New Zealand has much more at stake than any other nation in considering GM food production. Half of our export income, some $16 billion a year, is derived from primary production. This is five times the OECD average of 10%. In other words, the stakes are five times higher than average for New Zealand.

Even if New Zealand was fairly sure GM food would eventually provide economic benefits, is it smart to commit to this track now? The commercial prospects for GM food hinge not on proof of the science, but on consumer preferences. It is the choices made by importers and retailers in Europe and Japan that define the economics of GM food. The decision is also largely irreversible. Once a commitment has been made to large-scale GM plantings, there is essentially no going back.

In the wake of a series of food scandals including mad cow disease, educated and affluent consumers in Europe and the Far East increasingly want “safe” food. “A majority of Europeans do not support GM foods. These are judged not to be useful and to be risky for society,” the European Commission reported in its latest official survey in March. Already a group of major European supermarket chains and food processors have rejected GM foods, forming a consortium to source non-GM ingredients.

In April the New Zealand government released a study examining the economics of GM release for New Zealand and it begins to quantify what is at stake. Business and Economic Research Limited found that “20% to 30% [of consumers in major export markets] state they would cease purchasing New Zealand commodities if New Zealand released GMOs”. When these levels of market rejection were fed into economic models, BERL observed that additional productivity gains from GM would need to be considerably above historical levels over a decade to offset the effect of the market downturn. In the dairy and meat industries for example, even an additional 2.5% per annum gain in productivity from GM (versus an historical 1% per annum) was not quite sufficient to stave off a decline in GDP for the economy as a whole.

The results were even starker for farm incomes. The report stated for the dairy, meat and horticulture industries, while a 20% drop in sales would result in producer incomes falling 43%, should GM deliver a similar percentage rise in output, the overall income gain is just 5%. In consequence, the study observed that pursuing additional sales was a better strategy than seeking productivity gains through GM release.

The proposed release of GM wheat has further spelt out the market risks. Existing GM food production has largely ducked market resistance by being refined into products that escape current labelling requirements or by being fed to animals — though even feed is now coming under threat. But wheat is quite different. Unlike corn, soy and maize — the principal GM crops now grown — wheat is predominantly destined for human consumption. So what’s happening with GM wheat? When North American wheat exporters consulted their major buyers as to the acceptability of GM wheat, the responses were clear cut across Europe and Asia. Not only was there near universal refusal to take any GM wheat, many stated they would reject shipments that contained even trace GM contamination — including all Japanese importers surveyed where Japan is the biggest purchaser. Comments from the buyers to US Wheat Associates were stark. “The European milling industry will simply not buy one more kilo of any US wheat at all if GM wheat is commercialised,” said Grand Molini, the largest miller in Italy.

These responses highlight the real scope of the GM food issue. The risk is not that a minority of farmers decides to go GM and lose their markets. It is that if some go GM, then all farmers of similar produce are affected. For example, while only a minority of US corn production is GM, virtually all US corn exports to Europe have been lost — sales equivalent to about $US1 billion to date.

In New Zealand there has been considerable talk about how different production methods can “coexist”. However, the bottom line for North American wheat growers is that they cannot identify a system in which they would have confidence. Until they can see such a system, they are opposing the introduction of GM wheat. Similarly, the European Commission does not believe that zero contamination is possible in practice.

Advocates of GM release argue that the Environmental Risk Management Authority (ERMA) should be free to decide on a case-by-case basis if and when the first GM release takes place.

However, this approach would delegate a fundamental question of national policy and strategy to an agency that specialises simply in environmental risk. As the BERL report makes clear, GM release affects New Zealand at the country brand level — our “clean green” image. This is not readily assessed in the context of an ERMA “case-by-case” decision.

The Royal Commission on Genetic Modification recommendation that New Zealand could have it both ways was based on there being reliable means to keep GM and non-GM production apart. The Commission’s major recommendation that New Zealand “preserve opportunities” requires that non-GM food producers are able to deliver GM free food.

As noted above, it is markets that set the standards for what is GM free and these are intolerant of contamination. In absence of identified means to prevent cross-contamination, a decision to allow large-scale commercial release would remove the opportunity for non-GM farmers of like varieties to meet market demand for GM-free product. This is especially significant when only 22% of farmers say they intend to use GM technology in the next ten years.

There is no obvious demand for uptake of the existing GMO varieties by New Zealand farmers in the near future. “New Zealand grain growers see little of value for them in the current range of modified crops,” Federated Farmers has stated. New GM products of significance are five to ten years away from commercialisation.

So why open the gates to GM release now? Why not wait and see what emerges that could offer economic benefits when consumer responses are taken into account? Why relinquish New Zealand’s highly marketable status as a GM-free food producer at this time?

At least until the minimum economic conditions for GM release are satisfied, there is every reason for New Zealand to retain its status as GM-free food producer.

Simon Terry is executive director of the Sustainability Council of New Zealand, a group advocating New Zealand retain its status as a GM-free food producer.

If we planted GM ryegrass
A recent BERL report hypothesised the release of a theoretical GM ryegrass for use as feed to dairy and meat industries. Assuming significant productivity gains were possible and exclusive to New Zealand, it asks how these gains, combined with a consumer backlash to GM foods, would affect farm incomes. Using a Lincoln University economic model that simulates each of the key dynamics in international trade, the results show that should GM grass prove capable of delivering major productivity gains, the benefits from this would largely be offset by falling prices.

	Productivity increase
FALL IN DEMAND	None	25% increase	40% increase	60% increase
None	0.8%	5.1%	8.1%	10.5%
20% discount for all New Zealand meat, dairy and fruit	-43.3%	-	-	-