| We have been misled to believe there is no premium for non-GM canola but there is now clear evidence that premiums, or more appropriately GM discounts, are evident. Those not wanting to grow GM crops want to retain the choice to market on the consumer preferred market and insist on the GM industry taking responsibility for the market losses that may occur if GM crops are introduced.
Canada does not segregate and Canadian canola is sold as GM while Australian canola is sold as non-GM. Canada has dropped from a consistent US$32.68/tonne premium pre-GM to a $US30/tonne penalty and has difficulty in quitting ending stocks since adopting GM crops. This is clear evidence of market rejection to GM.
While Canada's main market for canola products (oil, meal and seed) is USA who is not GM sensitive, Australia's main markets are Japan, China and EU.
Nov 24th 2005, Graincorp Marketing Report "Recent sales to China from Canada have been at a $US30 discount to current prices being bid in NSW. Canada is expected to be a keen seller throughout our marketing campaign as they attempt to reduce potential ending stocks."
Premiums are difficult to guage when those not wanting GM food do not want it at any price. It is also difficult to assess comparitively when those countries growing GM canola do not differentiate their product as it is too difficult and too expensive to do so.
In 2001, the European Union, paid market premiums of up to A$12 - $14 per tonne for Australian non-GM canola. (Western Australia Department of Agriculture, Assessment of the International Trade for Genetically Modified Canola , March 2003, at 24.)
The issue with premiums is simple, those not wanting to grow GM crops do not want to market their product as GM and yet it is scientifically proven that it is impossible to grow uncontaminated crops near GM crops. It is not likely that any farmers will be able to market as "non-GM" or to sign the required contractual guarantees of no contamination because of the costs and liability for contamination recalls or rejected consignments. Therefore, it is unlikely that farmers can market on the "GM-free" or "non-GM" market as expected because this is a declaration that our crops are not contaminated which will be impossible to guarantee.
Quote from ABARE report "Genetically Modified Grains - Market Implications for Australian Grain Growers" "Canada is the only producer of GM canola, apart from small quantities produced in the United States." Canola, canola meal and oil are also exported to the United States which is not GM sensitive. Australia however must rely on markets that are GM sensitive. Japan is the largest importer of canola and a major customer for both Canada and Australia.
Prior to GM introduction, Canada received US $32.38/tonne premium over Australian canola between 1990-2000 (reference: hard data received from ABARE) -see graph below - note $US price. Since Jan 2001 this altered and premiums have been lost and in many cases recently, Australia now receives a premium over Canadian prices.
Japan is now Australia's largest canola market and there is a clear preference for GM-free produce.
According to MAFF's trade statistics:
http://www.maff.go.jp/toukei/sokuhou/data/yusyutugai2004/yusyutugai2004.xls
Year 2004
Japan imported canola from Canada: 1,684,000 tons for 65,547,000,000 JPY (3,892 JPY/ton)
Japan imported canola from Australia: 629,000 tons for 25,460,000,000 JPY (4,048 JPY/ton)
This equates to almost 5% premium for Australian canola from Japan in 2004.
Extract from: Trading Conditions for Genetically Modified Canola, Max Foster, ABARE "Price advantages for non-GM canola?"
"There is some evidence that the gap between Canadian and Australian canola prices has narrowed in recent years which is consistent with improved demand for non–GM canola (figure B). However, this narrowing could simply reflect the greater security of supply that has occurred with Australian canola over the same time and the continuing problems that Canada has had in disposing of a record canola production surge that occurred in 1998 and 1999."
"In a recent GRDC–funded research report by ABARE — see Genetically Modified Grains: Market Implications for Australian Grain Growers, ABARE Research Report 01.10 — it was estimated that the premium for non–GM canola over GM canola would have to be at least 10 per cent to offset the agronomic benefits of GM canola. At this stage, a premium of this level does not appear to be available on a wide scale in world markets. However, if Australia was to commercialise GM canola, there could be a marked reduction in the availability of non–GM canola, leading perhaps to stronger price premiums for non–GM canola."
"It was also concluded that if operating a mixed system of GM and non–GM canola requires elaborate identity preservation procedures to keep the two grain types separate in the marketing system, the agronomic benefits of GM canola may be outweighed by additional costs."
Source: Australian department of Forestry, Food and Agriculture (here)
The updated ABARE graph below has shown the gradual loss of premiums. 
Premiums have been explained away by pro-GM advocates as due to possible differences in oil content and an increase in freight rates but it is unlikely that this could explain more than a small proportion of the difference and only for a short term. See reasons given from the Canadian Canola Council of Canada. (here)
There is no reason why quality should decline in Canadian GM varieties to explain premium loss. If this was taken seriously, it could also be assumed that GM canola was of lower quality than non-GM.
On a personal note, my brother in law visited Canada and US on a business trip earlier this year and confirmed concerns regarding segregation difficulties, the need for completely separate supply chains for GM and non-GM produce, the lack of performance of GM, market rejection and a CAN$77 premium for high oil, non-GM canola. However much of the premium these farmers receive is absorbed by additional costs to verify and maintain a GM-free product.
A recent Choice consumer survey (here) of 645 members confirms the Australian consumer rejection of GM foods. Opinion on eating GM food:
I have serious concerns and very worried - 47%
I have some concerns and are somewhat worried - 37%
I have no concerns and not at all worried - 11%
I don't know enough about the issues to have an opinion - 5%
This survey also revealed that 75% of consumers want GM canola oil labelled. Our domestic market is significant, why would we want to jeopardise it?
Extract from the "WA government report of the Standing Committee on Environment and Public Affairs in relation to the Gene Technology Bill 2001 and the Gene Technology Amendment Bill 2001":
8.36 The preliminary results of Ms Baumann's survey of WA consumer's attitudes towards GM canola oil indicate that a large proportion (more than 50 per cent) of Western Australians would be willing to pay up to $1 more for non-GM canola oil. Respondents were "nearly uniform in their view that GM canola oil should be labelled GM."
8.37 ...The Committee met with a number of WA's key overseas customers and conducted a limited distribution of a questionnaire on export market attitudes to GMO's.
8.43 There was unanimity across the board that Australia currently has a 'clean and green image' in all of the countries suveyed. Japanese respondents were overwhelmingly of the view that the 'growing of genetically modified crops in Australia would affect its 'clean and green image'....
8.54 Respondents appeared to indicate that consumers are or would be willing to pay a premium for GM-free and organic products. The respondent from Korea noted that the premium that people were willing to pay would be between 15-20 per cent.
8.109 Information from trade buyers provided to the Committee stated that, while there was no price premium paid for non-GM canola in Japan, Australia was able to secure greater market access because it was producing non-GM canola.
8.111 The Committee notes that price premiums for non-GM grain exports are achievable in non-GM markets. For example, in Japan a labelled non-GM canola oil from Australian canola in 2001 sold at about a 34 per cent premium compared to the nation brand canola.
8.113 The Department's (WA Department of Agriculture) assessment on the international marketability of GM canola concluded that 10 per cent of WA's canola markets would be at risk of being lost should WA choose to adopt GM canola.
8.115 Includes Quote from Transcript of Evidence from key WA businessman, George Kailis "The Japanese Consumer Union et al has a paying membership of approximately 30 million consumers and is the largest consumer union in the world. The JCU has asked Australian farmers not to plant GMO's, because even though the Government is accepting GMOs into Japan, for whatever trade reasons, the consumers do not want it."
8.121 Includes quote from ABARE 2003 "It is easier to trade non-GM canola in the current market environment than it is to trade GM canola."
If Australia took the GM route, it is obvious that we could be receiving significantly less for our canola now. Those farmers not wanting to grow GM crops should not be expected to market on the GM market and should not be expected to be affected in any way. If farmers want to grow GM crops, they can have the choice to market on the consumer rejected GM market, but their choice must not impact on others.
Market access and economics is a very good reason for maintaining a GM-free status.
Julie Newman
Network of Concerned Farmers
(updated December 11th, 2005) |
