Starch & Fermentation

Analysis

Inside

Changes in consumers’ attitudes towards GMOs

December 2016

Trends in genetically modified organisms We last reviewed developments of genetically modified organisms (GMOs) in 2013; at the time, around 175 million hectares of GM crops were cultivated globally. The double-digit growth rates in area witnessed since 2000 have slowed in recent years. Area in 2015 contracted slightly for the first time (Diagram A).

Meanwhile, the conversation about the safety of GMOs for both health and the environment, which has been a long-term feature of the EU market among others, has spread to the US and culminated in Vermont passing a GMO labelling law in May 2014. The Vermont law was later overturned by the Safe and Accurate Food Labeling Act 2016, which established a voluntary GMO labelling system across the US. In this issue of the Starch & Fermentation Analysis, we discuss latest developments in the market of GM crops and food ingredients derived from them, and discuss the outlook for these products.

Diagram A: Global area under GM crops

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1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Mill

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hect

ares

The Americas account for most of GM output

GM maize was the first crop to be commercialised in the US in 1996 and this country has been the leader in the adoption of GMOs ever since. Currently, the country has the largest area given over to GM, accounting for 40% of global GM area (Diagram B). In addition to maize, other broadacre crops cultivated in the US are soybeans and cotton. Farming of GM crops has also been very successful in Brazil and Argentina, and the countries rank second and third, respectively, for area. India and Canada account for smaller shares of area, with a large number of countries making up the balance.

Diagram C show that soybeans have the largest share of global GM area, at over 50%, followed by maize, cotton and canola. Other crops (some of which are horticultural crops) account for a very small portion globally. Diagram D shows that, despite cotton having a relatively small

Diagram B: Distribution of global GM area by country

US39%

Brazil25%

Argentina14%

India6%

Canada6%

Others10%

Page 2 © LMC International Ltd, 2016 Starch & Fermentation Analysis: December 2016

portion of total GM area, it is the crop for which GM varieties account for the largest share of global area. It is followed by soybeans which has a similar share. In contrast, while maize has a significant share of GM area, at a global level, it accounts for around 25% of total maize area.

Focusing now on the main GMO producers, Diagram E summarises the GM share of the main crops in Argentina, Brazil and the US in 2015. It reveals that soybeans have the highest share of area in all three countries, at 90% and above. Maize and cotton have also very high shares in both Argentina and the US. This indicates that these industries have now reached saturation point and any expansion in hectarage will have to come from an increase in area, which is likely to be relatively small in the US. By comparison, Brazil has relatively low shares of GM maize and cotton.

As shown in Diagram C, around 5% of global GM area is planted to canola. The vast majority of this is grown in Canada, where its share is over 90% of total canola area. Other GM crops grown in Canada are maize and soybeans (accounting for around 81% and 62% of the area under each crop, respectively, in 2015).

The remaining 1% of GM crop area (Diagram C) is accounted for by sugarbeet (GM is grown sown in US and Canada) and minor horticultural crops such as squash, zucchini and papaya.

Most EU countries opted out of GM cultivation

In the EU, resistance to GMO has traditionally been very strong and only a type of GM maize is authorised for cultivation (MON 810). This is mostly grown in Spain on a relatively limited area estimated at 130,000 hectares in 2013 and 2014. By comparison, the EU maize area has been over none million hectares in recent years.

On the 11th of March 2015, a new piece of legislation (EU Directive 2015/412) was implemented. This gave freedom to individual EU member states to limit or prohibit the cultivation of GMOs. While authorisation of new GMOs continues to rest with the EU, Member States were allowed to opt-out of the cultivation of authorised GM crops such as MON 810. Most countries have banned the cultivation of GM crops, namely Latvia, Greece, France, Germany, Croatia, Austria, Hungary, Netherlands, Poland, Lithuania, Bulgaria, Cyprus, Denmark, Italy, Luxembourg, Malta and Slovenia. In Belgium and the UK, the ban covers only Wallonia, and Wales, Scotland and Northern Ireland, respectively. It is reported that this development

Diagram C: Distribution of global GM area by crop

Soybean51%

Maize30%

Canola5%

Cotton13%

Others1%

Diagram E: GM as % of total crop area for key producers

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10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Brazil Argentina US

Maize Soybeans Co tton

Diagram D: GM area as % of global area

0% 20% 40% 60% 80%

Canola

Maize

Soybeans

Co tton

Starch & Fermentation Analysis: December 2016 © LMC International Ltd, 2016 Page 3

will make it even more difficult for GMOs to be accepted in the EU.

Interestingly, while only one type of GMO is approved for cultivation, there are a number of GMO events that are allowed for use in feed; the EU is a large importer of those.

Indeed, the region relies heavily on imports of soybean products to meet its protein feed requirements. Around 13 million tonnes of soybeans and 18 million tonnes of soybean meal were imported into the EU per annum in recent years, with most of these shipments originating from Argentina, Brazil and the US, where GMOs account for a very large share of output as discussed above (Diagram F).

The EU is also a sizeable importer of corn (importing around 11-14 million in recent years). Over the last decade, the bloc has reduced its imports from GM producers in favour of other origins. Ukraine has been the largest supplier of maize to the EU in recent years. In the country, cultivation of GM crops has not been officially approved but some suggest that GM varieties are used, with some reports indicating that around one third of maize grown in Ukraine is from GM seed.

Labelling of food containing GMOs is mandatory in a large number of countries

In addition to the EU countries listed above, there are many more markets, albeit smaller than the EU, where GMO production is limited or banned. In a number of countries, GMO imports are also not allowed (Table A). In addition to these, in India, only non-food GM

crops, such as cotton, can be cultivated. In China, imports of GM products such as soybeans and corn, which are used to produce vegetable oil and for feed, are sizeable. However, only GM cotton and papaya are cultivated. GMOs are high on the country’s political agenda, with the 13th Five Year Plan (to 2020) emphasising the focus on research and development in the GMO field over the next five years.

Meanwhile, an even greater number of countries require mandatory labelling of all or some food containing GMOs. Important markets in this group are the EU, China, India, Japan, Russia, South Africa, South Korea, Thailand, Turkey and Vietnam (Table B). In Canada, GM labelling is voluntary and only required if there is a health or safety issue with the food which might be mitigated through labelling.

An increasing number of US food manufacturers offer GMO-free products

In the US, food ingredients derived from GMO crops have been used for almost 20 years. Over

Diagram F: Breakdown of EU imports of soybeans and soybean meal

0%

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20%

30%

40%

50%

60%

70%

80%

90%

100%

Soybean Soybean meal

Brazil US Par aguay Canada Ukraine Urugu ay Argentina Ot her

Table A: Countries where cultivation or imports of GMOs are banned

Cultivation Imports

x xxxx xx xx xx xxxx xx xx xxx

AlgeriaAzerbaijanBelizeBhutanBosnia and Herzegovina EcuadorKyrgyzstan MadagascarMoldovaNorwayPeruRussiaSaudi Arabia SerbiaSwitzerlandTurkeyVenezuela x x

Table B: Countries requiring mandatory labelling of all food containing GMOs

Australia India RussiaEU Indonesia Saudi Arabia

Belarus Japan SenegalBolivia Jordan South Africa

Bosnia and Herzegovina

Kazakhstan South Korea

Brazil Kenya Sri LankaBrazil Malaysia Switzerland

Cameroon Mali TaiwanChina Mauritius Thailand

Ecuador New Zealand TunisiaEl Salvador Norway Turkey

Ethiopia Peru Ukraine

Page 4 © LMC International Ltd, 2016 Starch & Fermentation Analysis: December 2016

time, consumers have become increasingly concerned about what is in their food and this trend has spread to GMOs.

In the country, the backlash against GMOs culminated in the state of Vermont passing a law, in May 2014, which required labelling of food made with GM crops. This was later overturned (in July 2016) by the Safe and Accurate Food Labeling Act 2016, which established a voluntary GMO labelling system to be run by the USDA prohibiting a patchwork of state laws. The federal government has two years to develop implementation regulations.

Meanwhile, food and beverage (F&B) manufacturers, as well as food ingredient producers, have been removing GMOs from their products and seeking non-GMO verification. According to the Non-GMO Project, over 30,000 F&B products are currently non-GMO verified (Diagram G) and over 3,700 wholesale ingredients are certified GMO-free.

For example, Bunge will offer non-GMO corn products (for the food sector) and non-GMO canola and soybean oil. Cargill has sought GMO-free accreditation for erythritol (which will now be produced from sugar rather than corn syrup), high oleic sunflower oil and cane sugar. The decision of Cargill to certify that sunflower oil and cane sugar are non-GMO is interesting as these products are traditionally non-GMO. However, this is not surprising given that the lines between GMO and non-GMO ingredients appear to be quite blurred in the eye of the consumer.

Indeed, earlier in 2016, Chipotle (a fast food chain) went GMO free. However, the chain was later sued on the basis of false advertising as dairy and meat products used by Chipotle were obtained from livestock-fed GM feed (Reilly vs. Chipotle Mexican Grill Inc.) A similar case of

false advertising has been brought against Dannon with the plaintiff indicating that Dannon’s products are not ‘all natural’ on the basis that they are produced from cows fed GM feed. While the Reilly case was dismissed and it remains to be seen how the Dannon lawsuit will fare, these cases are symptomatic of the environment in which food and food ingredient manufacturers are currently operating.

What is next for GMOs?

While concerns about the health and environmental impact of GMOs have been a longstanding issue, the adoption of GM crops has been very successful since their introduction.

Meanwhile, research continues into new types of GMOs and approval is being granted to new events in many countries – including those which require labelling of GMO-containing food. In the US, in November 2015, the Food and Drug Administration approved the first GM animal to be destined for food use (AquAdvantage salmon). In Brazil, the first variety of GM sugarcane is expected to be released in 2017.

However, it is undeniable that the trend towards food and beverages that are ‘natural, free-from, good for you’ is not abating and is spreading to more markets as incomes grow.

Within this context, we can expect food and beverage producers to continue to diversify their product offering to meet the demand of the more ‘health conscious’ consumers; this includes GMO-free products.

Last year, global GMO area contracted for the first time since this technology was first commercialised. Time will tell whether this is a short term development or the beginning of a structural shift.

Diagram G: Non-GMO verified products in the US

0 1,000 2,000 3,000 4,000 5,000

Alcoholic drinksDairy

Tofu, Tempeh & Alternative MeatPackaged/Frozen Meals

Baby Food & Infant FormulaAlternative Dairy

Soups and SaucesCereal & Breakfast Foods

PastaMeat, Fish & Eggs

Breads & Baked GoodsCandy, Chocolate, Desserts & Sweeteners

Herbs , Spices & Other IngredientsGrains, Beans & Flour

Condiments, Oils , Dressings & SpreadsBeverages

Fruits & VegetablesSnack Foods & Bars

Editors: Sara Girardello, Martin Todd, Jenny Miller, Tara Maris.

Published monthly by LMC International Ltd, © 2016 All rights are reserved and are covered by copyright law. The publication must remain confidential within the subscribing organization. No material may be reproduced or transmitted in whole or in part, in any manner, without the written consent of LMC International.

In the text, the following abbreviations are used: ton or mt = metric ton = tonne bu = bushel

bn = billion ha = hectare

mn = million kg = kilogram

lt = litre CGF = Corn gluten feed

HFCS = High Fructose Corn Syrup CGM = Corn gluten meal When we mention $, this refers to $US. Corn (US) = Maize (EU)

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