Genetically Modified Marketing Mess

Actions of importing countries, most notably the European Union (EU), to delay approval or refuse to accept genetically modified organism (GMO) grains continues to cause controversy. Some argue that these delays are unfair trade practices based on scare tactics. Others blame government bureaucratic processes. But there are those who appear to profess serious concerns about manipulating genetic material and its impact on nature and food safety. An example of this is a statement by England’s Prince Charles, " --- genetic modification of crops is taking mankind into realms that belong to God, and God alone." While there is little evidence to support many of these claims, those expressing them state they don’t want to take chances with nature and food safety.

These kinds of statements aren’t limited to Europeans; individuals and groups in this country have made similar statements. Criticisms of GMOs are also often voiced by those critical of corporate consolidation in agriculture or expressing environmental concerns. In contrast plant breeders state that they aren’t "playing God" and the GMO processes allow them to improve plant characteristics, improve food safety and protect the environment through reduced pesticide use.

"Produce what the market wants!" "The EU is one of our customers. If they don’t want GMOs, then produce what they want," argue those questioning the use of GMOs. Some even charge that the use of GMO seeds is a practice sold to greedy farmers, by large corporations, which aren’t paying any attention to what the consumer really wants. However, most producers would argue that we aren't greedy, just trying to efficiently manage low prices, production costs and tight margins.

What is the market saying? Not much. At least, not yet. A few grain companies have announced that they won't take some GMO grains for export. Others have announced that they will accept them. This will cause confusion on what can be delivered where and how do you keep it separate. Refusing GMOs is easier when grain supplies are burdensome. What happens when supplies get tight? Not surprisingly, chemical companies and commodity groups have been promoting export markets and seeking GMO approvals. But very little has been said about discounts for GMO grains or premiums for non-GMO grains. ADM did announce an 18 cent premium (based on Decatur, IL cash price) for the STS non-genetically altered soybeans. However, the markets aren't answering the questions of supply and demand — at least not clearly. How much of a premium are consumers willing to pay in order to acquire Non-GMO grain (demand)? How much premium do producers need to give up the production benefits that GMOs offer and compensate them for the extra costs associated with keeping Non-GMOs separate (supply)?

The bottom line will probably be the "bottom line." Short of forced political solutions through regulation, it’s up to the markets. Profitability will eventually be the deciding factor for most producers. Non-GMO grain demand will have to express itself in the form of price premiums. Otherwise, it appears that the market is saying that efficient production using GMO technology is still OK. -- Melvin

Decisive Marketing - July 2, 1999
http://outreach.missouri.edu/agconnection/DCT/DM990702.html -- Revised: April 20, 2004
breesm@missouri.edu