Chapter 5 On-farm impacts

In the context of declining Australian canola production and yields outlined in chapter 3, this chapter discusses why farmers grow canola and continue their pursuit to remain competitive producers of canola. The discussion then turns to the traits of genetically modified (GM) canola and how the farm business may benefit from access to these GM technologies.

5.1 Why do Victorian farmers grow canola?

From a relatively minor crop in the 1980s, canola is now the third largest broadacre crop (after wheat and barley) by area planted in Australia. Currently, Victoria produces around 23 per cent of the total volume of canola in Australia. Victorian farmers have been incorporating canola in their farming businesses since 1969, initially as an important break crop in winter cropping systems, then as a crop in its own right. Many farmers would not be able to sustain a continuous cropping system without including canola in rotations.

Canola is a profitable crop in its own right. While Victorian data are not available, in February 2007 the New South Wales Department of Primary Industries predicted that the gross margin for the 2007 winter crop of canola in central New South Wales will be nearly $220 per hectare, while the predicted gross margins for wheat are around $120 per hectare following a cereal crop and around $185 per hectare following a canola crop (New South Wales Department of Primary Industries 2007).

Farmers also seek to spread price and production risk by planting a variety of crops in any one year. The Birchip Cropping Group (sub. 55), for example, noted that without an economically attractive alternative to the cereal crops there is a lack of diversity in Australian cropping rotations. It cited a survey of oilseed growers and advisers, which found the most significant factor in a farmer's decision to grow canola is the reduction of cereal diseases, with the other significant factors including farm system weed control and the rotation of herbicide groups.

As the gross margins for New South Wales show, farmers also incorporate canola into winter cereal rotations because cereal crops may capture disease and weed management benefits. Norton (2003) noted the beneficial effects of canola on the yields of subsequent cereal and pulse crops. Pratley and Stanton (sub. 64) noted that results of their own trials (unpublished) demonstrated yield benefits for wheat in the years following a Roundup Ready® canola crop. Several submissions cited Australian research findings that planting wheat following canola has a 20 per cent yield benefit over rotations of wheat following wheat (Monsanto, sub. 101; Agrifood Awareness Australia, sub. 108).

Despite these benefits, the production and value of Australian canola have been in decline since 2000. As previously discussed, this fall has been driven by a number of factors including unfavourable seasonal conditions, increased disease presence and yield penalties associated with the adoption of triazine tolerant (TT) canola (as previously discussed in chapter 3). The next section discusses how GM canola may address some of the challenges faced by growers and enable farmers to continue to capture the benefits of incorporating canola into their cereal cropping businesses.

5.2 Benefits of genetically modified canola

There are several direct benefits for farmers from the adoption of GM canola, including increased yields and improved risk management systems (from use of hybrid varieties, improved weed management and earlier sowing options), and reduced on-farm costs (as a result of reduced tillage practices). Flow-on environmental benefits associated with reduced tillage practices include improved soil health and the option to use more environmentally benign herbicides.

5.2.1 Improved yields

The GM canola varieties that are the subject of the moratorium include hybrid

varieties as well as herbicide resistance for improved weed management. Both these traits can improve yield over conventional varieties, including TT canola.

Norton (2003) noted that farmers seek to sow canola as early in autumn as possible, given the direct relationship between planting date and yield. This study estimated that yield reduction is around 2–5 per cent of yield per week of delayed sowing. GM canola allows earlier sowing through improved management of weeds without reliance on a pre-emergence herbicide. The Victorian Farmers Federation noted that 'superior weed control enables earlier time of sowing with better returns and profits' (sub. 115, p. 16). Carmody et al. (2001) observed the time of sowing and paddock selection far outweigh any choice of canola variety.

As noted in chapter 3, one factor influencing the downward trend in Australian canola production and yield has been the adoption of the TT canola varieties. A TT canola production system allows for improved weed management, but yields are approximately 10–30 per cent lower than those of non-TT canola varieties (Robertson et al. 2002). Consistent with this study, many submissions argued that GM varieties would offer weed management advantages without the well known yield penalty of TT varieties.

The Monsanto submission asserted a 20 per cent improvement in weed competitiveness where GM canola replaces TT and conventional varieties (sub. 101). Although the trial data for GM canola in Australia are limited (given the current regulatory restrictions), Pacific Seeds suggested a 28 per cent yield advantage over TT varieties may be possible for Roundup Ready® canola, representing $300 per hectare in annual gross farm income in medium to high rainfall areas (sub. 84). Some submissions provided comparisons of yield and profit for conventional, TT and GM canola, showing that GM canola could overcome the current yield decline experienced by Australian canola growers, through hybridisation, particularly under moisture stress (Andrew Broad, sub. 4; Roslyn Corporation, sub. 23; Weidemann Pastoral Co., sub. 71).

Many Victorian farmers are optimistic about the potential for yield advantages of GM canola. The Victorian Farmers Federation pointed to the yield improvements and declining costs experienced in Canada (sub. 115). The Australian Oilseeds Federation expects farmers to benefit from GM canola (sub. 46) as does the Grains Council of Australia (sub. 5). Generally, submissions from farmers who favoured letting the moratorium expire indicated an expected yield improvement of between 10 and 20 per cent over conventional canola, with a few farmers expecting a little more (Roslyn Corporation sub. 23; Auscott, sub. 33; Birchip Cropping Group, sub. 55).

However, not all submissions expected significantly favourable increases in yield as a consequence of sowing GM canola. The Biological Farmers of Australia, for example, cited studies that show much lower yield benefits (Stone et al. 2002) — or even losses (Fulton and Keyowski 1999) — compared with conventional canola (sub. 114). It is worth noting, however, that these early studies showed GM canola yield varied from farm to farm as a result of production scale, product specialisation, geographic location and on-farm management — factors that affect the performance of all crops. The trends in average canola yields for Australia and Canada are discussed in section 3.2.

5.2.2 Reduced tillage

Because GM canola can be sown before opening autumn rains, it supports reduced tillage practices, resulting in direct environmental and production benefits. Environmental benefits arise from, for example, a reduction in herbicide use and the use of more environmentally benign herbicides. Current use of triazine based chemicals poses greater risks to human health and has greater residual effects. Further, where there is direct surface run-off to drinking water, supplies can pose a risk to human and ecological health (Warnemuende et al. 2007).

In addition, reduced tillage systems have environmental benefits, including:

• the capture of carbon in the soil contributing to greenhouse abatement efforts (CSIRO, sub. 105)
• improved soil structure and the removal of the need to burn stubble (Robertson et al. 2002)
• reduced fuel consumption and associated emissions by farm machinery, due to reduced tillage during the production cycle (Brookes and Barfoot 2006a).

Reductions in both volumes of fuel and herbicides as well as simplified on-farm management practices should also result in improved gross margins as has been the case in the Australian cotton industry (see appendix 6).

5.3 Impact on gross margins

The combined benefits of GM canola over conventional varieties can result in improved gross margins (discussed in chapter 6). The ACIL Tasman (2007a) economic analysis, conducted for this Review, estimated average farm gross margin benefits of GM canola of around $45 per hectare compared with non-GM varieties, following the introduction of GM canola. They further predicted that the whole farm gross margin for cultivating GM canola (for the average Victorian farm growing 300–400 hectares of canola) may increase by between $13 500 and $18 400 per year. These estimates exclude any rotational benefits that a cereal crop in the following year may capture. ACIL Tasman considered these figures to be conservative estimates, for a range of reasons detailed in its report. Chapter 6 contains further detail on the cost−benefit analysis.Foster (2003) reported that the agronomic benefits of GM canola in Canada seem to be substantial, yielding 10 per cent higher than non-GM canola varieties. Some submissions (for example, G and R Dyer and Son, sub. 75) pointed out that GM canola in Canada also delivers a 2–3 per cent higher oil content, which attracts a higher price per tonne.

Some disagreed with estimat es of the on-farm benefits of GM canola (for example, Twynam Agricultural Group, sub. 216) and highlighted some on-farm costs not often recognised by farmers. Christine Jaeger identified reduced soil fertility, follow-up weed control of volunteer GM plants, the loss of production in buffer zones, and insurance as additional costs of GM varieties (sub. 94). The Twynam Agricultural Group noted that some GM crops (including cotton) have clear environmental and financial benefits, but GM canola does not (sub. 216).

However, Pratley and Stanton (sub. 64) reported results of their five-year canola rotation trial in New South Wales between 1999 and 2003. Where herbicides were required for weed control, the trial found that Roundup Ready® canola outperformed conventional and TT varieties in yield, weed control and oil quality, and delivered the highest gross margin.

5.4 The importance of choice in farm business decision making

As highlighted in several submissions, a key issue for many farmers is the ability to access new technology. GM canola has several traits that would allow farmers to modify their tillage, weed and disease management practices, resulting in the potential to capture the agronomic benefits of canola while ensuring production efficiency and profitability.

Peak representative primary producer groups, such as the Grain Growers Association, support farmers being able to choose whether they use the technology on their own farms. They contended that this policy of choice will be best served by allowing the moratorium to expire (sub. 67).

Farmers want access to GM canola mostly as an added resource in their business management 'toolbox' to improve domestic and international competitiveness (Penny Hendy, sub. 51). Without farmers' access to the technology, the profitability of canola cropping will continue to decline, also affecting the subsequent cereal and pulse crops in the rotation and their profitability (Grains Council of Australia, sub. 5). As the National Farmers' Federation pointed out, farmers have varying expectations of the benefits that GM canola might provide to their production systems, depending on their information sources, growing conditions and business model (sub. 40). Some respondents who were dubious about the benefits still valued having the option to choose the new technology.

Some farmers want access to GM canola as a management tool in case TT canola becomes ineffective or unavailable in the future (Geoff and Bronwyn Hunt, sub. 59; Geoff Kendell, sub. 98). There is concern that triazine herbicides could be banned for public health and environmental reasons, as has occurred in some other countries (Driscoll Seeds, sub. 76). As stated by Driscoll Seeds: 'We see RR [Roundup Ready®] canola as another way of managing weed resistance to herbicides. It is not a silver bullet, but it will allow canola to be grown profitably into the future' (sub. 76, p. 2).

Beckie et al. (2006) cautioned against over-reliance on herbicide-tolerant crops in rotation and using the same mode-of-action herbicide over time. They maintained that 'cropping system diversity is the pillar of sustainable agriculture' and that integrated weed management must be carefully planned to prevent weed herbicide resistance (p. 1243). Roundup Ready® and InVigor® canola are resistant to herbicides from different modes of action.

Pratley and Stanton concluded their study by saying that 'The Roundup Ready system provides a new significant option for farmers for control of both broadleaf and grass weeds by an alternate mode of action to other selective herbicides' (sub. 64, p. 12). Their study demonstrated that the Roundup Ready® system is at least as productive as — if not more than — current canola weed management options.

The Panel acknowledges that not all farmers support allowing the moratorium to expire, or will want to access GM canola technology at this stage or in the future. However, if the moratorium is permitted to expire, that will not preclude farmers from continuing to use conventional canola cultivars. Access to the technology, and thus the provision of additional choice, can provide significant potential benefits to farm business. Farmers are in the best position to decide whether GM canola can be suitably incorporated into their whole farm plans to increase efficiency of production and capture the agronomic benefits.

Technological progress, increased knowledge, improvements in GM canola cultivars, as well as economic, social and environmental changes, require that farmers be able to adapt quickly if they are to remain competitive. Extension of the moratorium could affect farmers' ability to respond to change.

Finding 5.1

Access to genetically modified canola technology can provide farmers with improved choice regarding the management of their cropping businesses. Further, compared with non-genetically modified varieties, genetically modified canola appears to have a gross margin benefit of around $45 per hectare in an average season, for Victorian farmers.

Finding 5.2

Retaining the moratorium would damage the ability of Victoria's grain producers to respond, over time, to changing circumstances and their ability to remain competitive.