Fed Econ On GM Crop Prices

Jeffrey St. Clair sitka at home.com
Wed Dec 29 14:12:30 PST 1999


GMO crop use may boost food costs - Chicago

Fed

USA: December 29, 1999

CHICAGO - Use of genetically modified (GMO) crops in the food

system will likely increase handling and processing costs and retail

food prices to some extent, a Federal Reserve Bank economist said

on Monday.

In a quarterly letter on the farm economy, Chicago Fed agricultural

economist Mike Singer said biotechnology and GMO crops hold great

promise to improve the environment and better human health.

"However, concerns over the safety of these foods and the environmental

impact of genetically enhanced crops have risen dramatically in recent

months," Singer said.

"Though it seems highly unlikely that the continued development and use

of these products will be banned, labelling and perhaps additional

regulation may increase costs in the food system and, ultimately, affect

retail food prices."

GMO crops, which in recent years caught on widely with U.S. farmers,

usually contain genes inserted into seeds to help the plant withstand

herbicide applications, diseases or serious crop pests such as the

European corn borer.

More than a third of U.S. corn and more than half U.S. soybeans were

planted to GMO seeds this year, before a firestorm of consumer protests

led many food processors and distributors in Europe and Asia to call for

GMO segregation, further testing and labelling.

Disputes over the safety and evaluation of GMO crops contributed to the

breakdown of the latest World Trade Organisation talks in Seattle earlier

this month.

Singer said that given the level of consumer concerns and their effects this

year on food processors, it was likely that next year's GMO crops in the

U.S. will have to be segregated, tested, labelled and further regulated - all

adding to costs that would be pushed further down the food chain.

"The problem today is one of infrastructure, i.e. most farmers, handlers

and processors are not prepared to segregate grain," he said, noting that

segregation will demand either considerable downtime during harvest or

purchase of additional equipment and storage devoted to keeping GMO

identity intact.

"Either approach entails a significant additional cost," Singer said.

"Complete segregation may be all but impossible," he added.

Singer said that by next year's harvest testing procedures and standards

must be developed, "perhaps similar to standards already in existence for

levels of foreign matter allowed in various commodities."

Singer said it would be no surprise to see a reduction in plantings of GMO

crops next year by U.S. farmers.

"Many may decide to reduce the amount of GMO seed planted because

of concern over price discounts and demand uncertainty," Singer said.

REUTERS NEWS SERVICE



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