Transcript BIGMAP Symposium April 18, 2012

Managing for Co-Existence
By
Wallace E. Huffman
Distinguished Professor of Agriculture and
Economics, Iowa State University
[email protected]
* Over past 16 years, a dramatic increase in production of
food using organic and genetically modified (GM) methods
-1996: GM corn, soybean and cotton varieties released
with new HT and IR traits
-2002: AMS implemented a new national organic standard
•For the first time, the US had a uniform set of organic
standards -- farmers must have an approved
organic production plan following the NOP
• Strictly process based standard – easy to lose site of
• Only USDA certified organic production plans and
farms can display the USDA’s organic seal
*Objective: To shed new light on the economics of coexistence
between GM and organic agriculture in the US with
implications for trade.
- Brief review of organic and GM farming
- Likely economic Impacts of GM agr on organic agr
including adventitious presence; segregation,
coordination and identity preservation; inter-farm
effects and legal issues, insurance, local initiatives to
legislate production systems
- Conclusions
A. The Great Divide
So-called ‘Organic Farming’ is a post-WWII phenomena
• a few farmers resisted the rapid increase in use of
chemical/synthetic fertilizers and pesticides
• alternatively, choosing nitrogen fixing plants, livestock
manures and compost of other organic materials as a
source of nutrients for other plants;
natural methods to control pests, including
crop rotation and mechanical cultivation
Other farmers choose to adopt profitable new farming
technologies developed by chemical, pharma, seed,
machinery and building-trades industries
•Disparate institutions started to provide organic
certification in the US in 1970s
-CA Certified Organic Farmers 1973
-Oregon Tilth 1980s
-State of TX 1988
-State of CA 1992
• The Organic Foods Production Act 1990
with goal of establishing a unified set of
standards
• EU, Japan and Canada require organic foods
to be made of 95% organic ingredients
Recent the EU agreed to accept USDA certified
organic food as equivalent to the EU organic
standard
B. National Organic Standards
-After a long comment period, the new national organic
standards went into effect in Oct. ’02 for crop and livestock
production, processing and handling
• A long list of permitted substances and prohibited
substances/methods including GMOs, sewage sludge,
irradiation, synthetic/chemical fertilizers and pesticides
• Required a production plan that is certified by a USDA
accredited group
• Plan must detail practices to prevent comingling and
prevent contact with prohibited substances
• Adventitious presence of GMOs or other non-allowable
substances does not constitute a violation of the
NOP
-Organic Labeling and the USDA’s organic seal
National Organic Standards permit labels as
- “100 organic” ingredients (can use USDA’s seal)
- “Organic,” meaning 95% organic ingredients (carry
seal)
- “Made with organic ingredients,” meaning 70% organic
ingredients (not carry USDA’s organic seal)
- “Claim that product has some organic ingredients,”
meaning product contains less than 70% organic
ingredients (not carry USDA’s organic seal)
The Certified Organic farming operations incur significant
additional costs relative to conventional agr
In the US, the dominant organic type is “organic,”
100% organic is very difficult biologically and expensive to
produce, for example, organic honey is imported from NZ
C. Trends in Organic Agriculture
- USDA estimates on quantity of farmland under organic agr mgt
increased from 1.3 mil acres in 1997 to
• 7.0 mil acres in 2008, increasing 14% per year
--accounting for 5.3% of all agr land (2008)
• # of US organic farms expanded - 5,021 to 8,493
(1997-2008)
-Special 2008 Organic Production Survey (USDA) identified a
larger number of certified organic and exempt farm – 14,540
-Relative importance of organic differs by crop and by
livestock enterprise
• CA, WI and IA have the largest number of
certified organic farms
• Organic products cost roughly 50% more
-In 1997, consumers’ purchases of organic fruits and
vegetables dominate, but since more diverse set now
2
D. What Can Consumers Conclude about USDA Certified
Organic Products?
- Production processes meet the NOP
- Cannot conclude that products are “pesticide free,”
“GM free, or “environmentally friendly”
• Organic producers can and do use pesticides,
but a different set than GM farmers
• GMO content can occur due to adventitious presence
• Must control pests and diseases, and not all are
environmentally friendly (reduce yields)
-Not necessarily produced on small farms or locally;
farm size growing, imports growing (41%)
- Given higher prices for organic, the nutrient content is
is not necessarily different than conventional foods
E. Consumer demand for Organic Foods
*Demand determined by price, but also by freshness,
appearance and taste/texture
-organic produce does not necessary taste
better – results are mixed
-organic agr must rely on livestock manure and
nitrogen fixing plants (alfalfa, clovers, beans) for N
but difficult to met plant needs for large product
-when there is weak pest control, product
appearance deteriorates leading to discount on
organic fruit, e.g., apples
A. With background of key scientific discoveries,
gene splicing techniques were successfully applied to
field crops in mid 1990s
-IR was of high priority to control corn borer
plant modified to produce target-insect control
Environmentally friendly relative to earlier pesticides
-HT was of 2nd interest; to control weeds – plants are
resistant to a particular herbicide, e.g., Roundup, broad
spectrum post- emergent grass and broadleaf weed
quickly breaks down in the soil and has low human
health risks
B. Regulation of Release and Labeling of GM Traits
*Key US regulations: (1) approval to release in the environment
or distribute to farmers and (2) labeling of food products as
being safe for consumption
-In 1986, US gov choose to use existing health and safety
laws to regulate ag biotech, i.e., Coordinated Framework
for Regulation of Agr Biotech
-USDA, EPA and FDA share responsibilities for regulation
• USDA-APHIS regulates testing and release of GM plants
and vet biologics
• EPA regulates pesticides (IR), FDA regulates for food
safety
-“Substantial Equivalent”- If substances added to food by GM
are significantly different from substances currently in food,
they must be labeled as containing a food additive
However, all commercialized GMOs are SE
Labeling: Is voluntary
From 1985-2010, APHIS approved over 13,000 field trials of
GM crops; with over 20,000 phenotypic traits, mostly HT &
IR
*Regulation of GMOs in Europe:
• 1997 – Novel Foods Act implemented mandatory labeling,
if GMOs could be detected in the final product
• 2004 – Required labeling if GMOs used in any stage of
production of product permitted adventitious presence
of 0.9% GM
• 2007 – Threshold dropped to zero
• 2011 – New threshold for AP set at 0.1%
C. GM crops planted by farmers
*New IP of PVPCs (’72) and patents (’85) helped spur private
sector development of GM crops
• 1995 – no farm acreage of GM crops
• 2008 – 136 million acres, or average increase of 100% per yr
- US adoption rates for GM soybean, corn, cotton from 19962011 – Fig. 4
- US acres in GM field crops (2008) - Table 1
*Leading states (2008)
• GM corn – IA, IL, NE, MN, IN, SD, KN, OH, WI, MO, TX, ND, MI
• GM soybean – IA, IL, MN, IN, MO, NE, OH, SD, ND, AR, KS,
MI, WI
• GM cotton – TX, GA, AR, NC, MS, MO, TN, CA, LA
D. What can consumers conclude about GMOs?
- All GM food crops have been substantially equivalent
to previously marketed food products, inc enhanced oils
- GM crops for pharmaceuticals are to be segregated, but
adventitious presence has occurred in few cases – but
no adverse health effects detected
- New empirical evidence that BT corn has reduced levels
of harmful mycotoxins in corn products (Wu)
- Some evidence of localized weed resistance to Roundup
- Evidence from food experiments:
• Rousu et al. discounted GM (IR/HT) by 14%
• Colson et al. 25% premium for GM veg with enhanced
levels of antioxidants and vit C by intragenic GM
methods
A. Agr requires wide range of inputs, and seeds receive special
attention.
-For almost 100 years, US seed producers have been
taking special precautions to protect purity of their
seed, including using physical and biological buffers,
and careful handling
-Over past 20 years, sensitivity of instruments to impurities
has been increasing, and 100% pure is infeasible
biologically, mechanically and economically
-Organic agr production has been increasing at roughly
15% but GMO by 100% per year, and in big 3 GM crops,
GM is 500 x more common than organic
*Agr is largely an open-air production system where pollen
and pollinators frequently drifts onto neighboring fields,
and products are harvested and moved along marketing
chains where adventitious mixing may occur
•NOP policy is that a certified organic farmer is not to
be barred from selling USDA organic produce due to
adventitious presence of non-permitted substances
- No documented claim of organic produce being
rejected because it did not meet USDA standards
- Some organic producers have signed contracts to
deliver products with higher that 95% organic
ingredients, and there are cases where these
products have been refused, but presumably sold
as USDA organic (95% organic ingredients)
B. Adventitious Presence in Common in Agr
*Impossible for US farmers to grow and harvest a 100% pure
crop, adventitious presence of weed seed, seeds from
vol plants, dirt and other unwanted materials regularly
reduce purity of grain and oil seeds
-Farmers face incentives to keep this material low,
but not at 0% (McHughen and Kershen 2005)
*Main causes of adventitious presence
- transport and storage systems might comingle products
- action of wind and pollinators might carry pollen from
one field to another
- volunteer plants following from in-blown GM pollen
greatest concern for open pollinate crops – corn
much less concern for self pollinated crops – soy, cot
Examples:
- Co-mingling: StarLink (Aventis Crop Sc) – corn variety
engineered to produce protein toxic to various insect pests of
corn was approved for animal feed but found its way into corn
chips and other food products – a marketing chain problem
- Cross pollination by insects: Monsanto filed petition with USDA
for deregulating two alfalfa biotech events in 2004
• 2005 - USDA concluded HT alfalfa did not pose a plant-pest
risk and deregulated
• 2007 – Organic alfalfa interests and others filed lawsuit in N.
CA that challenged the USDA’ decision – court decided
that environmental and economic impact assessment was
inadequate, GM alfalfa pulled from market
• 2011 – USDA again deregulated HT alfalfa after prepared new
environmental assessment and taking comments
-Organic farmers are concerned about adventitious presence of
GM content in their organic food products – they label it as
“contamination,,” low-key label is “adventitious presence”
C. Segregation, Coordination and Identity Preservation
• Although US organic producers’ problems due to adventitious
presence of GMOs could be solved by banning GMOS, this is
politically unlikely with the 500:1 advantage of GM over organic
• HT alfalfa has passed a critical test
• Court (2/12) threw out OSGAT et al. v Monsanto case – organic
seed cos. complaint: might be sued by Monsanto when sell
seeds with adventitious presence of GMOs. Judge found no
credible threat
• Co-existence requires using available knowledge and existing laws
-Although seed products remain a contentious area, in seed
production, field isolation is a well est’ed practice and widely
used to restrict gene flow (Bradford 2006)
physical isolation - distances
biological isolation – timing
• Seed purity laws recognize that 100% purity is infeasible, and
hence, impurity thresholds and purity standards and auditing
procedures have been est’ed based on field level experience
and intended use of seed (Gealy, et. al. 2007)
-Distances between organic and non-organic fields may be
short but still achieve low prob of inter-field crosspollination in corn
• Ripplinger et al. (2009) show that in IA with tolerance level of
1/1,000 or (0.1%), the probability of detectable GM pollen flow
from a 40 ac field 0.5 mile downwind is 0.24% and at 3/4 mile,
the probability is a tiny number.
• Organic and GM grain and beans can be segregated and
an attempt for identity preservation but marginal cost rises
dramatically as purity increases
- Guaranteed 100% purity in bulk commodities is economic
and physically infeasible
D. Inter-Farm Effects and Legal Problems:
• Arise because of weak property rights on air above agr land
when airborne agr particles can easily move by wind and
pollinators from one farm to another
- Legal precedent for pollen drift has been slow to
evolve (Flood; Cox)
• Langan v Valicopters (1977) – organic farmer sued to recover
damages alleged to have occurred from chemical pesticide
drift from adjacent farm
- Court concluded high degree of risk of harm because of
uncontrollable and other factors
(1) size of spray particles
(2) air turbulence by applicant aircraft
(3) natural atmospheric forces
(4) gravity of harm – depends on activity on adjacent land
(5) activity is a matter of common usage
-In 1977, the court found plaintiffs were faultless, innocent
victims of chemical drift and defendants had to pay damages
Implications for pollen drift cases:
• Strict-liability suits (exact source) are difficult to prove
for pollen drift, and some state courts have required
that plaintiffs prove negligence in drift cases (hard!)
-Also, GM crops are living uncontrolled organisms, and
farmers are not responsible for their drifting, which
may go long distances
• Even when circumstances seem ripe for law suits farmers
seldom file -- makes cooperation on other issues difficult
• Also, federal regulations of GMOs and their release may
prevent states from imposing conflicting laws
• CA law recognizes legal recourse for pollen drift – no
evidence of any damages paid
E. Insurance against uncertain events:
*Uncertainty about adventitious presence of GMOs could
be managed through an insurance product
- Ripplinger et al. (2009) provide a model that can be
adopted to show the fair market value of an insurance
product to compensate organic farmers for adventitious
presence of GM content above a threshold
• First-party rather than strict-liability would make for
low transactions costs
• Use of fair-valued insurance product allows one to
compare risks against benefits by putting $ value to
the risks
• Bridges divide between biological scientists (risk/benefit)
and economist (cost/benefits)
• Solves technical problems – pollen can travel long
distances if conditions are right
*Real Potential for insurance against adventitious presence above
some threshold – sticky issue is who pays for insurance
*Precedence: US case law on agr issues tends to protect the
dominant local farming technology, making non-organic the
dominant technology almost everywhere
• Also, organic farmers might be assigned responsibility for
measures to reduce damage from pollen drift
– biological and physical buffers, which raises costs
• From Coase’s analysis of externalities—assignment of
liability between parties does not affect efficiency but
does affect distribution of income/wealth
• Economic, legal and biological realities seem likely to favor
some regional concentration in organic and GM/
conventional agr production systems
- But, efforts to legislate technology has created fierce
resistance--a lower degree of specialization may have
potential
F. Local/state Initiatives on Technology
*Since 2004, some local areas have voted on anti-GM or
pro-GM policies
• CA – where majority have occurred
-Mendocino county – first to passed an anti-GM
ordinance – 3/2004
-Five additional counties held anti-GM votes, 2004-05,
but passed only in Marin
- In Trinity and Santa Cruz, County Board Supervisors
voted in favor of anti-GM ordinance – 2006
- In another 11 counties, there have been votes on
pro-GMO referendum
• New England Towns serve role of counties elsewhere
Town of Montville, ME, 43 sq miles, voted to approve
an anti-GMO ordinance in 2008
at issue was cross-contamination of native trees
*State legislatures may attempt to pre-empt local bans on
GM technology
• CA – 2005 – failed
• 2005-2007 –Twenty other states had introduce leg but
passed in 15 states (FL, GA, PA, OH, IN, MI, IA, TX,
OK, KN, SD, ND), and three had vetoed (NE, MO, SC)
-Even in states that do have pre-emptive legislation, local
bans on GMOs may violate federal regulations
Proposition 37 to mandate GMO labeling in CA failed 2012
– estimated cost to consumers seemed to tip balance
Political Action, e.g., legislate a particular type of technology:
• One perspective: Interest group politics, where private
agents divide themselves according to private interests
into two groups – those that favor and initiative and
those that oppose it
• Political power: due to # and homogeneity of membership #
votes, and the amount of resources, but also ability to
control free-riding
• Policy outcome is due to relative strength of two opposing
groups, which shift with shocks to system – affecting
relative political power and expensive in resources used
because of a never-ending struggle
• A year ago, Secretary Vilsack stated that it is time for
cooperation between organic, GM and conventional farming
interest – dramatically lower the tendency to create conflict
• The tension between organic and other farming methods in the
US have heightened with the introduction of GM crops, given the
approved methods/processes and substances that the organic
industry chose to lobby for in implementing the Organic Food
Act of 1990
-For some, organic food production and organic foods
have become a religion; strong beliefs but little scientific
support
-The organic seed industry seems to have exaggerated
the potential negative consequences
-Lots of talking but not much effective communication
• The biotech industry has underestimated the potential for weed
resistance to Roundup, but resistance is a well known scientific
phenomena with any pesticide
• Society has undervalued Bt technology by ignoring the very toxic
nature of the chemical pesticides they replaced
• Regarding international trade
-Organic foods can be produced abroad, properly certified
and imported into the US
—must meet the same standards as US producers
-On June 1, 2012, the new US-EU Organic Equivalence
Arrangement went into effect
The EU and US will recognize each others’ organic
production rules and control systems as equivalent
for three years – USDA organic will be labeled as
“Organic” in the EU.
• To feed the world’s population over the next 40 years, public and
private R&D are needed to development new technologies and to
better understand existing technologies, including any special
problems they raise
-Farmers (and countries) will need opportunities to use new
farming technologies
-Consumers will demand increasing amounts of livestock
products and fruits and vegetables
- Large amounts of energy and resource should not be wasted
on divisive interest-group politics on ag technology choice