Consumer acceptance of GM crops higher, says ABARE

By Jane Byrne

- Last updated on GMT

Related tags: Wheat

There is evidence that global markets for certified non-GM grain are contracting, as consumer acceptance of GM grains such as canola grows, claims the Australian Bureau of Agricultural and Resource Economics (ABARE).

However, significant niches in non-GM and organic grain for which premium prices are paid, are likely to be sustained into the future, said Max Foster, ABARE's principal food and agribusiness research officer in an ABARE 2010 conference paper released this week.

He notes that these niches are mainly in the high income regions of Japan, the EU and North America.

Canola oil is increasingly used in bakery products and in other food applications, driven by consumer demand for trans fat-free oils.

Premium pricing

And, according to Foster, the key drivers of price premiums are mandatory labelling of GM products in some key grain consuming countries (particularly high income countries), higher production costs for non-GM crops and the cost of identity preservation.

The current generation of GM grains deliver largely agronomic benefits, said the research officer. However, he points out that the next generation of GM crops is likely to have improved quality traits that command higher prices in world grain markets. “These include oilseeds with oil profiles altered to include higher proportions of healthy oils such as omega 3.”

Foster claims that the ability to patent these traits could mean that the owners of the technologies have the ability to influence supply of the enhanced quality grains to maintain their prices above world prices for conventional grains.

Organic demand

Demand for organic grains appears to be increasing rapidly, he continued, but this hike is starting from a small base of less than one per cent of world grain use in 2009.

Again, notes Foster, the markets for organic grains are mainly in the high income regions of the EU, Japan and North America.

The limited price information available for organic grains suggests premiums of around 100 per cent over conventional and GM grains, which largely reflects higher production costs of organic grains, he added.

GM wheat

A report last autumn concluded that GM technology could reverse the decline in US wheat production and safeguard supplies for the food chain.

The report - a collaboration of the National Association of Wheat Growers (NAWG), U.S. Wheat Associates, the North American Millers’ Association, the Independent Bakers Association and the Wheat Foods Council - outlines the competitiveness problem facing the wheat industry, which is on a long term cycle of decline.

It explains that the differential between net returns for wheat and other crops is growing and states that production will continue to decline unless biotechnology is used to improve wheat's competitiveness.

Consumer opposition

Historically, GM wheat has faced strong opposition from consumers and the food industry. As a result there has been little investment in GM wheat and there is currently no commercial production of genetically modified wheat anywhere in the world.

The report claims biotechnology would help improve tolerance to drought, increase yields and improve nutrient use efficiency, as well as increasing resistance to disease. It gives the example of stem rust pathogen Ug99, which has spread from Uganda to the Arabian Peninsula and is expected to eventually reach the US.

The report does acknowledge that “consumer opinion in foreign markets is more variable”. It stresses the importance of choice and says that non-GM wheat supplies will still be available to consumers, incentivised by market mechanisms such as premiums and discounts.

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