Chapter 8 Impact on the organic food sector
Organic products are a small but diverse range of goods that may appear like their conventional equivalents but differ in how they have been produced (Australian Government 2004). By definition, organic production excludes genetically modified (GM) crops, and any products or byproducts that are derived from GM technology are not compatible with the principles of organic agriculture. This chapter explores the scale and scope of organic production in Australia and Victoria and how the commercial release of GM canola in Victoria may affect it. This chapter also examines international organic production and the impact of GM crop production on the organics industry.
8.1 The organics industry
Global certified organic production has increased by an estimated 8 million hectares since 2002, to over 31 million hectares in 2005 (Apted and Mazur 2007). Although there are no official census data on the extent of the organics industry in Australia, an estimated 8–12 million hectares were under certified organic management in 2005, accounting for around 2.5 per cent of agricultural land (Willer and Yussefi 2007). The majority of Australian land given to organic production is pastoral land in the low rainfall zone. About 15 per cent involves the organic production of grains (cereals, pulses and oilseeds).
While rising consumer demand for organics is becoming noticeable, the organic food market in Australia is still considered a niche market accounting for 0.5 per cent of foods purchased in Australia in 2003 (Apted and Mazur 2007). On the domestic market, organic produce receives a substantial price premium over that of conventionally grown produce (Australian Government 2004).
Australian exports of organic products were estimated at $50 million in 2002, with more than 50 per cent exported to the European Union and the remainder going to Japan, Switzerland and the United States (Apted and Mazur 2007). Organic cereals (predominantly wheat) accounted for over 70 per cent of exports, which also included oilseeds and oilseed products (sunflower and canola based) (10 per cent), fruit and vegetables (7 per cent), meat and wine (3 per cent) and honey (1 per cent) (Apted and Mazur 2007).
Organic production in Victoria is worth at least $32 million per year to the state economy (although some in the organics industry suggest it is considerably higher) and includes a broad range of organic fruit, vegetables, nuts, meat (beef, lamb, pork and poultry), wine grapes and grains. Victoria is Australia's leading producer of organic milk and leading organic food processor, particularly of dairy products, fruit juices, flour and flour mixes (Australian Bureau of Statistics 2006). The Review Panel is not aware of any commercial organic canola grown in Victoria at this time.
8.2 Genetically modified canola and the organic supply chain
This section explores the mechanics of the organics industry and how the introduction of GM canola would affect organics certification and management, the supply of organic animal feed and any additional costs to the organics supply chain.
8.2.1 Organic certification and management
In Australia, the Australian Quarantine and Inspection Service (AQIS) cooperates with seven approved certifying organisations to enforce the inspection and certification of organic produce for export (Australian Government 2004). This co-regulatory system was set up in the early 1990s to ensure buyers of organic products could be confident that certified produce is grown and processed according to organic or biodynamic principles.
The system is underpinned by Commonwealth legislation and the National Standard for Organic and Biodynamic Produce. The National Standard was developed to be compatible with EU, the Codex Alimentarius Commission and Japanese regulations to enhance international trade in organic products and has also been adopted by the organics industry for domestic marketing purposes. Although the National Standard is defined in export regulations, it is not defined in domestic food regulations.
Organic certification standards in Australia prohibit GM presence in organic products or byproducts (that is, there is no threshold for low level GM presence). However, the Panel recognises that some GM material could unintentionally enter the organics supply chain. To some organic producers, therefore, the introduction of GM canola would represent an additional risk to manage. The Biological Farmers of Australia took the view that 'any lifting of this moratorium would be an unmitigated disaster for Australian agriculture' (sub. 114, p. 22).
For some respondents to the Review, 'contamination' of non-GM material with GM material is the key concern and they considered that their livelihoods would be at risk (Milawa Mustards, sub. 24; Original Foods, sub. 47; Bexley Pastoral Co., sub. 56; D. and S. Brain, sub. 113). Organic and non-GM producers often cite gene flow as a potential source of unintended co-mingling. As the Panel is unaware, however, of any commercial organic canola under cultivation in Victoria, the risk of gene flow to organic canola is therefore not currently an issue (although this may change in the future if commercial organic canola is grown in the state).
Similarly, the risk posed by the cultivation of GM canola to organic honey producers does not appear to be a significant issue. Under the National Standard, hives must be placed at least 5 kilometres from crops treated with prohibited pesticides, to avoid the presence of pesticide residues in organic honey products. Conventional canola production too often relies on pesticides that are unacceptable to the organics industry, and because GM canola is likely to be planted as an alternative to conventional canola, there would be little additional effect on organic honey production. Further, pollen movement by foraging bees is unlikely to be a significant issue if organic honey producers observe the 5 kilometre separation distance.
Many organic farmers supply product direct to the consumer, but this is only a small proportion of total sales on average (Australian Government 2004). The majority of organic product (for example, meat, milk and cereals) reaches the consumer via specialised supply chain intermediaries, including processors.
Poultry and eggs, for example, are commonly processed on farm and sold direct to specialist retailers and health food stores. These and other produce, such as organic fruit and vegetables, do not share the same supply chain that GM canola is likely to follow, so the likelihood of GM canola material appearing in organic produce seems low.
At present, the threshold for GM material in organic produce is set at zero in Australia. In the European Union, agriculture ministers have agreed to amend the regulation of organic food to allow a non-zero threshold (0.9 per cent) for the unintentional presence of approved GM material in certified organic products. The new regulation will come into force in January 2009 and will allow Australian organic produce marketed into the European Union to have up to 0.9 per cent adventitious GM content without losing organic status.
8.2.2 Impact on organic feed
The Australian national organic standards for livestock and dairy production require that certified organic animals be fed on certified organic feedstuffs. The Victorian Organic Dairy Farmers Association (sub. 89) stated that organic dairy farmers have avoided canola meal in the past three years, not willing to risk inadvertent contamination from trial sites and imported product. Several other submissions also indicated that their business would completely avoid Australian (and presumably imported) canola (for example, Original Foods, sub. 47).
Nevertheless, the Australian organic standards allow for supplementary feed to be brought onto farms to provide a minor proportion (up to 5 per cent) of animal diets (Apted and Mazur 2007). Canola meal, therefore, potentially plays a minor part in the organic livestock and dairy sector. The adoption of GM canola could mean that previously available canola meal sources may, in the future, contain the unintentional presence of GM material. However, as Apted and Mazur (2007) discussed, the organic livestock industries source suitable feed other than canola meal (predominantly non-organic soybean meal), so the introduction of GM canola would have minimal impact on the organic livestock industry.
8.2.3 Supply chain and additional costs
Pursuing higher prices for specialised production methods, the organic sector argued that if GM canola were introduced, producers would have to practise a level of identity preservation not currently required, which would involve a prohibitive and unfairly placed cost. Original Foods, for example, stated that it goes to great lengths to verify the GM free status of its ingredients, and that retaining the canola moratorium would 'avoid added complexity to the range of compliance requirements' (sub. 47, p. 7).
The Panel notes, however, that Apted and Mazur's (2007) study found that introducing GM canola would have a minimal impact on the organic farming sector. In explaining this finding, Apted and Mazur noted that existing organic standards protect the organics industry (for example, the requirement that organic production be isolated from non-organic production) and also that sufficient organic and non-organic protein meals are available and used to feed the organic livestock industry.
8.3 Have genetically modified crops negatively affected organic production overseas?
In considering the potential impact of the introduction of GM canola on the Australian organics sector, it is pertinent to examine the impact of GM crops on organic production overseas, particularly in countries that have adopted GM crops. In North America, organic farming is one of the fastest growing sectors of agriculture, growing at about 20 per cent per year (Apted and Mazur 2007). Organic production acreage in the United States increased by almost 230 per cent between 1995 and 2005 and organic food sales are estimated to reach over 3 per cent of the US food market by 2010 (Department of Agriculture and Resource Economics 2006; US Department of Agriculture 2006; Weidemann Pastoral Co., sub. 71). In 2005, about four million acres of organic farmland was in production, with about 1.7 million acres dedicated to organic cropping and the remainder being pasture and rangeland for organic livestock production (US Department of Agriculture 2006).
The increase in US production of organic corn (up 400 per cent to 131 000 acres) and organic soybean (up 260 per cent to 122 000 acres) has been dramatic since the introduction of GM varieties (US Department of Agriculture 2006). In contrast, organic cotton production area in the United States has reduced by two thirds to around 10 000 acres (US Department of Agriculture 2006). It is difficult for organic cotton growers to implement and maintain organic status and remain profitable compared with other organic crops, because consumer demand for organic cotton is low. Further, consumers are less resistant to GM cotton for fibre than to GM foods (Baffes 2004).
In Canada, the organics sector has similarly increased, up 60 per cent over the past five years (Statistics Canada 2007; Louise Staley, sub. 87). In 2005, the area under organic production was about 531 000 hectares (compared with about 485 000 hectares in 2004). Of this area, grains and oilseeds represented about 231 000 hectares, pasture and fodder represented about 220 000 hectares, and the remaining area included fruits, herbs and vegetables (Statistics Canada 2007). Canadian organic products were predominantly exported (mostly cereal grains) to the United States, the European Union and Japan. Further, since 2000-01, organic milk production in Canada has increased by 300 per cent to 30 million litres per year.
Collectively, this points to the feasibility of the successful coexistence of organic and GM production systems in Victoria. The Victorian Organic Dairy Farmers Association (sub. 89), while opposed to lifting the moratorium, acknowledged that allowing GM canola could boost demand for organic milk and milk products. The Panel considers there may be an opportunity for organic sector expansion in Victoria if GM crops are introduced and consumer sensitivities remain apparent.
The Panel notes that the organic food sector provides choice for consumers who prefer not to consume food that has been produced using modern scientific farming, including GM technologies. This sector would benefit from support from the Victorian Government to enhance opportunities for growth.
The Panel notes the growth of the organics sector in countries where genetically modified crops have been extensively commercialised.