Political Economy of Genetically Modified (GM) Food Production in China, India & Kenya, and Brazil Carl E. Pray Based on research in collaboration with Gal Hochman, Jikun Huang, Jun Yang, Ruifa Hu, Latha Nagarajan, Bharat Ramaswami, Jose’ Maria da Silveira

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.

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).

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,

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

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

China Example: General Equilibrium Model Plugged Into GTAP Trade Model Dr. Yang Jun and Dr. Jikun Huang

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 22 Pesticide 150 (yuan/ha) -70 Labor cost 111 (day/ha) -11 Price of seeds 10 (yuan/kg) 65 230 Output price 2.17 (yuan/kg) 2 Source: 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 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% Source: a: Results from Huang et al. (2005) b Results from Yang (2005).

Impacts on maize and rice sectors, relative to baseline (%, 2025) Output 10.4 0.8 Price -9.3 -3.2 Import -30.6 (-701 million US$) -7.3 (-59 million US$) Export 121.0 (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

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 Bt/RR Corn RR Soybean MNC biotech/seed + ++ +++ Local biotech Govt bio scientists Local seed -- Pesticide cos - Farmers ++++ Traders/millers/ +/- Feed/livestock Food industry Consumer price decline ++/0 Exporters

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

Urban consumers’ perceptions on GM food safety for human consumption in China by year (%) Unsafe Safe No idea 2002 13 37 50 2003a 16 35 49 2003b 38 2010 18 29 53 2012 45 42 Average 26 27 47 Source: Jikun Huang and Bowen Peng 2015

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 Agroecology supporters/adopters are the main opposits to GM crops in Brazil. In general, they form an unique political group, advocating for land reform and environmentalist concerns. In my opinion, the label agroecology comprises most of the groups against GM in the country Agroecologists supporters are located among Embrapa, Universities and left wing politics in Brazil. Rural agroecologists are seeking to obtain better prices and market share for their products and less worried about biosafety/enviromentalists concerns. (personal opinion)

China industry: Expected profits or losses from adoption of Bt Rice and Bt Maize 2014 Number of firms   sample profit loss no change not sure BT rice all firms 160 26 32 77 25 Food firms 40 10 3 1 Feed firms 17 2 15 Pesticide 53 5 20 14 Seed 50 9 22 BT maize firms 37 33 66 24 8 firms 4 21 Seed firms 18

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

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

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

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 Govt bio scientists Local seed co Pesticide cos -- Large farmers -/+ ++++ Small farmers Traders/millers/ +/- Feed/livestock Grain exporters - Food industry Consumers Environmentalists --- In my opinion local seeds in Brazil are pro-GM. They are against IP regulation, claiming for the patenting of cultivars. There is only one national company with relevance in the Brazilian pesticide market, Ouro Fino, and they are Pro-GM. I am not sure that the political influence of small farmers in Brazil is being majority against GM. This group could be reduced to the landless and bioecology supporters/adopters who seeks to gain market.

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

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

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

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

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