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| The area under GM crop production has risen dramatically since the first GM crop was commercialised in 1996, reaching 114 million hectares in 2007. This is more than double the area grown to GM crops in 2001. There are now more than 12 million farmers across 23 countries growing GM crops (James 2007). The principal adopters are the United States, followed by Argentina, Brazil, Canada, India and China. These six countries account for 95 per cent of total GM crop plantings. Notably, the emerging economies – Argentina, Brazil, India and China – have increased their share of GM crop area over the past five years — from 25 per cent in 2001 to 39 per cent in 2007 (figure a, James 2001, 2007). In general, the potential productivity gains from planting GM crops are greater for farmers in emerging economies because of the higher incidence of pests in crops, and the significant potential for yield improvements (Abdalla, Berry, Connell, Tran and Buetre 2003; Qaim 2005). Accordingly, emerging economies are adopting GM technologies faster than developed economies. For example, the area under GM crops increased by 20 per cent in emerging economies in 2007 compared with 6 per cent in developed countries. The main traits for commercialised GM crops are improved agronomic features comprising herbicide tolerance (HT crops) or resistance to pests (Bt crops). More recently, varieties have been developed containing stacked traits for both pest and herbicide tolerance — loosely termed stacked trait varieties. The most widely adopted trait for GM crops by area in 2007 was herbicide tolerance (63 per cent), followed by stacked traits (19 per cent) and then pest resistance traits (18 per cent) (James 2007). The most widely planted GM crop worldwide in 2007 was soybean (51 per cent of total GM crop area) followed by maize (31 per cent), cotton (13 per cent) and canola (5 per cent) (table 1). GM soybean and canola varieties have traits for herbicide tolerance, while maize and cotton varieties have been developed for both pest and herbicide resistance. Collectively these four crops account for more than 99 per cent of the global GM crop area. Of the total area grown to soybeans, cotton, canola and maize in 2007 (301 million hectares), 38 per cent was planted with GM varieties. This compares with 16 per cent for these four crops in 2000. GM adoption has been highest for soybeans, reaching 64 per cent of total soybean plantings in 2007 (figure b; James 2007). Corresponding adoption rates were 43 per cent for cotton, 20 per cent for canola and 24 per cent for maize. |
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| Global policies and their influence on GM developments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| In various countries, some people are concerned about the potential health and environmental impacts of GM crop adoption, particularly in the longer term (Anderson and Jackson 2005). Accordingly, in many countries, regulations are implemented to protect domestic industries and consumers. These regulations cover the approval of GM crops, marketing, imports, labelling and documentation requirements. Details of these regulations are presented in appendix A. At the country level, regulations governing production and trade of GM crops are developed in accordance with global policies on genetically modified products. These regulations include, in particular, the Cartagena Protocol on Biosafety, and the World Trade Organisation (WTO) Agreement on the Applications of Sanitary and Phytosanitary Measures (SPS agreement). However, the relationship between these two agreements is ambiguous and can hamper trade in GM based products. For example, country specific regulations restricting the production and import of GM products, particularly those of the European Union, are having a negative impact on international trade in GM products (Zarrilli 2005). These impacts have the potential to intensify given the disparities between international agreements applying to trade in agricultural biotechnology (box 1). International standards for GM production, regulation and labelling may assist in reducing future trade disputes (Anderson and Jackson 2005). There is currently no international standard for GM products; however, the Cartagena Protocol requires parties to consider the implementation of standards for identification, handling and transport practices (Secretariat of the Convention on Biological Diversity 2000). In moving toward this goal, the OECD has actively assisted in harmonising international regulatory requirements, standards and policies related to biotechnology since 1985 (Phillips 2003). |
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| Diffusion of GM crops in emerging economies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Argentina, Brazil, India and China are important producers of agricultural commodities. Together, these economies produce a significant portion of global output of soybeans, maize, canola, rice, wheat and cotton (see appendix B). GM crops have demonstrated significant benefits to farmers (box 2). The increase in global farm income from GM crop uptake has been estimated at US$27 billion in nominal terms, for the decade to 2005, with approximately 47 per cent of income gains accruing to farmers in developing countries (Brookes and Barfoot 2006). Increases in farm income arising from adoption of GM crops in emerging economies has been driven by crop yield increases and reductions in production costs (box 2). The increase in farm income that GM crops offer is to some extent offset by increased seed costs in some cases. For example, in Brazil, seed costs for GM soybean varieties were approximately US$20 per hectare higher than for non-GM varieties in the early part of the decade (da Silviera and Borges, 2007). In China, seed costs for Bt cotton varieties were 100–250 per cent higher than non-GM cotton seeds in the period 1999-2001, although this price difference has declined over time in high adopting areas (Huang, Hu, Van Meijl and Van Tongeren 2003). Growth in GM crop adoption in emerging economies has been stimulated by policy and regulatory settings. The current policy arrangements for GM crops in emerging economies are presented in appendix C. |
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| Argentina | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GM soybeans resistant to glyphosate herbicide were the first GM crop to be released in Argentina in 1996, followed by GM maize and cotton varieties with herbicide and insect resistance in 1998 (table 2). Argentina has the second largest GM crop area in the world after the United States, covering 19.1 million hectares. On average, the total GM crop area in Argentina has increased by 70 per cent a year since 1996. The widespread use of GM varieties has enabled a rapid expansion of planted area, leading to growth in production and exports. Uptake of GM soybeans has been most rapid, with GM soybean crops accounting for around 99 per cent of soybean production in 2006-07 (figure c; ArgenBio 2007). There has also been rapid adoption of GM maize and GM cotton since these varieties were introduced in 1998. By 2006 the area of GM maize varieties was 73 per cent (3.1 million hectares) of total maize plantings, while GM cotton area reached 80 per cent (360 000 hectares). Other GM crops produced, although not yet on a commercial scale, include sunflower, tomato, canola and sugar. |
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| Brazil | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercialised GM crops in Brazil include soybean, cotton, and maize, covering an area of around 15 million hectares in 2007 (table 3). During the late 1990s, herbicide tolerant soybeans were rapidly adopted by farmers in several regions of Brazil, with seeds illegally imported from Argentina. By 2004 when GM soybeans were officially approved for commercial production, approximately a third of the planted area was already cultivated with GM varieties. In 2005, Brazil became the third largest producer of GM crops globally and, in 2006, accounted for 25 per cent of world soybean production. Brazil is the world’s third largest producer of maize, with around 13 million hectares planted in 2006. Brazil is also a large producer of cotton. A variety of Bt cotton was commercialised in 2005, and in 2006 farmers planted 120 000 hectares, approximately 10 per cent of the total crop area. Brazil’s cotton producers have severe pest problems and face significant insecticide costs. Bt cotton is therefore expected to provide significant benefits to cotton farmers. Brazil currently cultivates more than 1 million hectares of cotton. Brazil has also invested significant resources in the research and development of GM varieties of rice, sugar cane, potato, papaya and eucalyptus. |
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| India | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| India initially commercialised three varieties of Bt cotton in 2002. By 2006, there were 62 hybrids of Bt cotton approved for commercial production. Cotton is an important cash crop, contributing around 30 per cent of the gross value of India’s agricultural production (Bennett et al. 2004). The area under Bt cotton increased from 50 000 hectares in 2002 to 3.8 million hectares in 2006 (figure d; Indian Department of Agriculture and Cooperation 2007). In 2006-07, India surpassed the United States as the second largest cotton producer after China. Other GM crops under trial for release in India include eggplant (brinjal), rice, cauliflower, tomato, okra, potato and mustard. These crops have traits such as insect and disease resistance, increased shelf life and higher levels of essential amino acids. |
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| China | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| China has been highly effective in utilising biotechnology in the agricultural sector and has field trialled a range of GM crops (table 4). Two Bt cotton varieties were approved in 1997 and were rapidly adopted. There are now more than 53 varieties of GM cotton grown commercially. China has the third largest area of GM cotton after the United States and India, with 3.8 million hectares planted. China also has the largest number of farmers (7.1 million) growing Bt cotton. Around 69 per cent of total cotton plantings by area in China are pest resistant varieties (Bt cotton) or both Bt and herbicide tolerant varieties (stacked trait crops). Bt cotton has not been adopted to the extent it has been in United States (83 per cent) or Australia (92 per cent), largely because insect infestations are lower in China, reducing the benefit of planting Bt varieties (Petry and Xinping 2007). In 2005, the area under Bt cotton fell slightly as farmers replaced land intensive with labour intensive crops (Anderson, Valenzuela and Jackson 2006) (figure e, James 2006). Since the late 1980s, China has been developing GM rice varieties. One variety (Xa21) with a resistance to bacterial blight is close to commercialisation. It is currently being assessed for biosafety requirements (Huang et al. 2007). GM rice varieties able to resist rice stem borers, and leaf rollers and a hybrid variety able to resist many pests have also been developed. Other GM varieties that have been approved for commercialisation include tomato, sweet pepper, and petunia; however, plantings of these crops remain small. Other crops currently under field trials include wheat, maize, soybeans, potato and canola. A virus resistant papaya was also approved for commercialisation in late 2006 (James 2006). |
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| Market acceptance of GM crops | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GM crops have been widely accepted by many importing countries. As of 2006, 51 countries had approved imports of GM crops for food and/or feed. Many of these are major food importing countries, such as Japan, the Republic of Korea and Chinese Taipei, that do not plant GM crops (James 2006). The majority of soybeans, maize, cotton and canola exports are from GM adopting countries. It is estimated that in 2006, globally, up to 98 per cent of soybean trade, 80 per cent of maize trade, 73 per cent of canola trade and 57 per cent of cotton trade were sourced from countries that produce GM crops (figure f, Brookes and Barfoot 2006). Global trade in grains and oilseeds is dominated by GM cropping countries such as the United States, Canada, Brazil and Argentina (figure g; USDA 2007b). |
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| Soybeans and maize | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Soybeans and maize are both important crops in emerging economies. Brazil and Argentina together account for around 44 per cent of global soybean production and 48 per cent of global soybean exports. Both soybeans and maize are used as feed inputs to livestock production in the northern hemisphere. Argentina and Brazil export the majority of their soybean production. Around 22 per cent of the increase in global soybean production as well as an 11 per cent reduction in world price between 1996 and 2005 was, to some extent, attributable to increased GM crop production and exports by Argentina (Trigo and Cap 2006). Non-adopters of GM technology have forgone the potential on-farm benefits and incomes. For example, countries producing only non-GM soybeans are estimated to have lost farm income of around US$291 million in 2001 (Qaim and Traxler 2005). Exports by Argentina and Brazil of GM based soybean and maize products have faced market access restrictions into the European Union. Following the lifting of the European Union’s moratorium on GM crop imports in 2004, market restrictions have been replaced by the implementation of strict labelling requirements. However, other major export markets for soybean based products (India, Iran and South Africa) do not have labelling requirements for highly processed GM products. Similarly, soybean meal is primarily destined for the European Union, Egypt, Malaysia and Thailand. Of these, the European Union is the only market where labelling for GM products is required, and this only applies to meal destined for food rather than feed. The adoption of both GM soybeans and maize has contributed to an increase in production and consequently exports of these products in Argentina and Brazil (figure h; FAO Statistics Division 2007). |
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| Cotton | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The main emerging economies to adopt GM cotton varieties have been India and China. Further diffusion of Bt cotton in these countries is likely given the benefits and the higher revenue relative to non-Bt varieties. For example, India was previously a net importer of cotton; however, since Bt cotton was introduced, it has become a net exporter. As a result of Bt cotton’s introduction, India’s share of world cotton exports has increased from 0.2 per cent in 2001-02, to 7.0 per cent in 2005-06. China is the world’s largest producer and consumer of cotton, accounting for around a quarter of the world’s cotton production and more than a quarter of global consumption and imports. China is also a significant net importer of cotton. The majority of imports are sourced from the United States, India and Australia. |
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| Challenges for further adoption of GM crops in emerging economies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The uptake of GM crops in emerging economies has been facilitated by the experience of developed countries that have adopted GM crops. For example, in Argentina, glyphosate tolerant soybeans (and subsequently other GM crops) were able to be directly transferred from the United States into Argentinian cropping systems. This removed the need for domestic investments in research and development. However, the extent to which this practice occurs in future will be influenced by the status of intellectual property rights in the emerging economies. Intellectual property rights in emerging economies are still underdeveloped. Illegal seed trade and the legal diffusion of some GM seeds at low cost in emerging economies remain a significant problem for developers of GM seeds. For example, illegal seeds are responsible for around 35 per cent of GM crop plantings in Argentina. Additionally, the use of GM seeds legally, through loopholes in property right arrangements, has given emerging economies cost advantages over farmers in developed regions. For example, GM soybean seed was around 30 per cent more in Argentina in early part of the decade than conventional varieties, compared with 43 per cent more in the United States. Improvements in intellectual property rights in emerging economies are likely to aid in attracting foreign investment in research and development of GM crop traits in emerging economies. For example, China has achieved a good balance in its regulatory approach to GM crops, which has assisted its development. The government has supported biotechnology development through funding and research programs, and has also responded to demand for increased biosafety protection. Also, India has developed a strong policy regime for the development and commercialisation of GM varieties. The strengthened intellectual property rights regime and focus on foreign investment is likely to assist India in the development of GM varieties for large scale commercial crops. Production factors in emerging economies suggest that they are in a suitable position to adopt future biotechnology developments. Farmers are often experienced in adapting to new technological developments. However, inefficient farming practices and pest problems pose significant challenges yet to be overcome in these economies. For example, although India has the largest area under cotton plantings, output is less than that in the United States and China. Also, the Indian Government continues to provide considerable assistance to the agriculture sector through input subsidies, government procurement of output and price supports, limiting incentives for the agriculture sector to attain higher levels of efficiency. China’s agricultural policy is focused toward achieving self sufficiency but in recent years also on improving market access and opportunities for farmers to adapt to market conditions. Farmers are unable to own land, but are now able to take a lease for up to thirty years. In 2004, farmers were also granted permission to lease out their land, with a view to increased efficiency through expanding farm area. While farmers are now more flexible in altering production in response to demand, government policy is still focused toward promoting production of cereals and food grains (ABARE 2006). Other policies have also been introduced in China to boost agricultural productivity and rural incomes, notably tax cuts, subsidies and investments (USDA 2007a). In 2004, China spent $18 billion on rural infrastructure and agreed to reduce production taxes, previously set at 8.4 per cent. In addition, emerging economies may face infrastructure constraints. For example, India’s transport costs are 20–30 per cent higher than in many other developing countries, and significant infrastructure investment is required to enable India to reach its potential in terms of agricultural production and trade. In recent years, poor maintenance of infrastructure has been a key factor slowing growth in India’s agricultural production (Ministry of Finance 2007). Similarly, in Brazil, improvements in transport and storage facilities are likely to be needed to cope with the increase in production and exports. |
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for soybeans, there is little evidence that GM crops lead to a yield advantage over non-GM varieties (da Silviera and Borges 2007)