Download Climate change: Genetically Modified Organisms (GMO) as a mitigating measure?

CLIMATE CHANGE: GENETICALLY
MODIFIED ORGANISMS (GMO) AS A
MITIGATING MEASURE?
Intersessional Meeting of the Intergovernmental
Group on Tea
Rome, 5-6 May 2014
Cemal Atici, Economist, Trade and Markets Division, FAO
Introduction

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
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The land area under cultivation with genetically modified
organisms (GMOs) has grown steadily over the last two
decades.
Alleviation of the impacts of climate change and farmers
adaptation are some of the arguments for GM crops.
However, current systems of production, handling and
transportation can lead to the unintentional low level
presence of GMOs in non-GMO consignments.
National policies and regulations that govern the
acceptability of GM crops vary, and a number of traderelated problems have been reported as a result of the
unintentional mixing of GM and non-GM crops.

FAO conducted a survey to increase understanding of
the extent of trade disruption due to the low level
presence (LLP) and adventitious presence (AP) of
GMOs.
Tradeoffs of GM Crops
Positive:

Higher Productivity (food security),

Resilience to climatic (drought resistance) and
salinity) problems, less input use.

Nutritionally enriched products.
other related (pests, herbs,
Negative:

Higher initial research and input (seed) cost,

Concerns for health (human & animal),
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Environment concerns (loss of biodiversity, impact on non-target organisms),
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Unintentional gene transfer from GM to non-GM crops

Low level presence and adventitious presence

Limited access to GM seeds (Patenting),
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Lack of information for consumers (Labeling),
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Concerns of traditional farmers, ethical concerns,

Lack of related regulations and technical capacities to detect GMOs in trade.


An IFPRI Study (2009)1 found that even with no climate
change world prices for many agricultural commodities
(rice, wheat, maize) will increase by 39-63 % in 2050
driven by population, income growth, biofuels).
Climate change (rise in temperature and change in
rainfall patterns) results in additional price increases by
11-100 % even after CO2 fertilization effect.
1Climate
Change: Impact on Agriculture and Cost of Adaptation, IFPRI, 2009
Source: FAOSTAT, 2014
Change in average maximum temperature (Co), 2000–2050
Change in precipitation (mm), 2000–2050
Source: IFPRI, 2009
Global area of GM crops, 1996–2012
180
Area, million hectares
160
140
120
100
80
60
40
20
0
Source: Compiled from James, 2010, 2013.
Share of countries in global GM cropping area, 2010
China Paraguay
2%
2%
Canada
2%
India
6%
Pakistan
2%
South Africa
2%
Others
6%
USA
45%
Argentina
16%
Brazil
17%
Source: Compiled from James, 2010.
International Guidelines/Agreements Related to the
GMOs
Food and feed:
 The Codex Alimentarius Commission
 OECD Task Force for the Safety of Novel Foods and
Feeds.
Environment:
 The OECD’s Working Group on Harmonization of
Regulatory Oversight in Biotechnology
 The Cartagena Protocol on Biosafety to the Convention
on Biological Diversity (CBD)
Trade:
 The Agreement on the Application of Sanitary and
Phytosanitary Measures (the SPS Agreement) is an
international treaty of the World Trade Organization
(WTO)
 Agreement on Technical Barriers to Trade (TBT)
 Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPs)
Economic Effects of GM Crops
Source
Method
Commodity analysed
Findings
Anderson and
Jackson (2005)
Global Trade
Analysis Project
GM varieties of
various grains and
oilseeds
Sobolevsky et al.
(2005)
Partial equilibrium
four-region world
trade model
Roundup Ready
(RR) soybean
Gross economic benefits to farmers
from adopting GM crops under a
variety of scenarios could be positive
even if the strict controls on imports
from GM-adopting countries imposed
by the European Union (EU) are
maintained.
The USA, Argentina, Brazil, and the
Rest of the World all gain from the
introduction of RR soybeans although
some groups may lose.
Multi-country general GM field crops
The gains associated with the adoption
equilibrium model
(rice, wheat, maize, of GM food crops largely exceed any
soybean and
type of potential trade losses these
cotton)
countries may incur. Adopting GM
crops also allows net importing
countries to reduce their imports
greatly.
Vigani et al. (2009) Trade flow
Food trade
Bilateral variations in GMO regulations
negatively affect trade flows. Main
impeding factors are the approval
process,
labelling
policies
and
traceability requirements.
Gruere et al.
(2007)
Bouet et al. (2011) Spatial equilibrium
model
Gruere (2009)
Analytical model
Kalaitzandonakes
et al. (2011)
Spatial equilibrium
model
Maize and soybean Information requirements (labelling)
would have greater effects on trade,
creating significant trade distortion that
diverts exports from their original
destination.
Maize and soybean A GM ban is the most costly option,
and can only be justified if the country
does not import that crop or perceived
risks exceed the cost. An LLP policy
with a 0 percent tolerance level is
almost identical.
Maize
Smaller Latin American importing
countries are likely to experience 2–8
percent price increases as a result of
trade disruptions, whereas larger
importers would experience price
increases of 9–20 percent caused by a
zero tolerance level for LLP.
Results of the FAO Survey on Accidental Presence of Low Levels
of Genetically Modified Organisms (GMOs) in Internationally
Traded Food Crops, 2013
FAO-LLP Survey Response Rate
Total Number of Surveys Sent
Total Number of Responses
Received
Response Rate, %
193
64
33.16
GM Crops Production
No
53%
Yes - Research
only (field trials)
24%
Yes – Both
research and
commercial
production
23%
GM Regulation
No, but we
plan to have
one in the
future.
11%
No, we don’t
No Answer
have one.
3%
8%
Yes
78%
Zero Tolerance for Unauthorized GM Crops
No Answer
6%
No
22%
Yes
72%
Food Safety Assessment
Combination of
above
17%
We do not conduct
food safety
assessment of GM
crops
24%
No Answer
8%
According to the
international
guidelines (Codex
principles and
guidelines)
According to the
9%
domestic guidelines
9%
According to the
other guidelines
(regional, private,
trade-partner
countries’ etc)
33%
LLP Threshold
No Answer
13%
No
50%
Yes
37%
Technical Capacity To Detect GMOs
According to Codex Guidelines
No Answer
22%
No
20%
Yes
33%
No, but
capacity is
being
developed
14%
Partially
11%
LLP/AP in Imports in the last 10
Years
No Answer
8%
Yes
37%
No
55%
Number of LLP/AP incidents by country of origin (exporting
countries)
Brazil Romania S. Italy
Africa 1%
1%
1%
Others
France Pakistan
1% Vietnam
Chile
3%
Colombia
1%
1%
1%
1%
1%
Thailand
2%
Argentina
3%
US
34%
Canada
20%
China
29%
LLP/AP Incidents by Commodity, 20002012
60
50
Numbers
40
30
20
10
0
Number of LLP/AP Incidents and Trend (20002012)
80
70
Numbers
60
50
40
30
20
10
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Importance of Factors Contributing to the Trade Risks
Posed by LLP/AP
Unintentional movement/development
of unauthorized GM crops/ seed
Different policies on GMOs exist between trading
partners
2; 4%
1; 12%
1; 8%
3; 15%
5; 56%
2; 13%
5; 49%
3; 14%
4; 17%
4; 12%
Different timing (and duration of the process) for
approval of GM crops
1; 10%
2; 6%
5; 48%
3; 25%
4; 11%
Econometric Analysis of the Effect of LLP on Trade
Flow
lnEij =
lnα + β1lnYi + β2 lnY j + β3lnDij + β4 lnReg -Index j + β5 lnLLPj + lnεij
E: Bilateral export flow between country i and j, in
volume,
Yi: GDP of exporting country,
Yj: GDP of importing country,
Dij: Distance between exporting and importing country,
Reg-Indexj: GMO Regulation Index of importing country,
LLPj: LLP Threshold of the importing country,
εij: Residual term.
12


RI
=
Regulation Items 
∑

i =1




Min:0
Regulation − Index : 

Max:10





 Adjusted Index:100

ln (X ij /YiY j ) = β 0 + β1 ln Tij + ( 1 − σ) ln Pi + ( 1 − σ) ln Pj + ε ij
Table 4. Composition of GMO Regulation Index
Numbe
r Item
1 Existence of Food, Feed and Environmental Regulation
2 Safety Risk Assessment
3 Labelling Requirement
4 LLP Test Requirement
5 Traceability Requirement
6 Socio-Economic Assessment
7 Existence of Zero-Tolerance for Unauthorized GM Crops
Conducting Food, Feed, and Environmental Safety Assessments According to
8 International Guidelines
9 Restrictiveness of Authorization Policy
10 Testing Requirement from Exporting Country
11 Technical Capacity to Detect GMOs
12 Detection Methods Utilized
Regression Result of Bilateral Maize Export Flow
[Model 1]
(GMO regulation
impact)
[Model 2]
(GMO regulation
impact)
[Model 3]
(LLP impact)
[Model 4]
(LLP impact)
–10.28
(–3.43***)
–
–10.68
(–3.99***)
–
–10.73
(–3.98***)
–
–
–
–
–0.68
(–3.94***)
–
Ln-Pj
–
Ln-Dij
–0.97
(–8.68***)
–0.49
(–1.70*)
–0.69
(–3.76***)
0.28
(2.10**)
1.00
(10.21***)
0.84
(9.23***)
–0.97
(–8.68***)
–0.49
(–1.70*)
–
–0.69
(–4.08***)
–
Ln-Pi
–10.28
(–3.43***)
1.00
(10.20***)
0.84
(9.23***)
–1.70
(–7.72***)
–0.56
(–3.43***)
–
1.03
(10.47***)
0.86
(9.39***)
–0.92
(–8.20***)
–
1.01
(10.23***)
0.86
(9.44***)
–0.93
(–8.35***)
–
–0.17
(–1.48)
0.22
33.10***
1467
582
Constant
Ln-Yi
Ln-Yj
Ln-GDPCi
Ln-GDPCj
Ln-Reg-Indexj
Ln-LLPj
R2
F
Schwarz B.I.C.
N
0.23
0.23
–0.10
(–1.48)
0.22
28.21***
1468
582
28.21***
1468
582
32.63***
1467
582
Maize export flow regression with country fixed effects
(Dependent variable:
natural logarithm of the
ratio of export flow to
product of incomes)
Variable
Ln-Dij
[Model 6] (Regulation
impact)
[Model 7] (LLP impact)
–1.35***
(–11.94)
–1.48***
(–13.00)
–0.63**
(–2.25)
–
–
0.20*
(1.79)
R2
0.41
0.40
F
5.26***
5.12***
N
582
582
Ln-Reg-Indexj
Ln-LLPj
Conclusions
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The FAO Survey revealed that almost half of the
responding produce GM crops for commercial or
research purposes.
However, 67 percent of the respondents indicated that
they have no, or limited, technical capacity to detect
GMOs according to Codex guidelines.
Some incidents reported by importing countries related
to LLP/AP. Generally, such situations are handled
through rejection or market withdrawals by importers in
developed countries, but in some cases consignments
were accepted by some developing countries because of
the lack of regulation.
Restrictiveness of regulations, including zero tolerance,
does have a deterrent impact on maize trade. However,
the restrictive LLP threshold itself has a limited deterrent
effect on bilateral export flows in general.
IMPLICATIONS





Biotechnology can be used as a mitigating measure for
climate change. However, risks assessments (health,
environment etc.) should be made accordingly.
The occurrence of GMO related trade disruptions beyond
a certain level can lead to income loss for exporters and
consequently for producers, and consumers in importing
countries can face higher domestic prices when imports
are restricted.
Possible loss of export markets due to LLP/AP caused
by GM crops especially for developing countries would
be a major concern. Especially those countries that
depend on the export of (non-GM) that commodity.
Technical capacities should be developed/improved to
detect low levels of GMOs.
Biosafety/GM regulations should be designed optimally
such that they include risk assessments, liabilities,
labelling requirements, etc.
Thanks…