Brookes

Using biotechnology in Hungarian agriculture: possible farm level impacts

Graham Brookes PG Economics UK www.pgeconomics.co.uk

Coverage „ Global

context & impact „ Possible farm level economic & environmental impacts in Hungary „ Co-existence issues

Global plantings to GM crops 19962004 (‘000 hectares) 90,000 80,000 '000 hectares

70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 1996 1997 1998 1999 2000 2001 2002 2003 2004

Global farm level economic impact 2004: farm income benefit $6.5 billion „ 2004: equiv to adding value to global production of these crops of 3.1% to 4.2% „ Since 1996, farm income gain = $27 billion „

Farm income gains: by country: 1996-2004 million $ Canada $807 million increase United States $10.7 billion increase

China $4.2 billion increase

Mexico $41 million increase

India $124 million increase

— Brazil $829 million increase — Paraguay $80 million increase South Africa $56 million increase — Argentina $10.1 billion increase

Australia $70 million increase

Other farm level benefits GM HT crops

GM IR crops

Increased management flexibility/convenience

Production risk management tool

Less knock back

Energy cost savings

Facilitation of no till practices

Machinery use savings

Cleaner crops = lower harvest cost & quality premia

Convenience benefit

Less damage in follow on crops

Improved crop quality Improved health & safety for farmers/workers

Impact on pesticide use „

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Significant reduction in global environmental impact of production agriculture Since 1996 use of pesticides down by 172 m kg (-6%) & associated environmental footprint 14% In 2004, reduction in volume of use (-42 million kg) is equivalent to 32% of total active ingredient use in EU arable crop production

Impact on greenhouse gas emissions Lower GHG emissions: 2 main sources:

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Reduced fuel use (less spraying & soil cultivation) = 1.1 billion kgs less co2 released 2004 GM HT crops facilitate no till systems = less soil preparation = additional soil carbon sequestration (2004: 9.4 billion kgs less co2 released) Total global benefit in 2004 = equivalent to removing 20% of UK cars from the road

Possible farm level economic impact in Hungary: focus on maize 3 pieces of technology: „ „

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Herbicide tolerance Insect resistance (Bt) to European corn borer Insect resistance to corn rootworm

See handouts for data supporting summary analysis in following slides

Potential commercial farm level impact of using GM technology (per ha) on grain maize crops in Hungary Herbicide tolerant (grain) maize

Insect resistant (grain) maize

Yield

No expected impact: possibly small improvement

+4.5% to +10% where economic losses currently incurred

Variable costs of production

A decrease of between 7.9% and 8.4% from lower costs of herbicides

An increase in variable costs of between 5.6% and 8.4% (the seed premium for the technology being greater than any costs savings from reduced insecticide use)

Gross margin profitability

+2.3% to +3%

+3.8% to +4.8% GM IR targeting the corn borer and +9.3% GM IR targeting corn rootworm

Other impacts

Increased management flexibility and better weed control

Increased management flexibility, reduced production risk, lower levels of mycotoxins

Possible adoption % (in terms of total grain maize crop)

40%

10% for GM IR targeting the European corn borer, 460,000 ha for GM IR targeting corn rootworm

National level impact on farm income (baseline 2004)

+6.3 to +8.27 million euros

+2.66 to +3.34 million euros: GM IR targeting corn borer +24.2 million euros: GM IR targeting corn rootworm

What is co-existence? „

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Co-existence relates to ‘the economic

consequences of adventitious presence of material from one crop in another and the principle that farmers should be able to cultivate freely the agricultural crops they choose, be it GM crops, conventional or organic crops’ (EU Commission 2003) Is not about product/crop safety but about production and marketing of crops approved for use

Is co-existence an issue? Is only an issue where there is demand for non GM

Co-existence on the farm today: nothing new „ Separation

of space „ Separation of time „ Communication with neighbours „ Good farm practices

Co-existence experience in Spain No economic or commercial problems have occurred „

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Mainstream buyers of non GM (starch) have no problem in sourcing non GM even in main areas where GM is grown (including from co-ops with GM and non GM grower members) Isolated instances of GM presence in organic crops cited in 2001 – lack of data to support claims – likely cause use of conventional seed (not tested)

Co-existence requires co-operation „

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Co-existence requires ‘give & take’ on all sides Emphasis should not be placed all on GM sector

Key principles for good coexistence Context Consistency Proportionality Equity Practicality

Developing co-existence guidelines/rules in any country, region, locality „

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Apply five general principles – context, consistency, proportionality, equity & practicality Adapt these principles to local, case by case crop production in a region

Concluding comments „ „ „ „

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Benefit from GM crop adoption varies with level of pest & weed problems = varies by region and year Offers substantial benefits to some farmers but of marginal benefit to others = not a technology for all farmers Main benefits to the farmer; higher yield, improved farm profitability, convenience, risk management and less exposure to pesticides Main benefits to society: contribution to lower costs/real prices, improved grain quality (less mycotoxins) and improved environmental ‘foot print’ (less spraying) Co-existence is nothing new: farmers have been implementing effective measures for many years on specialist crops GM & non GM crop co-existence has not been a problem to date Tools exist to implement co-existence Spain is a model of how co-existence works successfully – other member states should copy