Political Economy of Genetically Modified (GM) Food Production in China, India &

Kenya, and Brazil

Carl E. PrayBased on research in collaboration with Gal Hochman,

Jikun Huang, Jun Yang, Ruifa Hu, Latha Nagarajan, Bharat Ramaswami, Jose’ Maria da Silveira

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No GM food crop production in India, China and Kenya: Regulators approve, Politicians veto

In China regulators approved insect resistant rice and high phytase corn in 2009 as safe for production

– But no permit for cultivation of GM rice or corn varieties– New government is showing signs of support for GM corn

• In India regulators approved insect resistant eggplant for cultivation in 2009– Minister of Environment declared a moratorium on Bt

eggplant 2010.

• Kenya – regulators had approved imports of GM corn and soybeans for food aid and consumption– Kenyan cabinet placed a ban on GMOs in 2012 imports and

consumption over fears of cancer.

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Politics changing – will we have GM corn production in Asia? • CHINA: Political climate clearly more favorable for GMOs

President Xi Jinping speech regarding GM technology at the People’s Congress December 23, 2013 published October 2014: – “Be courageous in innovative research, occupy the commanding height

of transgenic technology and don’t let big foreign companies take all the markets of transgenic agricultural products.”

– 2015 No.1 Policy Document: Govt will promote GM crop production

• INDIA: New (2014) Minister of Agriculture and Environment supporting GM crops as safe and profitable.– Resuming field trials of Bt eggplant, mustard, corn, and others. – Government educating Hindu nationalists to obtain their support

• Comparison with BRAZIL one of the few big countries that had major biotech policy change since 2000 – 2005 major policy change to support biosafety regulatory system

CTNBIO legalizes GM soybeans. Permits GM corn (2007).

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Past analyses of why countries do or do not permit GM food production.• Consumer attitudes and the role of civil society environmental

and consumer organizations in generating opposition to GM technology – food safety, failure, and distrust of regulators– India – GM agricultural technology an agricultural failure and leads to

farmer suicides. (Ron Herring) – China - GM food not safe for human consumption - GM rice already

polluting Chinese rice production. – Kenya – GM food leads to cancer (cite Seralini article), impotence

• Political economy models (Graff, Hochman, and Zilberman various years Pray and Naseem 2003)– Consumers and small farmers big beneficiaries in aggregate but large

numbers, small benefit per individual and difficult to organize– Concentrated economic groups who could lose block GM approval –

pesticide industry, biotech industries that can’t compete, farmers who gain from protection,

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Framework of today’s presentation • Political approval of GM food or feed production approval

in China, India, and Kenya

• Consumers concerns about novel foods - particularly if encouraged be civil society organizations both national and international – can prevent GM commercialization

• To obtain approval economic interest groups must champion biotech

• And Government must have political goals that GM foods could contribute to

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Extend the political economy analyses

• Extended analysis of who benefits and loses from adoption – Not just biotech/seed industry/Farmers/Consumers– Simulations results

• “consumers” in to feed/livestock/food industry and final consumers • Seed becomes biotech, multinationals, local seed industry and pesticide

industry• Chinese example & summary of others – Anwar provided the Kenya story

• Surveyed industry groups about their perceptions of benefits or losses and their lobbying activities

• Analyze behavior by examining groups’ activities through content analysis of media and interviews with industry groups

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China Example: General Equilibrium Model Plugged Into GTAP Trade Model

Dr. Yang Jun and Dr. Jikun Huang

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Assumptions about GM maize impact

 Non GM Hybrid 

maize ZhengDan958a

GM maize% change

    Bt ZhengDan  Foreign variety 

Available Year in Chinese Market

  2015 2017

Yield  6.0 (tons/ha) 18 22Pesticide  150 (yuan/ha) -70 -70Labor cost  111 (day/ha) -11 -11Price of seeds  10 (yuan/kg) 65 230

Output price  2.17 (yuan/kg) 0 2Source: Baseline data CCAP survey of 20 countries in 2010. GM maize changes based on information from CAAS, foreign seed companies and interviews with experts in China.

Impacts of GM rice on yield and inputs, relative to the conventional variety

Source: a: Results from Huang et al. (2005) b Results from Yang (2005).

　 Non-GM variety GM (Bt ) rice

Yield a (kg/ha) 6115 6%

Pesticide a (kg/ha) 21.2 -80%

Labor cost b (day/ha)

125 -9.7%

Price of seeds b (yuan/ha)

348 24%

Impacts on maize and rice sectors, relative to baseline (%, 2025)

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　 Maize Rice

Output 10.4 0.8

Price -9.3 -3.2

Import-30.6 (-701 million

US$)-7.3 (-59 million

US$)

Export121.0 (5.5 million

US$)15.9 (14 Million

US$)Net import (million US$)

706 73

Self-sufficiency

-Baseline 88.4 96.8-Policy scenario

91.7 97.0

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Impact on the value added of related sectors under different scenarios, relative to baseline (million US$, 2025)

Bt rice Bt maize

 

 Rice & maize farms

-1254

(-2.1%)

344

(2.3%)

 

Farmers Income (Value added + value of labor saving) 

952

(3.1%)

508

(3.5%)

  Animal and feed industry

531

(0.11%)

254

(0.05%)

  Agr. Chemical industry

-56

(-0.87%)

-2.2

(-0.03%)   Seed industry      73 177

Consumers (EV)   China 3129 1955   USA -21 -250

　 ROW 132 94

Summary of Benefits (+++) & Losses (---) to Stakeholders of GM rice & corn production based on simulations

Stakeholders China (projection)India

(projection) Kenya Brazil (actual)

Bt Rice Bt Corn Rice Corn Corn Bt/RR Corn

RR Soybean

MNC biotech/seed + + + ++ + +++ +++Local biotech ++ ++ + 0 0 0 0Govt bio scientists ++ ++ 0 0 ++ +++

Local seed +++ +++ ++ + + -- ++Pesticide cos -- -- -- -- - ++ +++Farmers ++ +++ ++++ +++ ++++ ++++ ++++Traders/millers/ + +/- + ++ ++Feed/livestock + +++ + ++ ++Food industry +/- ++ + +Consumer price decline ++++ + ++++ + ++/0 ++ ++Exporters -- +++ ++++

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Perception of Benefits: Consumers

• China and India: Millions of consumers would receive some economic benefits from GM but see little evidence of benefits– India & China rice consumers benefits through lower prices but small for

individual consumer in China and India – 2 or 3% decline in prices in India, 4% in China (assuming no price discount for GM grain and no price supports)

– GM corn benefits to consumers go through livestock/feed industry passes only a portion of gains through to consumers (<0.1% price declines in China)

• Kenya – Consumers would benefit depending on government import policies

• Brazil– Brazilian consumers get lower meat and cooking oil prices– Most benefits to Chinese consumers of oil and meat, European

consumers of meat, and other global consumers

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Urban consumers’ perceptions on GM food safety for human consumption in China by year (%)

Year Unsafe Safe No idea

2002 13 37 50

2003a 16 35 49

2003b 13 38 49

2010 18 29 53

2012 45 13 42

Average 26 27 47

Source: Jikun Huang and Bowen Peng 2015

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Consumer’s perceptions – other countries• India –

– Recent studies of urban consumers show “weak-aversion” to GM food (Bansil & Ramaswami)

– Farmers like technology – main concern is biotech seed prices and availability (Ramaswami 2015).

• Kenya – Surveys 2003 – 2009 (de Groot & collaborators) both urban and rural

consumers positive before debate on biosafety bill and cancer controversy

– Rural consumers more positive, urban consumers concerned about food safety

• Brazil– Like US consumers – some urban consumers concerned

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China industry: Expected profits or losses from adoption of Bt Rice and Bt Maize 2014

Number of firms

  sample profit loss no change not sureBT rice all firms 160 26 32 77 25

    Food firms 40 10 3 26 1

   Feed firms 17 2 0 15 0

    Pesticide  53 5 20 14 14

    Seed 50 9 9 22 10BT maize firms 160 37 33 66 24

    Food firms 40 10 3 26 1

    Feed firms 17 9 0 8 0

    Pesticide     firms 53 4 21 14 14

    Seed firms 50 14 9 18 9

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Industry groups’ perceptions mixed in India and Kenya – mainly positive in Brazil• Pesticides

– Insecticide producers would lose some profits from Bt– Herbicide producers pro biotech

• Feed/livestock industry main concern is availability of inexpensive maize & soybean imports (both GM) and no disruptions of imports

• Case study of seed/biotech – expected them to be active because GM cotton provided big profits in India & potential profits from GM seed of food crops but mixed because of concerns about MNCs taking markets

• Food industry follows consumers – Chinese food firms had bad experience with GM rice & Basmati exports

fear they would lose markets.– Basmati exporters in India fear losing export markets

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Commercial maize and rice farmers mainly supporters

• Once they get “Stealth” seeds they won’t give it up – Bt rice in China (still illegal) – small farms

• Commercial farmers of these crops positive – Farm leaders interviewed and organizations’ publications in India

and Kenya – – Exception basmati rice producers in India –

• Small farmers organizations oppose biotech & Agribusiness in Brazil and farm groups associated with Communist Parties in India

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Who is active in the debate?

• Civil society environmental and consumer groups

• MNC Biotech cos in India and Brazil

• Local seed companies to limited extent

• Government biotech scientists in China and Brazil to a lesser extent in India and Kenya

• Farmers in Brazil, less in India and Kenya, and less in China

• Exporters oppose in India but support in Brazil

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Government goals: for interest groups to influence policy their goals must be consistent with goals of groups in government

Main goals of national governments on ag tech. • Brazil – increase agricultural exports, strengthen

agribusiness, attract foreign investment…..• India – economic growth supported partially by foreign

investment, support local biotech industry, self-sufficient in production of wheat and rice.

• Kenya – access conventional and GM tech through royalty free agreements…

• China - build global Chinese biotech firms; self sufficient in production of corn and rice

Summary of Political Influence of Interest Groups on Ag Technology (assessment by Rutgers team)Pro-GM (+++) Oppose GM (---)

Stakeholders China India Kenya Brazil

MNC biotech/seed + ++ + +++Local biotech +++ + 0 0Govt bio scientists +++ + + ++Local seed co ++ ++ + +Pesticide cos -- -- 0 +

Large farmers + ++ -/+ ++++Small farmers 0 ++ 0 --Traders/millers/ + +/- ++ ++Feed/livestock + ++Grain exporters - -- 0 +++

Food industry - - +Consumers -- -- -- ++Environmentalists - --- -- ---

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Will Coalitions for GM corn prevail?• China –

– Supporters: Chinese biotech + government biotech scientists + officials at Ministry of Science and Tech and Ministry of Ag.

– Opponents: Urban consumers + Chinese seed industry

• India – – Supporters: MNCs & Indian biotech industry + most farmer

organizations + feed and livestock industry???– Opponents: Greenpeace & some urban consumers + rice exporters +

farmers who are rice exporters + nationalist groups

• Kenya– Supporters: Seed cos., grain millers, commercial farmers– Opponents: Environmental groups & urban consumer groups.

• Brazil – Supporters: MNC biotech/seed/pesticide industry + EMBRAPA +

commercial farmers + exporters– Opponents: Consumer groups + Greenpeace + Landless Rural

Workers’ Movement

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Farmers organized and politically powerful in making policy in Brazil: ensure GM production• Government supports commercial farming & exports• Influential anti-GM consumer, environmental, small farm

group oppose• Commercial farmers could see benefits & have power

– started growing GM soybeans from Argentina in 1996?? or 1997 in Rio Grande do Sul - 5 million “illegal” ha in 2003/4

– RR Soybean technology particularly suited to medium to large farmers– Large and medium sized farmers are organized to prevent land reform:

"Bancada Ruralista" in Congress, Governors of states like Mato Grosso do Sul.

• Multinationals biotech make large profits – Monsanto’s 2nd biggest market after US

• Pesticide industry & exporters support GM maize and soybeans

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Government led biotech in China – GM corn likely • Government goals – corn, wheat & rice self-sufficiency &

Chinese biotech company that is globally competitive with Monsanto– Huge and growing imports of corn and DDGs – Self sufficient in rice and demand declining– Govt. thinks Chinese industry finally has competitive GM technology

• Consumer opposition growing stronger but less influence with this government - will hold back on approval of GM rice to get GM corn

• Government biotech scientists do most GM research in China and expect to benefit personally

• Other economic interest groups split but not influential– Chinese seed and pesticide industry groups split don’t expect much– Farmers have little influence…– Food opposed to GM rice

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India – GM corn uncertain

• Government interested in rapid economic development through foreign and Indian investment

• Urban consumers concerned but not as worried as China - environmental influence reduced recently

• But few local champions of technology • Most farmer’s organizations support GM but fine rice and soybeans farmers’

organizations oppose– Major activities of farmers’ organizations are price supports – rice, wheat, cotton

– and input subsidies. – Technology secondary issue

• No corn industry association – in part because there is no minimum support price and trade is handled by international firms….

• Some Indian biotech and seed companies support but some seed firms oppose

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Kenyan situation – direction still not clear

• New government more pro-biotech, but structure changed• Urban consumer’s health fears, vocal anti-biotech NGOs • Bt maize technology ready, drought tolerance requires a few

more years • Most economic interest groups not engaged

– Monsanto and Syngenta are pushing through AATF– Local seed companies like the idea of royalty free seed but fear the

hybrid maize breeding power and HT traits of global multinationals– Maize farmers have large numbers but no effective, organized lobby– Consumers could gain lower prices, but worried about health effects– Grain milling industry is starting to become engaged