 |
 |
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The economic effects on Australia of increased uptake of GM crops in Argentina, Brazil, India and China are explored in this chapter. The crops considered for adoption in the analysis are oilseeds (predominantly canola for Australia) and wheat. Canola and wheat are significant export commodities in Australia’s agriculture sector. While GM canola has not yet been actively adopted by emerging economies and Australia, this may change over time. In early 2008 Victoria lifted its moratoria on growing GM canola and NSW made amendments to the Gene Technology (GM Crop Moratorium) Act 2003 to allow the growing of GM crops under licence and with Ministerial approval. GM canola has since received approval for commercial production in both states in early 2008. GM wheat is not grown anywhere in the world. However, research is being undertaken into developing GM wheat varieties for commercial release. For example, Syngenta, a Swiss based company, is carrying out field trials in North America of a GM wheat variety resistant to the fungal disease, Fusarium, a disease that can stunt plant growth and reduce yields of wheat crops by around 1-3 per cent (Gianessi 2005). Fusarium infected crops also pose a serious risk to consumers as toxins produced by the fungi can affect human health (GMO Compass 2007b). GM wheat field trials are also underway in Mexico and China (Berwald et al. 2006). Similar to soybeans, wheat is a basic building block to a range of food ingredients, and is used widely in food applications. The commercial release of a HT wheat in northern America suffered a set back when Monsanto, a leading agricultural biotechnology company, shelved its research in 2004 owing to market access concerns (Decision News Media 2004). Syngenta continues to assess market acceptance of the genetically modified wheat. In preparation for release of GM wheat, US Wheat Associates — which markets US wheat to foreign buyers — has voted to approve a plan to promote biotech wheat through educational seminars, country specific promotional programs, safety and quality demonstrations and guiding development of segregation systems (Decision News Media 2005). In media reports it is stated that the earliest possible date for the release of Syngenta’s GM wheat is early next decade (Heller 2006). Given the uncertainty surrounding the commercial release of GM wheat, and adoption of GM canola in the emerging economies, the illustrative analysis presented in this chapter should be considered as only an indication of how Australia’s wheat and oilseeds competitive position in export markets would be affected by an assumed uptake of these crops by emerging economies. Two illustrative cases are analysed for the increased adoption of GM grain crops in Australia — namely access everywhere including the European Union (unrestricted) and restricted access to the European Union market (restricted). A reference case is developed for each case, with the only difference between the two being the stance taken by the European Union on GM crop imports. Each reference case assumes that GM oilseeds and wheat are gradually adopted in Argentina, Brazil, India and China over the period 2009–18, reaching full adoption in 2018. Under each reference case a scenario is developed to analyse the likely gains to the Australian agriculture sector from adoption of GM canola and wheat, alongside emerging economies (table 8). ABARE’s global trade and environment model (GTEM) — a general equilibrium model of the global economy — is used in the analysis. Full documentation of the model is available on ABARE’s website (abare.gov.au). GTEM has the capacity to simulate interactions between sectors within countries as well as the linkages between countries through trade and investment flows. Economic impacts of adoption of GM crops on the Australian economy are measured in terms of percentage changes from the reference case in gross national product (GNP) in 2018. This is also the case for changes in Australian agricultural commodity exports. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assumptions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Yield improvements resulting from GM crop adoption were assumed for each crop in the countries analysed based on a review of literature (box 3) and are reported in table 9. These assumptions are based on field trials in specific regions and under specific climatic and agronomic conditions. It is assumed that the actual productivity gains that these GM crops achieve in individual emerging economies and Australia are likely to approximate those simulated here, depending on the specific climatic and agronomic conditions. In each illustrative scenario, the estimated economic impacts on Australia are expressed as a change in gross national product relative to the reference case in 2007 Australian dollars. These impacts should be regarded as indicative only. The results also need to be viewed within the context of any possible additional costs incurred — for example, potentially higher seed costs and costs of identity preservation in agricultural systems producing both GM and non-GM crops. These likely increases in costs are not considered in the scenarios because of a lack of information. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Economic impact of GM crop uptake | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| An uptake of GM oilseed and wheat crops in Argentina, Brazil, India and China is likely to lead to productivity gains that will affect Australia through international trade flows. This will be reflected in a reduction in per unit production costs and increased crop production and exports for GM adopting countries. Accordingly, higher supplies would put downward pressure on world prices for these products. The implications of higher supplies and lower prices in the world market vary for different sectors and regions. Net importers and consumers of these crops would benefit from the lower prices. The emerging economies also benefit — not only from lower production costs but from potentially higher export incomes or, in the case of India and China, from being able to gradually replace imports with progressive increases in domestic production. Australia would potentially face a loss of market share and both production and exports could fall if Australia does not take up GM crops alongside the emerging economies. However, Australia might be able to take advantage of markets for non-GM crops, reducing, to some extent, the negative impact. For example, if the European Union restricted GM imports, Australia could potentially increase its market share in the European Union. Alternatively if Australia adopted GM crops, Australian crop production could expand as farmers would benefit from lower per unit production costs. Total exports are likely to increase as Australia’s crop exports gain competitiveness in international markets. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Economic gains if australia adopted GM crops | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| If Australia adopted GM technology, alongside China, India, Brazil and Argentina, Australia’s economy would benefit compared with each of the two assumed reference cases (figure m). Under unrestricted access for GM crops everywhere, Australia’s gross national product (GNP) is estimated to be $912 million (in 2007 Australian dollars) higher in 2018 — the year assumed for full adoption — relative to the reference case where Australia does not adopt. This gain in GNP would reduce to $732 million, compared with the reference case, in the case where access to the EU market for GM crop imports was restricted for Australia, China, India, Brazil and Argentina. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Effects on australia’s wheat and oilseed exports | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| If Australia fully adopted GM oilseed and wheat crops by 2018, the value of exports for these crops would increase relative to the reference case. If there were no restriction in foreign markets on GM crop imports, the export income for these crops increases by an estimated $918 million by 2018, relative to the reference case. If the European Union restricted imports of GM crops, the export income for these crops increases by an estimated $682 million by 2018, compared with the reference case (figure n). With the improved export competitiveness of the oilseeds and wheat industries, resources would be likely to move into these industries from the rest of the agriculture sector, leading to a small decline in exports in other agricultural industries. For the agriculture sector as a whole, export earnings would increase by an estimated $747 million by 2018, compared with the reference case, if Australia adopted the GM varieties of oilseeds and wheat alongside the emerging economies and there were no restrictions on the imports of GM crops in foreign markets. Under the assumption that the European Union bans imports of GM crops, the increase in agricultural exports as a whole would be around $558 million in 2018, compared with the reference case. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
