Datum: 26.11.98 21:49
Genetically modified crops spell trouble on the farm
The article below on GM crops appeared in the November/December
1998 edition
of CSM (Chartered Surveyor Monthly), the official journal of the
Royal
Institution of Chartered Surveyors. The RICS has 90,000 members
world-wide
practicing in over 100 countries, the majority of whom receive
the journal.
Amongst other services Rural Practice Chartered Surveyors provide
land
management advice to owners and occupiers of agricultural land
throughout
the UK.
A copy of the article is also available on the RICS web site at
http://www.rics.org.uk/csm/ . (RICS home page is at
www.rics.org.uk )
The printed version of the article is also accompanied by the
following
quotation from a speech given by Jeff Rooker, minister of state
for food
safety, House of Commons, 30 July 1998:
"I accept the argument that genetic modification is not
simply speeding up
the natural process. It cannot be when genes are mixed from
different
species. There is some comfort in the regulatory process for
medicine
which, I admit, is not in place for food and
agriculture....."
CSM confirm that the article may be reproduced in any other
journal or
publication provided its original publication source is
acknowledged.
The RICS, in London, can be contacted on +44 (0)171 222 7000
(Natural Law Party Wessex)
(more information on GMO problems available at
www.btinternet.com/~nlpwessex )
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GENETICALLY MODIFIED CROPS SPELL TROUBLE ON THE FARM
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Mark Griffiths gives a personal view of the potential impact
of genetically modified crops on farm business finance
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The court of appeal case Regina v Secretary of State for the
Environment and
MAFF ex parte Watson this year drew attention to land management
complications which the introduction of genetically modified (GM)
crops into
British agriculture is likely to cause. One of these is that any
farm
certified by the Soil Association whose crops become
cross-pollinated by GM
crops will lose its organic status.
This, of course, has serious financial implications for growers
of organic
crops. But the implications do not stop there. Following the
initial lead
given by Iceland Frozen Foods, other big food retailers,
including
supermarket giants Tesco and Sainsbury, are seeking contracts
with suppliers
who can guarantee GM-free food. This requirement is being driven
by consumer
demand.
A fine crop of legal claims
Any farm that loses its GM-free status, either because of its
cropping
history or because of cross-pollination from a neighbour, could
be denied
access to important markets, and that may lead to legal claims
against
neighbours for GM contamination and to disputes between landlord
and tenant.
Although as yet untested in law, the growing of GM crops may also
prove to
be a breach of the `rules of good husbandry' included in many
tenancy
agreements. These require land to be kept `clean' and in `good
condition'. A
tenant could end up with a substantial claim for depreciation in
the value
of the landlord's freehold reversionary interest at the end of a
tenancy.
Both scenarios would be likely to have damaging effects on
freehold and
rental land values, and in so doing may also be of concern to
banks if
secured loans based on the collateral value of the land have been
made.
Just as arable land without IACS eligibility is worth less, so
land which
has lost GM-free status could suffer substantial capital value
depreciation.
Market economics and CAP reform
The reform of the CAP will mean that farm gate prices will be
much more
dependent on market demand for agricultural products. It will no
longer be
financially so attractive to sell products that the market does
not want
into intervention storage in the hope that the EU will release
them onto
world markets later, courtesy of generous export subsidies.
In the post-Agenda-2000 scenario, what the consumer wants and
does not want
becomes of critical importance to the farming industry in a way
that was
previously unknown.
A MORI poll published in June showed that 61% of people in the UK
do not
want to eat GM food ingredients. This figure is up by 8% from
January 1998,
and could rise still further on a crescendo of public debate.
Consumer resistance to genetically engineered food is driven by
concern over
the unknown long term effects of GM crops on public health and
the
environment, and a lack of confidence in the regulatory system
and the
biotechnology industry itself. Most such crops contain randomly
spliced
foreign genetic material from viruses, bacteria or other
organisms which
have never previously been an integral part of the human diet.
Now that Sainsbury and Tesco both claim that almost all their
own-brand
products are free of DNA and protein from GM soya, the GM-free
market can no
longer be considered fringe or niche (soya is in 60% of processed
foods). As
a result of these competitive forces, GM soya is now trading at a
15%
discount on world markets. If this scenario eventually causes GM
crops grown
in the UK to undergo a similar price penalty or to become
unsaleable on
domestic markets, the impact on farm profitability and land
values for GM
crop growers may be considerable.
Maintaining GM-free status
Most farms are still getting accustomed to the details of
standard crop
assurance schemes. Existing schemes, however, have not
anticipated the
traceability complications that will be thrown up by GM crops.
If and when GM crops get the green light in the UK, it is
inevitable that
the supermarkets, driven by consumer preference and competitive
pressures,
will seek GM-specific husbandry and traceability safeguards.
There are a number of special, practical problems associated with
GM crops.
First, in the field and in-store they look no different to
traditional crops
(there has already been one case of an experimental GM crop in
the south of
England being mixed mistakenly in-store with its non-GM
commercial crop
equivalent).
Second, some GM crops can be
cross-pollinated over 2.5km, so GM cropping on one farm may
affect the
GM-free status of another. And third, once GM crops have been
grown on a
farm, inherited modified genetic sequences in crop volunteers and
related
weed species (for example, Charlock, in the case of rape) are
likely to
persist on the farm even after the crop has been harvested and
sold. Once GM
crops have been grown on a farm, GM-free status could be lost for
ever.
Are GM crops worthwhile?
Ironically, the country which claims to be the greatest democracy
in the
world has introduced GM crops almost without consumers knowing.
In the USA, unlike Europe, there has been no prior public
consultation. And
there is no mandatory labelling or GM crop segregation either.
From the farmer's perspective, the case for growing GM crops
rests largely
on their ability to produce higher yields and margins. Initially
that was
what drove the expansion of their use in the USA. However, after
two or
three years of practical cropping experience in North America,
there is now
evidence that some GM crops may actually be producing lower
yields and
margins than their conventional equivalents. Certainly, there is
data to
this effect in the case of soya, oilseed rape and cotton.
A growing number of farmers in the USA and Canada are now
considering
whether or not they should cut back on their GM production.
Even if GM varieties in the UK perform better than those in the
US, careful
consideration needs to be given to the wider implications of
their use. The
possibility of lost markets and litigation with neighbours,
landlords,
banks, retailers and consumers is not to be dismissed lightly.
These are all issues which a valuer will have to take into
account when
advising owners and occupiers of agricultural land in future.
Assessment of
the way these factors affect the market for crops and land may
have a
crucial effect on both the farm trading account and its balance
sheet.
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[Additonal box with article]
CUSTOMER PROTOCOLS
What conditions will future customer protocols be likely to seek
from
farmers who wish to maintain their GM-free status?
Issues that are likely to need addressing include the following.
* Will farmers be allowed to grow certified GM-free crops on
units that also
grow or have grown GM crops?
* If so, what procedures will be required to ensure that the same
machinery,
handling equipment and storage facilities are not used for both
types of
crops. British sugar has already been told by major customers
that if any GM
beet passes through its factories _ whether segregated or not _
all orders
will be withdrawn and a switch made to imported cane supplies.
* Will farmers be eligible to grow certified GM-free crops on
units that are
next to holdings that are growing GMOs and therefore at risk from
contamination from cross-pollination?
* What insurance cover will farmers have to take out in the event
of GM
material being found in products that are claimed to be GM-free,
resulting
in the downgrading of product value, or claims for environmental
damage or
injury to health (if this should eventually arise?)
* How do such risks relate to the extension of food safety
`strict
liability' to unprocessed agricultural produce due in 1999?
* What insurance cover will farmers be required to take out in
the event
of[in case?]their GM crops pollinating a neighbour's crops in a
way that
causes loss of contracts or environmental damage, injury to
health, or
diminished property value?
Operating such stringent guidelines would clearly be a big task,
particularly when considering the issue of
cross-contamination from neighbouring farms. However, this issue
is unlikely
to go away.
Food Safety Minister Jeff Rooker has already implied in a
statement to the
Commons relating to issues raised by the Watson case that he is
prepared to
consider the introduction of statutory GM-free buffer zones
around organic
farms in order to protect the financial investment that the
government
itself is making to encourage the organic sector through
conversion schemes.
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CONTACT
Mark Griffiths FRICS, Dreweatt Neate, is European rural policy
adviser for
the RICS. Tel: +44 (0)1962 842233
: Next month, the NFU will give its view on the commercial
production of
GMOs in the UK
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[CSM EDITOR] As this issue of CSM went to press, the government
was
considering a three-year moratorium on the commercial production
of GMOs.
The move was welcomed by environmental groups, including English
Nature, but
crop producers threatened legal action if the ban were to go
ahead.