GUEST BLOG: Jon Carapiet – Premium for GE-Free food adds value to exports and to Brand New Zealand.
When National Party leader Christopher Luxon announced their policy to encourage commercial release of GE organisms in New Zealand he was challenged by Jack Tame on OneNews about the unintended consequences of the plan.
Questioned about the value of our clean green Brand and risk of contamination of conventional and organic production, Mr. Luxon argued that the added value to the economy from GE-free exports was a mere five percent. It is nothing for producers or exporters to be concerned about. (1)
The deregulation of GE for commercial release comes with a trade-off that the National Party are willing to make in discounting the value of GE-free/ non-GMO food exports.
But what if they’ve got their numbers wrong?
What if the premium is not five percent but more than that?
What would a15% premium for non-GMO mean for New Zealand’s future Food Strategy and ensuring strict control of GE in agriculture?
What if the premium is not five percent but six times that? What if studies show an average 29% premium for GE-free, with variation by product-type and consumer market?
What about something even higher…+ 45%?
The economic benefits of biotechnology are cited as the main justification for ending strict regulation of Gene Editing. National’s announcement has cut short the wider conversation about the future of sustainable agriculture and the role of ethical genomic science within that.
The Productivity Commission published its Frontiers report also in support of change to the rules to unleash biotechnology. But that report largely relies on industry messaging against regulation.(2) The Productivity Commission cites future promise for products like GE ryegrass, but gives no cost/benefit analysis comparing alternatives to reduce methane. Nor does it downgrade claims for GE ryegrass in light of failed US trials.(3)
How much is the GE-Free premium worth?
This is something that the Productivity Commission did not evaluate in its Frontiers review, but should have. Providing data for New Zealand exports is vital to ensure we understand the true value and protect the advantage that GE-free status provides.
On the downside, there is anecdotal evidence of farmers receiving ‘just a few cents on a kilo of milk solids’ for being non-GMO. If so, farmers need to be asking hard questions of their company management. Maybe they are still missing what consumers are saying and underselling their brand story to overseas customers, as indicated to Silver Fern Farms in a Kantar market research report.(4)
Without a proper evaluation of the economic benefit of GE-free status for farmers, producers and exporters it is not possible to make informed decisions.
Is there is enough added-value in natural, safe, non-GMO food that there no longer need be such a thing as a ‘commodity’ from Brand New Zealand?
Nobody seems to know, but the best available evidence suggests a much higher premium needs to be accounted for. That is to say the best available evidence so far, other than limited public data, Christopher Luxon’s guesstimate, anecdotes and more useful real-world observations of market demand for GE-free food.
This data on the premium for GE-free is included in a Food and Fibre sector report referenced by the Chief Scientist in a recent letter to the Prime Minister to support a review of GE regulations. The Well-NZ report for the Food and Fiber sector by Te Puna Whakaaronui has two resources to identify the level of market premium for GE-free food that we should expect.(5)
The first report is a meta-analysis of 25 studies by Lusk et al which calculated the premium at +29%. The other study cited in the Food & Fibre report is a meta-analysis by Dannenberg which found a premium of 45%.
Clearly they cant both be right. Both studies come with caveats, including variations for the premium by country and product. Nevertheless, the premium is significantly greater than five percent and far too much to be discounted as an economic asset.
There is definitely money in it and appeal to consumers.
The adoption of the Non-GMO Project label by Fonterra and Lewis Road Creamery is a response to market signals. The only logic in using the label is to gain a marketing advantage, at least in the USA. (6)
A survey by the International Food Information Council (IFIC) Foundation in 2018 found nearly half of US consumers try to avoid GMO foods. (7)
The US Department of Agriculture identified that US producers of GE foods are missing out! They had lost access and exports to high-value markets with a demand for non-GMO products worth billions of dollars. (8)
European consumers and farmers are pushing back on synthetic food, including a vote in the Italian senate to ban cellular meat. (9)
Retailers and consumers are joining the EU Environment Ministers in strongly opposing exemptions of regulation for Gene Editing that will deny people the right to choose.(10,11) In the UK 80% of consumers want products of New Genomic Techniques tested, tracked and labelled. (12)
Even the makers of the Impossible Burger have responded to consumer preferences for non-GMO soy in key markets outside the US. They have replaced the main GE ingredient with certified non-GM soy and test each batch they import to ensure there is no GE contamination.(13)
A recent report by Plant and Food Research found people are open to new technologies but had a preference for controlled and contained agriculture. In New Zealand and Australia use of Gene Editing has the highest level of consumer rejection of all the technologies tested.(14)
Consumer sentiment around GE foods remains suspicious said Dr Denise Conroy, project leader for the study of Future Urban Consumers. The appeal of organic food in overseas markets is also noted. It is driven by concerns over food safety, contamination and poor regulation, which New Zealand consumers have traditionally had to less worry about.
The organic sector also benefits from its standards that exclude synthetic inputs and GE organisms. New Zealand organic exports grew 20% between 2017 and 2020 to $723 million.(15)
Counting the Cost. Who knows?
It is possible that MBIE and other industry organisations, organic producers and our major food exporters already have data we need. They may be working on publishing it to inform the conversation about trade-offs and the most appropriate applications for an ethical biotechnology strategy for New Zealand.
Calculations to inform the debate are overdue and made more urgent by The National Party’s policy. At an individual level the right to choose will be taken away for consumers and farmers by rules that exempt new gene edited products from regulation. New Genomic Techniques will not be required to be safety tested, traced through the food system or labelled on packaging.
At a national level, the cost to the economy and to Brand New Zealand would be much greater than the National Party imagines.
Data will allow a conversation on how New Zealand can best navigate the complex economic and environmental challenges we face, including the role of biotechnology and regulation of Gene Editing in agriculture. There is value and economic advantage to Brand New Zealand from GE-free exports, but how much is it really worth and who will protect it?
1) https://www.1news.co.nz/2023/06/11/nzs-gmo-laws-to-be-loosened-under-national-govt-luxon/
2) https://www.productivity.govt.nz/assets/Documents/Final-report-Frontier-firms.pdf
3) https://www.newsroom.co.nz/grass-isnt-greener-for-gm-trial-in-australia
4) https://www.farmersweekly.co.nz/news/nz-farmers-have-what-the-world-wants/
Page 38, section 3
Lusk, Jayson L., Mustafa Jamal, Lauren Kurlander, Maud Roucan, and Lesley Taulman. 2005. “A Meta-Analysis of Genetically Modified Food Valuation Studies,” Journal of Agricultural and Resource Economics, 30.1: 28–44.
Dannenberg, Astrid. 2009. “The Dispersion and Development of Consumer Preferences for Genetically Modified Food — A Meta-Analysis,” Ecological Economics:The Journal of the International Society for Ecological Economics, 68.8–9: 2182–92.
6) https://www.dairyreporter.com/Article/2017/04/14/Fonterra-s-NZMP-non-GMO-ingredients-launch
8) https://apps.fas.usda.gov/newgainapi/api/report/downloadreportbyfilename?filename=Voluntary%20GMO-Free%20Labeling%20Program%20Generates%2011%20Billion%20Dollars_Berlin_Germany_6-28-2019.pdf
9) https://www.efanews.eu/item/33094-synthetic-food-bill-passes-in-the-italian-senate.html
10) https://gmwatch.org/files/Retailers_Resolution_Against_Deregulation_New_GMOs_First_Signatories.pdf
13) https://www.scoop.co.nz/stories/BU2304/S00358/impossible-burger-stops-using-gmo-soy-protein-as-its-main-ingredient-in-nz.htm
15) 2021 Organic Sector Report https://drive.google.com/file/d/1soMkI1mOGHUzfgKA_6NJ7RM1rrafuXcZ/view
Jon Carapiet: Born in Ghana and educated at Cambridge and Auckland Universities, Jon is a consumer researcher and advocate, photographer and writer. Jon started talking about valuing and protecting Brand New Zealand in the early 2000’s and is spokesman for GE-Free NZ (in food and environment). Twitter jon@brandnewzealand
Thanks for your article, Jon.
Since when did the National Party ever do things for the good of the country? Their policies are in place to please their major supporters & if anyone else gains from them that is coincidental.
What you are missing out on in your deduction is the volume of Non GE modified crops the world market will accept.
Sure you will get more for your product purchased by people who want to indulge in their needs with the GE free products. But how big is this market and is the market sustainable as world wide recession hits?
In my corporate days experience; the premium people will pay CONSISTENTLY for “clean green” products is between 5 and 10%.
The frauhous in Germany may look at New Zealand kiwifruit and pay 10% more over the Chinese grown kiwifruit. But will she do this on an ongoing basis? If she tries Chinese grown kiwifruit (New Zealand temporary out of stock say) and can not distinguish any taste difference, will she go back to buying the more expensive New Zealand kiwifruit? (will the supermarket stock even the more expensive New Zealand kiwifruit if sales volume versus the Chinese grown ones does not warrant stocking them).
History tells us that she will not, for it makes not a scrap of difference to her or her direct environment.
“Clean Green” is 100% overrated in regards marketing exclusiveness, that customers will pay extra for.
Ask your self; why do people buy McDonald’s hamburgers when better and more healthy options are available? Same reason, good healthy burgers are 50% more expensive than McDonald’s ones. Hence they don’t buy the more expensive ones.
Gerrit a long comment with 20th century thinking.
Wake up man. GE is a dangerous drug for the mind as well as the crops. But eventually, like thalidomide was shown to be unsafe by experience and observation, we will find GE is so dangerous that there will be murder done. An unsatisfactory outcome and a failure of restraint in meddling with earth’s millenia-built factors.
Stay away from it except in headline blazing special cases, and even then I don’t trust the wicked, wealth and power-inspired to abide by any restraints. Don’t make it easy for the ba….tards. Or are you, have a son, relation, already trained up and ready to be let loose like a lithium-powered arrowhead?
Not arguing the pro or cons of GE, simply stating that the market for non GE modified foods is limited to those who can pay an excess for the privilege.
To get non GE modified produce on the wider market it needs to be priced the same as GE modified food or people simply wont buy it. There is no premium attached to non GE foods. Only persuasive marketing will sell that food (easily) but the writer suggest that non GE could command a premium of 40 to 50%. That is a total day dream fantasy.
A market exists for a 5 to 10% premium no doubt, but that market is small and difficult to service and distribute to.
So sure market non GE foods but don’t expect the market to pay a premium.
Bit like the argument for free range eggs versus caged chicken eggs. Price matters.
https://www.stuff.co.nz/life-style/food-wine/food-news/105367829/we-want-free-range-eggs-right-up-to-the-point-of-buying-them
“At this Pak ‘n Save, a dozen Farmer Brown free-range mixed-grade eggs work out at 58 cents each. Colony-cage eggs are 30 cents each, while standard caged eggs cost just 25 cents each.”
“The beanie-wearing man pulls a carton of caged eggs from the Pak ‘n Save egg shelves, hesitates, then slides it back.
”I’m having a bit of a guilty conscience,” he says. “I feel I should do the right thing, you know, those battery hens, but …”
It’s the price, isn’t it?
“Well, yeah, it’s hard but you need everyone on board to make a change,” he says, staring at the shelves.
But when he thinks I’m not looking, he plucks out the caged eggs and walks off.”
Thanks a refreshing well documented article that allows for the comic benefits of the public holding the line for gene edited food. There has always been a distinction here for the food , the soil and environment Ben and with the higher standards of the EU market NZ is an organic and trusted leader in many areas.
Yes there’s a the push for gene edited pigs to help in medicine as on the mainstream media today .
Lets not trip up and conflate the two as the pro GE business lobby attempted to do over time with media misinformation Ben W.
This has been a good riposte to one of the National party leaders assumptions or election statements with the recent Sunday morning Jack Tame interview .Lets be aware this blog contains more facts than industry hype for our food markets here or overseas .whether niche or more reliability focused. China and Germany have certainly trusted our safer food standards , remember the milk power incident , the Helen Clarke govt hesitantly became aware of the ethical trade issues? This should be shared wisely to show the lack of depth of some of the general business assumptions of unregulated gene edited foods, we can’t fob off all the public all the time. Much of the spin or new GE developments are not proven to be sage as good research and articles like this demonstrate. Our Green holistic NZ brand is far from perfect , though. We do engage in country wide discussions on climate change , the intensive or dirty dairying with our rivers and nitrates (high bowel cancer rates) , the over use of Roundup or glyphosate based toxins, carbon emissions with the agricultural methane too. Look for the easier, tested solutions out of a lab first, its common sense , when we see the failure of ‘golden’ Vit A rice or the rye grass off shore, initially hyped, food experiments.
Typo first line ? “Economic benefits “ are larger , why is there not more research on this and organic food , I think we know why its so one sided or hyped No au contraire , millsy, the ‘anti vax’ is far more about medicine ( on repeat, most know this) , not hijacked sorry, its rather than the GEfree and organic and the food safety standards.We have had the line of “being left behind 20 yrs ago” remember, there’s the opposite shown here . More research before the haphazard decision by National or Act for votes to deregulate “gene editing “ version ,as if, its different sue to ‘sniping’ genes or poor science. Why no public eduction on genome editing?
Yes, I was againt GE in the past. However now, we need it more than ever. Using GE we can get the same or more milk from fewer cows, lessen the need for nitrates in fertiliser, get more meat from cattle, get more wool from sheep, and reduce agricultural impact on the environment. The world will leave us behind if we continue our ban on GE crops. We should be becoming the Silicon Valley of biotech (or whatever you want to choose), not some subsistence hobbit village.
Thank fuck the anti vaxx QAnons have hijacked the GE free movement and made it cool for the left to support GE.
I think you are a bullshitter.