Hurley, 2001 What to Know Before Planting GMO Terry Hurley Telephone:

Hurley, 2001 Overview How Much GMO is Out There? Production –Profitability –Risk Marketing –Markets –Market Access –Market Premiums –What’s the Consumer Thinking? Regulation What’s Next

Hurley, 2001 Bt Corn and Herbicide Tolerant (HT) Soybean Plantings Notes: Source = USDA/NASS estimates represent planting intentions.

Hurley, 2001 U.S. Distribution of Bt Corn* * Represents the percentage of total corn acreage planted to Bt corn hybrids in counties in which > 50,000 total acres of corn were planted. (Source: Bt corn industry sales data as compiled by FSI, Inc., 1999)

Hurley, 2001 Production Decisions For GMOs Step 1: Evaluate the Tangibles –Increased Revenues/Decreased Costs –Decreased Revenues/Increased Costs –Partial Budget Analysis Step 2: Evaluate the Intangibles –Increased Flexibility –Risk Management Benefits –Safer Handling –Environmental Safety –Product Quality

Hurley, 2001 Example of Partial Budget Analysis Are Roundup Ready soybeans more profitable?

Hurley, 2001 Example of Partial Budget Analysis Is Bt corn more profitable?

Hurley, 2001 Conclusions of Partial Budget Analysis HT Soybeans –Change in net returns are less than 0, so the conventional soybeans are more profitable under the assumptions of the analysis. –What factors may be missing in this analysis? Bt Corn –Change in net returns are greater than 0, so Bt is more profitable under the assumptions of the analysis. –Conventional corn could be more profitable with market premiums in excess of $0.12 a bushel. –What factors may be missing in this analysis?

Hurley, 2001 Should growers ever adopt GMOs when conventional varieties are equally or more profitable per acre? Some Intangibles May Increase Profitability Indirectly –Increased flexibility –Product Quality Others Do Not –Risk Management –Environmental Safety Emphasizing Intangibles That Do Not Affect Profitability Can Reduce Competitiveness

Hurley, 2001 Recent Estimates of Yield Loss From European Corn Borer

Hurley, 2001 Markets Foreign Opposition Segments Markets Market Premiums Are Possible What Growers Plant Determines Market Access Greater Market Access Does Not Guarantee Premiums

Hurley, 2001 GM Export Market GM Domestic Market Non-GM Market Plant Unapproved for Export GM-Seed Plant Approved for Export GM-Seed Plant Non-GM Seed GM Export Market GM Domestic Market Non-GM Market GM Export Market GM Domestic Market Non-GM Market Market Access

Hurley, 2001 Market Approval and Access Market approval and access is based on Events. Events are defined by how the plant is different. –Proteins –Promoters All hybrids are based on an Event. Determining approval status of a hybrid requires knowing the approval status of the Event on which the hybrid is based. Elevators Accepting Non-EU Approved Hybrids –

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Status of Current and New Approvals US EPA approvals for Bt corn Events are conditional. –Original Expiration: January and April of 2001 –Extensions to September 30, 2001 –October Scientific Advisory Panel –Bt176 Registration Will Not Be Renewed Japanese Approvals Being Reviewed Under New Regulations Moratorium Continues in the EU

Hurley, 2001 Market Premiums For Non-GM Market Premiums Arise From Excess Demand –If there is enough supply to meet demands, market premiums unlikely. Non-GM premiums are out there, but not widely available. Tokyo Grain Exchange Offer Non-GM Futures –Good barometer of market conditions for Non-GM soybean. No Consistent Source of Market Premiums for Non-GM Corn

Hurley, 2001 U.S. Soybean Use

Hurley, 2001 U.S. Corn Use

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Hurley, 2001 Customer Attitudes Most US Consumers Seem to Support Biotechnology –Support Fell in Fall 1999 –Little/No Rebound Since –Affect of StarLink Not Clear Exports Have Not Changed Dramatically As Percentage of US Supply –Some Evidence Growth May Have Declined –USDA Reports StarLink Contamination Hurt Exports Many EU Supermarkets Going Non-GM Livestock

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Export Trends

Hurley, 2001 March 1, 2001 U.S. Exports and Outstanding Export Sales Japan -17% South Korea -43% Taiwan+1% Africa-4% Western Hemisphere+5% Total-10% Pre-StarLink Projections +13 to 17% Source: Robert Wisner, Extension Economist, Iowa State University

Hurley, 2001 Regulation United States Department of Agriculture –Animal and Plant Health Inspection Service (APHIS) Department of Health and Human Services –Food and Drug Administration (FDA) Environmental Protection Agency (EPA) GMO Labeling Around the World

Hurley, 2001 Animal and Plant Health Inspection Service Protects American Agriculture Against Pests and Disease Regulates Movement, Importation, and Testing of GM Approves Petitions for Non-regulated Status –Required for Commercialization

Hurley, 2001 Food and Drug Administration Governs the Safety and Labeling of Drugs, Food, and Feed Can Remove Products From Market Voluntary/Mandatory Consultations Labeling –Allergens-Yes –Substantial Equivalents-No

Hurley, 2001 Environmental Protection Agency Governs Pesticide and Herbicide Use Regulates Plant-Pesticides (Bt Crops) Treats Plant-Pesticides Different From Other Pesticides Planning New Guidelines Currently, Case by Case

Hurley, 2001 Insect Resistance Management Requirements for Bt Corn in Minnesota At Least 20% Conventional Corn Refuge Spraying for European Corn Borer, and/or Corn Earworm Based on Economic Thresholds Is Permitted on Refuge Refuge Can Be in External Blocks, on the Edges or Headlands of Fields, or in Strips in a Field of Greater Than 6 Rows Refuge Must Be Planted Within 1/2 Mile of the Bt Field –1/4 Mile is Preferable If Refuge May Be Sprayed Source:

Hurley, 2001 GMO Labeling Around the World Labeling Scheduled to Be in Place For 2001 Harvest: –European Union (1% Tolerance) –Japan (5% Tolerance) –South Korea (3% Tolerance) Labeling Pending: –Philippines –Australia (1% Tolerance) –New Zealand (1% Tolerance) –Thailand –Malaysia –Hong Kong (5% Tolerance) Labeling Encouraged by Global Biosafety Protocol Treaty Source: Robert Wisner, Extension Economist, Iowa State University and Rodney Williamson, Iowa Corn Growers Association

Hurley, 2001 Final Notes Bt Corn and HT Soybeans May Be Profitable, But No Guarantee- Growers Must Work the Numbers For Their Operation –Primary Value of Bt Corn is Yield Protection-Sensitive to Commodity Prices and Highly Variable Pest Infestations –Primary Value of HT Soybeans is Cost Savings and Flexibility-Insensitive to Commodity Prices and Weeds Are More Consistent Problem Growers Need to Know –Hybrid Event –Market Options –Planting Restrictions Growers Need to Watch –Consumer Attitudes –What Neighbors Grow

Hurley, 2001 What’s Next? Corn Rootworm Control Corn Rootworm and European Corn Borer Control Multiple Toxin European Corn Borer Control Time Line is Still Uncertain –StarLink Has Slowed Things Down –Monsanto Has Product Ready to Go –Pioneer Has Product that is Close

Hurley, 2001 Thank you for your time!