The International Consortium on Agricultural Biotechnology Research (ICABR)
Market access and market acceptance for biotechnology products
Grant Isaac, PhD Candidate, London School of Economics
Peter W.B. Phillips, Van Vliet Chair Professor, University of Saskatchewan
Faculty of Agriculture
Theme: V.A. Public perceptions: demand for products with altered attributes
Being able to produce biotechnology-based products is only one challenge facing the industry. The science, and resulting industrial restructuring, are largely underway. Now farmers, companies and countries producing biotechnology-based agri-food products face significant barriers to international markets and have yet to determine how to promote their products in order to create sustainable, profitable market shares.
The agri-food industry is beginning to consider that formal international market access is inextricably tied to the general public attitudes to agri-food products with biotechnologically-altered attributes. Many governments are slow-walking their import and production approvals as they attempt to sort out the science, economics and politics of these new products. Meanwhile, consumers generally admit they are either skeptical about or averse to consuming these products. The two perspectives have created virtual roadblocks to the introduction of these new products in many international markets. The immediate problem that faces farmers and companies wanting to produce and sell "genetically modified organisms" is that a number of countries have not yet accepted these "new" organisms for sale for human consumption. Currently, Canada, the US, Australia, Mexico, Japan and the EU all regulate the production, sale and importation of GMOs, but the main impediments to trade have been thrown up by the EU.
This paper examines the current regulatory state of affairs and the efforts being made to overcome these potential trade barriers at the World Trade Organization (in the TBT and SPS committees), at Codex Alimentaris and through the BioSafety Protocol negotiations,
The second, and perhaps more important issue, is weak consumer acceptance of GMOs. Recent surveys of consumers in Canada, the US and the EU suggest that consumer opinions about biotechnology-based agri-food products range from indifference to outright rejection. Positioning biotech agrifood products into such markets will be difficult, as adoption rates for usually short-lived innovative products need to be rapid to recoup the development costs. Furthermore, marketing mistakes by one company can create spill-overs for all other companies in the sector. Although each individual product may be the property of only one company, the ability to get paid for it will depend on how industry and governments manages the introduction of all new products.
This paper will examine the simultaneity between market access and market acceptance, in an effort to determine whether the biotechnology industry is facing only a short-term , transitional difficulty, caused by trying to sell new products (often with no visible incremental benefits to consumers), or whether it faces a long-term problem. One school of thought is that marketing problems may disappear when the new biotechnology "products" with differentiated characteristics begin to appear, because they have the potential to create visible value that consumers are willing to pay for. Biotechnology-based products, in contrast to commodities, have the potential to be branded, which increases the incentive for private firms to manage them more actively.