The day after the Bayer/Monsanto agreement was announced this week, The Wall Street Journal had an article entitled "Behind the Monsanto Deal, Doubts About the GMO Revolution" (subscription required or article can be purchased). The paragraph that best summarizes the article was, "Today, farmers are finding it harder to justify the high and often rising prices for modified, or GMO, seed, given the measly returns of the current farm economy. Spending on crop seeds has nearly quadrupled since 1996, when Monsanto Co. became the first of the companies to launch biotech varieties. Yet major crop prices have skidded lower for three years, and this year, many farmers stand to lose money."
The article contained a graphic that showed that since 1996, the year GM soybeans were introduced on a commercial scale, soybean seed prices have risen 305% to $60.75 per acre, but commodity prices have risen only 31% to $9.79. It is a bit puzzling why the Wall Street Journal did not choose to plot the yield increases per acre since 1996; we all know that higher yields are good but reduce prices, all other things being equal.
This is an entomological newsletter and I won't discuss the benefits to growers that have come from having herbicide tolerant GM crops that allowed greater yields through less weed competition while using a simpler and less expensive herbicide regimen. I will also not discuss the yield losses later incurred when weeds became resistant to those herbicides, or the additional expense of having to go back to a more complicated and expensive herbicide regimen. And I will not discuss the latest generation of herbicide tolerant GM crops that are tolerant to one of two types of older herbicides that have been reformulated to reduce off-target drift. These new crops are being sold in part as the answer to the resistance problem that was caused by the first generation of herbicide tolerant crops. The seed companies will charge on the order of $6 per acre for this trait ($25 - 30 per bag of seed) over and above the cost of current technology, and will additionally profit by selling growers the specific herbicides that must be used on these crops.
GM crops with toxins for insects (Bt crops) have reduced insecticide use and provided environmental benefits. In the Midwest, Bt corn with toxins for European corn borer has reduced the populations of that pest to the point that non-Bt corn can be grown without the need for an insecticide application. Similarly, in my part of the country we no longer fear southwestern corn borer; the planting of Bt corn has greatly reduced the size of the population. Obviously the widespread planting of Bt crops toxic to some insects has resulted in significant benefits.
However, 2016 has been a year of frustration for some farmers who plant GM corn, soybean and cotton. As the Wall Street Journal article said, this is in part because the price of seed seems to be high compared to the value of the commodity at the grain elevator or gin. It is also because some of our insect toxin traits in corn and cotton no longer work as well (or at all) on some of the insects that damage crops and reduce crop quality. This is not the first year for such frustration; resistance to corn rootworm Bt crops was first scientifically documented in 2011 and has spread geographically and to all four Bt toxins used in corn. At least two caterpillar toxins (probably three) have failed due to resistance, as corn growers in the Midwest and Canada are finding out this season due to extensive western bean cutworm damage in their Cry1F corn. This year cotton farmers found themselves having to spray GM crops with insecticides to prevent yield loss.
Our insect-protected Bt crops never were "bulletproof". In fact they never worked very well at all on some pests and were not intended as the sole control for other pests. In the latter case, the word "suppression" or some similar word was usually mentioned in company literature, or no mention was made at all and the grower was left to come to his or her own conclusion. The job of selling seed being what it is, the nuances between the ability to control one pest and suppress others was often lost and these technologies competed with each other in the sales arena based on being oversold in their abilities. Sales material showed perfect ears of corn and growers were led to believe in the invincibility of the product.
The current frustration then is a result of resistance development in the pests the technologies were meant to control, and resistance in pests for which the technologies formerly provided suppression. In both cases it has become necessary to use traditional insecticides on top of the Bt technologies or suffer significant yield loss. And even when traditional insecticides are used there is often yield loss after the increased expense.
Why are seed prices so high? The Wall Street Journal article said that when GM crops were introduced Monsanto came up with a formula that was quickly adopted by the rest of the industry. "For every dollar that biotech seeds saved farmers in pesticides and labor, Monsanto would keep about 33 cents, in the form of a “technology fee” charged on top of each bag of seed." Seed prices keep going up, but GM crops are no longer saving growers as much in pesticides and labor as they once did. This is to say that in many places GM crops have less value now in terms of insect and weed control. It is not hard to understand the frustration at paying higher prices for something of lesser value.
However, our GM crops are not just herbicide tolerance and insect resistance traits, they are also improved genetics for yield and drought and disease tolerance. These qualities are expensive to produce, and the regulatory system in the US adds significant cost to some of them.
On the surface it would seem that growers could choose to buy non-GM seed and go back to the way we handled insect and weed control prior to 1996. This might work for insects, especially in places Bt crops have driven down populations of major pests. Unfortunately, non-GM crop breeding slowed considerably in the age of GM breeding, and the yield potential of many non-GM crops, even in the absence of pests, is not competitive with GM crops. (This is more true in corn than in cotton.) Another difficulty is that the introduction of GM crops coincided with the Food Quality Protection Act. This was convenient for the EPA because one could rationalize that Bt crops could replace many of the insecticides that would be cancelled. Today there are fewer insecticide options for use in non-Bt crops (or Bt crops with resistant insects), and many of the newer insecticides carry high price tags.
For sure there is still value in GM crops, but right now that value does not seem to be what it once was. It is unclear whether 2016 is the year we will look back on and point to as the start of a movement away from GM crops, or whether improved technologies and higher commodity prices in the future will make them look like a more valuable proposition.
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(A 2013 USDA publication called Genetically Engineered Crops in the United States provides a concise summary of the number of GM traits introduced and the economic returns from them. Unfortunately, the publication is somewhat outdated because it does not address the weed and insect resistance to GM crops that has occurred in the last four years.)
