July 2003 Volume 9 Number 3
Europe: Trade & GMOs, CAP
President Bush asserted that Europe should stop obstructing the sale of
genetically modified food, and for the first time linked Europe's 1998
ban on GMO crops to world hunger by saying that Europe's policies
discourage developing countries from growing GMO crops. Bush asserted
that "high-yield bio-crops" would greatly increase agricultural
productivity in some of the world's poorest nations, but that European
nations were discouraging GMO crops because of "unfounded, unscientific
The US in May 2003 sued in the World Trade Organization to overturn a
moratorium on genetically modified organisms (GMO) in food crops in most
European countries. US farmers, who lead the world in planting
genetically altered crops, consider the European bans on GMO crops to be
a trade barrier. A Ministerial Conference and Expo on Agricultural
Science and Technology drew representatives of 120 nations to Sacramento
in June 2003, with the US urging European nations to lift their bans on
In another move likely to cause US-EU tension, the EU wants to limit
"geographical indications" on food and wine products to traditional
production areas, so that only wines and spirits produced in Bordeaux,
Cognac, Porto and Sherry, or cheeses produced in Gorgonzola, Parmesan,
and Stilton, could carry these labels.
During the World Food Summit in 1996, world leaders pledged to halve the
number of hungry people (then about 800 million) by 2015. A recent
update noted that progress has been slowed by poverty, low agricultural
productivity, environmental degradation, poorly designed government
policies, and, increasingly, AIDS; the number of hungry people has
increased to 1.1 billion. Many of these problems are apparent in
Farm Supports. According to the OECD, direct and indirect transfers to
farmers (producer subsidy equivalent or PSE) totaled $230 billion in
2001, equivalent to a third of farm sales in OECD countries; most of this
aid reaches farmers via price supports and input subsidies. Most of
these costs are paid by consumers in OECD countries, but some are paid by
farmers in developing countries because the subsidies increase the
world's supply of farm commodities, thus depressing prices for the
commodities produced in developing countries; rich countries often keep
out imports to protect their farmers.
Farm subsidies are four times ODA provided by OECD countries, and the
IMF estimates that, if all farm subsidies were eliminated in all
countries, the world's $32 trillion GDP would rise by $128 billion or 0.4
percent. The OECD calculates that the PSE per full-time equivalent
farmer was $35,000 in Norway between 1999 and 2001; $29,000 in Iceland
and Switzerland; $25,000 in Japan; $21,000 in the US; and $16,000 in the
The US limits farm subsidies to $360,000 a farm each year, but many farm
families have arranged the ownership of their land into multiple "farms"
to receive far more. Two-thirds of US subsidy payments go to 10 percent
of US farms, and some argue that farm subsidies have propped up land
prices, making it harder for young people to become farmers. The average
price of US farm land has risen by $470 in the last decade to $1,210
despite depressed commodity prices.
CAP. The EU announced plans in June 2003 to reform its 45-year old, $50
billion a year Common Agricultural Policy over two years by allowing CAP
to pay production-based subsidies for up to 25 percent of the cereals
crops and up to 40 percent for beef production; the rest of the payments
to farmers would be based on farm size and how well farmers care for the
environment and their animals. For example, it has been suggested that
farmers could receive payments for avoiding harvesting crops when they
are being used by nesting birds, or for raising cattle in alpine areas
that preserve pasture lands for hikers.
Under the current CAP, 80 percent of EU farm subsidies to the largest 20
percent of EU farms; French farmers receive 20 percent of CAP subsidies.
The St. Louis-based Monsanto Company helped to develop most of the
world's biotech crops, becoming the world's No. 2 agricultural seed
company, behind the Pioneer Hi-Bred unit of DuPont, and produces the
best-selling agricultural chemical of all time, Roundup, which has 90
percent of the world's herbicide market. Genetically altered seeds were
first sold in the US in 1996, when two million acres were planted; in
2003, some 100 million acres are expected to be planted. However,
Monsanto has had more success with soybeans, where 80 percent are GMO in
the US, than with potatoes, where fast-food chains have said no to GMOs.
Catfish. Catfish are a $500 million-a-year business in the US, with
production concentrated in the Mississippi Delta. About 13,000 US
workers are employed on US catfish farms, earning about $8 an hour. US
farmers receive about $0.70 a pound for catfish, which is a flat-headed,
scaleless bottom-feeder once called a river rat, while the Vietnamese
sell their fish for $0.50 a pound. In July 2003, the International Trade
Commission voted 4-0 to impose a tariff of up to 64 percent on the
catfish imports to protect US producers.
GMO Fish. The US Food and Drug Administration is considering approval of
its first "transgenic" animal, one that has genetic material transplanted
from another. Some newly bioengineered salmon have a gene from an
eel-like fish that enable them to grow five times faster than its natural
cousins, reaching maturity in 18 months, while another genetically
modified salmon produces antifreeze in its blood so it can survive icy
waters that swirl through oceanic fish farms. Scientists say GMO fish
are safe but, if they were to escape, they could have advantages that
would help them to wipe out their wild counterparts.
Economics is driving the push for GMO animals. It now takes about 2.5
pounds of wild fish ground into meal to produce one pound of farmed
salmon, and the GMO fish need less feed and grow faster.
Animals are being tailored to the demands of factory farms, including
featherless chickens and low-emission pigs that excrete 75 percent less
phosphorous, a key contaminant in agricultural runoff. The FDA has not
yet approved any transgenic fish or any other kind of genetically
modified animal for the marketplace. Advances in genetically modified
plants are much further along, both in government approval and public
acceptance-- corn, soybeans and cotton that have been modified to resist
insects and tolerate herbicides.
India. About 55,000 Indian farmers in seven states, two percent of
India's cotton growers, sowed the genetically engineered Bollgard cotton
seed in 2002-03, which protects against bollworm. India has more land
under cotton cultivation than any country in the world, but yields are
low because of pest attacks, and India is a net importer of cotton.
The fields north of Bombay are beginning to produce wine, pushing prices
for irrigated land up to $21,500 an acre. Struggling Indian wine makers
try to get their wines accepted abroad because, "When you don't have a
big wine culture, people are not that confident of their instincts about
wine," so stories about drinking Indian wine in Europe or the US lead to
acceptance in India. India joined the World Trade Organization in
January 1995, and has promised to reduce tariffs on wine from 250 percent
to 100 percent by 2006.
David E. Sanger, "Bush Links Europe's Ban on Bio-Crops With Hunger," New
York Times, May 22, 2003. Kenneth R. Weiss, "It Came From the Gene Lab,"
Los Angeles Times, May 14, 2003.