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 1996-
2004 (‘000 hectares)
90,000
80,000
70,000
'000 hectares

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 Australia
$80 million increase South Africa $70 million increase
— Argentina $56 million increase
$10.1 billion increase
 Other farm level benefits
GM HT crops
Increased management
flexibility/convenience
Less knock back
Facilitation of no till practices
Cleaner crops = lower harvest cost &
quality premia
Less damage in follow on crops
GM IR crops
Production risk management tool
Energy cost savings
Machinery use savings
Convenience benefit
Improved crop quality
Improved health & safety for
farmers/workers
 Impact on pesticide use
„ 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:
„ 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:
„ 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 A decrease of between 7.9% and 8.4% from lower An increase in variable costs of between 5.6%
production costs of herbicides and 8.4% (the seed premium for the
technology being greater than any costs
savings from reduced insecticide use)
Gross margin +2.3% to +3% +3.8% to +4.8% GM IR targeting the corn
profitability borer and +9.3% GM IR targeting corn
rootworm
Other impacts Increased management flexibility and better weed Increased management flexibility, reduced
control production risk, lower levels of mycotoxins

Possible adoption % 40% 10% for GM IR targeting the European corn

(in terms of total borer, 460,000 ha for GM IR targeting corn
grain maize crop) rootworm
National level impact +6.3 to +8.27 million euros +2.66 to +3.34 million euros: GM IR targeting
on farm income corn borer
(baseline 2004) +24.2 million euros: GM IR targeting corn
rootworm
 What is co-existence?
„ 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

„ 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

„ Co-existence requires ‘give & take’ on all

sides

„ Emphasis should not be placed all on GM

sector
Key principles for good co-
existence
Context
Consistency
Proportionality
Equity
Practicality
 Developing co-existence
guidelines/rules in any country,
region, locality
„ Apply five general principles –
context, consistency, proportionality,
equity & practicality

„ Adapt these principles to local, case

by case crop production in a region
 Concluding comments
„ 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