Graham Brookes PG Economics Ltd, UK 10 October 2018 All Party Parliamentary Group on Science and Technology in Agriculture UK plant genetics – a regulatory environment to maximise advantage to the UK economy post Brexit Graham Brookes PG Economics Ltd, UK 10 October 2018

UK plant genetics sector baseline Current size of sector is very small (10 FTEs and £1.25 annual expenditure) - compares with 480 FTEs and £45-£50 million annual expenditure 20 yrs ago Regulation: set by EU GMO regulatory framework (now inclusive of NBTs based on mutagenesis techniques developed since 2001) EU regulation system does not operate ‘as intended’ UK is substantial importer of GM commodities – mostly soybeans/derivatives EU authorisation process has created uncertainty, disrupted trade/use of commodities and driven away R and D ©PG Economics Ltd 2018

Relevance of sector to UK economy Current small size of sector and lack of seed innovation = UK has foregone benefits over last 25 years Loss of FTEs were high value-added research jobs Is an R and D gap on new seed tech applicable to UK crops/conditions/problems UK farmers have missed out on possible economic benefits of new tech UK farmers/citizens have missed out on possible environmental benefits UK citizens have missed out on better quality products (eg, low acrylamide potatoes) UK ag commodity user sector faced with ongoing uncertainty over import supplies may have re- focused more of their businesses outside the UK/EU to locations with greater regulatory clarity ©PG Economics Ltd 2018

Post Brexit regulatory/trade scenarios examined Scenario 1: The status quo – continued alignment with the EU Scenario 2: improved implementation and some change; making the existing GMO system work ‘as intended’ and some NBTs not subject to GMO regulations Scenario 3: UK sets its own path -divergence from EU regulations on both GMOs and NBTs UK regulation of crop biotechnology (importation and use and planting) and timing of approvals changes in line with EU regulatory developments UK regulation of crop biotechnology based on EU regulation but operating as originally intended - UK approvals made as soon as EFSA scientific risk assessment opinions given rather than after EU comitology delays and flexibility provisions relating to scientific data requirements applied UK sets own science-based regulations and guidelines for GMOs approval for planting crops and the importation and use of crops/derivatives derived from/containing GMOs which are in line with international norms UK regulation of NBTs remains aligned with EU decisions – plant breeding innovations derived from NBTs subject to the GMO regulations UK regulation of NBTs diverges from the EU: some innovations derived from NBTs are not fully subject to GMO regulations   As scenario 2 – some plant breeding innovations derived from NBTs not fully subject to GMO regulations ©PG Economics Ltd 2018

Potential impact: Scenario 1: the status quo – continued alignment with the EU Importation and use of commodities/derivatives that may contain GMOs Ongoing uncertainty and disruption to import supplies of food and feed ingredients, higher cost of raw materials and loss of competitiveness Plant genetics sector research and development (annual) expenditure Reduced Plant genetics sector employment Longer term economic benefits from GMO/NBT innovations Probably negative Wider UK societal benefits ©PG Economics Ltd 2018

Potential for increase relating to NBTs Potential impact Scenario 2: making the existing GMO system work ‘as intended’ and some NBTs not subject to GMO regulations Importation and use of commodities/derivatives that may contain GMOs Reduced uncertainty = greater flexibility in use of raw materials leading to lower costs of feed and a more competitive livestock product production sector Plant genetics sector research and development (annual) expenditure Potential for increase relating to some plant breeding innovations derived from NBTs Plant genetics sector employment Potential for increase relating to NBTs Longer term economic benefits from GMO/NBT innovations Reasonable prospect of new crop innovations from NBTs being available to UK farmers in longer term: higher yielding crops, lower costs of production, more efficient seed production sector, better quality raw materials for food and industrial processing sectors Wider UK societal benefits Some possible long-term benefits: depends on traits - potential for environmental improvements (reduced pesticide application) and improved products/health benefits (eg, high oleic oils) ©PG Economics Ltd 2018

Potential impact: Scenario 3: UK sets its own path -divergence from EU regulations on both GMOs and NBTs Importation and use of commodities/derivatives that may contain GMOs Reduced uncertainty = greater flexibility in use of raw materials leading to lower costs of feed and a more competitive livestock product production sector Plant genetics sector research and development (annual) expenditure Potential for increase relating to both GMOs and NBTs – to a level higher than under scenario 2 Plant genetics sector employment Longer term economic benefits from GMO/NBT innovations Reasonable prospect of new crop innovations from GMOs and NBTs being available to UK farmers in longer term: higher yielding crops, lower costs of production, more efficient seed production sector, better quality raw materials for food and industrial processing sectors Wider UK societal benefits Some possible long-term benefits - depends on traits - potential for environmental improvements (eg, reduction in fungicide application with GM blight resistant potatoes and improved products/health benefits (eg, better quality potatoes, low acrylamide potatoes) ©PG Economics Ltd 2018

Conclusions Scenario one (status quo) = negative impacts relative to today because of implications of CJEU (July 2018) ruling Scenarios two and three offer more favourable environment for R &D expenditure and employment and commercial development Scenario three likely to offer largest long term economic and wider societal gains to UK ©PG Economics Ltd 2018

Unlikely to be of importance because: Does EU regulation/market constrain scope for UK regulatory divergence? Unlikely to be of importance because: UK crop production mostly used domestically and supply chain used to segregating supplies for specific markets Brexit is supposed to offer scope for expanding non EU trade = expectation that relative importance of EU market to decline Any commercial development of new plant genetic innovations applicable to UK crops will take several years to come to market – in this time EU likely to come under increasing pressure to change/modernise its regulation especially as leading ag exporting countries are not subjecting most NBTs to GMO-style regulation = potential trade disruption in key raw materials for EU food, feed/livestock user sectors Likely WTO case bought against EU by leading ag exporter nations Growing realisation of EU farmers that they are missing out on important innovations ©PG Economics Ltd 2018