The Economic Issues Surrounding GMOs

Staff Writer
Is it about health or the environment or morality — or is it all about the money?
Economics of GMO
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Voices from both sides of the debate discuss the economic impact of introducing genetically modified foods into the marketplace.

This is one in a series of stories; visit The Daily Meal Special Report: GMOs (Genetically Modified Organisms) for more.

Whether or not genetically modified foods should be mass-manufactured and available in the marketplace is one of the most contentious food and public policy issues of our time. Some countries have banned or severely limited their importation. In 2011, Hungarian officials burned over one thousand acres of corn crops suspected to contain genetically modified seeds. In the United States, corporations with a vested interest in manufacturing GM seeds have made their presence known. In 2013, the opposition campaign against the Washington State ballot Initiative 522, which would have required GM foods to bear an identifying label, received over 20 million dollars in contributions, two-thirds of which came from five major multinational corporate entities. The science set aside for a moment, the economic impact of GM manufacturing plays a critical role in how this debate moves forward.

Those in support of genetically modified foods have noted the significant role that GM foods could play in fighting malnutrition in the developing world; which, according to The United Nations Food and Agriculture Organization, affects nearly one out of eight people on earth. Jayson Lusk, the Regents Professor and Willard Sparks Endowed Chair in the Department of Agricultural Economics at Oklahoma State University, argues that many global issues of our time could be aided by the use of biotechnology.

“The world is facing many challenges,” says Lusk. “(They include) a growing world population, climate change, and droughts in many areas of the U.S., just to name a few.  Biotechnology and genetic engineering do not hold all the answers, but all tools should be on the table to sustainably address these societal challenges."

On a domestic level, proponents of GM products see the opportunity to develop strain-resistant crops that cost less to manufacture. These lower food costs would benefit the farmers, and in turn would reduce the cost of foods for the retail consumer.

"In the U.S., about 90% of all corn and soybean acres are planted with GE varieties,” says Lusk. “These were decisions made by real-life, flesh and blood farmers. No one was (or is) holding a gun to their head. The fact that farmers willingly adopted GE varieties at such a fast clip (even while paying a premium price for them) reveals their belief that it is in their best interest to do so.  The scientific evidence shows that adopters of GE corn, soy, and cotton have enjoyed slightly higher levels of profitability.”

Not everyone agrees that GM products are a net plus for consumers and farmers. Jeffrey Smith, the founding executive director of The Institute for Responsible Technology (IRT), argues that the figures actually show GM products negatively impacting farmers and domestic food production.

“The stated justification for promoting GMO’s in the first Bush administration was that they would increase US exports and US domination of agriculture,” writes Smith. “The opposite happened. Europe shut its doors to GM corn, soy exports shrunk, and the U.S. spent billions to prop up the prices of the GM crops no one wanted.”

Part of the reason the opposing sides in the GM debate don’t appear to be talking to one another has to do with how the data is read. Domestic farming subsidies in the U.S. play a major role in keeping the farmer at least in part insulated from fluctuations in the market at home and abroad. This explains how certain domestic agricultural products can continue to be produced at a sustained rate, even if the market demand does not meet the current levels of production.

The demography of the farming industry is another explanation for the disparate views on current economic figures related to GM farming. While the 2007 Census of Agriculture figures show that 87 percent of farms in the U.S. are “family owned,” the term can be misleading. According to an EPA report on U.S. farming demographics, “Many of the country's largest agricultural enterprises are family owned.”

In addition, the measurable trend towards disproportionate production concentrations has been noted. The EPA report notes that 2007 USDA figures show “a mere 187,816 of the 2.2 million farms in this country accounted for 63 percent of sales of agricultural products.”

What about the so-called “mom and pop” small-scale farmers and other producers of organic goods? How are they impacted by these broader trends, and specifically do they to benefit from adopting GM seeds?

On a macroeconomic level, it may appear that in some instances the adoption of GM crops reduces costs and increases production. However, the argument against GMO adoption often points to a negative impact on small-scale agriculture.

“Independent research confirms that average farmer profit does not increase with GMOs,” Smith writes.  “And numerous examples of closed markets and suppressed prices have followed the introduction of genetically modified crops worldwide. In Hawaii; for example, GM papaya was blocked by Japan. Prices dropped from $1.29 per kilo to about $.80, and in spite of increased papaya consumption in United States, papaya production in Hawaii dropped by 40 percent.”

In a statement to The Daily Meal, The Northeast Organic Farming Organization of New York notes that allowing GM seeds to be cultivated alongside non-GM seeds results in an “Increased risk for contamination of genetic content with genetically-engineered genes.”  

“Through the natural process of pollination, genes travel miles and combine with crops across a local region,” the statement continues. “When GE genes are in the air, the risk of contaminating certified organic or non-GE crops increases. For organic farmers, GE contamination means losing the ability to sell that crop as organic, which closes a farmer out of their market.”

This means that in some cases, the sheer existence of GM crops in close proximity to non-GM crops may eliminate choice for those who are unsure of their safety, or simply wish to opt-out of their purchase for any reason.

The debate over the economic benefits and potential perils of introducing GM foods into the marketplace will surely remain a fiercely contested issue for many years to come. 

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