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GM and the intensification of farming

About the author
Dieter Helm is a fellow in economics at New College, Oxford. Among his recent publications are A New British Energy Policy (Social Market Foundation, November 2005).

Genetically-modified organisms (GMOs) have become, with nuclear power, one of the most contested and controversial subjects of environmental debate. On one side, the advantages of scientific progress, of helping to feed the poor, of reducing the need for pesticides and herbicides, and perhaps even of using less land for agriculture are advanced as reasons why we should embrace GMOs. On the other, caution owing to fear of science and of scientists manipulating genes, of cross-fertilisation and of further agricultural intensification are given as reasons for banning the new technologies. As with nuclear power, the strength of feeling sometimes spills over into direct action, such as crop destruction.

Much of this debate is highly technical. Genetic engineering is a complex activity, and, like most technologies, the problems lie less with the techniques themselves than with their applications. The environmental effects are largely, but not exclusively, in the sphere of agriculture, and, in particular, in the intensification of farming practice, in cross-pollination and the escape of new hybrids into the wider countryside. Like earlier technical advances in farm mechanisation and agrochemical applications, these effects are likely to be wide-ranging.

CAP + GMOs = more intensive farming

GMOs are in demand by farmers not because they like the technology, but because their use may increase the profits from farming by reducing costs and increasing output. GMOs may have higher yields, be resistant to pest and diseases, and be capable of utilising fertilisers more efficiently and of withstanding wider or more intensive doses of pesticides and herbicides.

In agriculture, however, the European Union’s Common Agriculture Policy (CAP) makes such economic calculations more complicated. The CAP subsidises output, and hence makes the value of output greater (probably much greater) than market forces dictate. It thereby encourages technologies which increase crop yield, even if the costs are increased too, beyond the market level.

The consequences in the last quarter of a century are all too obvious: the destruction of much of the natural habitat in the name of ever bigger fields, mono-culture, and the overgrazing of upland areas. Farmland birds, an indicator of biodiversity, have (unsurprisingly) suffered a massive setback.

Add GMOs to this context, and, as long as the incentive towards intensification remains (as it will do even after the next round of CAP reform), GMOs will simply ratchet up the process. GMOs are designed to produce more from a given area of scarce and CAP-driven expensive land. To do this, the crops can be quicker growing, enabling earlier sowings and more crops, give higher yield (by being able to take up more fertiliser), and be more resistant to diseases and/or pesticides and herbicides.

Some proponents of GMOs claim that almost all the effects come from higher yields and pest resistance, without the need for more agrochemicals. That is unlikely, and for two reasons. First, there are simply the facts. There is not much evidence for the proposition in general, and only some evidence for particular examples of GMOs. Second, there are the commercial interests. If it were true that the use of fertiliser, pesticide, and herbicide would decline with GMO applications in general, agrochemical businesses would be very hostile to the take-up. On the contrary, these companies see GMOs as complements to, not substitutes for, non-GMO crops. For them, farming will become even more chemically dependent.

What we face therefore is another round of agricultural intensification. The pressures on the countryside will grow, fields will become more biologically dead, and the species decline and loss will go on. Farming will become more an outdoor factory activity and less a matter of countryside stewardship for the variety of competing interests. The by-products of the new GMO farming will worsen these impacts on the margins of our intensive landscapes, through cross-pollination and escaped species. Fish farming has brought substantive harm to wild salmon populations; fur-farming brought us the mink and the coypu; despite all the protestations to the contrary. GMOs are unlikely to be less risk filled.

Luddism or regulation?

For many environmentalists, the answer is simply to ban GMOs. Such a strategy has merits: there is no need for GMOs, and the harmful effects would thereby be avoided. But just as it was impossible to stop the tractor taking over from the much more environmentally benign horse and plough, such a strategy is likely to fail. (This fruitless opposition to technological change often goes by the name Luddism.)

A technology itself is neutral: it is how it is used that counts. There are some benefits from GMOs, and, more generally, genetic technology holds out the hope of understanding animal and plant biology in ways that could help to eradicate diseases, alleviate suffering, and shift away from some of the worst chemical excesses.

There is nothing in GMOs per se which is environmentally damaging; it is the incentives which surround their introduction which do the harm, and these economic factors can in many cases be changed. Taxing pesticides, herbicides and nitrates – making the polluters pay – would be a first step. Reform of the CAP, by removing incentives to overproduce, would be a giant step towards a more sustainable agriculture.

Some GMOs are, however, likely to be much more harmful, and there is a case for a selective ban on their use. In pharmaceuticals, new drugs need licences and have to pass stringent testing procedures. There is no reason why the licensing regime for GMOs should not adopt the same sort of risk-averse approach, with the burden of proof on the promoters. Too often, environmental standards are set too low, and much lower than those applied to human health. Proper regulation – and much more demanding regulation – is appropriate for GMOs.

Changing the incentives

The incentives confronting modern farmers are those of any other business. They exploit their resources. The trouble is that the core resource is not properly priced and its output is subsidised by the CAP.

GMOs will lead to further intensification because of this mis-pricing. Fertilisers destroy much biodiversity, and then run-off pollutes our rivers and wetlands. Similarly with pesticides and herbicides; millions are spent cleaning up the resulting pollution – not least in water-treatment works to take the harmful chemicals out of our drinking water.

The obvious thing to do is to tax these pollutants, and in some cases ban them. These chemicals cause harm and the externalities can be measured and charged to the polluters. Higher prices will reduce their use – and the incentives to use those GMOs, that can withstand higher applications in favour of those that are more environmentally benign. Where the damage is very great, they can be regulated and even banned. Nitrate-sensitive areas are an obvious example.

The agrochemical industry and (in Britain) the National Farmers’ Union (NFU), of course, protest. The former say taxes will not affect usage; and the latter say farmers’ incomes will be damaged. Both arguments are spurious. If the taxes will not affect demand for chemicals, then the agrochemical industry will not be adversely affected; if the revenue from the taxes is recycled – or hypothecated – within the agricultural sector, some farmers will gain and the net effect will be zero. Using the revenue to help farmers switch from agrochemical to organic farming is one example. It takes little imagination to see why the agrochemical industry would hate this, and why the NFU, financed largely by the big commercial farmers, would object too.

These reforms are needed regardless of GMOs. They stand on their own merits and could begin to redress the destruction of the countryside in recent decades. But what is really needed is reform of the CAP – indeed, it needs abolition. There can be few man-made environmental disasters on this scale.

Not only has it damaged so much of the landscape; it is also chronically inefficient in a conventional sense. The subsidies cost very large sums to every household, and take up the major part of the total EU budget. What keeps the CAP going is that the agrochemical industry and large-scale farms have deep vested interests in it, and these interests have corrupted the political process itself. Land prices reflect the subsidies, and the incentives for ever greater production need more fertilisers, pesticides and herbicides.

A better way forward for farming

GMO technology is neutral, but its applications are not. In the current CAP context, and without proper pollution taxes, the net effect is likely to be harmful, inducing another round of agricultural intensification. But environmentalists, whilst wise to be sceptical about technical change, have got the wrong end of the stick: the intensification is the result of the economic incentives which have been created.

Change the incentives, and GMOs would have very different effects. Those GMOs which used less chemicals would be more economic; and marginal output incentives would be less powerful. Fortunately, what needs to be done is well-known. It is well-known that if polluters do not pay for the damage they cause, there will be too much pollution. It is also well known that the CAP has very large costs relative to its benefits (to the extent that there are any).

The obstacles to such sensible reforms are political. These are the interests of the big farmers and the NFU, on the one hand, and the agrochemical industry, on the other. That these interests have managed to command public subsidies way outside the small scale of agriculture in our economy, and to such detrimental effects, demonstrates just how politically successful they have been.

However, the gains from reform exceed (massively) the losses. The task is to marshall the gainers to take on the losers. To campaign against GMOs directly is to miss the point: better to campaign against the chemicals and the CAP.


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