SC’s Bt talong ruling’s economic implications
IN the past few weeks, a lot has been written about the recent ruling of the Supreme Court (SC) banning Bacillus thuringiensis (Bt) talong (eggplant), a genetically modified product like Bt corn.
Last Dec. 8, 2015, the SC stopped field trials for the genetically modified (GM) eggplant. It also declared null and void the Department of Agriculture’s Administrative Order on GM field testing.
But SC went overboard by ruling that any field testing, contained use, propagation and importation of genetically modified organisms (GMOs) is also stopped pending the promulgation of a new administrative order.
Opinion-makers and scientists, such as National Academy of Science and Technology Chair Emil Javier and Member Dr. Eufemio Rasco, Jr., deemed the SC decision flawed.
Some farmers’ groups had urged the SC to junk the writ of kalikasan against Bt talong, claiming that the crop does not need deadly pesticides as it is designed to kill pests.
What is the potential impact of the SC decision on Philippine society if it is not reversed? I will discuss this viewpoint empirically as an economist and agribusiness observer.
There are several levels of analytics. First is the impact on food security. Second is the impact on farm income and rural poverty. Third, the impact on food processing industries. Finally, on jobs.
Bt talong is a small component compared to the spillover effects on GM products: Bt corn, Bt soybean, meat products as well as processed foods using meat, corn and soybean oil.
Bt corn
In 2015, some 95 percent of yellow corn produced by small farmers was Bt. This came from nearly one million hectares producing 5 million tons, some 70 percent of all corn production. We are talking here of over 500,000 farmers and nearly P50 billion in farm output (Bureau of Agriculture Statistics -BAS)
The fertilizer and seed component of this output will be over P10 billion a year. Some sectors would say that they can be replaced by open-pollinated corn, but the farm income would be much lower, and so would be the production.
The impact on the hogs, chicken broiler and layer industries would be tremendous. Imports of non-Bt corn and soybean are not sound options as supply is very limited and at very high cost. Aquaculture, mainly bangus and tilapia, will also be impacted as fish feeds contain soybean meal. About 20 percent of fish feed uses soybean meal. Non-GM soybean meal costs 40 percent higher.
The animals will not grow to desired weight due to limited and costly nutrition. Meat prices must increase for raisers to continue producing underweight animals. Consumers can try organic pigs and chickens at double the price.
Supply would be scarce as most of the corn would come from Bt sources: the United States and Argentina. It would dramatically increase the cost of meat and eggs, hit the household budget, and saddle eating-out businesses like Jollibee, KFC, McDonald’s and carinderias.
Imports of Bt soybean meal will cease. Bt soybean meal is the main source of protein in animal feeds while yellow corn is a source of energy. In 2015, the country imported some 2.35 million tons mostly from the US.
Last year, the country produced some 2.12 million tons of pigs, 1.66 million tons of chicken, and 445,000 tons of eggs. The total value of the farm output was almost P400 billion (BAS). Another 210,000 tons each of pork and chicken meat were imported, mostly fed with GM corn and soybean. They comprise some 13 percent and 19 percent of domestic consumption (USDA). In 2014, the country produced 390,000 tons of bangus and 259,000 tons of tilapia (BAS).
Food processing
The meat processing and the fast-food industries use a lot of imported meat. Since most are fed with Bt corn and Bt soybean from the United States, what now? Meat companies will have to pay higher for raw materials costs.
Meat spending comprises 27 percent of family food spending in 2012 valued at P484 billion. Eating-out business was P311 billion, 17.5 percent of family food spending.
How will the increased meat prices impact on inflation? Meat and eating-out spending accounts for almost 20 percent of total family spending (Family Income and Expenditure Survey, 2012).
The potential job losses of the value chain from production of corn to feeds to meat processing could be significant . And what could happen to national food security?
In this debate, we must trust in evidence-based scientific analysis. Judges must be circumspect in making judgment on highly scientific matters. Or else, common medicines like aspirin, mefenamic acid (pain relievers), and insulin for diabetics would be banned as they are not absolutely safe, although relatively safe. And what about farm chemicals that protect plants, such as rice and vegetables? They are not absolutely safe too? Will they be banned, too, in the future?
Rural poverty is already very high at near 40 percent of population. Most of them farmers and small fishers. How would the SC ruling impact them? Quo vadis? Will the interests of the minority win over those of the many?
(The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or MAP. The author is the Vice Chair of the MAP AgriBusiness and Countryside Development Committee, and the Execuitve Director of the Center for Food and AgriBusiness of the University of Asia & the Pacific. Feedback at <[email protected]> and <[email protected]>. For previous articles, please visit <map.org.ph>)
