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Market Failure: Genetically Modified Food - Activity

A report on the use of Genetically Modified (GM) crops was released in the autumn of 2003. Supporters of GM technology pointed out that it showed GM technology did have a future; detractors hailed the report as a victory for them claiming it confirmed the suspicions they had abut the potential damage GM crops could cause. How can such a report please both sides? It depends on which parts of the report you look at and what you choose to place the emphasis on. Some of the trials suggested that the ecosystems upon which so many plants and animals rely could be adversely affected whereas other aspects of the trials seemed to suggest there might be some benefits!

How will the face of farming change in the coming years?

Image: How will the face of farming change in the coming years?

Would farmers and consumers benefit from growing GM crops?

The Case For:

The main arguments put forward by the key players in the market is that the use of GM technology would increase crop yields and that there would be additional benefits in terms of the reduction in pesticides that need to be used. GM crops could be engineered to be more resistant to disease and pests and thus be more 'reliable'. Less spraying is not only good for the environment but also helps to reduce the cost of production meaning that consumers could get quality crops at a cheaper price.


The Case Against:

Those against GM crops argue that it could damage the status of the growing number of organic farmers because there would be no way to prevent cross-contamination. The moment contamination occurred, organic farmers by definition would no longer be organic. In addition, opponents of GM foods argue that the experience in the United States and Canada shows that far from reducing the amount of chemicals needed to grow a successful crop, even more powerful chemicals need to be developed to kill off the 'super weeds' that grow as a result of the collateral breeding between GM crops and their plant neighbours and they suggest that the evidence to support the reduction in costs and increase in yields and profitability does not seem to have come!

Stepping aside from the emotional aspects of the argument, it can be seen that we have been tampering with nature for many. Look at any garden and you will see plants that are a uniform height and colour, plants that would not normally survive in our climate and many that have been produced by some form of intended or unintended gene manipulation. The way that we produce our food - even the organic food - has changed beyond recognition thanks to the use of science to create crops that are more resistant to disease and pests, and which are more uniform in habit, yield and behaviour. To avoid eating any food that has not been manipulated in some way would be almost impossible.

For many, therefore, the issue is that we do not fully understand genetics and what the distinction is between an F1 hybrid petunia and a geneticaly modified maize seed. Moreover, we are bombarded with snippets of information from the likes of Greenpeace and Friends of the Earth on one side and equally from the large companies who have a major interest in the development of GM technology - companies like Monsanto, Bayer, Syngenta, Dow Agro-Chemicals, and Du-Pont, on the other. The government in turn, seem to be finding it difficult to present a coherent case to the public that is definitive - probably because they do not fully understand or know all the ramifications themselves!

Questions

Read the information above and answer the following questions:

  1. Using examples, what do you understand by the following terms:
    • External costs
    • External benefits
    (8 Marks)
  2. Read the final paragraph above. Explain how the contents of this paragraph highlight how ignorance can be a major cause of market failure. (10 Marks)
  3. Use diagrams to explain how society could suffer a welfare loss from the use of GM technology, but also from not using GM technology. (16 Marks)
  4. With reference to the case study and any other information you are aware of, examine the case for the extension of GM technology in agriculture in the UK. (16 Marks)

Total Marks = 50