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Genetically engineered crops (GMOs): Impacting U.S. corn exports and increasing corporate agribusiness power over farmers

(Saturday, Nov. 16, 2002 -- CropChoice news) -- Dan McGuire, director of the American Corn Growers Association's Farmer Choice - Customer First program, delivered the following presentation yesterday to the Kentucky Community Farm Alliance and the national convention of the Genetic Engineering Action Network. Other speakers on the Biotechnology Panel discussion were Wendell Berry; Marti Crouch; Scott Smith, dean of the University of Kentucky College of Agriculture; agricultural economist Valerie Askren; and agronomist Joe Chappell.

It's great being here with you on behalf of the American Corn Growers Foundation and American Corn Growers Association's Farmer Choice - Customer First program to discuss the implications and issues surrounding genetically engineered crops (GMOs as they're known).

Kentucky is the number one tobacco producing state in the nation. The last USDA census reported nearly 45,000 farms producing tobacco. I don't claim to know much about tobacco production but I will share some of our experiences with the way that GMOs have impacted the corn sector. Kentucky did produce 156 million bushels of corn in 2001 and over 116 million this year. According to that 1997 USDA Census you had 7,510 farms producing corn; 6,609 farms producing soybeans with nearly 50 million bushels of production in 2001 and nearly 40 million this year; and over 3,000 farms producing about 20 million bushels of winter wheat the last two years. So, you have considerable grain production. Kentucky also had about 16,000 farms producing hay, silage and field seeds. That's the second largest category of crop farms, making Kentucky the second or third largest hay producing state behind Texas and Missouri. Kentucky is a big agricultural state.

But biotechnology is the topic tonight, so, lets review what's happened to U.S. corn exports and corn prices since the introduction of GMOs. First, it's important to put the corn situation in the context of the so-called "export and market oriented" farm policy. Farmers have been living under that scheme ever since the 1985 farm bill. We were told the U.S. needed a farm policy that keeps corn and grain prices low in order to be competitive in the world export market. That farm and trade strategy has plagued farmers with very low corn prices ever since except in times of weather-related crop shortfalls somewhere in the world. But U.S. corn exports did not rise to the near 2.5 billion bushels as projected by some USDA economists. And land grant university think tanks like the Food and Agricultural Policy Research Institute (FAPRI) also had such overly optimistic projections in the baselines when that farm policy and the WTO agenda were being sold to the U.S. Congress and rural America. Indeed U.S. corn exports have been trending downwardâ€|not upward since the passage of the 1996 "Freedom to Farm" law and GMO varieties have had quite a bit to do with that negative export trend. In the just ended corn marketing year as of August 31st, U.S. corn exports were only 1.9 billion bushels, at least half a billion off the target level that the "free trade" policy advocates told farmers they could expect. That reduction in exports caused U.S. corn inventories to rise year-over-year, depressing corn prices.

U.S. corn exports to Europe have dropped from 106 million bushels in MY 1995/96 to nearly zero bushels in the year we just ended. Japan, the largest export market for U.S. corn reduced their purchases by 53 million bushels the year before last because the GMO variety StarLink was planted by U.S. farmers. It was only approved for livestock and industrial use but couldn't be kept out of human food products and totally disrupted the corn market. We estimate that the U.S. has lost about 400 million bushels of corn exports in total (on a cumulative basis) since GMO corn varieties were introduced in MY 1995/96. Those lost exports have reduced corn prices to U.S. farmers in a range from a couple of cents per bushel in MY 1997/98 to forty cents per bushel in MY 1999/2000 and fifty cents per bushel in MY 2001/02, and up to perhaps as much as a dollar per bushel in the current MY 2002/03. Why such a price impact this year? Because in a drought year like this had those 400 million bushels of export sales not been lost we would be seeing a much more dramatic impact on corn prices this year. Corn inventories would be much lower, so the impact of those lost five or six years of exports from GMOs is really coming home to roost this year. I estimate that the U.S. would be looking at 1.2 billion bushel inventory in the year we just ended instead of 1.6 billion and USDA may well be forecasting only about 340 million bushels in ending corn stocks for next August 31st instead of 848 million and that would have kept prices much higher for much longer. Economists can quibble over the actual impact of these lost exports on everything from corn production, price and export levels in the years I mention but regardless of the exact numbers, the indisputable fact is that the impact of GMOs on corn exports and corn prices has been significantly negative.

Another impact has been to encourage foreign competitor exporting countries to increase their conventional, non-GMO corn production with the strategy of going after foreign buyers that the U.S. has lost or alienated. Brazil, China and Eastern Europe are examples.

Now, I want to address the issue of whether GMOs can "feed the world" as some biotech promoters would have us believe. GMOs will not end hunger in the world any more than the so-called Green Revolution of the 1970s did. Even if GMOs did result in higher yields, which is a questionable premise, the problem does not lie in food production but more in food distribution and consumption patterns and the lack of adequate income. According to a recent Associated Press article that appeared on ProgressiveFarmer.com, "The world today has more food per capita than ever before in history. It is enough to provide everyone with 4.3 pounds of food everyday; 2.5 pounds of grain, beans and nuts; about half a pound of meat, milk and eggs and another of fruits and vegetables. World Bank data shows us that the average calories per capita available in developing countries had increased from 1,925 calories per capita in 1961 to 2,540 calories per capita in 1992; which is higher than the requirement of the Food and Agriculture Organization (FAO) of 2,200-2,300 cal/capita. The United Nations figures show that there are more than 800 million hungry people in the world today, with 36 million in the United States, the world's foremost exporter. This shows, as experts have observed, that the problem is not in food production but more in its distribution."

Why is this so? Because food production and distribution responds to money!

Quoting from the AP article again, "The problem of world food security is therefore not the farmers' demand for new technology to increase productivity or food production, but in distribution and our consumption patterns. It would be preferable to ensure better food prices for farmers and ensure enough land for food production. We need new policies to regulate this, although it seems to be impossible under trade liberalization where everything is market-driven. As individuals, we can also contribute, for example by having a more diverse diet, especially from food produced locally by small farmers. Instead of putting ourselves in a vulnerable situation by making our food security dependent on fewer kinds of food and genes through GMOs produced by multinational firms, wouldn't it be better to have more diverse sources of local food?"

The realization that tobacco is not food provides a nice transition for my final point about GMOs and the cautions I suggest to you regarding GMO tobacco. Just like GMO corn, soybeans, canola or wheat, GMO tobacco varieties are likely to come with similar patents, technology use agreements and production contracts. Those binding legal provisions give biotech companies tremendous power and steadily erode farmers rights concerning everything from saving seed to where you can market your crop. Regarding the issue of pharmaceutical crops I would urge tobacco farmers to protect your rights and ask some very tough questions before going down that road. If so-called "pharm-crops" are as profitable as their promoters say, why would the biotech patent holders on those tobacco varieties let tobacco farmers have a fair share of the profit? I don't know if tobacco farmers have paid into university research departments to develop new tobacco varieties like corn, wheat, soybean and other farmers have over the years through taxes (known as check-offs), combined with state and federal general tax funding. If so, just like grain farmers you should have a right to those public varieties, including the right to save that seed or that cutting for next year. However, some universities have gotten so close to biotech companies and their millions of dollars that public crop variety programs seem to be going by the wayside in favor of the new biotech regime and public germplasm seems to be getting sold off to the biotech companies who then charge farmers a technology fee for what those same farmers have been helping pay to develop for about half a century. That needs to stop and land grant universities need to prioritize their original mission of serving farmers, rural communities and the public interest. In fact, I would suggest that any biotech company that has benefited from public variety research should be paying a royalty back to farmers or at least public institutions.

Never underestimate the power of the revolving door relationship between agribusiness and the federal government's regulatory and research agencies that are responsible for regulating biotech crops and public food safety. This unfortunate trend has gotten worse over the years and plays itself out in a strong way with biotech crops. Using even the U.S. Patent Office biotech companies have sidestepped the will of Congress regarding seed patents. GMOs are a vehicle for them to expand the kind of oligarchy power that exists between multinational agribusiness corporations, public institutions and the regulatory agencies that are supposed to be the "referees" in the marketplace.

There are a lot more consumers and farmers than there are multinational corporations so lets use our advantage in numbers of people to create strong coalitions and wrestle back some of the power that rightfully belongs to us, especially regarding public crop varieties.

In closing, agribusiness corporations are notorious for exploiting farmers. Consider how poultry and hog farmers have been totally exploited by production contracts that favor the economic interests and profits of those same agribusiness corporations that write those contracts. Consider how the value added profit from processed products derived from corn, wheat and soybeans goes to the processors, not the farmers. That helps explain why food prices to consumers go up even when grain prices to farmers go down and why farm programs aimed at stabilizing farm income, are so expensive. And, consider how Monsanto has used detective agencies and others to go on to private farms without the farm owners' specific permission so they could take samples of what they thought were Roundup Ready soybeans planted in violation of their seed patents. Then they filed lawsuits against hundreds of U.S. farmers, intimidating thousands of others. Their seed and technology use agreements let them get by doing that. Lets remember that the biotech companies producing GMOs are primarily in the business of making big profits for themselves by selling higher priced, patented GMO seed and then also selling the herbicides and other chemicals that they require farmers to use on those crops.

I won't go into the other serious legal and marketing issues that range from crop segregation, liability for crop contamination, testing for GMOs and trade disputes. Hopefully the issues I have covered in some detail will be helpful. It's a pleasure being here with you to discuss biotechnology. Thank you.