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| Genetically modified (GM) crops have been rapidly adopted in many countries in the past decade — in particular, in the United States, Argentina, Brazil, Canada, India, China and Australia. After a decade of commercial plantings, the global area of GM crops reached around 114 million hectares in 2007. Cotton, soy bean, maize and canola are the main GM varieties grown, accounting for — by area — 99 per cent of all GM crops planted in 2007 (see Appendix A). The purpose of this report is to assess the potential economic gains from further GM crop adoption in Australia. Gains to a key canola growing region — the NSW Murray Water Catchment Management Area — and the main grain producing states of New South Wales, Victoria, South Australia, Western Australia and Queensland are quantified under two scenarios — a ‘canola-only scenario’ and a ‘five-crops scenario’ (adoption of GM canola alongside GM soy bean, GM maize, GM wheat and GM rice). These scenarios are examined under two alternative adoption timeframes: early adoption (from the 2008-09 financial year) and delayed adoption (from 2013-14), with the cumulative benefits from adoption accruing to 2017-18 in 2006-07 present value terms (hereafter described as ‘in 2006-07 dollars’). A canola only scenario assesses the economic benefits from adoption of GM canola in each key canola-growing state in Australia — New South Wales, Victoria, South Australia and Western Australia. A five crops scenario is presented for illustrative purposes, estimating the potential cumulative economic benefits from adoption to 2017-18 under early and delayed adoption scenarios in the states mentioned above and in Queensland. Crops considered are canola, soy bean, maize, wheat and rice. The benefits that farmers gain by switching to GM crop varieties have been a key driver of the rapid adoption of these crops. These benefits are mainly increased crop yield and reduced farm input costs — especially costs associated with the use of pesticide, herbicide and farm labour. GM crop adoption may also lead to indirect impacts on upstream industries (industries that produce agricultural inputs) and on downstream industries (industries that use agricultural products). The economic benefits derived from the adoption of GM crops are quantitatively assessed later in this report for key agricultural industries (canola, soy bean, maize, wheat and rice) and key producing states/regions in Australia. Other benefits from GM crop adoption, such as increased flexibility in farm management and environmental, occupational health and safety benefits, are less easily quantified but important, and are qualitatively assessed in this report. A strict regulatory framework for the production and importation of GM products has been adopted in Australia. For example, all dealings in genetically modified organisms, whether domestically produced or imported, are monitored, assessed and approved by the Office of the Gene Technology Regulator (OGTR). In addition, Food Standards Australia and New Zealand provides a strict testing regime to ensure any food derived from crops containing GM modifications is safe for human consumption. State and territory governments are responsible for deciding whether to allow the growing of approved GM crops in their jurisdiction. Australia’s commercial experience with GM crops is largely limited to GM cotton and carnations. The introduction of GM cotton varieties has reduced input costs for cotton farmers, as the varieties planted have been modified to be resistant to insect pests and herbicide treatments, allowing less use of pesticides and labour for clearing cotton fields of weeds during crop rotations. More than 90 per cent of Australian cotton has been planted to GM varieties. HT canola, a GM variety which is tolerant to herbicide applications, has been approved for commercial release by OGTR. Both the Victorian and New South Wales governments have approved GM canola production for the 2008 growing season, and commercial plantings are likely to commence. Over the longer term, other broadacre GM grain crops, such as wheat, soy bean, rice and maize, may also be approved for commercial plantings and adopted by Australian farmers. For example, wheat modified for drought resistance is currently undergoing field crop trials in Australia (Appendix B). Trials for GM rice have been undertaken in China. |