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What Are the Cost Benefits of GM Foods?

By: Ian Murnaghan BSc (hons), MSc - Updated: 3 Feb 2017 | comments*Discuss
Cost Benefits Gm Foods Production

With all of the controversy around genetically modified (GM) foods, the aspect of costs and economics has become a commonly argued one. Assessing the cost benefits of GM foods is not an easy task but it is an important one because it impacts a nation's livelihood and also affects the purchasing price that consumers pay to obtain the food.

Unfortunately, the studies pertaining to GM foods and cost effectiveness have very mixed results and are impacted by a wide range of factors that leave each crop – cotton or corn, for instance – sometimes showing vastly different economic profiles.

Understanding GM Crops And Cost Measures

To actually assess how profitable a GM crop is involves years of monitoring the cultivation of the crops and the commercialising and marketing aspects of that crop. Even in a given year, the yields of a GM crop and the pricing can vary tremendously. The overall supply and demand for the food also influence how the product is priced, how much is purchased by consumers and how much farmers obtain in terms of planned yield.

Labour And Productivity for GM Crops

One aspect of GM crops that is thought to be more beneficial than conventional crops is the production aspect. GM crops are considered more convenient, especially ones that provide specific benefits such as increased pest resistance and the ability to withstand weather extremes.

Due to these benefits, the crops are believed to be more flexible with regards to growing practices. Less labour may be needed to produce the crop, which could translate into savings for the farmers. However, farms may have to be restructured over the long-term, which will allow farms to accommodate these changes to growing practices. Such adjustments could be expensive, which might detract from the short-term cost benefits that occur from increased productivity and reduced labour.

At the same time, growing GM foods means that workers on a farm must learn new skills for managing the crops as well as becoming educated and proficient in newer growing practices. Additional training costs are offset against the improved productivity on the farm. Management costs are another area that needs to be factored in when considering how cost effective GM crops can be for farmers.

GM Food Pricing And Costs

In comparison with conventional crop seeds, GM seeds are more expensive. The value of GM technology is considered 'worthy' of such an increase according to the manufacturers because the seeds have beneficial traits such as resistance against weeds, pests, disease or other factors.

Manufacturers also cite that the increased cost of the seeds serves to fund further research into genetic modification techniques and developments. In addition, the markets for GM seeds and conventional ones are considered to be quite separate, which means that costs will similarly vary.

Cost-savings of GM Crops

The market price of GM crops is often simply assumed to be the same when studies have been performed on profits from crops. The impact of GM crops on the pricing of specific crops is a very difficult aspect to assess but in those studies where pricing on GM crops and non-GM crops was assumed to be the same, GM crops were cited as more profitable only where the increased costs of the seeds were offset by the farmer's savings in disease and insect resistance or a better crop yield.

Negative Consequences to GM Foods and Costs

One report published by an organisation in the UK stated that GM crops have actually been disastrous from an economic perspective. The report cites that farm subsidies and lower crop prices as well as reduced exports because of a poor reputation for GM foods in common export countries have all had an overall loss effect in the billions of dollars. This particular report did find GM crops to have a lower market value, compared to non-GM products in countries where GM products were not favoured.

It seems that attitudes against GM products have been a key factor in preventing the foods from being embraced. Due to the loss of export trade, the crop prices ultimately were reduced for GM crops and the government then stepped in with subsidies, which resulted in billions extra spent each year on GM crops.

In contrast, some organic foods are experiencing rapid growth and enormous profits, although the industry may be threatened to some extent due to contamination of GM seeds that are easily blown by the wind into neighbouring farms.

Clearly, assessing the cost benefits of GM foods is difficult although some organisations are concluding quite adamantly that not only are there no cost benefits, but that GM foods are resulting in huge losses to the industry itself and other ones such as the organic food industry.

Given the number of conflicting studies available on the cost aspects of GM foods, the only real conclusion that can be made is that more research must be done to determine what cost benefits exist from GM foods and how the technology can economically benefit a nation.

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Hi there, What was the UK report you mention? I'd like to find it, if you could let me know that would be lovely. Ta.
Meg - 13-Sep-12 @ 2:37 PM
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