Wednesday, March 12, 2008

Economic impact of genetic engineering on developi

Genetic engineering (GE) is a recently developed technology that allows the alteration of the genetic make up of living organisms. This technology allows scientists not only to exchange genes from members of the same species, which is what farmers and nature has been doing through out history, but also the exchange of genes between completely separate species. For example genetic engendering allows scientists to insert the genes from a fish into a tomato, something that can never happen in nature. Many in the biotechnology industry claim that the recent advancements in this field of research will help solve many of the problems developing countries face. These claims have led to a massive increase in commercial growing of genetically modified organisms, (GMOs) from 1.7 million hectares in 1996 to 58.1 million hectares in 2002 worldwide. 99% of this growth has only been in four countries; Argentina, Canada, China and the USA, the USA being the largest, producing 68%.

Amidst this enthusiasm there has been growing concern that there exist many hidden costs involved with GE technology. Critics of GE technology claim there are known and unknown health, social, ethical and environmental risks involved with the introduction of this technology. There are also claims that this technology has little if any benefits to the developing world and will in fact only benefit the developed world, and multinational biotech corporations such as Monsanto. Critics argue that whatever benefits developing nations gain from GE technology, these are far outweighed by the risks involved.

Proponents’ of genetically modified foods strongest claim is that this technology will benefit farmers in developing countries by allowing those farmers to be more productive and grow a higher yield of crops. Many studies do agree that GE technologies do give farmers a higher yield, but even this is a contested issue. Because many of these studies are sponsored and linked to the very corporations that are developing these technologies, validity of the results are questionable. In fact, there have been certain independent studies that have concluded that genetically modified seeds in fact produce a lower yield than do conventional seeds. For example these is a two-year study by the University of Nebraska, in which Monsanto’s Roundup Ready soybeans yield 6 percent less than their closest relatives and 11 percent less than high-yielding soybean varieties. This study shows that with all things being equal, genetically modified crops may in fact produce a lower yield. Because GE soy is commercially grown more than any other GE crop it will be good to take a look at why.

With Roundup Ready soybeans growing to 81% of the totally soy grown within the United States in 2003 , one must ask why farmers are switching to GE soy. The reason for this is the lower costs of pesticides and herbicides. The advantage of Roundup Ready soybeans is not that they are more productive or that the seeds cost less. In fact the seeds cost about six dollars more per acre than traditional soy seeds. The advantage comes in the form of a more resistant plant. Because Roundup Ready soy has been genetically altered to be more resistant to herbicides and pesticides, specifically a Monsanto produced brand called Roundup. Because these new GE soybeans are able to withstand stronger herbicide and pesticide use at a younger age, without any damage to the crop, farmers are able to kill off weeds and pests earlier and easier. This use of stronger herbicides and pesticides in farming leads to a cleaner crop, with a lower cost of labor.

A 1998 study by Mike Duffy, an economist from Iowa State University shows that all in all the costs and benefits of using GE technologies in soy and corn production do not lead to any sort of significant difference in returns compared to traditional none GE seeds. The main reasons for farmers switching to genetically altered technologies is the lower amount of labor needed for production and the cleaner crop produced with an increase of herbicides.

Clearly the fact that Roundup Ready soy, the most highly used commercial GMO product, has lower yields than traditional soy products we can dismiss the main argument given by the biotech industry that they are trying to help end world hunger. According to the United Nations and many none governmental organizations around the world the problem of world hunger is not one of a scarcity of food; it is in fact a problem of distribution of food. Today the world produces 17 percent more calories per person today than it did 30 years ago . The world does not need larger supplies of food; the world needs to address the way in which food is distributed, something that GMO technology has no effects on. The only people that the biotech industry is trying to help are themselves. This is the reason that currently the main commercial implementation of genetically modified technology has been to increase crop resistance to pesticide use. The main producers of GE technology, firms such as Monsanto, are also the world’s main producers of pesticides and herbicides.

The example of soy shows that the only real impact of genetic engineering has been to transfer some of the cost of labor into capital costs. This may be a good thing for the developing world where labor is more scarce, and capital intensive production should be sought. The developing world, on the other hand, with its high population and high unemployment would be better off using more labor intensive means of production. If GE soy technologies are applied in less developed nations, where labor is cheaper than in the developed countries, the cost of capital will not be offset as it has been in the United States by lowering labor costs. The costs of GE seeds are too high for farmers from developing countries to implement their usage. The costs of implementing this technology will not be offset by the benefits that farmers in the US have received. Not only will farmers lose money, but unemployment, which is already a problem in many developing nations, will increase, as farmers need to hire less labor to produce the same amount of crops.

The high initial cost of purchasing GE seeds makes the technology more difficult to implement by poor farmers in less developed countries. As happened during the “green revolution” these small farmers would be forced to take out loans to buy this new technology, and if the technology does not deliver higher profits these farmers may lose their land.

Even if a technology was developed that would bring the cost of production down to or below that of existing production cost, there is the issue of consumer preference. The increasing debate over genetic engineering has created a substantial difference in perception of the risks and benefits involved with GE food. Governments around the world, most notably members of the European Union have places restrictions and bans on many GMO products. Many of these countries are considering putting labels on products with GMO ingredients. Considering that many developing countries’ economies are highly dependant on agricultural export, these countries can not risk the loss of major export markets.

With pressure from the biotech industry, the United States, and the World Trade Organization some countries are become more lax on their restrictions on GE imports and regulations. The most recent example is the lifting of a moratorium on commercial GMOs in New Zealand on October 29th, 2003. While the governments of many countries are slowly lowering their restrictions on GE technology, many of the consumers in these countries are still highly opposed to the consumption of GMOs. The highest consumer opposition to this technology comes from Western Europe and Japan. With many consumers in the developed world being highly opposed to GMOs and willing to pay a different, higher price for GMO free food, GE crops stop being a substitute for traditional crops, and two separate markets are formed, with different demand curves. Even if a GE technology is developed that allows higher productivity at equal or slightly lower costs, this may still not be a profitable investment for farmers that export to locations such as Western Europe where there is high consumer resistance to GMOs. In a market where GE foods are not substitutes for traditional foods, many consumers will be unwilling to purchase GE products. Also, if GE technology does become more productive than traditional food, those who are willing to substitute GE food for traditional food will have a larger supply of both genetically modified and traditional food to chose from. With the lower demand, and higher supply, the price of genetically modified foods will fall. What benefits the farmers of GMOs received in switching to this technology will be accompanied by a loss of price of their goods.

The option of growing a limited amount of genetically modified products, and keeping the rest of the market GMO free, is a very costly, if not impossible task. Fear of GMOs spreading to the wild and having negative effects on the local ecosystems is one of the main environmental arguments against GE technology. Some countries have attempted to stop this by creating “buffer zones” between genetically altered plants and traditional plants. The problem with this is most of these buffer zones are too small in size. Genetically altered plants have been found to spread their pollen over 800 meters , it is highly unlikely and would be extremely costly for farmers to have to implement buffer zones this large around their farms to make sure their crop does not contaminate any outside crops. While this is currently an argument environmentalists are using to show that GMOs are a threat to the ecosystem, this is not only a threat to the environment, but also to other farmers who wish to farm using traditional seeds. Farmers who try to sell their products to the none GMO market and have their fields contaminated by pollen from their neighbor’s GE crop will not be able to sell their products as GMO free. If the market for GMO product goes bad it will be close to impossible for a country to stop production of GMOs once they get out of their contained areas.

One technological innovation that the biotech industry has come up with that does not have this problem is the terminator technology. Industry wide research has been devoted to expanding this technology. Terminator seeds are seeds which create plants that are sterile and cannot produce new seeds. With this technology farmers are forced to purchase new seeds every year from biotech corporations, unlike traditionally where farmers were able to use seeds from the previous harvest to plant the next year’s crop. The reason for developing this technology is simply to protect the patent on the corporations genetically altered product. Forcing the purchase of new seeds every season would hurt farmers in poorer developing nations most. For generations farmers around the world have been harvesting seeds from their best plants every year, naturally evolving their crops to be better. The ability to breed the best plants with one another is taken away when farers plant sterile seeds. This technology will force farmers from developing nations to be more dependant on multinational biotech corporations.

While terminator technology has been met with large criticisms and biotech firms have been slow to implement its uses in the United States, because of fears of their patents not being enforced in developing countries, to ensure that their technology is not used by anyone without their permission, biotech companies are more likely to use terminator technologies in developing countries.

Critics of GMOs claim that the long term health effects of these technologies are not known yet. The economic risks involved are also not all known. “Super weeds” that are not stopped by herbicides can cause a lower crop yield. Many scientists argue that usage of higher amounts of herbicides will create resistance in certain types of weeds, and these “super weeds” will not be stopped by herbicide use. Another, more alarming trend is that certain traits of genetically altered crops have crossed into weeds and those weeds now posses the same resistance to herbicides that the genetic alterations gave the crop.

Under monoculture a farmer’s crops are at higher risk of being destroyed by a disease. Because a farmer grows all the same species, if a disease breaks out, that farmers whole crop can be ruined. This is the same danger with GMOs only to a higher extent. Because genetically modified crops are exactly the same genetically, the risk from diseases is much higher. Unlike traditional crops which may be divers enough to avoid a totally disaster, GE crops have no diversity.

Not only is GE implementation a bad idea for farmers from developing countries, it is already threat to many farmers who produce things such as sugar. Biotech firms are altering the genetic makeup of certain crops grown in northern climates to produce sugar and other derivatives, traditionally only obtained from crops grown in developing countries. With the development of this technology developed countries in the north will be able to grow products that they otherwise would have had to trade for. For example, coconut oil is naturally high in lauric acid. However it has become threatened by genetically engineered high-lauric acid canola oil grown in developed countries.

While genetic engineering has been attacked on environmental, health and ethical grounds, it is clear that economically this technology will harm the developing world more than it can ever help. The technology is not being used to feed the world’s hungry, nor does it need to be, distribution is the problem. Through patens and higher use of their own pesticides, GE technology has so far only been used to make biotech companies more money. The costs of implementing this technology are too high. With a higher investment in capital, and unknown returns in not something a low income farmer can afford. This would be especially costly if terminator seeds are implemented in developing countries, due to fear of patents not being honored in those countries. Developing countries should focus on more labor intensive production that does not leave them dependant on multinational corporations and the developed world.



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