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GMO contamination cutting into organic crop margins – report

Investors looking to reap rewards from non-GMO price premiums may face additional costs from exposure to genetically engineered material.

The unintended spread of genetically modified organisms (GMO), which are used on more than 90 percent of major row crop acreage in the US, could pose a significant and increasing risk for to non-GMO and certified organic crop producers, a report from the United States Department of Agriculture found.

US producers of organic crops can benefit from significant price premiums. Companies like Sustainable Farm Partners and Farmland LP have made acquisition and conversion of US farmland a centrepiece of their investment strategies, but the report finds risk from exposure to genetically engineered material imposes additional costs to producers of these crops.

In the major row-crop producing states of Illinois, Nebraska and Oklahoma, between 6 and 7 percent of certified organic producers lost revenue due to unintended commingling with genetically engineered material between 2011 and 2014. Overall, one percent of the producers surveyed from 20 US states had experienced the problem.

In the US, tolerance levels for the accidental presence of genetically engineered materials are set by buyers. Non-GMO products that exceed a buyer’s threshold may be turned away or lose their non-GMO price premium. Non-GMO producers face additional costs in their efforts to avoid such losses.

Common measures to stop commingling include the establishment of buffer strips or other barriers and adjusting planting dates to prevent pollen drift from GMO crops on neighbouring land. These methods can affect revenues by reducing yields and taking acreage out of production. Non-GMO producers also rely on third party-tested seed and extensive documentation to minimise the potential for commingling.

A survey of around 300 certified organic producers, predominantly from Midwestern states, found costs of shielding crops from genetically engineered material were between $6,500 and $8,500 per farm on average.

The study shows that losses from commingling of genetically engineered and non-GMO crops were a small fraction of overall sales. However, the rapid growth of GMO use in the US means that the risk is likely to increase.

Since their introduction in 1996, genetically engineered crop varieties have spread to nearly half of US farmland, the report states. Only 1 percent of fruit and vegetable acreage is planted with genetically engineered crops, which is likely to increase because new GMO varieties have recently been approved for cultivation. This production would spread commingling risk to higher value crops across more acreage of US farmland.