WRITING NATURE: DISCOURSES OF ECOLOGY

The Economics of Genetically Modified Foods

Mark Hammer

 

One of the hallmarks of the modern era has been the birth of genetic engineering. This technology allows us to modify the very fabric of life to our own ends; one important application of this that has developed in the last twenty years is the genetic modification of plants in food production. Genetically modified foods have flourished in the United States, creating a raging controversy both here and abroad over the prudence of growing and consuming these crops. Much of the popular debate centers on the moral implications of the issue; however, this paper concentrates on the issue's economic impact to come to an objective conclusion. Through examination of the scientific evidence available, it is clear that genetic engineering affords great potential for economic gain in the future. However, the present line of genetically modified crops fails to live up to this potential. Consequently, farmers should go cautiously in adopting the technology until more of its potentials have been realized and its negative side effects better understood.

The technology of genetic engineering rests on a very simple premise&emdash;to improve an organism by adding genes from other organisms to its genome. In genetically modified crops, the genes are usually present in all cells of the adult organism, including the reproductive cell lines. Consequently, they are passed on to the plant's offspring. Genetic engineering technology has revolutionary potential in agriculture, for it allows one to design a plant to one's liking. In this way, it may seem a world away from previously existing agricultural technologies. However, this is not quite true, for humans have practiced so-called "artificial selection," or selective breeding, for thousands of years. Food plants that exist today were bred by people to taste better and produce more than their natural counterparts. In fact, this procedure, which is not at all the object of moral or environmental outrage, can be as dangerous as genetic engineering. For example, an artificially bred potato variety proved poisonous to humans because of increased toxin levels (Webber ¶106). Clearly, genetic engineering is merely a refined version of selective breeding, just another step in the long tradition of improvements in agriculture. The only real difference between the two methods is the possibility in genetic engineering of mixing genes between species.

The increased power of genetic engineering over selective breeding allows a large number of applications, some of which are still in development. One of the more common uses of genetic engineering is to introduce herbicide resistance into plants. This lets the farmer to spray herbicide liberally on his crops, killing all of the weeds but none of the crops. A prime example of this usage is "Roundup Ready" soybeans, resistant to the herbicide Roundup (Altieri and Rosset 156). Another application of genetic engineering is making plants hardier or more productive; in particular, one can insert disease resistance or the ability to grow in harsh environments. Bt corn, for example, produces insecticide (156), and strawberries could potentially contain "antifreeze" genes from fish to prevent frost damage (Webber ¶15). A third use of genetic engineering is the modification of crops so that their produce lasts longer on the shelf. For example, there is work on introducing genes into sweet corn to make it stay sweet longer (¶11). In a similar vein, scientists are working on making foods more nutritious as well as better tasting. Research is also directed toward creating plants that produce medicines; these medicines would probably be much cheaper, and would certainly be easier to consume, than those produced in factories. One example of this is the production of hepatitis B vaccines in potatoes, currently in development ("Molecular" ¶23).

With such great potential benefits come also potential harms, and the debate over whether or not to pursue genetic modification in agriculture is a passionate one. There are a number of valid claims on both sides ("Molecular"; "Genetically"). Those supporting genetically modified foods cite their efficiency (profitability and productivity), necessary to a growing world population; their potential to be healthier than naturally occurring varieties; and their observed safety (Americans have been eating them for years without harm). Those against genetic modification remind us of the possibility of gene migration to other species; the possibility that genetically modified foods may be unhealthy in the long run; the fact that allegedly untrustworthy large corporations are in charge of the industry; and the possibility that scientists may be unethical or unknowledgeable. These arguments all have economic impacts that must be examined more closely.

One important area of consideration regarding genetically modified foods is their direct financial impact: on consumers in developed countries, on consumers in developing countries, on farmers, and on international trade.

Consumers in developed countries are a critically important market for genetically modified foods. In this market, the difference between the genetically modified varieties and their natural counterparts has two categories of effects on consumers. The first type is an effect on the consumer's perception of the food's quality. If the consumer feels that genetically modified foods are better, he is willing to buy more and pay more for what he buys. Conversely, if the consumer perceives a decrease in quality, he will not buy as much genetically modified food and may switch to substitutes, such as organic foods. The consumer's perception of quality may be motivated by a number of concerns. On the side of lesser quality, one big issue is fear. If consumers are led to believe that genetically modified foods are unsafe, they will certainly not buy them. Another factor potentially decreasing quality is the fact that the foods may actually have less nutritional value than their natural counterparts (Altieri and Rosset 156). In this case, health-conscious consumers would rather buy the natural varieties. Finally, there is the possibility that some of the foods are toxic or allergenic (157). This would cause a harsh consumer backlash against all genetically modified foods, possibly crippling the industry for years. On balance, there are a number of issues that could increase the quality of genetically modified foods. These include, at least for some varieties, a much healthier appearance. Foods engineered to have a longer shelf life will appear, and taste, much better than their natural counterparts. Examples of this include the sweet corn mentioned above and non-bruising, redder tomatoes (Webber ¶7). As appearance is very important to consumers, it is quite likely that they will forgo any small improvements in, say, nutritional content for tomatoes that are not bruised or ugly. Another positive characteristic of genetically modified foods is that they are (or could be) produced with fewer pesticides; hence there is much less pesticide residue on the produce itself (Gaisford et al. 11). Again, consumers will perceive that this is a significant improvement over traditional foods. Genetic engineering also allows the creation of plants without allergens; for example, a company could design a peanut that is edible by those allergic to conventional peanuts (Gaisford et al. 12). This would open the peanut market to many more people, and all consumers will feel safer about buying peanuts, since there would not be a risk of inadvertently causing an allergic reaction. In a similar way, foods could be engineered to be healthier for the consumer; for example, people on diets would buy especially starchy potatoes designed to make leaner French fries (Gaisford et al. 12). In addition, foods could be made to be more convenient for the consumer to prepare, such as seedless watermelons or tender-stemmed broccoli (Gaisford et al. 12). The numerous benefits of genetically modified foods conflict with their potential health hazards, leaving a final judgement of quality unclear.

In addition to a different quality, consumers will also notice a price difference between genetically modified foods and their natural counterparts. Most likely, since genetically modified foods are cheaper for farmers, the savings will be passed on to consumers and the produce will be cheaper (Gaisford et al. 11). However, this effect is not as great as one would imagine, for the simple reason that food is cheap already (Avramovic 25). Another price advantage of genetically modified plants is the potential for the costs of certain medicines to be reduced by the use of plants to produce them (Gaisford et al. 12). Some examples of this include the work on potato-produced hepatitis B vaccine discussed above and the production of a blood anticoagulant in canola (Gaisford et al. 12). It is clear that, as far as prices go, genetic engineering in agriculture will have a large impact on the pharmaceuticals industry but only a slight effect on the food industry.

The same sort of consumer issues are relevant in developing countries, but the issues have different implications in these very poor and hungry areas. Here quantity is a bigger problem than quality: many people in developing countries are malnourished and have inadequate healthcare. Therefore, the applications to the pharmaceutical business discussed above would be greatly beneficial to developing countries, since their problem is not only drug prices but also drug availability. A similar problem is seen in traditional food agriculture: in many places there is a severe lack of nutritional edibles. Genetically modified crops would help because they allow the possibility of farming in poor soil or with much less use of fertilizer (McGloughlin 165). Additionally, the use of crops engineered to have higher nutritional content (as discussed above) would have an extremely beneficial effect on developing countries (McGloughlin 164). Finally, crops engineered to have longer shelf lives will be very useful because storage and transportation are difficult in developing countries (Gaisford et al. 14). The potential disadvantages to using genetically modified foods there are the same as those for developed countries, especially the possibility of health risks and the possibility that the foods are in fact less nutritional than natural ones.

Some proponents of genetic engineering remark that these disadvantages are immaterial when we are faced with population expansion. In fact, this point is not only relevant to developing countries&emdash;the population of the entire world is increasing, and it needs to be fed. According to some, the so-called "Malthusian Trap" (Conko 150), the idea that population grows much faster than food supply, will catch us unprepared unless we employ genetic engineering in our agriculture (McGloughlin 164). As much as other issues complicate the debate today, in the near future population pressure will be an unequivocal impetus necessitating more efficient and greater production of food.

Genetically modified foods do not just affect consumers; farmers must also weigh the costs and benefits of this new technology as they try to earn profits in a highly competitive market. One major (alleged) benefit of genetically modified crops is their efficiency. In particular, genetically modified foods usually promise increased productivity. Both by direct improvements in the plants and by the addition of inherent pesticides, the yield of genetically modified plants is supposedly much higher than that of their natural counterparts (McGloughlin 166). For this reason, China has begun to employ genetically modified foods to help alleviate its food problems (Huang et al. 367). However, the scientific evidence of this increase in production efficiency is controversial; many researchers assert that genetically modified crop yield is no different and even in some cases lower than that of traditional methods (Altieri and Rosset 156). Pretty says that "there is widespread consensus that yields have not increased, rather they have tended to be lower compared with conventional varieties" (255). In view of these conflicting reports, it seems that the few properly controlled studies on this issue that exist are in disagreement, so a proper judgement is not possible. A less controversial issue relating to the efficiency of genetically modified foods is their cost to farmers. Usually, they are much cheaper and easier to maintain. In particular, genetically modified foods generally require much less pesticide or herbicide usage. One effect of this is to drive down the price of pesticides in general because of decreased demand (McGloughlin 165); in fact, this competition with genetically modified foods aids all farmers. Of course, the decreased pesticide usage for those farmers using genetically modified foods means their operating costs are lower already. In addition to decreased pesticide usage, genetically modified foods offer a number of other advantages, specific to their variety. For example, plants could be made that act like legumes, fixing their own nitrogen and so requiring less fertilizer (Avramovic 19). The only obstacle to these decreased maintenance costs is the potential for monopolies to take advantage of the farmers. Because a modified variety of plant is unique to a specific manufacturer, that company has monopoly power. Hence it can charge more money for the product; this is sometimes called a "technology fee" (Pretty 257). Theoretically, the company could make the technology fee equal to the savings gained by using the more efficient genetically modified variety; in this case, there would be no advantage to the farmer for using genetically modified crops. According to Pretty, this practice is common, but sometimes companies will give a discount to small farmers or farmers in developing countries (257).

The combination of yield effects and cost effects produces a net effect on the profits of farmers using genetically modified foods. The USDA report on the Adoption of Bioengineered Crops concludes that at least some genetically modified foods are profitable, such as herbicide-tolerant corn (24). However, in many cases, "factors other than the financial impacts appear to be important reasons for the rapid adoption of GE [genetically engineered] crops" (McBride and El-Osta 175). The net effect of genetically modified foods on farmer profits is then not significantly positive, so it appears that at this moment there is no real economic reason for farmers to use them.

Despite no clear direct economic advantage, farmers may have other valid reasons to use genetically modified foods. For example, genetically modified foods are easier for the farmer to take care of, allowing him to spend more time doing other things. In particular, since (in some cases) they are hardier and better at growing in poor soil, the farmer has to work less to make the land suitable for growing (Gaisford et al. 13). Additionally, in some cases, one is able to do without any pesticide at all, an especially huge boon for farmers in developing countries who might find it hard to get pesticides (Gaisford et al. 13). Another advantage to using genetically modified foods is that they are better for the environment. For example, the lower pesticide usage is probably more sustainable than the older method of high pesticide usage (see below). In addition, the increased efficiency mentioned above (if it is present) would allow farmers to use less acreage to produce the same amount of food and make the same amount of money. Therefore, there could be more land left to nature. These environmental advantages in the short run translate to economic advantages in the long run, as land is then fertile for much longer.

Unfortunately, the advantages are not as great as they may seem. One problem derives from the economic gain itself. It is a well-known result in economics that, in the perfectly competitive market of agriculture, the higher profits earned by farmers in the short run will eventually pass to consumers, causing farmers to make less money in the long run. Problems also arise with the ecological impact of genetically modified crops. As discussed below, the technology of genetic engineering could cause great harm to the environment in the long run, particularly in ways troublesome for farmers. Consequently, the economic evaluation of the farmers' situation yields a number of potential costs and benefits but no conclusive recommendation.

Of course, both consumers and farmers are at the mercy of the world market. Currently, as Figure 1 shows, the United States and Canada are by far the major producers of genetically modified foods, with very few other countries participating.

Fig 1. (Environmental News Network)

In the international market, genetically modified foods have been differentiated from those produced naturally, and so countries have the choice of whether or not to accept them. The first impact of this choice is in the trade balance between the United States and the European Union, as the former uses genetically modified foods extensively, whereas the latter does not use them at all. Because of this, with the stipulation that genetically modified crops have increased yields, EU producers are significantly hurt (Frisvold, Sullivan, and Raneses 241). To combat this, the EU could either require the labeling of genetically modified foods or impose an import ban; unfortunately, both of these tactics hurt European consumers (Gaisford et al. 195, 200). Of course, they also hurt American producers; in fact, it is very difficult for the United States to produce non-genetically modified foods, since they are used so extensively here and have most likely contaminated non-modified populations (see also below) (207). However, Gaisford, et al., point out that "inventions, innovations and their applications give adopting countries a lead over others" (222). In other words, in the long run, it is quite likely that the United States will benefit from genetic engineering, though it is hurt in the short run.

The same issues that affect developed countries apply to developing countries. Unfortunately, for them the conflict mirrors the Cold War, in that the developed countries play the developing countries off each other. They are able to do this because only the most economically powerful countries have any real say in trade agreements (Pinstrup-Anderson 215); China is the only developing country has the potential to hold sway in the international economic community (217). Trade agreements notwithstanding, the effects of genetically modified crops upon a developing country depends on whether the country is an exporter or an importer. If the country imports the cheaper genetically modified food, it is at an advantage; however, if it exports genetically modified food, it may run into various import bans. Despite this potential obstacle, developing countries do have reasons to use genetically modified agriculture. One is that the increased efficiency (if true) would help their agricultural industry and so aid their economy in general (Gaisford et al. 14). The other advantage is that mentioned for developed countries: those countries that adopt new technology are helped in the long run.

The analysis of the direct economic impacts of genetically modified foods shows that the advantages are few at the moment, but in the future they may be significant. In the long run, though, one must also consider the potential ecological impact of genetic engineering. This is because any damage to the environment now will make farming much more difficult in the future; that will place great burdens on farmers as well as on the hungry population, driving up prices and increasing the probability of shortages. Hence we must ensure that what we plant today will not come back to haunt us.

The first issue regarding ecological impact of genetically modified foods is responsibility. Both the scientists who develop the genetically modified varieties and the corporations that market them must act with prudence and caution. This requires genetic engineers to consider ecological issues; as McGloughlin says, "biotechnology and agroecological approaches are synergistic" (171). In addition, the corporations that fund the development and marketing of the genetic modifications must also act in a trustworthy fashion. If they ignore signs of trouble, irreversible damage may be done to the environment.

Genetically modified crops may have a number of impacts on the environment. Among these is the issue of sustainability, i.e. how long can one do something before it does not work anymore. For example, the use of a single pesticide is generally not sustainable because insects will develop resistance to it in the long run. Many proponents of genetically modified crops assert that they are more sustainable than the traditional methods of agriculture (McGloughlin 171). In particular, genetically modified crops allegedly decrease pesticide usage. Both the USDA report on Adoption of Bioengineered Crops and the USDA's Agriculture Fact Book 2002 show this decreased usage. As Figures 2 and 3 show, corn crops in particular exhibited a decreased pesticide usage, up to a 9% difference between genetically modified and traditional agriculture in 1998.

 

 

Fig 2. (Fernandez-Cornejo and McBride 27)

Fig 3. (Agriculture Fact Book 46)

In addition, independent scientists have also found this decrease to be the case (Huang et al.), (Pretty). However, others dispute this claim, asserting that the USDA is using a misleading definition of pesticide usage (Benbrook 204). If it is in fact true that genetically modified crops require less pesticide use, then they are more sustainable, and hence it is better for farmers in the long run to use them (Pretty 255). Of course, this method is still not completely sustainable; it is likely that insects will eventually become resistant to the pesticides. Altieri and Rosset assert that, because of this, genetic engineering has exactly the same disadvantages as traditional farming (157), while McGloughlin says that it is an improvement when combined with other techniques (167). This reduction in pesticide and herbicide usage leads to the concept of no-till agriculture, which is farming without the necessity to do the hard work of tilling to remove weeds. Genetically engineered plants can do this much better than traditional plants because they do not require as much herbicide and pesticide usage. No-till agriculture is much better for the environment because it decreases soil erosion and protects beneficial insects that live in the soil (McGloughlin 169). For these reasons, no-till agriculture is much more sustainable than traditional till agriculture. However, as some point out, it is possible to practice no-till agriculture without using genetically modified crops (Griffiths ¶18). It is clear, though, that the use of genetically modified crops does increase the sustainability of agriculture, although the extent of this effect is contended.

The other major issue in the ecology of genetically modified crops centers around the world plant gene pool. One problem is that the use of genetically modified crops decreases the diversity of the gene pool because there is usually very little diversity in the seeds produced by bioengineering companies (Altieri and Rosset 157). This is problematic because it is then very easy for a disease to destroy all crops of a specific type, since their immunities are all the same. Another problem with genetically modified crops is that they may overexpress the genes inserted in them; if these are toxins, their overproduction could harm beneficial insects (158). Of course, this problem is also relevant to traditional pesticide use; additionally, the problem can be fixed in genetically engineered plants by having them produce less of the toxin or produce it in specific areas of the plant (McGloughlin 170). A third problem with genetically modified crops is the possibility of the creation of "superweeds" (Altieri and Rosset 158). If a herbicide resistance gene migrates from a genetically engineered crop to a close relative that is a weed, then that species of weed will be resistant to the pesticide. This would create a big problem for farmers, who would then have to find another pesticide to use on that weed. The most common effect of gene migration, however, is the migration of genes from genetically modified plants to non-modified plants of the same species, contaminating the population. This is a legitimate concern for those trying to grow natural crops for sale in Europe or for sale at home as organic foods. The net ecological assessment of genetically modified crops, then, is that there is slight potential for ecological havoc; however, a more realistic assessment shows that the most likely gene pool effects are similar to those caused by traditional artificial selection methods (McGlouglin 168-9).

The potential of genetically modified foods to harm the environment raises the question of responsibility; the oligopolies and monopolies that produce the seeds control both a farmer's profitability and the environment's health. By the very nature of genetic modification, the companies producing modified organisms have monopoly power (Gaisford et al. 80). This means that they are able to charge higher prices and, because they are currently the large agribusinesses, it is likely that they could also act irresponsibly or unfairly. In sum, the noncompetitive nature of the genetically modified seed market means that the producers are able to take advantage of farmers (Goldsmith 1323). Of course, this monopoly power is the reward companies get for innovation (Gaisford et al. 80), for they take a great risk when they invest in research. Without compensation, there would be no innovation, and without innovation, we would not be able to feed the growing world population (McGloughlin 164). The problems arise, of course, when the corporations take unfair advantage of their monopoly power to overcharge farmers. The potential for abuse is rather high, but it is the price we pay for innovation.

The irresponsible actions of the large agribusinesses may extend far beyond their interactions with farmers. These concerns are suggested by the fact that, as one writer says, "some of the world's worst polluters are fixing dinner" (Story 8). In fact, there are already a number of examples of corporations engaging in questionable behavior. One is the production of herbicide-resistant seeds by the company that produces the herbicide, which Altieri and Rosset allege was a determined effort to increase the company's market share in the herbicide industry (156). Additionally, Altieri and Rosset assert that agribusinesses are opposed to the labeling of genetically modified foods so that they can escape liability for problems (157). A third example that suggests corporate irresponsibility is the "rapid adoption of GE [genetically engineered] crops when the evidence about farm financial impacts is not clear or counter-intuitive" (McBride and El-Osta 189). In other words, despite the scientific results showing decreased profitability, farmers are increasing their use and testing of genetically modified crops exponentially, as Figures 4 and 5 show.

 

Fig 4. (Marrs)

Fig 5. (IFPRI)

Part of the reason for the increase, according to McBride and El-Osta, is a misleading perception of their efficiency, promulgated by the biotechnology corporations (189). Clearly, biotechnology corporations are not to be trusted to act fairly; the question then is whether the innovations they produce are worth the trouble the companies may cause.

As is clear from the above economic analysis, a definitive conclusion supporting or rejecting genetically modified crops is not easy. Most of the current evidence shows no significant differences between genetically modified crops and their natural counterparts. Hence, in the absence of any compelling reason to adopt genetically engineered crops, farmers should use personal preference in determining the crops they plant. However, in the future, the situation may be much different; the technology's potentials presented above could help alleviate the world hunger problem, make food healthier, make medicines cheaper, and make agriculture more environmentally friendly. On the flip side, there is potential for significant ecological harm to be caused if the new genes get out of control. Consequently, it is up to science to collect more evidence to determine the true risk of genetic engineering and to implement its potential benefits. Only then could a final analysis be made as to whether or not genetic engineering is an advantageous technology, at which point farmers could conclusively decide whether or not to participate. However, in the face of a growing world population and looming potential environmental problems, it seems likely that genetic modification will be a necessity.

 

 

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