What to Know Before Planting GMO

1. What to Know Before Planting GMO Terry Hurley Telephone: 612-625-0216 E-Mail: thurley@dept.agecon.umn.edu

2. Overview • How Much GMO is Out There? • Production • Profitability • Risk • Marketing • Markets • Market Access • Market Premiums • What’s the Consumer Thinking? • Regulation • What’s Next

3. Bt Corn and Herbicide Tolerant (HT) Soybean Plantings Notes: Source = USDA/NASS. 2001 estimates represent planting intentions.

4. U.S. Distribution of Bt Corn* * Represents the percentage of total corn acreage planted to Bt corn hybrids in counties in which > 50,000 total acres of corn were planted. (Source: Bt corn industry sales data as compiled by FSI, Inc., 1999)

5. Production Decisions For GMOs • Step 1: Evaluate the Tangibles • Increased Revenues/Decreased Costs • Decreased Revenues/Increased Costs • Partial Budget Analysis • Step 2: Evaluate the Intangibles • Increased Flexibility • Risk Management Benefits • Safer Handling • Environmental Safety • Product Quality

6. Exampleof Partial Budget Analysis Are Roundup Ready soybeans more profitable?

7. Exampleof Partial Budget Analysis Is Bt corn more profitable?

8. Conclusions of Partial Budget Analysis • HT Soybeans • Change in net returns are less than 0, so the conventional soybeans are more profitable under the assumptions of the analysis. • What factors may be missing in this analysis? • Bt Corn • Change in net returns are greater than 0, so Bt is more profitable under the assumptions of the analysis. • Conventional corn could be more profitable with market premiums in excess of $0.12 a bushel. • What factors may be missing in this analysis?

9. Should growers ever adopt GMOs when conventional varieties are equally or more profitable per acre? • Some Intangibles May Increase Profitability Indirectly • Increased flexibility • Product Quality • Others Do Not • Risk Management • Environmental Safety • Emphasizing Intangibles That Do Not Affect Profitability Can Reduce Competitiveness

10. Recent Estimates of Yield Loss From European Corn Borer

11. Markets • Foreign Opposition Segments Markets • Market Premiums Are Possible • What Growers Plant Determines Market Access • Greater Market Access Does Not Guarantee Premiums

12. Market Access GM Export Market GM Export Market GM Export Market Non-GM Market Non-GM Market Non-GM Market GM Domestic Market GM Domestic Market GM Domestic Market Plant Unapproved for Export GM-Seed Plant Approved for Export GM-Seed Plant Non-GM Seed

13. Market Approval and Access • Market approval and access is based on Events. • Events are defined by how the plant is different. • Proteins • Promoters • All hybrids are based on an Event. • Determining approval status of a hybrid requires knowing the approval status of the Event on which the hybrid is based. • Elevators Accepting Non-EU Approved Hybrids • http://asta.farmprogress.com/

15. Status of Current and New Approvals • US EPA approvals for Bt corn Events are conditional. • Original Expiration: January and April of 2001 • Extensions to September 30, 2001 • October Scientific Advisory Panel • Bt176 Registration Will Not Be Renewed • Japanese Approvals Being Reviewed Under New Regulations • Moratorium Continues in the EU

16. Market Premiums For Non-GM • Market Premiums Arise From Excess Demand • If there is enough supply to meet demands, market premiums unlikely. • Non-GM premiums are out there, but not widely available. • Tokyo Grain Exchange Offer Non-GM Futures • Good barometer of market conditions for Non-GM soybean. • No Consistent Source of Market Premiums for Non-GM Corn

17. U.S. Soybean Use

18. U.S. Corn Use

19. http://www.tge.or.jp/index.html

20. http://www.tge.or.jp/index.html

21. Customer Attitudes • Most US Consumers Seem to Support Biotechnology • Support Fell in Fall 1999 • Little/No Rebound Since • Affect of StarLink Not Clear • Exports Have Not Changed Dramatically As Percentage of US Supply • Some Evidence Growth May Have Declined • USDA Reports StarLink Contamination Hurt Exports • Many EU Supermarkets Going Non-GM Livestock

27. Export Trends

28. March 1, 2001 U.S. Exports and Outstanding Export Sales • Japan -17% • South Korea -43% • Taiwan +1% • Africa -4% • Western Hemisphere +5% • Total -10% • Pre-StarLink Projections +13 to 17% Source: Robert Wisner, Extension Economist, Iowa State University

29. Regulation • United States Department of Agriculture • Animal and Plant Health Inspection Service (APHIS) • Department of Health and Human Services • Food and Drug Administration (FDA) • Environmental Protection Agency (EPA) • GMO Labeling Around the World

30. Animal and Plant Health Inspection Service • Protects American Agriculture Against Pests and Disease • Regulates Movement, Importation, and Testing of GM • Approves Petitions for Non-regulated Status • Required for Commercialization

31. Food and Drug Administration • Governs the Safety and Labeling of Drugs, Food, and Feed • Can Remove Products From Market • Voluntary/Mandatory Consultations • Labeling • Allergens-Yes • Substantial Equivalents-No

32. Environmental Protection Agency • Governs Pesticide and Herbicide Use • Regulates Plant-Pesticides (Bt Crops) • Treats Plant-Pesticides Different From Other Pesticides • Planning New Guidelines • Currently, Case by Case

33. Insect Resistance Management Requirements for Bt Corn in Minnesota • At Least 20% Conventional Corn Refuge • Spraying for European Corn Borer, and/or Corn Earworm Based on Economic Thresholds Is Permitted on Refuge • Refuge Can Be in External Blocks, on the Edges or Headlands of Fields, or in Strips in a Field of Greater Than 6 Rows • Refuge Must Be Planted Within 1/2 Mile of the Bt Field • 1/4 Mile is Preferable If Refuge May Be Sprayed Source:http://www.epa.gov/pesticides/biopesticides/otherdocs/bt_corn_ltr.htm

34. GMO Labeling Around the World • Labeling Scheduled to Be in Place For 2001 Harvest: • European Union (1% Tolerance) • Japan (5% Tolerance) • South Korea (3% Tolerance) • Labeling Pending: • Philippines • Australia (1% Tolerance) • New Zealand (1% Tolerance) • Thailand • Malaysia • Hong Kong (5% Tolerance) • Labeling Encouraged by Global Biosafety Protocol Treaty Source: Robert Wisner, Extension Economist, Iowa State University and Rodney Williamson, Iowa Corn Growers Association

35. Final Notes • Bt Corn and HT Soybeans May Be Profitable, But No Guarantee-Growers MustWork the Numbers For Their Operation • Primary Value of Bt Corn is Yield Protection-Sensitive to Commodity Prices and Highly Variable Pest Infestations • Primary Value of HT Soybeans is Cost Savings and Flexibility-Insensitive to Commodity Prices and Weeds Are More Consistent Problem • Growers Need to Know • Hybrid Event • Market Options • Planting Restrictions • Growers Need to Watch • Consumer Attitudes • What Neighbors Grow

36. What’s Next? • Corn Rootworm Control • Corn Rootworm and European Corn Borer Control • Multiple Toxin European Corn Borer Control • Time Line is Still Uncertain • StarLink Has Slowed Things Down • Monsanto Has Product Ready to Go • Pioneer Has Product that is Close

37. Thank you for your time!