GM vs CONVENTIONAL A PRODUCTIONECONOMIC PERSPECTIVE

By: Dr. Duane R. BerglundProfessor of Agronomy

North Dakota State University

2003 GM Planting Intention

GM Crops in 2003- % Acres

USASoybeans 81Corn 40Canola 72Cotton 73

North DakotaSoybeans 74

Corn 35*

Canola 72Cotton 0

*Estimate

GM Production Economics Agronomic costs

Segregation expenses

Competing Commodities

Market impact and risks associated

Agronomics and $$$

Are Yields Increased? Costs of Input ( Seed and Chemicals) Cost or benefits for GM crop in

rotation/crop sequence/field separation Control cost of volunteers Pest Resistance-Weeds or Insects Technology fee No Farmer saved seed allowed

2002 -Soybean Performance - ND

TypeNorth Red River Valley*

South Red River Valley**

Ave. Bu/A

% Yield Ave. Bu/A

% Yield

Conventional 46.6 (27)

91 % 45.5 (26)

100 %

Roundup-Ready

51.5 (78)

100 % 44.1 (80)

97 %* Locations: Arthur, Grandin and Northwood

** Locations: Wyndmere, Mooreton and Great Bend

2002- Corn Performance North Dakota

Oakes Barney FargoType Bu/A Bu/A Bu/A

Trial Average

171 133 146

BT173 (24)

135 (20)

161 (26)

RR172 (18)

-151 (24)

GM Canola vs. Conventional

Average Canola Yields at Langdon- 2002

2971

2003

0

500

1000

1500

2000

2500

3000

Yield lbs/ a

2002rr 2002nonrr

2001 & 2002 Average Canola Yields at Carrington

2326 2323

14881275

0

500

1000

1500

2000

2500

Yield lbs/ a

nonRR 01 rr2001 nonRR 02 RR 2002

Farmer Economic Concerns with the Use of GM Crops

Seed costs – Technology fee or not?

Chemical cost vs. alternative chemicals

Application costs (spraying or tillage)

Crop yields equal or not Weeds controlled Market acceptance of GMO’s Bin-Run Seed –not an alternative

Soybean Technology Fee:

2003 and prior- $8.00 per 50 lbs. (bag) 2004 – Increased fee- $10 per bag. 50 lb bag of soybeans has approximately 150,000 seeds per bag.

With germination of 90%, Seeding in narrow rows of 175,000 live seed per acre would require 194,500 seeds, or 64.5 lbs. seed.

Tech fee cost per acre then would be: $12.96/A.

Soybean Economics

Public-(Conv.) Private-(Conv.)

Roundup Ready

$ Seed/A(175,000/A)

$10.80 $19.44 $20.73

Technology Fee --- --- $12.56

Herb. PPI*Herb. Post**

$5.25$11.50

$5.25$11.50

($5.25)$10.00

Roundup

Seed + Herb.Totals

$27.55 $36.19 ($48.54)$43.29

Seed Cost - Public - $10.00/buPrivate - $15.00/50 lb bagR.R. - $16.00/50 lb. Bag

Tech. Fee - R. R. Soybeans - $10.00/50 lb. Bag

*Trifluralin – PPI Seed Used: 64.8 lbs.(175,000) live seed**Raptor-Post

Corn Technology Fees RR Corn- $24.00 per bag*

Bt. Corn Borer- $18.00 per bag

Bt. Corn Rootworm - $18.00 per bag

Liberty Link Corn- No Tech fee!!

* 80, 000 seeds per bag- Will plant 2.5 to 4 Acres

Corn EconomicsConventional Liberty Link Roundup

Ready

$ Seed/lb $1.10/1000 $1.25/1000 $1.20/1000

$ Seed/A $29.33 $33.32 $32.00

$ Insect Control ($12.00) $6.00 (BT) $6.00 (BT)

Tech. FeeRoundup Ready

--- --- $8.00Roundup

Ready

Herb. PPI**Herb. Post***

$10.00$12.00

$17.00(Liberty)

$10.00(Roundup)

Seed + Chemical

($63.33)$51.33

$56.32 $56.00

Seed Corn – 80,000 seeds/bag – 3 Acres/bag – (26,600 seeds/A)B.T. Fee - $18/80,000 seed bag - $6.00/A-26,600 plant pop.R.R. Fee - $24/80,000 seed bag - $8.00/A-26,600 plant pop. Or $6.00/A 20,000 plant pop. *PPI Herb – Surpass**Accent + Banvel + Atrazine + MSO

Canola Technology Fee RR Ready Canola- $15/A planted plus the farmer receives 1 pint/A free of Roundup

RT

Liberty Canola- No Tech Fee!!

Clearfield Canola- Not a GM crop, No Fee!

Canola EconomicsConventional Liberty

LinkRoundup Ready

$ Seed/bag (50 lbs)

$105.00 $130.00 $130.00

$ Seed/A (5 lbs)

$10.50 $13.00 $13.00

Helix Xtra $8.00 $8.00 $8.00

Tech. Fee/A* --- --- $15.00(Includes-1 pt.

Round-Up)

Herb. PPI**Herb. Post***

$6.00$8.00

$17.00(Liberty)

Round-up$5.00

Totals-Chemical/Seed

$31.30 $38.00 $41.00

*Roundup Tech. Fee - $15.00/A – Includes 1 pint Roundup Ultra RT**Trifluralin PPI***Assure II – post applied, or 1 pint additional Glyphosate

Segregation/Testing in PracticeSegregation/Testing in Practice

Malting Barley- 100% of malting barley is segregated and marketed by variety

Dry Edible Beans by Class/Var.

Examples of Identity Preserved Grains

Soybeans High oleic High sucrose High protein

White wheat Malting barley NON-GM0

Soybean, canola and corn.

Corn High oil White High amylose Waxy

Organic crops

Segregation and Identity Preserved Crops have what in Common??

Increased Costs-$$

Increased costs?

Farm: Cleaning planters, combines and

other equipment Field locations/induce or prevent

cross-pollination Additional bin

storage/cleaning/opportunity costs The Information Trail

Increased costs?

Elevator: Separate bins/opportunity costs Dumping in correct pit = added risk of cross

contamination Cleaning pits, conveyors and loading

equipment, trucks, and rail. Terminal elevators- Storage separation,

barge loading and separated transport. Totes are not feasible for high volume

commodities

- Strip tests (protein): – $7.50/test–Time: <1 Hour–Accuracy: 95%

PCR (DNA) --preferred in international contracts (currently used in RRW corn)

–1-2 days–Tolerance/Confidence/cost (Sept 2001)

1% tol. @ 99% conf. @ $120/test.1% tol. @ 95% conf. @ $300/test.1% tol. @ 99% conf. @ $400/test

Testing: Technology-Testing: Technology-

“Field of Dreams”Philosophy of Farmers and Others Build it and they will come Produce it and they must buy?? Mill, press and process it and they

will eat it! We are the primary source of

product! Consumers have little choice!

Loss of Markets by GM CropsRisk to add surplus

commodity at reduced prices

(Examples) Corn in Europe and

Asia Canola to Europe Soybeans to Europe

and parts of Asia

Canola Sales in Millions Dollars by Canada

0

50

100

150

200

250

300

350

1996 2001 2003

EuropeChina

US Corn Sales to European Union ( Tons Sold)

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1996 2002

Corn

US Soybean Sales to European Union (Million Tons Sold)

0

1

2

3

4

5

6

7

8

1996 2002

Soybeans

GM Wheat- Production Economics Increased Yields Better Crop safety Reduced Dockage Less Herbicide cost Control Volunteers

Seed Cost- Higher as no-saved seed

Technology User Fee Market and Prices

Wheat Production Comparison(Estimates) Per Acre Input costs-

Conventional Wheat

Roundup Ready Wheat

Seed Cost/A (1.5 bu.)

$12.38 $12.38

Herbicide CostPer Acre

$14.50 $4.50

Tech. User Fee None $12.00

System Cost $ per Acre

$26.88 $28.88

Other Cost considerations Conventional Wheat Saved Seed Purchase of RR Wheat Seed plus TUA

fee each year!! Control of Volunteers in other Crops Yield advantage? 3 bu/A Sask. Data. Reduced control costs of weeds in

sequential crops Segregation costs

Roundup Ready Wheat and the Markets

International Buyers are saying “no” to Gm Wheat!!

Millers and bakers in USA are negative.

Market prices may drop significantly! How much??

Fast food industry may become involved

U.S. HRS Exports and GM U.S. HRS Exports and GM Aversion- 2001 surveyAversion- 2001 survey

GM Wheat: If and When Released Genetically Modified (GM) wheat such

as Roundup Ready wheat is an example of “irreversible technology.

It will cause environmental, production and market externalities.

Without the ability to segregate GM and non-GM wheat in the market channels, the market is vulnerable to downward price trends.

Any Questions??