AP) limits') but not 'GM free' grain (sub. 61, p. 6). AWB Limited similarly stated in its policy on the application of biotechnology that 'We will provide non-GM and GM products to commercial customers in Australia and overseas to meet their requirements' (sub. 54, p. 2). GrainCorp is also of this view: 'We will supply the market with supply chain and market solutions for GM and non-GM as demanded' (sub. 104, p. 2).
The 2007 position of these major Australian grain handlers and traders indicates a supply chain that is confident it can meet its customers' needs. AWB Limited further noted that key Asian markets such as China, Japan and South Korea have already approved InVigor® and Roundup Ready® canola, so there will be no regulatory or labelling issues with low level presence of GM canola in a wheat shipment. Notably, as set by the Canadian grain industry, low level GM presence thresholds of 0.9 per cent in non-GM canola and 0.05 per cent in wheat 'should be possible within the current supply chain without additional costs' (AWB Limited, sub. 54, p. 3). With the industry adoption of principles and protocols for managing the supply chain in place (see section 4.7), AWB Limited stated that it is 'comfortable that it can protect its commercial position through legally binding contractual arrangements with suppliers and customers' (sub. 54, p. 3).
Segregation is routine in the grain supply chain, across which the costs of segregation are distributed. There is no apparent market failure in relation to segregation to meet customer requirements.
4.7 Grain supply chain ability to achieve coexistence
The Panel notes that there is a more cohesive grain industry view in 2007 (compared with four years ago), asking for the Victorian Government to allow the moratorium to expire. Effort by participants in the grain supply chain to enable the coexistence of GM and non-GM crops has been significant. In 2003, the grain industry had difficulty determining its capacity to manage GM canola in the supply chain because import approval status and thresholds for low level unintended presence in key markets were unclear. AWB Limited, for example, did not support the commercial release of GM canola in 2004 because it was not sure whether coexistence could be achieved in the supply chain.
There is now agreement among grain industry stakeholders about how coexistence would be managed in Victoria if markets required segregation. These stakeholders consider that they can successfully separate GM canola and non-GM canola in the supply chain. Since 2003, many other countries have clarified their import status, and threshold limits for low level presence have been specified in most key markets, including Australia. In particular, AWB
Limited recently changed its policy to state that it is 'not opposed to the lifting of the current moratorium on GM canola … because of the potential benefits to farmers and the community' (sub. 54, p. 2). ABB Grain expressed its confidence that the grain industry can segregate to industry and market requirements (sub. 61), and the Australian Oilseeds Federation stated that 'the industry will benefit from GM canola; that this can be managed in a market choice framework; and that the industry is prepared for GM canola' (sub. 46, p. 14).
The Single Vision Grains Australia report (signed by 29 grain supply chain participants — see box 4.2) detailed evidence of this new cohesive view. The report Delivering market choice with GM canola showed current industry stakeholder support for the introduction of GM canola, along with readiness to manage the commercial introduction of GM crops. The report said new canola varieties will be introduced in a manner that: maintains or enhances trade in Australian canola; enables market choice along the supply chain; is open and transparent; and provides confidence to all stakeholders, particularly customers, consumers and governments. The additional Single Vision Grains Australia report Principles for process management of grain within the Australian supply chain is a guide for industry in an environment where GM and non-GM grain is marketed. It sets out principles relating to technical and market access issues.
Box 4.2 Grain supply chain participants who are signatories to the Single Vision Grains Australia initiative
|ABB Grain Ltd||Grains Council of Australia Ltd|
|AgForce Queensland Pty Ltd||Grains Research and Development Corporation|
|Agrifood Awareness Australia Ltd||Monsanto Australia Ltd|
|Allied Mills Australia Pty Ltd||
National Agricultural Commodity|
|AusBiotech Ltd||National Farmers' Federation|
|Australian Food and Grocery Council||NSW Farmers' Association|
|Australian Oilseeds Federation||Nufarm Ltd|
|Australian Seed Federation||Pacific Seeds Pty Ltd|
|Bayer CropScience Australia Pty Ltd||PGA Western Graingrowers Committee|
|Cargill Australia Ltd||Pioneer Hi-Bred Australia Pty Ltd|
|Co-operative Bulk Handlers Ltd||Riverland Oilseed Processors Pty Ltd|
|CropLife Australia Ltd||South Australian Farmers' Federation|
|Flour Millers' Council of Australia Pty Ltd||Victorian Farmers Federation|
|Grain Growers Association||WA Farmers Federation Grains Section|
Source: Single Vision Grains Australia 2007 Delivering market choice with GM canola, July
The institutional framework for applying the principles and protocols developed by the signatories is the existing National Agricultural Commodities Marketing Association (NACMA), which is responsible for ensuring facilitation of trade across the Australian grain supply chain for both domestic and export grain. Each year, over 95 per cent of the Australian grain crop is stored in facilities operated by NACMA members, with 90 per cent of the grain contracts executed in Australia referring to NACMA grain standards and/or trade rules. NACMA has over 300 member organisations, from regional family businesses to large national and international trading companies.
The industry thus proposes self-regulation in the pathway to market for new crop technologies. The Panel understands that NACMA will develop the required processes for any new varieties brought to market (sub. 25). These processes would apply to both varieties developed by traditional breeding techniques and those deriving from GM events approved by the Office of the Gene Technology Regulator (OGTR). According to the demands of the market, the practices may vary from formal systems based on Hazard Analysis Critical Control Point (HACCP) and International Organization for Standardization (ISO) requirements, to proprietary systems, industry codes of practice and best agricultural or manufacturing practices. The NACMA dispute resolution process will play an important role in this industry self-regulation.
Representative industry groups and farmers alike expressed confidence in these industry initiatives, as shown by the following two examples:
The FMCA [Flour Millers' Council of Australia] believes that over the period of the moratorium a somewhat fragmented industry view has been consolidated in support of an environment where GM and non GM grain is marketed and that procedures and processes of assurances have been enhanced and adopted. (Flour Millers' Council of Australia, sub. 74, p. 3)
GrainCorp supports the removal of the GM moratoriums in Victoria and other states, and is confident that the Australian grains industry has the capacity to deliver market choice through the existing supply chain. (GrainCorp, sub. 104, p. 9)
Some individual farmers referred to these broader industry initiatives, and proclaimed their readiness to take on any new obligations and responsibilities associated with the use of GM crops (Chris Kelly, sub. 6; Heather Baldock, sub. 44). They perceived these obligations as an extension of the existing product quality standards required of farmers (Victorian Farmers Federation campaign letter, sub. 17).
The Panel understands that the Primary Industries Ministerial Council may consider the Single Vision Grains Australia approach, because it appears to provide measures for coexistence that would fit within a national framework for the coexistence of GM and non-GM crops.
4.8 Downstream industries
Some downstream industries have complex issues to consider. In particular, the dairy industry presented a changed position on the introduction of GM canola since 2003. Historically, the Australian dairy industry has held a range of views about GM technology. The Australian Dairy Industry Council undertook extensive consultation with all sections of the dairy supply chain in developing its policy. The Council's board adopted the following policy on gene technology with no dissenting view from manufacturers and few dissenting views from individual farmers:
… providing the outputs of GM technology have been thoroughly assessed on a case-by-case basis and approved for human, animal and environmental safety under the national regulatory framework, the dairy industry should have the opportunity and choice of researching, testing and potentially using GM plants in the future. (Australian Dairy Industry Council, sub. 26, p. 1)
In the context of canola, the Australian Dairy Industry Council has confidence that the supply chain can manage market requirements, and 'on balance, recommends that the Government should allow the moratorium on GM canola to expire' (sub. 26, p. 2). The Panel understands that milk processors can (and do) limit the inclusion of GM feed ingredients for lactating cows to 5 per cent without jeopardising markets.
The Australian Grain Harvesters Association (sub. 7) expressed concerns about the expiry of the moratorium, including operational problems, additional expenses and potential liability issues for its members. It did not take a stance on the moratorium, but provided a useful perspective on harvester cleaning and associated costs to assist the Panel (see chapter 9 for a discussion of liability issues).
The stock feed industry uses GM derived raw materials from imported soybeans, Australian cottonseed, imported canola meal and other GM micro-ingredients and feed additives (Stock Feed Manufacturers' Council of Australia, sub. 36). The Stock Feed Manufacturers' Council of Australia wants the moratorium removed, so its members can use more Australian grown canola (GM and non-GM). On the other hand, while Australian Pork Limited (APL) did not provide a submission, the Panel understands APL is uncertain about the introduction of GM crops (ACIL Tasman 2007b). ACIL Tasman (2007b) further reported that some niche poultry markets, such as the markets for turkey and duck, may require diets to be free of GM ingredients.
Given the importance of consumer attitudes and purchasing behaviours to members of the Australian Food and Grocery Council, the Panel is interested in the Council's position. While the Council 'neither promotes nor defends gene technology per se', it seeks to avoid unnecessary regulation, and it recommends that Victoria allow the moratorium to expire (sub.78, p. 4). The Council supports a strong regulatory framework for public health, food safety and the environment, within which companies and individuals can make their own independent decisions. The broader issue of regulatory burden and its stifling impact on innovation appears to strongly inform the Council's position on the Victorian GM canola moratorium.
There has been significant coordinated effort across the Australian grain industry to put in place protocols to manage the grain supply chain and to provide for segregation of grain types as the market dictates. The Panel considers that the industry can achieve effective separation of genetically modified and non-genetically modified crops in the supply chain that meets the grain industry standards for low level presence of genetically modified material.
National adoption of systems to manage the grain supply chain, following the introduction of genetically modified canola, will ensure least cost to business.