Transgenic wheat : potential price impacts for Canada's wheat export market

Abstract

The introduction of genetically modified (GM) transgenic wheat will undoubtedly affect Canada's wheat industry, expected to arrive in western Canada in approximately 2003-05.

This thesis examines one of the possible outcomes of introducing genetically modified wheat to the western Canadian grain industry. The introduction of transgenic wheat was modelled while assuming that conventional and transgenic wheat were co-mingled in the current grain handling network. This resulted in the loss of ten export markets for Canadian Western Red Spring (CWRS) wheat. The primary objectives of the thesis are to estimate the potential revenue loss to the CWRS wheat pool account, and calculate the potential farm-gate price reduction for CWRS wheat (resulting from the introduction of transgenic wheat).

The empirical model results revealed an annual average reduction in revenue to the pool account for CWRS wheat of approximately $185 million, roughly 8.5% of the total revenue in the pool account for any given year. The annual price reduction for low, medium and high quality wheat was $9.24/tonne, $16.11/tonne, and $20.62/tonne respectively. Also, the annual average CWRS wheat price reduction across all qualities of CWRS wheat was estimated at $ 13.95/tonne.

The thesis concludes with a discussion of future policies regarding registration of new transgenic crop varieties, formulating potential wheat segregation systems, and establishing marketing guidelines for GM grains in the world export market. An opportunity exists for involved stakeholders to avoid the negative consequences resulting from the introduction of transgenic wheat as modelled in the empirical analysis. The best case situation would include the introduction of transgenic wheat and associated benefits to both the technology provider and wheat producers, the establishment of export tolerance levels that permitted the separation of transgenic and conventional wheat within the current grain handling network, and the preservation of all current export markets for CWRS wheat produced in western Canada. This discussion identifies some of the challenges the involved industry participants will face as they seek to manage the introduction of genetically modified wheat to western Canada.