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Consultancy Support for the Analysis of the Impact of GM Crops on UK Farm Profitability

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Consultancy Support for the Analysis of the Impact of GM Crops on UK Farm Profitability Consultancy support for the analysis of the impact of GM crops on UK farm profitability Final report Submitted to The Strategy Unit of the Cabinet Office By PG Economics Ltd April 29th 2003 NOTE: THE VIEWS EXPRESSED IN THIS REPORT ARE THOSE OF PG ECONOMICS, AND NOT NECESSARILY THOSE OF THE STRATEGY UNIT PG Economics Ltd, Dorchester, Dorset Consultancy support for the impact of GM crops on UK farm profitability Disclaimer A number of different sources of information were used in compiling this report. It also contains some forecasts and estimates. It therefore remains possible that the report contains inaccuracies. The authors do not accept any liability arising from any such errors or omissions and shall not be liable for any loss or damage suffered as a result of any information given in this publication Page: 2 Final report for the SU by PG Economics Ltd Consultancy support for the impact of GM crops on UK farm profitability Table of contents Executive summary.................................................................................................................. 8 1 Introduction........................................................................................................................ 18 1.1 Objectives.................................................................................................................... 18 1.2 Boundaries of the research............................................................................................ 18 1.3 Methodology ................................................................................................................ 20 1.4 Report structure............................................................................................................ 20 2 GM crops in the UK - the context......................................................................................... 21 2.1 General background to arable farming in the UK ............................................................ 21 2.2 General factors affecting farm profitability and choice of production systems ................... 21 2.3 Key policy and market environment............................................................................... 22 2.3.1 The CAP and its Mid Term Review: broad implications for arable crops.................... 22 2.3.2 Policy change: relevance to UK arable crop profitability........................................... 23 2.4 Underlying market developments and supply chain responses ......................................... 24 2.5 The time period for the development of new technology like GM crops ........................... 25 3 Generic issues affecting GM crop growing............................................................................ 26 3.1 Demand issues: GM versus non GM derived crop product markets .................................. 26 3.1.1 GM versus non GM market developments and features............................................. 26 3.1.2 GM versus non GM market developments: possible influence on GM crop uptake and arable crop profitability in the UK ................................................................................... 27 3.2 Technology costs.......................................................................................................... 29 3.3 Co-existence ................................................................................................................ 30 3.3.1 Co-existence in conventional agriculture.................................................................. 30 3.3.2 Co-existence and GM crops: general economic points............................................... 32 3.3.3 Co-existence and liability........................................................................................ 32 3.3.4 Co-existence and tolerances.................................................................................... 33 3.3.5 Costs involved in meeting tolerance thresholds ......................................................... 34 3.3.6 Summary of key findings relating to possible co-existence tolerance-related costs...... 39 3.4 Possible development of herbicide resistant weeds and weed shifts .................................. 40 3.5 Will use of GM crops like insect resistant maize or herbicide tolerant oilseeds hasten the build up of resistance of pests (and weeds) .......................................................................... 41 4 The possible impact of GM crops on the profitability of UK arable agriculture........................ 42 4.1 Wheat.......................................................................................................................... 42 4.1.1 The importance of wheat in the UK......................................................................... 42 4.1.2 Conventional wheat crop production........................................................................ 43 4.1.3 Alternative production systems................................................................................ 49 4.1.4 GM traits under development and possible impact on UK farming profitability .......... 52 4.2 Oilseed rape ................................................................................................................. 58 4.2.1 The importance of oilseed rape in the UK ................................................................ 58 4.2.2 Conventional oilseed rape production....................................................................... 60 4.2.3 Alternative production systems: organic oilseed rape production ............................... 62 4.2.4 GM traits under development and possible impact.................................................... 63 4.3 Sugar beet.................................................................................................................... 69 4.3.1 The importance of sugar beet in the UK ................................................................... 69 4.3.2 Conventional sugar beet production ......................................................................... 69 4.3.3 Alternative production systems: organic sugar beet production .................................. 72 4.3.4 GM development in sugar beet................................................................................ 73 4.4 Potato .......................................................................................................................... 75 4.4.1 The importance of potato production in the UK........................................................ 75 4.4.2 Conventional potato production............................................................................... 77 4.4.3 Alternative production systems: organic potato production........................................ 80 4.4.4 GM developments in potato..................................................................................... 82 Page: 3 Final report for the SU by PG Economics Ltd Consultancy support for the impact of GM crops on UK farm profitability 4.5 Forage maize ................................................................................................................ 84 4.5.1 The importance of forage maize in the UK............................................................... 84 4.5.2 Conventional forage maize production ..................................................................... 85 4.5.3 Alternative productions systems: organic forage maize ............................................. 86 4.5.4 GM developments in maize ..................................................................................... 86 4.6 Herbicide tolerant crops in the rotation........................................................................... 89 5 Impact on profitability: a case study (oilseed rape) ................................................................ 90 Appendix 1: Future policy and market environment likely to be faced by UK farmers................ 93 A 1.1 CAP policy............................................................................................................... 93 A 1.1.1 General.............................................................................................................. 93 A 1.1.2 Cereals ............................................................................................................... 93 A 1.1.3 Oilseeds and protein crops ................................................................................... 94 A 1.1.4 Other crops ........................................................................................................ 94 A 1.2 Trade environment .................................................................................................... 95 A 1.3 Prices....................................................................................................................... 96 A 1.4 Biofuels .................................................................................................................... 97 Appendix 2: GM technology developments in arable crops of relevance to the UK .................... 98 A 2.1 Oilseed rape ............................................................................................................. 98 A.2.2 Sugar beet...............................................................................................................100 A.2.3 Potato......................................................................................................................101 A 2.4 Maize ......................................................................................................................103
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