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GM wheat may be great, but Canada's markets don't want it

(Tuesday, Aug. 12, 2003 -- CropChoice news) -- Murray Fulton, Hartley Furtan, Richard Grey, George Khachatourians, The Globe and Mail, 08/11/03: The discovery of a cow with BSE, and the closing of markets for Canadian beef in countries such as Japan and the United States, has underscored the importance of export markets for western Canadian agriculture. The Canadian beef industry has suffered huge losses. But the lessons of this setback may not have been learned by other sectors.

There's also a very real, though far less well-known, danger that Canada could lose a number of extremely important export markets for western Canadian wheat -- markets that include the U.S., Europe and Japan. Wheat is the second-largest revenue earner for grain and livestock farmers in western Canada after beef, and most of western Canada's wheat production is sold outside of the country. But Canada's reputation as a wheat producer may be lost if the Canadian government approves the licensing and commercialization of genetically modified (GM) wheat.

The key issue in the debate over licensing GM wheat is not about whether GM wheat is safe to grow, or whether it provides agronomic benefits. There are small but significant benefits to both farmers and the company supplying the technology. Rather, the issue is how the customers for Canada's wheat feel about the desirability of the GM version.

There is mounting evidence that many consumers, bakers, and millers -- in both domestic and foreign markets -- just do not want to buy GM wheat.

Indeed, the United States Bakers Association has stated that its members do not want to purchase GM wheat. Overseas markets, such as Europe and Japan, have also gone on record expressing their wish to avoid purchasing GM wheat.

It would seem logical to adopt a strategy of letting wheat farmers choose between growing GM and non-GM wheat, depending on market signals. For one thing, GM wheat will provide agronomic benefits to some wheat producers. As for the price of GM wheat -- which we initially would expect to be lower than non-GM because of consumer resistance -- the market will sort out how much of each type is produced to best satisfy its requirements.

The trouble with this strategy is that it depends on farmers' ability to segregate the two types of wheat. But farmers' experience with GM canola shows how tricky that can be. And there's virtual consensus in the scientific community that it would be costly and difficult to keep GM and non-GM wheat separate for long.

If the two types of wheat can't be segregated, GM wheat will contaminate non-GM to the point where consumers will consider all Canadian wheat to be genetically modified. Then the price for all Canadian wheat will decline to the price of GM wheat, and markets such as Japan, the European Union and the U.S. will close their doors to Canadian wheat.

These markets are important to Canadian producers because they have either traditionally commanded higher prices (as in the case of Japan) or are nearby (the United States).

Thus, introducing GM versions of the crop can be expected to harm all markets for western Canadian wheat. And unlike BSE, this effect will likely be irreparable, because once GM wheat has been released, it will be impossible to remove it from the system.

Despite this, Ottawa has encouraged the registration of GM wheat in Canada. Why? One reason might be that the government believes that it can get away with a "damn the torpedoes" approach: If GM wheat is scientifically safe, then it should be licensed. Since Canada supports the research and development of GM food -- which in many cases is the proper policy decision -- the government wants to appear consistent. A second reason might be that the government, and other industry players, may be under pressure from private biotech companies to grant approval.

Is it possible that Agriculture and Agri-food Canada (AAFC) and the Minister of Agriculture are fully aware of the potential harm that their acceptance of GM wheat could cause wheat producers, but have nevertheless opted to do whatever could benefit the biotech companies?

Given the importance of future research investment to the overall Canadian economy, as well as the political support that the corporate sector can offer, the government may have decided it is desirable to let GM registration proceed. There are strong corporate links among biotech industries, the AAFC, provincial research programs, and a variety of farm groups. The result may be that corporate interests come before producer interests in the federal agenda.

A third explanation is that Ottawa has decided it has no role in considering the impact of new technologies on markets, and therefore should remain silent and let things run their course. The federal innovation agenda has been set, and related problems are ignored.

It's hard to reconcile this explanation with Ottawa's creation of the new Agricultural Policy Framework, under which the federal government is introducing and financially supporting "on-farm food-safety systems" and environmental farm plans to ensure that Canadian agricultural products command a premium in world markets. For the government to spend public resources to court consumers with promises of enhanced food safety (for food that is already safe), while at the same time introducing GM wheat -- which consumers fear -- is both hypocritical and wasteful.

Before moving ahead with promising new GM technology, Canada must have a full review and debate over its costs and benefits. Whatever the reasons for Ottawa's complacent decision to register GM wheat, the decision is of the utmost importance to the Prairie agricultural economy.

Murray Fulton, Hartley Furtan and Richard Grey are professors of agricultural economics at the University of Saskatchewan. George Khachatourians is professor of applied microbiology and food science.

Source: http://www.globeandmail.com/servlet/ArticleNews/TPStory/LAC/20030811/COWHEAT/TPComment/TopStories