September 06, 2007
GMOs: Organics Best Friend?
Yesterdays New York Times ran a piece describing renewed interest in genetically modified crops (GMOs) even in countries that had "longstanding resistance" to their use. The piece is interesting because is ran shortly after "Sticker Shock in the Organic Isle" which describes how the rise in the cost of organic foods may begin to price people out of the market.
The two articles create an interesting juxtaposition and raise the ironic question, "will GMOs save organics?" The problem faced by the organic industry is that the recent surge in commodity prices has created a disincentive for farmers to make the three year transition to organic. Farmers switched over in the past because organic production was fetching a premium in an otherwise depressed market. With the economics of wheat and corn now turned upside down, the economic incentive for transition is gone. Further, the run up in prices combined with diminished consumer buying-power suggest the market for organics will level or perhaps decline. How many of you will be buying milk at $7 a gallon?
The renewed interest in genetically modified crops is driven by price and supply concerns. I know there are thoughtful analyses that take issue with the economics and productivity of GMOs, but for the moment the bottom line for producers is that they are enhancing production particularly on more marginal land. Further, the pressure to increase production is coming from the hungry citizens of less affluent countries where issues like externalities and perturbing nature are not primary concerns.
Increasing overall supply would serve the organic industry by alleviating the current price dynamic. This outcome appears much more likely than a surge in consumer buying power. Therefore, it may not be unreasonable to suggest that GMOs could prove to be organics best friend.