The International Consortium on Agricultural Biotechnology Research (ICABR)


How do agricultural policies in Europe affect global gains from GMO technology?

Kym Anderson,
Chantal Nielsen,
University of Adelaide,

Genetically modified crop varieties allegedly promise benefits to both farmers and consumers, and may also lower damage to the natural environment, for example by reducing pesticide use. But at the same time some other environmental issues, together with food safety and ethical concerns with the production and use of GMOs (genetically modified organisms), are being raised as potential negative aspects of GMOs. The most extreme opponents – particularly in Western Europe – want to see GM products totally excluded from production and consumption in their country. The national economic and world trade implications of some countries using GMO varieties in crop production will depend not only on which countries choose to adopt them (i.e. their importance in world production, consumption and trade) but also on the existing (non-GMO-specific) agricultural policies in affected markets. The use of genetically modified crop varieties is currently most widespread in the maize and soybean sectors – sectors that are relatively heavily protected and supported in Western Europe. This paper uses a well-received empirical model of the global economy (GTAP) to quantify the effects on production, prices, trade patterns and national welfare of selected countries enjoying an assumed degree of productivity growth in the maize and soybean sectors from adopting GMO crops. The effects of this cost-reducing technology are first explored in a situation characterised by the existing distortionary policies in Western Europe and then in a situation where agricultural policies in Western Europe are completely liberalised. In both cases we investigate the effects of Western Europe refraining from using GMO technology in its own production but without imposing trade restrictions on GM products for consumption as food or feed or for processing. The estimated implications for various countries’ participation in world agricultural trade, and for their economic welfare, are highlighted.

Key words: GMOs, benefits of R&D, agricultural and trade policies

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