Registering genetically modified herbicide-tolerant wheat any time soon
won’t put more money into farmers’ pockets, say researchers at the
University of Saskatchewan.
A team of agricultural economists looked at the main issues associated
with introducing the new technology, including agronomic costs and
benefits, the costs of segregation and the effect on export markets and
prices.
While GM wheat will make production cheaper, they concluded, those
benefits are more than outweighed by the costs of developing a system
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to segregate GM wheat, the impact of lost export markets and lower
wheat prices.
At the end of the day, the researchers said, GM wheat wouldn’t boost
farmers’ bottom lines under current conditions.
“There is considerable value in waiting to license genetically modified
herbicide-tolerant wheat from the producer’s perspective, given that
segregation is currently not possible at a cost that producers would
pay and still be better off with the new technology,” said the study
team headed by agricultural economist Hartley Furtan.
If tolerance levels for GM wheat were set at around five percent and
segregation could be done at a cost of between four and eight cents a
bushel, then producers would benefit from registration.
But that seems unlikely, Furtan said in an interview.
“Five percent seems to be a number that people in the industry think is
possible,” he said. “If the markets would accept five percent, then we
could reach it, but right now in Europe, the tolerance is zero.”
Furtan said the studies showed there are lots of issues to be dealt
with before GM wheat can be released commercially.
“If you had some more certainty about the future, then maybe you could
license it, but there are just too many uncertainties.”
He said the cost of technology use agreements will also play a big role
in whether GM wheat pays for producers.
The studies by the University of Saskatchewan researchers looked at
three specific issues related to GM wheat:
- Production costs and benefits – From a strictly agronomic
perspective, it was found that adopting herbicide-tolerant GM wheat
results in an overall increase in returns for farmers, based on
increased yields and lower costs of production.
Adopting Roundup Ready wheat resulted in an average benefit of $6.67
per acre versus conventional wheat, while Clearfield wheat varieties
produced a $4.59 per acre benefit for producers.
But researchers cautioned that the results varied depending on the
rotation and tillage systems used, especially with Roundup Ready.
- Segregation – The study found that the best way to segregate GM wheat
would be to designate regional high-throughput terminals to handle the
GM varieties.
It compared the costs of three different methods of segregating GM
wheat: designating a high throughput regional terminal, designating a
number of small wooden elevators or segregating within existing
terminals.
The lowest cost alternative was segregation within existing terminals.
However, when the risk of contamination was weighed, that became an
undesirable option to the researchers.
Under one typical scenario, the total cost for the region for a
designated terminal was $4.88 per tonne, versus $13.72 per tonne for
multiple small elevators.
The cost to producers was always significantly lower in the multiple
elevator option, since farm-to-elevator trucking costs would be lower.
- Export revenue – This study found that introducing GM wheat would
cost $185 million in lost sales revenue to the Canadian Wheat Board
pool accounts, representing 8.5 percent of total pool revenue.
The annual price reduction was pegged at $9.24 per tonne for low
quality wheat, $16.11 per tonne for medium quality and $20.62 per tonne
for high quality, with an average price reduction of $13.95 per tonne.
The study identified 10 export markets that would be lost if GM wheat
was mixed with conventional wheat, including major customers such as
Algeria, Brazil, Iran, Italy, Japan, Malaysia and the United Kingdom.
The researchers added that some of those losses could be offset if GM
herbicide-tolerant varieties garnered price premiums due to end-use
benefits such as improved milling quality.
Monsanto spokesperson Trish Jordan said the more research and
discussion there is about GM wheat, the better, although she added the
company doesn’t agree with everything in the studies.
She said the company realizes that if Roundup Ready wheat doesn’t
provide economic benefits for everybody in the system, including
farmers, it won’t fly.
There is no firm target date for registering Roundup Ready wheat,
although the company has talked about 2003 to 2005.
“We’ll introduce it when we can meet all our commitments,” she said.
“We’ll get there when we get there.”
