Transcript What to Know before Planting GMO

What to Know Before Planting GMO
Terry Hurley
Telephone: 612-625-0216
E-Mail: [email protected]
Hurley, 2001
Overview
• How Much GMO is Out There?
• Production
– Profitability
– Risk
• Marketing
–
–
–
–
Markets
Market Access
Market Premiums
What’s the Consumer Thinking?
• Regulation
• What’s Next
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Bt Corn and Herbicide Tolerant (HT) Soybean Plantings
70
63.0
Percent of Acres
60
57.0
50
44.2
40
Bt Corn
HT Soybeans
30
25.0
20
10
0
54.0
17.0
7.4
1.4
1996
19.1
18.0
16.0
7.6
1997
1998
1999
2000
2001
Year
Notes: Source = USDA/NASS. 2001 estimates represent planting intentions.
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U.S. Distribution of Bt Corn*
% Bt Corn
0 - 9%
10 - 19%
20 - 29%
30 - 39%
40 - 49%
>50%
* Represents the percentage of total corn acreage planted to Bt corn hybrids in counties in which > 50,000 total acres
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of corn were planted. (Source: Bt corn industry sales data as compiled by FSI, Inc., 1999)
Production Decisions For GMOs
• Step 1: Evaluate the Tangibles
– Increased Revenues/Decreased Costs
– Decreased Revenues/Increased Costs
– Partial Budget Analysis
• Step 2: Evaluate the Intangibles
–
–
–
–
–
Increased Flexibility
Risk Management Benefits
Safer Handling
Environmental Safety
Product Quality
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Example of Partial Budget Analysis
Are Roundup Ready soybeans more profitable?
Conventional
Roundup
Ready
51
49
49 – 51 = - 2
5.00
-2  5.00 = -10.00
18.89
13.06
33.65
26.42
11.59
24.91
26.42 - 18.89 = 7.53
11.59 - 13.06 = -1.47
24.91 - 33.65 = -8.74
7.53 + (-1.47) + (-8.74) =
-2.68
Change
Revenue
Yield (Bu./Acre)
Expected Price ($/Bu.)
Change ($/Acre)
Cost
Seed ($/Acre)
Tillage and Planting ($/Acre)
Chemical and Application ($/Acre)
Change ($/Acre)
Change in Net Returns ($/Acre)
Subtract Change in Cost
From Change in Revenue
-10.00 – (-2.68) =
-7.32
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Example of Partial Budget Analysis
Is Bt corn more profitable?
Conventional
Bt
Change
135
145
145 – 135 = 10
2.00
10  2.00 = 20.00
3.00
0.00
14.00  (1/5) =
2.80
0.00
10.00
0.00
0.00 – 3.00 = -3.00
10.00 – 0.00 = 10.00
0.00 – 2.80 = -2.80
Revenue
Yield (Bu./Acre)
Expected Price ($/Bu.)
Change ($/Acre)
Cost
Scouting Cost ($/Acre)
Technology Fee ($/Acre)
Chemical and Application
Change ($/Acre)
Change in Net Returns ($/Acre)
Subtract Change in Cost
From Change in Revenue
(-3.00) + 10.00 + (-2.80) =
4.20
20.00 – 4.20 =
15.80
Premium required for the Divide Change in Net Returns by
15.80 / 135 =
conventional corn to be more
Conventional Yield
0.12
profitable than the Bt ($/Acre).
Note: Chemical and Application Costs assume scouting would find economically significant
European Corn borer infestation in one out of every five years.
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Conclusions of Partial Budget Analysis
• HT Soybeans
– Change in net returns are less than 0, so the conventional soybeans
are more profitable under the assumptions of the analysis.
– What factors may be missing in this analysis?
• Bt Corn
– Change in net returns are greater than 0, so Bt is more profitable
under the assumptions of the analysis.
– Conventional corn could be more profitable with market premiums
in excess of $0.12 a bushel.
– What factors may be missing in this analysis?
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Should growers ever adopt GMOs when
conventional varieties are equally or more
profitable per acre?
• Some Intangibles May Increase Profitability Indirectly
– Increased flexibility
– Product Quality
•
Others Do Not
– Risk Management
– Environmental Safety
• Emphasizing Intangibles That Do Not Affect Profitability Can Reduce
Competitiveness
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Recent Estimates of Yield Loss From
European Corn Borer
0.6
Average
Number of
Second
Generation
European
Corn Borer
Per Plant
0.5
1.0
1.5
2.0
4.7
(2.8)
6.1
(2.8)
7.0
(2.7)
7.6
(2.6)
Coefficient of Variation
1.0
0.8
Percent Yield Loss
4.4
4.5
(2.9)
(2.8)
5.7
5.9
(3.0)
(2.9)
6.5
6.8
(3.0)
(2.9)
7.1
7.3
(2.9)
(2.8)
1.2
4.2
(3.0)
5.5
(3.1)
6.3
(3.1)
6.9
(3.0)
Notes: Standard deviation of the estimate is in parentheses. Estimate calculated using data provided by Marlin
Rice, Extension Entomologists, Iowa State University. The coefficient of variation is equal to the standard
deviation divided by the average.
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Markets
•
•
•
•
Foreign Opposition Segments Markets
Market Premiums Are Possible
What Growers Plant Determines Market Access
Greater Market Access Does Not Guarantee Premiums
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Market Access
GM
Export
Market
Non-GM
Market
GM
Export
Market
Non-GM
Market
GM
Domestic
Market
GM
Domestic
Market
Plant
Unapproved
for Export
GM-Seed
Plant
Approved
for Export
GM-Seed
GM
Non-GM
Export
Market
Market
GM
Domestic
Market
Plant
Non-GM
Seed
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Market Approval and Access
• Market approval and access is based on Events.
• Events are defined by how the plant is different.
– Proteins
– Promoters
• All hybrids are based on an Event.
• Determining approval status of a hybrid requires knowing the approval
status of the Event on which the hybrid is based.
• Elevators Accepting Non-EU Approved Hybrids
– http://asta.farmprogress.com/
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Approval Status of Transgenic Corn Events
Product Registrant
Event
Characteristic
Trade Name
U.S.
Bt176 Cry1Ab ECB resistance
Syngenta Knockout/ Mycogen
Yes
NatureGard
Bt11 Cry1Ab ECB resistance
Syngenta YieldGard/
Yes
Liberty Link
Mon810 Cry1Ab ECB resistance
Monsanto YieldGard
Yes
T25
Glufosinate tolerance
Aventis LibertyLink
Yes
MonGA21
Glyphosate tolerance
Monsanto Roundup Ready
Yes
Mon810 Cry1Ab ECB resistance/
Monsanto YieldGard/
Yes
+GA21
Glyphosate tolerance
Roundup Ready
Source: National Corn Growers Association updated 1/10/2001, reviewed May 3, 2001
<http://www.ncga.com/11biotechnology/know_where/know_grow_approved.htm>
Approval
Japan
Yes
EU
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
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Status of Current and New Approvals
• US EPA approvals for Bt corn Events are conditional.
–
–
–
–
Original Expiration: January and April of 2001
Extensions to September 30, 2001
October Scientific Advisory Panel
Bt176 Registration Will Not Be Renewed
• Japanese Approvals Being Reviewed Under New Regulations
• Moratorium Continues in the EU
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Market Premiums For Non-GM
• Market Premiums Arise From Excess Demand
– If there is enough supply to meet demands, market premiums unlikely.
• Non-GM premiums are out there, but not widely available.
• Tokyo Grain Exchange Offer Non-GM Futures
– Good barometer of market conditions for Non-GM soybean.
• No Consistent Source of Market Premiums for Non-GM Corn
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U.S. Soybean Use
50
40
Export
Domestic Feed Etc.
Domestic Food
30
20
10
0
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
Percent of Supply
60
Year
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U.S. Corn Use
60
50
Export
Domestic Feed Etc.
Domestic Food
40
30
20
10
0
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
Percent of Supply
70
Year
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Tokyo Grain Exchange Prices (1-22-01)
Non-GM
US Soybean
Contract Soybean Price
Price
($/Bushel)
($/Bushel)
February-2001
5.90
5.85
April-2001
5.48
5.07
June-2001
5.52
5.20
August-2001
5.59
5.29
October-2001
5.75
5.36
December-2001
5.87
5.42
Delivery: Tokyo, Kanagawa, Chiba, and Saitama.
Premium
($/Bushel)
0.04
0.41
0.31
0.30
0.40
0.45
Premium as
Percent of US
Soybean Price
0.7
8.0
6.0
5.7
7.4
8.4
http://www.tge.or.jp/index.html
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Tokyo Grain Exchange Prices (5-14-01)
Non-GM
US Soybean
Contract Soybean Price
Price
($/Bushel)
($/Bushel)
June-01
6.18
6.17
August-01
5.84
5.64
October-01
5.76
5.31
December-01
5.65
5.41
February-02
5.65
5.41
April-02
5.66
5.34
Delivery: Tokyo, Kanagawa, Chiba, and Saitama.
Premium
($/Bushel)
0.02
0.20
0.45
0.24
0.24
0.32
Premium as
Percent of US
Soybean Price
0.3
3.5
8.5
4.4
4.5
6.0
http://www.tge.or.jp/index.html
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Customer Attitudes
• Most US Consumers Seem to Support Biotechnology
– Support Fell in Fall 1999
– Little/No Rebound Since
– Affect of StarLink Not Clear
• Exports Have Not Changed Dramatically As Percentage of US Supply
– Some Evidence Growth May Have Declined
– USDA Reports StarLink Contamination Hurt Exports
• Many EU Supermarkets Going Non-GM Livestock
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Do you feel confident of not confident that the food at most grocery stores is safe to eat?
September 1999
April 2000
Percentage
Confident
80
80
Not Confident
19
18
No Opinion
1
2
Telephone survey conducted by the Gallup Organization
(Sample Size1,000).
http://www.gallup.com/poll/indicators/indhealth.asp
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As you may know, some food products and medicines are being developed using new
scientific techniques. The general area is called “biotechnology” and includes tools such
as genetic engineering and genetic modification of food. Overall would you say you
strongly support, moderately support, moderately oppose, or strongly oppose the use of
biotechnology in agriculture and food production?
September 1999
April 2000
Percentage
Strong/Moderate Support
51
48
Strong/Moderate Oppose
41
41
No Opinion
8
11
Telephone survey conducted by the Gallup Organization
(Sample Size1,000).
http://www.gallup.com/poll/indicators/indhealth.asp
Hurley, 2001
As you may know, some food products and medicines are being developed using new
scientific techniques. The general area is called “biotechnology” and includes tools such
as genetic engineering and genetic modification of food. From what you know or have
heard, do you believe that foods that have been produced using biotechnology pose a
serious health hazard to consumers, or not?
September 1999
April 2000
Percentage
No
53
51
Yes
27
30
No Opinion
20
19
Telephone survey conducted by the Gallup Organization
(Sample Size1,000).
http://www.gallup.com/poll/indicators/indhealth.asp
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All things being equal, how likely would you be to buy a variety of produce, like
tomatoes or potatoes, if it had been modified by biotechnology to be protected from
insect damage and required fewer pesticide applications?
March
February
October
May
January
1997
1999
1999
2000
2001
Percentage
Very/Somewhat Likely
77
77
67
69
70
Not too/at all Likely
23
21
27
28
27
Don’t Know/Refuse
1
2
6
3
3
Telephone survey conducted by Wirthlin Group Quorum Surveys for International Food Information Council Foundation
(Sample Size1,000).
http://www.ificinfo.health.org/foodbiotech/survey.htm
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Do you feel biotechnology will provide benefits for you and your family within the next
five years?
March
February
October
May
January
1997
1999
1999
2000
2001
Percentage
Yes
78
75
63
59
64
No
14
15
21
25
22
Don’t Know/Refuse
8
10
16
16
14
Telephone survey conducted by Wirthlin Group Quorum Surveys for International Food Information Council Foundation
(Sample Size1,000).
http://www.ificinfo.health.org/foodbiotech/survey.htm
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Export Trends
Percent of U.S. Supply
Exported
50
40
30
Soybean
20
10
Corn
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Year
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March 1, 2001 U.S. Exports and Outstanding
Export Sales
•
•
•
•
•
•
•
Japan
South Korea
Taiwan
Africa
Western Hemisphere
Total
Pre-StarLink Projections
-17%
-43%
+1%
-4%
+5%
-10%
+13 to 17%
Source: Robert Wisner, Extension Economist, Iowa State University
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Regulation
• United States Department of Agriculture
– Animal and Plant Health Inspection Service (APHIS)
• Department of Health and Human Services
– Food and Drug Administration (FDA)
• Environmental Protection Agency (EPA)
• GMO Labeling Around the World
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Animal and Plant Health Inspection Service
• Protects American Agriculture Against Pests and Disease
• Regulates Movement, Importation, and Testing of GM
• Approves Petitions for Non-regulated Status
– Required for Commercialization
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Food and Drug Administration
•
•
•
•
Governs the Safety and Labeling of Drugs, Food, and Feed
Can Remove Products From Market
Voluntary/Mandatory Consultations
Labeling
– Allergens-Yes
– Substantial Equivalents-No
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Environmental Protection Agency
•
•
•
•
•
Governs Pesticide and Herbicide Use
Regulates Plant-Pesticides (Bt Crops)
Treats Plant-Pesticides Different From Other Pesticides
Planning New Guidelines
Currently, Case by Case
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Insect Resistance Management Requirements
for Bt Corn in Minnesota
• At Least 20% Conventional Corn Refuge
• Spraying for European Corn Borer, and/or Corn Earworm Based on
Economic Thresholds Is Permitted on Refuge
• Refuge Can Be in External Blocks, on the Edges or Headlands of
Fields, or in Strips in a Field of Greater Than 6 Rows
• Refuge Must Be Planted Within 1/2 Mile of the Bt Field
– 1/4 Mile is Preferable If Refuge May Be Sprayed
Source:http://www.epa.gov/pesticides/biopesticides/otherdocs/bt_corn_ltr.htm
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GMO Labeling Around the World
• Labeling Scheduled to Be in Place For 2001 Harvest:
– European Union (1% Tolerance)
– Japan (5% Tolerance)
– South Korea (3% Tolerance)
• Labeling Pending:
–
–
–
–
–
–
Philippines
Australia (1% Tolerance)
New Zealand (1% Tolerance)
Thailand
Malaysia
Hong Kong (5% Tolerance)
• Labeling Encouraged by Global Biosafety Protocol Treaty
Source: Robert Wisner, Extension Economist, Iowa State University and
Rodney Williamson, Iowa Corn Growers Association
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Final Notes
• Bt Corn and HT Soybeans May Be Profitable, But No GuaranteeGrowers Must Work the Numbers For Their Operation
– Primary Value of Bt Corn is Yield Protection-Sensitive to Commodity
Prices and Highly Variable Pest Infestations
– Primary Value of HT Soybeans is Cost Savings and Flexibility-Insensitive
to Commodity Prices and Weeds Are More Consistent Problem
• Growers Need to Know
– Hybrid Event
– Market Options
– Planting Restrictions
• Growers Need to Watch
– Consumer Attitudes
– What Neighbors Grow
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What’s Next?
•
•
•
•
Corn Rootworm Control
Corn Rootworm and European Corn Borer Control
Multiple Toxin European Corn Borer Control
Time Line is Still Uncertain
– StarLink Has Slowed Things Down
– Monsanto Has Product Ready to Go
– Pioneer Has Product that is Close
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Thank you for your time!
Hurley, 2001