Exports face price wars as Europe approves GMOs

Kenya and other agricultural produce exporters eyeing the European market could soon face new price wars as the key outlet opens up its doors to more genetically modified foods.

In a development that signalled Europe’s resolve to increase GMO products uptake, the European Commission last week approved the importation of six new varieties of maize produced through the controversial technology.

The approvals, which are valid for 10 years, cover imports for food and animal feed, but not for cultivation.

“The six adoptions of today are the result of a usual and standard procedure concerning the authorisation of GMOs to be used in food and feed and have no link with the recently adopted package on cultivation,” the commission said in a statement.

The EU’s executive arm granted the approvals unilaterally after EU farm ministers failed to reach a decision on the applications in June — providing a leeway for fresh imports of the now approved GM maize varieties from countries such as the United States, Brazil and Argentina.

The current GMO versus non-GMO global market focus relates to four crops: soybeans, maize, cotton and oilseed rape.

Kenya makes shipments of convectional produced yellow corn and sweet corn to the EU market alongside other produce such as vegetables and cut flower.

Analysts said the increased presence of more GMO products in the EU market is likely to trigger fresh challenges in terms of pricing in the long term.

“Price differentials between GM and non-GM derivatives may increase marginally, reflecting need to check the non-GM status and ensure segregation,” three independent Europe-based analysts, Graham Brookes, Nevile Craddock, and Barbel Kniel said in a joint report of the EU market.

The report is dubbed The Global GM Market; Implications for the European Food Chain — An analysis of labelling requirements, market dynamics and cost implications.

“In addition to the higher raw material costs that may arise from operating a non-GM ingredient policy other overhead costs will arise, dependent upon the size of the business and the complexity of its product and even customer portfolio,” they further said.

They argued that operating costs may be adversely affected by reduced production capacity utilisation from having to shut down continuous manufacturing lines for cleaning, having to operate and install separate storage facilities, and possible reduced functionality of ingredients in products resulting in increased levels of wastage or reduced product shelf life.

“In some cases, it is known that companies have chosen to use particular non-GM ingredients across their product range — and thus incur additional raw material costs — rather that operate segregated storage and production regimes” they said.

Kenya Flower Council CEO Jane Ngige, however, played down threats to the country’s fresh produce exports in the short term.

“We have a competitive edge in terms of naturally grown produce that gives us an edge in costs when compared to other producers who have to endure higher energy costs to grow the same products,” she told Business Daily.

“We shall, however, stay focused on proceedings in the EU market in terms of GMO even though we don’t see an immediate threat.”

Kenya is yet to embrace the GMO concept even though an Act guiding the legal and legislative framework on modern biotechnology is already in place.

The Biosafety Act 2009 was approved by President Kibaki in February last year with the National Biosafety Committee being put in place as an interim measure until the law is implemented.

The National Biosafety Committee executes its activities under the National Council for Science and Technology (NCST).

Former Agriculture minister William Ruto supported the GMO technology.

“We are now forced to pay a premium for normal maize because close to 90 per cent of the global grain market is now comprised of GMOs,” he said late last year.

He said the government pays an average $300 per tonne for normal maize compared to $200 per tonne paid for GMO stocks.

Currently there is one GM maize variety — MON 810 — that is commercially cultivated in the EU with its genetic modification aimed at protecting the crop against a harmful pest, the European corn borer. It was authorised in 1998.

Besides MON 810, a GMO starch potato known as “Amflora” was authorised for cultivation and industrial processing in March.

The starch is intended for industrial use such as production of paper.