Consumers are rejecting GM products and accordingly require GM to be segregated from non-GM, which is virtually impossible and very expensive to achieve throughout the entire supply chain.
As farmers, it is of great concern that conventional farmers may be effectively forced to market our produce on the GM market due to excessive costs and liabilities.
It is unlikely that Australia can market all of its produce long term on the GM market and yet economics is not considered a reason for rejection of licenses. On commercial release, if Australia markets as GM, we could risk losing major markets and yet this decision is irreversible.
It is debated that "there is no problem with GM canola markets as there is no GM DNA in the finished product." This is a misleading statement as farmers sell canola seed, not canola oil, and GM is detectable to extremely low levels in the seed we export. There is also supposed acceptance of a 1% tolerance level and yet this is not a market reality - to sell a labelled product as "non-GM" or "GM-free" can be reasonably assumed to be a guarantee of no GM contamination.
Both China and European Union will soon introduce labelling of oils derived from GM products and this has the potential to severely impact on market access. Even if half of the consumers will tolerate GM labelled products, there will rarely be a choice between both. The retail outlet will stock the fastest moving item and it will not be the GM product. This label preference could turn a 50% consumer rejection to a 100% market rejection.
Market access is not dictated by governments but by consumers. Many retailers have responded to the demand by advertising their products as GM-free, including entire supermarket chains refusing to stock GM products. Consumers will not be forced to buy GM if they do not want to, they will turn to alternative oils.
Some reports show consumers are likely to pay up to 50% more for non-GM canola oil, see reference. While some premiums are being paid in Canada for non-GM (see here) and evidence of premiums have been revealed in the WA Ag Dept survey showing a 10% premium for EU preference for non-GM, premiums are not entirely relevent to the debate as markets not wanting GM, do not want it at any price, and this becomes a market access issue.
The recent introduction of healthy alternative High Erucic Acid Rapeseed and High Oleic Acid canola are attracting premiums of $US 27-40/tonne. The premiums that may be available for the Non-GM production of HEA and HOA varieties may be under threat if they are to be sold as GM due to market rejection.
Main Canola Markets based on a 5yr average 1997-2001 Bureau of Statistics: China: 37%, Japan: 29%, European Union: 13%
China: 37%
Has not yet officially approved GM canola and require a guarantee of the health and safety of the product prior to acceptance. It must be noted that even the American FDA will not guarantee the health and safety of GM products. Rejection is based on a zero tolerance of contamination and there is concern that safety interim certificates may be used as a bargaining chip for negotiating lower prices for contaminated products. Canada is faced with uncertainty regarding continuation of safety interim certificates (see article here)
Chinese markets are price sensitive and alternative cooking oil sources are used in preference if the price is too high.
China will be Introducing strict labelling policy soon to include the labelling of canola oil. (See article here)
Japan: 29%
Japan is a diplomatic importer and imports quantities appropriate to percentage of world trade. While canola is not differentiated by consumers by labelling, there is security that GM canola will be purchased on an equal basis with non-GM canola. There is increasing unrest regarding consumption of GM products which may lead to a demand for differentiation at a later date.
Canada is the worlds largest exporter of canola and Japan is the worlds largest importer. Japan relies on supply from Canada and Canada does not segregate their product and it is assumed that all Canadian canola is GM (unless organic).
Japanese consumers have shown a preference for non-GM and if GM’s are to be introduced to Australia, there is a need for a strict traceable and auditable identity preservation system in order to sell non-GM to Japan. Some Japanese buyers have shown interest in purchasing from WA in preference to Canada due to its non-GM status. (more)
Some smaller mills have been dedicated to purely non-GM canola but the largest capacity mills have found it is too expensive to segregate as their production runs require boilers to be lit 90-120 days at a time and accessing a consistent supply of enough non-GM canola for a run is not possible.
Jusco is the third largest supermarket chain and Jusco's private label non-GMO canola oil (from Australian canola) currently represents about 10 to 20% of their sales volume and is sold at about a 34% premium compared to the national brand canola. There are costs involved to market a product as non-GMO but it proves that consumer non-acceptance is strong enough to gain premiums for retailers which will ensure market preference for non-GM.
European Union: 13%
EU strongly reject GM food and Australia has picked up this market due to our GM-free status. EU are in the process of getting extremely strict labelling legislation in place including the labelling of oils. There are also plans to provide a strict traceable and auditable identity preservation system covering stock fed GM products. See http://europa.eu.int/eur lex/en/consleg/main/1998/en_1998R1139_index.html
Consumer polls show 60-95% of consumers reject GM foods and this is expected to increase if EU is forced to accept GM’s prematurely by the US (surprisingly with Australia’s support) using WTO intervention.
Extracts from the WA Ag Dept market report show – The European Union market paid premiums during 2001 for imports of non-GM canola, following their relatively poor canola crop in 2000. Australia is the main export source of non-GM canola for the EU and could benefit from the premiums. It was reported in August 2000 that European buyers paid amounts up to US$5.00 per tonne premium on a 150,000 tonne cargo of Australian non-GM canola (Foster, 2000). In October 2001, the EU was offering bids to purchase non-GM canola and was prepared to pay A$12 to $14 per tonne premiums (GPWA, 2001). Portmann and Tucek (2001) state market signals suggest that there is no more than A$10 per tonne premium for the non-GM canola crop, but also commented that it is unlikely that the real price differential will be seen until there is a shortage of non-GM product.
Domestic markets: 80% of Australian canola is exported and the remaining 20% is processed or used domestically. There has been a strong demand for GM-free from domestic markets (more) and (more), including the use of canola oil on vineyards for disease control. (More)
Domestically, the largest buyer of fats and oils grown or processed in Australia, Goodman Fielder, has announced that it would purchase only oils derived from conventional canola, because their consumers weren't interested in purchasing GM products.
There are many companies rejecting GM from their entire food chain including processed oils and animal feed. These include: Unilever, Dick Smith Foods, Heinz Watties, Arnotts Campbells, Burger King, Berri, Murray Goulburn, National Foods. more (here)
Consumer polls:
Foster M. (2002). Genetically Modified Grains. ABARE Research Report 01.10
"Consumer attitudes appear to be hardening against GM products, even in North America where consumption of GM grains has been very large. According to Angus Reid Group 2000, US consumers with negative views grew from 45 percent of the population in 1998 to 51 percent in 2000. The trend is even more pronounced in Canada – 59 percent of consumers in 2000 held negative views about GM foods, compared with 45 percent in 1998"
"Proportion of Consumers who see the trend toward genetically modified foods as negative" - Brazil 45%, United States 51%, Australia 51%, United Kingdom 58%, Canada 59%, France 70%, Germany 72%, Japan 82%. (Interpreted from Foster M. (2002). Genetically Modified Grains. ABARE Research Report 01.10 pp29)
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?
