October 21, 2003



A Reported Loss of $1.7 Billion if Australia, New Zealand Reject GM Crops


A new report found that, should the farmers failed to adopt genetically modified (GM) crops, Australia and New Zealand's economies would suffer a loss of $1.7 billion.


Compiled by the Australian Bureau of Agricultural and Resource Economics (ABARE), the report found even if the European Union and some developing markets banned GM crops, Australia and New Zealand farmers would be at least $1.2 billion worse off.


ABARE found Australia and New Zealand could supply traditional crops to the EU, but that would not be enough to offset the benefits accruing to other countries which used GM technology.


Neither Australia nor New Zealand commercially grows GM food crops, although a genetically altered canola has been approved for use in Australia.


GM crops, although widely grown in the United States, Canada, China and Argentina, have been resisted strongly by the EU.


A study by British scientists released last week found in two of three cases, ecological biodiversity would occur with production of GM crops.


ABARE said pressure would increase, especially from developing countries, for GM crops which offered better yields and reduced use of expensive pesticides and herbicides.


It found world gross domestic product would increase USD 210 billion ($A304.6 billion) by 2015 through GM crop use.


Modelling three scenarios, including a ban on GM crops by Europe, it found Australian and New Zealand farmers would face a small loss of $251 million if there were worldwide adoption of the new technology.


But Australia and New Zealand would be economically devastated if both countries rejected GM crops outright.


"With biotechnology in crop production adopted widely around the world but not in Australia, Australian welfare could substantially decline owing to the large erosion of Australia's competitiveness in agricultural markets," ABARE said.


"If the EU insulates its domestic prices from import competition while adopting GM technologies, economic losses to the Australia-New Zealand region are estimated to increase up to $US1.7 billion ($A2.5 billion)."


ABARE said developing countries would face major population pressures over the next five decades, with the global population expected to reach 9.1 billion by 2050.


It said although some of the developing world's food problems were due to poor infrastructure and political instability; they also had to dramatically improve yields from crops.


"In a world of rising population, biotechnology shows considerable potential to contribute to both food security and environmental sustainability in developing countries," ABARE added.