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Economic report a furphy says Network.



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28 March 2003

Economic report a furphy says Network

- Dr Norton’s report does NOT take into account the increased costs of the required coexistence identity preservation system, liability cost increases, testing cost increases and export cost increases.

- Dr Norton’s estimate of up to $135M in benefits and a 10% productivity yield by the use of GM canola is in direct contrast to the AFFA Productivity Commission report (2002) which showed a researched productivity increase of only 1% and an increase in costs of at least 10%.

- It is interesting that the ‘model’ comparison calculated only a single pass of glyphosate when in practise Canadian growers use 2-3 passes of glyphosate in their crop.

- The report has relied on the comparison of wheat following canola, compared to wheat following wheat. This is an uncommon practise and farmers would expect a drop in yield.

- The report appears to have compounded the supposed benefits to produce an inaccurate figure. Extra yield would be due to early sowing and improved weed competitiveness, yet all figures have been added together in this report to quantify the benefits.

- We continue to be concerned about the lack of economic studies and call on the Government to assist in funding a fully independent, comprehensive economic analysis of the impact of GM canola on all farmers.

28 March 2003

NORTON’S REPORT A FURPHY SAYS NETWORK

28 March 2003: According to the Network of Concerned Farmers (NCF), the report issued mid-week by Dr Robert Norton, University of Melbourne on a possible $135M gain through the introduction of Genetically Modified (GM) canola is seriously flawed.

"Dr Norton’s report does NOT take into account the increased costs of the required coexistence identity preservation system, liability cost increases, testing cost increases and export cost increases," Mrs Julie Newman, WA farmer, grains processor and NCF member said.

"Dr Norton’s estimate of up to $135M in benefits and a 10% productivity yield by the use of GM canola is in direct contrast to the AFFA Productivity Commission report (2002) which showed a researched productivity increase of only 1% and an increase in costs of at least 10%. Dr Norton’s report appears to be based on uncommon crop models for comparisons and incorrect calculations," Mrs Newman said.

In response to the key findings (ital -Dr Norton’s findings):

An extra 200,000 hectares of canola could be grown under conservation farming practices (maintenance of soil resources through minimal tillage and stubble retention) "The majority of farmers already use minimal tillage and stubble retention as part of conventional farming and extra adoption should not be accredited to GM. Who’s going to expand canola production if there is no profit in growing it? Over half of our canola markets are planning on labelling canola oil which will have a major impact on markets. Can we afford to lose the EU market which is 13% of Australia’s export market and risk losing our main Chinese market?" Mrs Newman asked.

640 tonnes less triazine herbicide would be used each year because of changes to weed management systems "Growers will instead use the alternative weed control herbicides promoted by the GM canola retailers," Mrs Newman said. "It is interesting that the ‘model’ comparison calculated only a single pass of glyphosate when in practise Canadian growers use 2-3 passes of glyphosate in their crop."

Average Australian canola yields would increase from 1.27t/ha to 1.38t/ha with an increase in canola production estimated at 295,000 tonnes annually "If this is the best yield increase, it equates to an approximate10% increase which will be immediately offset by the increased cost of segregation to growers which has been conservatively estimated at 10%," Mrs Newman said.

Canola plantings would expand by 160,000 hectares in drier cropping areas" "This estimate can only occur if there is a real profit, but, taking into account the 10% over-estimated benefit, minus 10% segregation and identity preservation costs, minus the 4% ABARE quoted costs to the Biotech company for patented seed = 4% loss," Mrs Newman said. "The report appears to have compounded the supposed benefits to produce an inaccurate figure. Extra yield would be due to early sowing and improved weed competitiveness, yet all figures have been added

Marketing systems for GM wheat

GM Wheat submission -

submission Insurance avoid GM risk

International Protocols

World Trade Organisation

together in this report to quantify the benefits," Mrs Newman explained.

In rotation with GM canola, wheat production would increase by 64,000 tonnes in this additional canola area. "The report has relied on the comparison of wheat following canola, compared to wheat following wheat. This is an uncommon practise and farmers would expect a drop in yield," she said. "Costs will increase in crop rotations following RR GM canola as extra chemical will need to be added to control canola volunteers, if glyphosate is used as a total weed control. Wheat farmers will also be impacted negatively due to the requirement to grade out canola contamination from export consignments."

Mrs Newman explained that there is no possible way that farmers can benefit with the proposed introduction of GM canola as the costs and risks far outweigh the supposed benefits. "We continue to be concerned about the lack of economic studies and call on the Government to assist in funding a fully independent, comprehensive economic analysis of the impact of GM canola on all farmers," she concluded.

For further information:

Contact: Penny Townley, Secretariat, Network of Concerned Farmers, tel: (02) 6672 8373 or mobile: (0414) 244 710 OR

Julie Newman: tel: (08) 9871 1562 or mobile (0427) 711 644.

References re Costs:

A quote from the Federal Govt Productivity Commission report titled "Modelling Possible Impacts of GM Crops on Australian Trade.

pg 46 "...studies indicate such regulation could raise farmers' costs by as much as 40 per cent. However, for some markets (such as grains) the necessary infrastructure to support the regulation is already in place. Thus, estimated increases of 5 per cent (Japan and Korea) and 10 per cent (Australia, New Zealand and the EU) are presented..."

More specifics:

pg 37 Segregation and Identity preservation costs (SIP) "The size of SIP costs has been estimated in a number of studies (Buckwell et al. 1999; Bullock et al. 2000; ERS 2000). Many of these studies have focused on the costs of segregating non-GM from GM crops for US suppliers to sell products to export markets such as the EU. Buckwell et al. (1999), for example, give a number of examples of SIP costs for different products under different SIP arrangements. They find, where tolerances of GM residue were up to 1 per cent, that additional costs were approximately 10 per cent

of farm gate prices. They suggest that this 10 per cent cost increase is probably the most likely estimate of the additional costs of SIP, given that the direction of most labelling regulation is to allow up to 1 per cent tolerance of GM material.

A study by the EC (2000) covering non-GM and specialty soybean, corn, canola nd sunflower in the US, Canada and European Union, shows results of similar magnitude, with the additional costs of SIP ranging from 10-15% of sale price. The study estimated that SIP would increase grain prices at the farm gayte by 6-17%. It argues that because this range of cost estimates corresponds to the experience with existing SIP systems for value-added market segments, it can be taken as a reliable estimation of SIP costs.

In Australia, Leading Dog Consulting (2001) estimated that, given present testing technology and SIP systems, costs will increase by around 10-15% through the supply chain. The report notes that in the United States, the estimated average total cost of segregation (including testing) for both soybeans and corn is 12 per cent of the sale price.given the ambiguous evidence on price premiums, the trend toward greater food safety and farm accountability, and the mixed approaches to regulation across the world, regulation costs on both GM and non-GM producers are imposed in the model."

Full report can be obtained from www.avcare.org.au

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GM canola to boost Australia crop by 20 pct

AUSTRALIA: March 28, 2003

SYDNEY - Australia could boost canola production by around 20 percent a year by introducing a genetically modified (GM) crop, a university report says.

The report, released as a long-awaited official decision approaches on whether transgenic canola crops will be allowed in Australia, says national canola production would increase by almost 300,000 tonnes a year if GM crops were introduced.

"The adoption of GM canola is likely to provide significant benefits...by increasing canola production through higher yields and expansion of areas," Dr Robert Norton of the University of Melbourne's School of Agriculture and Food Systems said.

Australia would achieve little export growth and suffer declining international competitiveness if it did not adopt GM canola crops, the report said.

Canola, widely used a cooking oil around the world, would become Australia's first GM food crop if given official approval. Cotton and carnations are the only transgenic crops so far commercially grown in Australia.

Rapid expansion of Australia's canola industry, to 2.4 million tonnes in 1999/00 from just 200,000 tonnes in 1991/92, has made it the world's second biggest exporter after Canada, whose crop is more than 60 percent GM.

The Melbourne University report forecast that GM canola would boost average Australian yields to 1.38 tonnes per hectare from 1.27, boosting production by 295,000 tonnes a year.

Wheat production would also increase by 64,000 tonnes on the additional canola area because of fertiliser benefits which flow to a wheat crop grown after a canola crop, the report said.

The direct increase in canola and wheat production would be worth A$135 million ($81 million) a year, the report said.

But with canola boosting wheat yields overall by 20 percent because of fertiliser benefits, Australia would reap an extra 500,000 tonnes of wheat worth A$100 million a year overall because of the canola crop, the report said.

RISKS "MANAGEABLE"

GM canola reduced herbicide use in the Canadian industry by 40 percent, the report said. This was in line with Monsanto Co's (MON.N) Ingard GM cotton, which had reduced pesticide use in the Australian industry by 50 percent between 1999 and 2001, it said. *** see note below***

Monsanto field work claimed a 10-20 percent yield benefit over conventional canola and a 20 percent benefit over conventional herbicide-tolerant canola, the report said.

This was consistent with Canadian yield benefits, it said.

Risks such as the movement of pollen from GM to conventional crops were considered manageable, the university report said.

The study was based on GM canola replacing 50 percent of conventional herbicide-tolerant canola and 40 percent of conventional canola, with an additional 160,000 hectares planted to the oilseed because of the new technology.

After years of debate and official inquiries, two

proposed GM canola varieties are currently under advanced consideration by national authority The Office of the Gene Technology Regulator.

One, InVigor, is produced by Germany's Bayer CropScience (BAYG.DE). RoundupReady is produced by U.S.-based Monsanto.

The regulator is seen close to issuing a risk assessment report, which would open two months of public comment, allowing just enough time for the planting of a 2003 GM crop.

REUTERS NEWS SERVICE

Network note *** Ingard Cotton is specifically to reduce pesticide use and has been grown in Australia for some time. The canola crops proposed for commercial release are very different as they are produced to allow spraying of the crop with a specific chemical which would normally kill the crop.

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