Standing Committee on Rural and Regional Affairs and Transport
Senator SIEWERT-I would like to ask some questions around genetic engineering. This month ABARE released a report on the expected benefits if Australia moved to genetically engineered crops. I may have been interpreting it wrong, but it seemed to me that it made quite extraordinary claims about the values GE crops would bring to Australia and the properties forgone if we do not move to genetic engineering. It seemed to me from my analysis that what ABARE was calculating was the projected value of the crops in total rather than the additional yield benefits. Could you tell me if I am correct or have I misinterpreted it?
Dr Penm-Using our in-house model for the Australian economy, including the farm sector, we undertake a survey of international experience in terms of GM crops. We undertook two simulations. One is focused on canola. Another one is a scenario consisting of five possible GM crops. Some of them including wheat and rice are not commercially available right now. But given we are forward looking, we use that as a demonstration/illustration for possible impact. To answer your question, the simulation results for this particular paper is a cumulative impact of the increase in crop adoptions, including export, over a 10-year period. We have undertaken a simulation in two ways. One is that we assume from 2008-09 that canola will be adopted for Australia as a whole and then we examine the economic benefits for each year till 2018-19 and then we add them all up. Then we are analysing another scenario with delayed adoption, that is, we assume adoption will only happen in 2013-14 and then for five years. That is how we did our simulation. It is not really the total crop production we are talking about. It is an increase in economic value of the crop production over a period of 10 years.
Senator SIEWERT-You are assuming in that that all of the crop is genetically engineered?
Dr Penm-Yes. In the model we took the assumption that the adoption will be immediate; there is no
gradual adoption, that is, just assuming that it will happen in that year. Then we also undertake the simulation using the assumption that there will not be any segregation between GM and non-GM. You are correct. We are assuming that everything will be GM.
Senator SIEWERT-It is extremely misleading, the media that you did around it. I have seen the media release and have copies of it. It was extremely misleading. It indicated that Australia was missing out on I think it was $9 billion worth of crops. There is no scenario whatsoever that this country would next year be planting a full GE crop. No country in the world, as far as I am aware, has 100 per cent GE crops. There is no commercialisation of wheat, as you just pointed out. So how does ABARE get away with producing a report like that, which misleads the community entirely? I have not gone into all of the other issues that I have with that report.
Dr Penm-We have no control over the media report. But-
Senator SIEWERT-But I have seen the media release.
Dr Penm-If I remember correctly, what we have said is that for the five crop scenarios over the 10-year period the total economic benefits will be around $8 billion something, reaching $9 billion. I have a copy of the media release here. I am not quite sure where the confusion or the misleading information originates. It clearly states in our report that all those scenarios are for illustrative purposes. We are not saying this is a situation that will happen definitely.
Senator SIEWERT-Why produce a report like that that is in fact no realistic scenario whatsoever, is clearly coming down in favour of GE without properly articulating the constraints, without properly factoring in segregation, liability, and weeds, for a start? Not to mention the fact that a commercial wheat crop is years and years away and, as far as I am aware, there are no commercial wheat crops, GE wheat crops available.
Mr Gunasekera-I guess the idea there was to highlight the maximum potential in terms of increase in the value and output if we adopt GM technology. It is a bit similar to the work that we undertake when you look at trade liberalisation. Sometimes we look at what are the potential impacts of total trade liberalisation. We know it is really unlikely that we will achieve total trade liberalisation within a certain period of time. But it provides some strong indications of the potential gains if we take that path.
Senator SIEWERT-Where do you factor in and provide advice on the constraints on GE? It is misleading and I would not say it was sound economic advice if you do not factor in the constraints, the segregation adequately, the fact that it is not available, that there are weed problems, and the cost of labelling. All of those sorts of issues were not factored into the advice in the report.
Mr Glyde-What you are talking about in terms of describing the real world is often not amenable to modelling and the complexity-
Senator SIEWERT-Exactly. It is misleading in the extreme.
Senator Sherry-Hang on. Let him finish his answer.
Mr Glyde-It comes back to the question of the expectations in relation to accuracy. What we are trying to show, as Dr Gunasekera has tried to say, is that there are some potential benefits here. Within the confines of the economic model that we have, and indeed within the confines of any of the general equilibrium models, you cannot often factor in the precision of the real world. What we do is we describe an illustrative scenario.
We make abundantly clear in the document where the assumptions are. As Dr Penm has said, we are assuming in an unreal world in essence that there will be instantaneous adoption of the technology; there will be no segregation. Clearly, there will be some farmers who will not wish to partake in GMOs in the country. We are also looking at future potential. There are field trials going on for wheat, et cetera, and the other products. But we have done one case study in relation to canola which is real-it is here right now-and others to demonstrate the potential. We document those assumptions and we lay them out. I reject your suggestion that we are biased in our work. What we are doing is we are documenting the simplifying assumptions that you need in order to be able to illustrate a particular point. We are not saying that government should immediately move to broad scale introduction of GMA.
Senator SIEWERT-That is exactly how it can be interpreted. That is exactly how the media interpreted it. Where is ABARE's critical analysis of their marketing constraints?
Mr Glyde-It is in the document.
Senator SIEWERT-It is not. The marketing analysis is not there. It assumes no widespread problems with markets. Where is the balance? Communities should expect from its leading economic forecaster the analysis of the other constraints associated with GE. Where is the analysis of the herbicide resistance that we were talking about earlier? Where is the proper analysis of market constraints? You are assuming, as you said, 100 per cent adoption. There will not be 100 per cent adoption. So those figures are misleading to the community. Where is all that analysis done?
Mr Glyde-The explanation of the assumptions is in the document. Issues in relation to market acceptance, price premiums are in other-
Senator SIEWERT-It is not adequately articulated there.
Mr Glyde-The other point to make is that this is one of a series of reports that we have produced over the last little while. We have dealt with some of those other issues that you have mentioned before to the extent that economics can and modelling can. We have analysed marketing acceptance. In other markets is there a price premium and are other countries providing price premiums? We have gone through those. We have listed out in a scholarly fashion the documents upon which those assessments and those numbers have been based, where we have got the estimates of yield improvements, and our estimates of increased costs for the adoption of the technology. They are documented and are provided in the report. I would hope you would agree that it is very hard to summarise in a one-page media release or indeed in a one-page summary that draws attention to the existence of the report every single caveat in the document. And yet the caveats are there, the assumptions are there, and the evidence is all documented. It is all in the bibliography and the like.
Senator SIEWERT-As to the issues I have been raising around herbicide resistance, those sorts of things are not there. Weediness isn't there. You can go back to Hansard. I have been raising issues with the report that ABARE has been generating on GM for a long time. The issues go back to I think the 2005 estimates or 2006, when you generated one of your reports and I was questioning you about the lack of analysis of weediness and segregation? Those sorts of issues were not there then.
Mr Gunasekera-The reality is our major competitors, China, India, Brazil and Argentina, are embracing GM technology in an increasing fashion and they are increasing their productivity and production and increasing their capture of world markets. It is important for ABARE to highlight the potential losses if we do not take that path in the future. It is important to highlight the realism, what is happening in the global agricultural production scene and global agricultural trade scene.
Senator SIEWERT-What percentage of canola crops worldwide is currently GE? We will see if it is consistent with what I have been told.
Dr Penm-Based on the number I have in here, I think for canola it is about 20 per cent. For soya bean it is much higher. I think it is over 80 per cent.
Senator SIEWERT-How much of the total crops around the world, if we are talking about going to those five crops that are in the report, are GM?
Dr Penm-Like I said, wheat and rice are not commercially available; naturally, there is no GM share in world production at the moment. There has been significant research interest in GM wheat and GM rice. GM rice has been trialled very aggressively in China. To get back to your earlier question, we do not really try to use this report to address all the issues associated with GM. There are some economic issues and some noneconomic issues-for example, segregation. From my understanding of GRDC's answers, it thinks segregation will not be an issue. I also understand the Grants Council of Australia put out a media release. They do not think segregation is achievable. I have to say that we rely on those organisations on certain issues. This paper is not one publication in which we try to address all the issues. This is a series of publications we have been producing over the past few years. Sometimes the issues need to be linked with other publications to get a better understanding.
Another critical issue for us is that it is almost impossible, as pointed out by our executive director, in terms of modelling capacities to incorporate all the issues in the single model. If we wait until GM wheat and GM rice become available and then we start doing the research, it may not necessarily fit into ABARE's role of providing economic advice to our department and to our government. For example, for this paper we are talking about we started the research in, if I remember correctly, April last year and we only just released it. It took almost 11 months to complete the report. It is a series of publications; the research needs to be continued.
I do not think we can take just one report to address every single issue in relation to GM.
Senator SIEWERT-When are you going to be doing the analysis of the other side of the debate and look at non-industry based research? A lot of the research that you use is industry based. When are you going to look at some of the alternative research that is looking at the problems, the segregation issues they have in Canada, the markets, liability-all those issues? When are you going to do all of the research and the modelling that factors those in?
Dr Penm-We are in the process of constructing our work programs. That is not a question for me to answer. But we certainly can talk to our department and stakeholders. From my understanding, there have been significant media inquiries in terms of who actually funds this research. As we listed in here, the funding comes from our department. It seems to me that there will be issues if any stakeholders would like to provide funding for ABARE to undertake this research. That is also a constraint that we are facing.
Senator ALLISON-Were assumptions built into the report-I am sorry, I have not seen it-for climate change and reduced rainfall?
Mr Glyde-I am pretty sure we have not factored in any assumptions in relation to climate change. There is a whole lot of simplifying assumptions that we make in order to make the task doable. We cannot necessarily take on board every single factor in putting out the document. We try to explain what we have assumed and what we have not assumed and what we have tried to model to try and illustrate that there are some benefits here. I think it also comes back to the discussion we were having earlier on today in relation to the problems of feeding the world and the application of new technology to overcome some of the disbenefits of climate change. We have to look at new technologies and whether GM is the right technology. That is a matter for governments and others to decide taking on board the economic advice, the views of stakeholders, scientific advice, social assessments and the like. We are not trying to make that decision. We are not trying to put out the all-encompassing document that does that. What we are trying to do is illustrate some of the economic aspects of this very critical public policy issue. There is a potential benefit. New technologies have been part of the big drivers of the productivity increase in Australian farming, and this is a new technology that we need to look at and fully evaluate. This is our contribution, if you like, to try to illustrate some of the economic dimension. As to the assumptions, you might dislike the fact that we have sourced it, but what we have done is lay out those assumptions, where we have got it from and put it out for comment. The fact that it has generated a lot of comment is probably a good thing in trying to assist the community to come to these difficult decisions.
Senator SIEWERT-How does it assist the community to come to those decisions when what you provide is a figure saying $9 billion?
Mr Glyde-What we provide is an assessment of two scenarios into the future looking at the economic costs and benefits, doing the best we can to explain what is in the scenario, what is not in the scenario, what it does cover, and what it does not cover.
Senator SIEWERT-The message out there is that, if we do not go with GE, $9 billion worth of agricultural production will be lost. That is in fact not true. The information is not true. So where does the government and anybody else making decisions get the other side of the debate from, if you are not providing that as well?
Mr Glyde-What we are providing is what we can within our degree of competencies that we have within an economic research organisation. We are trying to shed some economic light, if you like, on to an issue. That is our role. We are not trying to do the all-encompassing integrating factor. We are a bunch of economists. We are not a bunch-
Senator ALLISON-The issues we are talking about are potential economic constraints. Why are you not taking them and looking at them and modelling them? On segregation, there are plenty of people who say that they cannot do it. I accept that you have heard GRDC make one statement. But there are others that say you cannot. There are issues around liability. There are issues around access to markets. Those are economic constraints as well, I would have thought, or have economic consequences.
Mr Glyde-On the questions of segregation, we have tried to shed some light on that early on in our report. I think it was last year. We did a sample of farmers I think in WA to get a sense of what some of the costs were if you were going forward with the segregated regime so as to try and shed some light on that. It was not the complete picture. There was some criticism about what we did and did not do in that. But it was our attempt to deal with the segregation question.
Senator NASH-Did you talk to the bulk handlers or just the farmers?
Mr Glyde-I am not quite sure who we talked to in relation to that report.
Senator NASH-It is a big issue, if you did not talk to the bulk handlers. Can you take that on notice?
Dr Penm-In April, ABARE held a workshop inviting industry people to discuss the GM issue and also we sent two officers-
Senator NASH-Could you provide the list to the committee, on notice, of who you actually had at that workshop?
Dr Penm-I missed your question.
Senator NASH-Could you provide a list to the committee of the people who attended that workshop?
Dr Penm-Yes. Also, we sent two ABARE officers to talk to bulk handlers. Currently we are doing GM testing issues. If a GM crop becomes available, there will be testing procedures and so on. Just providing some information for the follow-on research ABARE is undertaking.
Senator MILNE-The International Assessment of Agricultural Knowledge, Science and Technology for Development released its work in April this year and identified the current situation in global agriculture. It identified some key challenges and options for the future of farming. Has ABARE taken that report into account in its scenario planning on GE?
Mr Glyde-Dr Penm, are you familiar with that report?
Dr Penm-I think we are familiar with that report.
Senator MILNE-Did you take it into account in the scenario planning?
Mr Gunasekera-I cannot comment on the report, but if you look at our report and the reference list in our report, we have extensively revealed the international literature on this issue quite extensively: what is happening in North America, what is happening in Europe, what is happening in Asia. But I cannot specifically identify the specific reference that you are referring to there.
Senator MILNE-This is a report of some 400 scientists from around the world. It has the same sort of standing as the IPCC report has on climate. This has it on future scenarios and challenges in agriculture. It is not just any report. It is a peak report. I would like to know, if you can take it on notice, how it fed into it. Can you also tell me where the research is being done for you and who is doing it on GE? Is it all in house or have you got consultancies with various either industry groups or CRCs? Who is actually doing the work for you?
Dr Penm-All the GM crop work is undertaken in house. We have not commissioned any outside consultants. We basically do the whole research and report using our own Commonwealth staff members.
Senator SIEWERT-Could you tell me if you are doing any work around the issue of liability?
Mr Glyde-That is, who should pay, whether it is the adopter of the GM technology or the person who decides to stay GM free?
Senator SIEWERT-I know the approach that you have been taking in your reports, but I am wondering if you are doing any economic analysis of the impact of liability.
Dr Penm-That is not currently our work program for this financial year.
Senator SIEWERT-You are not going to be looking at that this financial year?
Dr Penm-We have not formulated our work program for the next financial year, but for this financial year that is not currently in our work program. Another issue is whether ABARE would be the best organisation to address the financial liability issue. That is also a question.
Senator SIEWERT-Thank you. What I specifically want to go to now is GE, genetic engineering, which is beyond the questions that I asked ABARE. I did flag these yesterday and said that I would like to ask them and was told to ask them here. I presume this is where I should be asking them.
Senator SIEWERT-Do you have a figure on how much the federal government is investing in research into genetically engineered crops in Australia?
Dr O'Flynn-The question is possibly in two parts. We have invested some funding through the work that we have commissioned under the National Biotechnology Strategy. That is not actually into research, that is more into analysis and communication. The research in GM crops would be through the Research and Development Corporation, and I cannot answer that question.
Senator SIEWERT-There was quite a lot of discussion under GRDC, but is that the only area that you are funding into or are there other areas?
Mr Thompson-No. I think you will find that most of the industry based R&D corporations have an
element of their funding directed at GM. Cotton does; sugar has some and grains has quite a bit as you are aware. We could take it on notice. Just as Peter Redding was able to give you that answer yesterday for GRDC, we would be able to take it on notice and get it for all the R&D corporations.
Senator SIEWERT-If you could that would be very much appreciated. Could you also take on notice to give me a run-down on any research or the funding items on organic agriculture?
Mr Thompson-I think we can do that as well.
Senator SIEWERT-If that is possible it would be appreciated. Thank you. Is it possible when you are providing the information to tell us the amount of funding and who is doing those research projects?
Mr Thompson-We would have to check with each of the R&D corporations, but at the level at which they disaggregate their project funding, the amount of money, and unless there is something I am unaware of, usually the name of the research institution is available.
Senator SIEWERT-That would be appreciated. There are issues that I wanted to quickly touch on with policy and I do not know if I should be directing these to the minister. When the Rudd government made some promises in the run-up to the election around genetically modified crops they said that they would put in place 'a rigorous and transparent process based on environmental and safety considerations for assessing and approving or rejecting research propositions which require the release of GMOs outside the laboratory'. Has that commitment been implemented yet and, if so, what has been done to implement it?
Senator Sherry-No. Nothing has been announced to date.
Senator SIEWERT-Nothing has been announced to date. Is it 'watch this space' on that one?
Senator Sherry-We are into government six months and there is still presumably another two-and-a-half years.
Senator SIEWERT-I am aware of that. I am also aware that genetically modified organisms are currently being released into the environment and you have just gone through a budget process. Labor also promised that there would be 'a strong national body that is independent and scientifically based that will be overseeing the process'. Are there any proposals to date to put in place that strong national body?
Senator Sherry-I will take it on notice and check with the minister.
Senator SIEWERT-That would be appreciated. Thank you