TCS Daily


GE Crops and Poverty Alleviation

By Al Rio - December 14, 2004 12:00 AM

Europe needs to take an urgent look at two recent World Bank reports on genetically engineered (GE) crops and food technologies in developing countries. The first focuses on GE rice (mainly harvested in Asia), and the second looks at crops in Sub-Saharan Africa.

Among the key findings of the first study are:

* existing GE varieties of crops have "conferred direct benefits to farmers through reduced input costs and/or improved management flexibility, and benefits to consumers via lower food prices";

* new developments promise to include GE "varieties of various crops that also provide direct benefits to consumers through enhanced consumption characteristics such as improved nutritional content" (the so-called nutriceuticals);

* the computational models behind this research conducted at the World Bank estimate "the potential welfare gains from the consumer-focused health attributes of golden rice and compares them with the welfare benefits of producer-focused attributes of other new (non-golden) GM rice varieties". They also estimate "the welfare impact if GM adoption were to spread beyond rice to other grains and oilseeds", finding that, even if richer countries ban food imports from GE-adopting countries, great benefits will follow the poorer ones;

* the consumer-focused health attributes of golden rice are reflected in the improved productivity of unskilled farm and non-farm workers whose health would improve because of greater vitamin A intake.

It's clear from the report how much we all can gain from these GE crops (see the report for a demonstration of the economic welfare effects of GM crops adoption by developing Asia and the US, Canada and Argentina).

The simulations assume first that these last three countries adopt GE coarse grains and oilseeds, with benefits of more than $2 billion for the whole world (this is the base simulation); in the second run, the same countries plus China, and other South and Southeast Asian countries, adopt golden rice, and the world benefits by more than $17 billion. In those simulations where the EU, Japan and South Korea impose a ban on imports of rice and other cultivars from countries adopting those GE crops, benefits fell to $12 billion. In the last result, with even more limits in the EU, Japan and Korea, the world makes a clear net loss over the base simulations of around $5 billion (the difference between maximum benefit and maximum loss is a surprising $22 billion).

Of course, this is just a set of simulations. But, despite the limitations of the paper, we see that effects in producing countries can be largely positive, even if protectionist countries ban GE crops and derivatives. Those which gain more are the poorest ones. And those which ban the more, lose the more. This is a beautiful irony.

The special case of Sub-Saharan Africa merited a study by itself. Two decades ago, Africa accounted for a tenth of the world's people living on less than $1 a day, but now it amounts to one-third of it. The authors use, as in the first study, a general equilibrium model. They assume, among other things, perfect competition, flexible wages, flexible exchange rates, and full use of all productive factors "which are immobile internationally." The model was calibrated to the economic structures and trade flows of 1997, when GE crops where gaining acceptance. That was the year before the EU adopted a de facto moratorium.

What's interesting in the model simulations is that the welfare gains can be rather large, especially from golden rice (and "golden" wheat, so to speak): current estimates of better health and a bigger contribution to unskilled laborers' productivity are greater for nutritionally enhanced grain than for conventional, non-GE foods. And fortunately, even if the European Union keeps banning GE food imports, the gains do not vary much. But what's more revealing, if Sub-Saharan countries ban GE crop imports to prevent losing EU markets for their traditional non-GE produce, consumers in Sub-Saharan Africa would lose more than what a privileged market access would earn producers. This means that those African countries which consider banning GE crops would suffer net losses too.

Note that these papers do not consider non-food GE crops, like cotton, already a success in China, so the researchers are not computing the savings and benefits of less tillage and less pesticides. Studies like these pile upon scientific reports showing the same or better safety for GE varieties than for conventional ones, and EU consumers would get better prices, and producing countries would get more exports and advance their development. Knowing all this, why are EU governments so protectionist? They are depriving the less well-off people of a way to better their lives, both in developing and developed countries.

Peter Turner and Al Rio are co-founders of Republicans in Spain


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