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