Economic Implications

Economic Concerns for Farmers

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Approximately 33% of this year's U.S. corn crop and 55% of U.S. soybeans are genetically modified, according to industry estimates (Frankel, 1999). Therefore, the concerns behind the GMO's are extremely prevalent in the market. Despite all the promises from major companies such as Monsanto and Novartis of benefits for farmers to increase profits and be more marketable, farming transgenic crops proves to have its own set of burdens. Recent rejection of genetically engineered crops in European and Asian markets has reduced their demand, forcing farmers to absorb larger losses for planting GM crops. Some U.S. companies including Gerber, H.J. Heinz and Iams Pet Supply are now rejecting GM crops as well (Lehrman, 1999). The National Corn Growers Association warns that some major processors are now calling for separation between GM and non-GM crops, as well as differential pricing between the two. Archer Daniels Midland Co. has warned suppliers to separate crops and rumored premiums for non-GMO's are anywhere from 8 to 15 cents a bushel for corn and 20 to 30 cents a bushel for soybeans (Frankel, 1999). In turn, farmers who planted transgenic crops are pressured to endure the extra costs for storage and handling separated crops. The National Corn Growers Association also released reports alerting farmers to issues of liability, warning that there is no way to assure crops do not contain GMO germplasm due to contaminated pollen drift. This implies that farmers need to be careful signing contracts with processors (National Corn Growers Association). Transgenic seeds cost more than regular seeds, for example, Novartis corn sells for $124 a bag versus $80 for regular corn (Wadman, 1998). However, most farmers will not be able to sell crops at the higher prices they expected. In fact, farmers could be selling for prices less than the regular crops they used to plant. For the farmer's sake, the hope is the loss in profitability is offset by the lower production costs resulting from better pest and weed management. The 1999-2000 harvest however, poses a grim situation for farmers because the extra production costs will probably outweigh the benefits.

*Progressive Farmer Poll of farmer opinion on european trade.

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