The Socio-economic and Environmental Impacts of LMOs:

The Socio-economic and Environmental Impacts of LMOs: The Case of GM Corn in the Philippines* Leonardo A. Gonzales, PhD** *Paper presented during the UPLB Students Forum, Drilon Hall, SEARCA, Los Banos, Laguna, March 21, 2016 ** Founding President and Chairman, SIKAP/STRIVE, Inc. Email: lag@strivefoundation.com

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Selected Publications SIKAP/STRIVE, Inc. Four Seasons of Commercialization Monitoring and Evaluating the Socio- Economic Impact of Bt Corn in the Philippines OUTSTANDING MONOGRAPH AWARD During NAST Annual Scientific Meeting, July 2008 Modern Biotechnology & Agriculture A History of Commercialization of Biotech Maize in the Philippines OUTSTANDING BOOK AWARD During NAST Annual Scientific Meeting, July 2010 Sustainable Corn Production in the Philippines

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Outline of the Presentation Global Trends in the Commercial Adoption of GM Crops Empirical Findings of the SIKAP/STRIVE, Inc. Impact Assessment Study Socio-economic Implications of the Supreme Court Ruling on GMOs

I S A A A

Global Area (Million Hectares) of Biotech Crops, 2014: by Country I S A A A Biotech Mega Countries 50,000 hectares (125,000 acres), or more 87% Americas Increase over 2013 3 to 4% 2% Africa Source: Clive James, 2014. 11% Asia 28 countries which have adopted biotech crops In 2014, global area of biotech crops was 181.5 million hectares, representing an increase of 3 to 4% over 2013, equivalent to 6.3 million hectares. 1. USA 2. Brazil* 3. Argentina* 4. India* 5. Canada 6. China* 7. Paraguay* 8. Pakistan* 9. South Africa* 10. Uruguay* 11. Bolivia* 12. Philippines* 13. Australia 14. Burkina Faso* 15. Myanmar* 16. Mexico* 17. Spain 18. Colombia* 19. Sudan* 73.1 42.2 24.3 11.6 11.6 3.9 3.9 2.9 2.7 1.6 1.0 0.8 0.5 0.5 0.3 0.2 0.1 0.1 0.1 Less than 50,000 hectares Honduras* Chile* Portugal Cuba* Czech Republic Million Hectares Romania Slovakia Costa Rica* Bangladesh* * Developing countries

Global Area of Biotech Crops, 1996 to 2014: By Trait (Million Hectares, Million Acres) I S A A A M Acres 297 120 247 198 100 80 Herbicide Tolerance Stacked Traits Insect Resistance (Bt) 148 60 99 40 49 20 0 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Clive James, 2014

Global Adoption Rates (%) for Principal Biotech Crops (Million Hectares, Million Acres), 2014 I S A A A M Acres 494 445 395 346 296 247 198 140 99 49 0 200 180 160 140 120 100 80 60 40 20 0 Conventional Biotech 111 37 184 36 82% Soybean 68% Cotton 30% Maize 25% Canola Source: Clive James, 2014 Hectarage based on FAO Preliminary Data for 2012.

LMO ADOPTION IN THE PHILIPPINES The GM corn technology is now more ten years old in the Philippines In 2002: Bt or corn borer resistant corn In 2005: HT or herbicide tolerant corn; and Bt/HT or Stacked corn In 2007: Bt corn first renewal of propagation permit In 2014: Around 830,000 hectares were planted to GM Corn. 20

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Area Planted ('000 ha) 1400 Area Planted to Yellow Corn by Seed Technology, 1995-2013. SIKAP/STRIVE, INC. 1200 1000 800 600 400 200 0 Bt HT Stacked (Bt/HT) Pyramided Stacked Yellow Corn 2002/2007: MON810 2005/2010: NK603, Bt11, Stacked Year Note: 1995-2013 data series came from BPI; 2012 and 2013 are own estimates of SIKAP/STRIVE, Inc. 21

SIKAP/STRIVE, INC. IMPACT ASSESSMENT STUDY Covered nine major corn producing provinces Eight cropping seasons (2003-2004 2011-2012) Sample corn households of 3,505

IMPACT ASSESSMENT STUDY The basic research hypothesis was: Technological innovations like GM Products are sustainable if they provide positive socio-economic impacts to society and are compliant with the basic requirements of the natural resource systems. 23

EMPIRICAL FINDINGS A. Impacts of Bt Corn 2003-2011 Microeconomic farm level impacts 24

EMPIRICAL FINDINGS A.1 Farm level impact Yield The average yield advantage of Bt corn over ordinary hybrid (OH) corn was 19% from 2003 to 2011. The corn borer resistance agronomic trait of Bt corn largely contributed to the yield difference. 25

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Yield (mt/ha) SIKAP/STRIVE, INC. 7.0 6.0 5.0 4.0 Trends in Yellow Corn Yield by Seed Technology. Yellow Corn (National) Bt GM (Bt, HT and Bt/HT) Average Ordinary Hybrid 19% Bt vs OH 22% OH vs National 3.0 2.0 2002/2007: MON810 2005/2010: NK603, Bt11 1.0 2004-05: El Niño 2007: El Niño 0.0 Year 26

EMPIRICAL FINDINGS A.1 Farm level impact Cost On the average, Bt corn has a cost advantage of 10% relative to OH corn from 2003 to 2011. 27

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Farm Level Production Cost (P/kg, 2003 Constant Prices) 5.0 4.5 4.0 3.5 3.0 Trends in Yellow Corn Farm Production Cost. SIKAP/STRIVE, INC. 10% Bt vs OH 2.5 2.0 1.5 1.0 2002/2007: MON810 2005/2010: NK603, Bt11 Bt GM (Bt, HT and Bt/HT) Average Ordinary Hybrid 0.5 0.0 Year 28

EMPIRICAL FINDINGS A.1 Farm level impact Income The average real peso per kilogram income advantage of Bt corn over OH corn was 8% per annum from 2003 to 2011. 29

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Farm Level Income (P/kg, 2003 Constant Prices) SIKAP/STRIVE, INC. Trends in Yellow Corn Farm Income. 5.5 5.0 4.5 4.0 8% Bt vs OH 3.5 3.0 2.5 2.0 1.5 1.0 2002/2007: MON810 2005/2010: NK603, Bt11 Bt GM (Bt, HT and Bt/HT) Average Ordinary Hybrid 0.5 0.0 Year 30

EMPIRICAL FINDINGS A.1 Farm level impact Economic carrying capacity Bt corn consistently outperformed OH corn by 29%, in meeting the food and poverty thresholds, from 2003 to 2011. 31

Carrying Capacity Ratio. SIKAP/STRIVE, INC. NFI x L x C i i i CC i = -------------- SE x 1.15 Where: CC i is the carrying capacity ratio of activity i; Ni i = net income of activity i; L i = is the landholding from activity i; C i = is the cropping intensity of activity i; and SE = subsistence level expenditures or poverty thresholds for a family of five and the 0.15 in 1.15 represents 15 percent savings of households. 32

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Food Carrying Capacity Ratio (using 2003 Constant Prices) SIKAP/STRIVE, INC. 1.5 Trends in Yellow Corn Food Carrying Capacity. 1.0 29% Bt vs OH 0.5 2002/2007: MON810 2005/2010: NK603, Bt11 Bt GM (Bt, HT and Bt/HT) Average Ordinary Hybrid 0.0 Year 33

Poverty Carrying Capacity Ratio (using 2003 Constant Prices) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 SIKAP/STRIVE, INC. 1.0 Trends in Yellow Corn Poverty Carrying Capacity. 29% Bt vs OH 0.5 2002/2007: MON810 2005/2010: NK603, Bt11 Bt GM (Bt, HT and Bt/HT) Average Ordinary Hybrid 0.0 Year 34

EMPIRICAL FINDINGS A.1 Farm level Impact Return on investment Bt corn users had 42% higher return on investment than OH corn users from 2003 to 2011. In order to recover the investments at the farm level, corn yield must be at least 4.0 mt/ha. 35

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Return on Investment (%, using 2003 Constant Prices) SIKAP/STRIVE, INC. 90 80 70 60 50 40 30 Trends in Yellow Corn Farm Level Return on Investment. Bt GM (Bt, HT and Bt/HT) Average Ordinary Hybrid 42% Bt vs OH 20 10 2002/2007: MON810 2005/2010: NK603, Bt11 0 Year 36

EMPIRICAL FINDINGS A. Impacts of Bt Corn 2003-2011 Environmental impacts 37

EMPIRICAL FINDINGS A.2 Environmental impact indicators Resource use efficiency is the amount of resource needed to produce one mt of corn grain In terms of ratio: INPUT RESOURCE USE ------------ OR ------------------------------- OUTPUT GRAIN PRODUCTION 38

EMPIRICAL FINDINGS A.2 Environmental impact Land use efficiency Bt corn seed users required 15% less land than OH corn seed users in generating one metric ton of corn grain from 2003 to 2011. The land use efficiencies of the analyzed seed technologies (OH, Bt and GM) increased dramatically during this period. 39

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Land Use Efficiency (ha/mt grain) SIKAP/STRIVE, INC. 0.4 Land Use Efficiency of Yellow Corn by Seed Technology. 0.3 0.2 0.1 0.0 National: 27% EFF in 11 Years Bt: 35% EFF in 8 Years Ordinary Hybrid: 39% EFF in 8 Years Yellow Corn (National) Bt GM (Bt, HT and Bt/HT) Average Ordinary Hybrid 15% Bt vs OH Year 40

EMPIRICAL FINDINGS A.2 Environmental impact Fertilizer use efficiency Bt corn adopters, on the average, were 9% more efficient in the use of fertilizer than OH corn seed users from 2003 to 2011. Fertilizer use efficiency across the analyzed seed technologies improved during this period. 41

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Fertilizer Use Efficiency (kg NPK/mt grain) SIKAP/STRIVE, INC. 50 Fertilizer Use Efficiency of Yellow Corn by Seed Technology. 45 40 35 30 25 20 15 10 5 0 National: 25% EFF in 11 Years Bt: 43% EFF in 8 Years Ordinary Hybrid: 35% EFF in 8 Years 9% Bt vs OH Yellow Corn (National) Bt GM (Bt, HT and Bt/HT) Average Ordinary Hybrid Year 42

EMPIRICAL FINDINGS A.2 Environmental impact Labor use efficiency Bt corn seed users were 26% more efficient than OH corn seed users in terms of labor usage from 2003 to 2011. There was general labor use efficiency improvement across seed technologies during the same period. 43

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Human Labor Use Efficiency (mandays/mt grain) SIKAP/STRIVE, INC. 14 Labor Use Efficiency of Yellow Corn by Seed Technology. 12 10 8 6 4 2 0 Yellow Corn (National) National: 30% EFF in 11 Years Bt Bt: 46% EFF in 8 Years GM (Bt, HT and Bt/HT) Average Ordinary Hybrid Ordinary Hybrid: 50% EFF in 8 Years 26% Bt vs OH Year 44

EMPIRICAL FINDINGS A.2 Environmental impact Pesticide use efficiency Bt corn required 54% less pesticides than OH corn in order to produce the same amount of corn grain from 2003 to 2011. All seed technologies analyzed were associated with decreasing pesticide application rates during the study period. 45

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Pesticide Use Efficiency (ml/mt grain) 250 200 Pesticide Use Efficiency of Yellow Corn by Seed Technology. SIKAP/STRIVE, INC. National: 51% EFF in 11 Years Bt: 88% EFF in 8 Years Ordinary Hybrid: 83% EFF in 8 Years 150 100 Yellow Corn (National) Bt GM (Bt, HT and Bt/HT) Average Ordinary Hybrid 50 0 54% Bt vs OH Year 46

EMPIRICAL FINDINGS A. Impacts of Bt Corn 2003-2011 Macroeconomic impacts 47

EMPIRICAL FINDINGS A.3 Macroeconomic impact Estimated incremental difference between GM corn and OH corn at the national level. Aggregate farm income Preharvest labor savings Incremental income from seed and fertilizer sales Postharvest labor income multiplier 48

EMPIRICAL FINDINGS A.3 Macroeconomic impact The total macroeconomic effects of GM corn (combined Bt, HT and Bt/HT) was P17,178 million or US$399.5 million in 2011. The effects of Bt corn was only P221 million or US$ P5.1 million, equivalent to only one percent of total. This was primarily due to low area planted to Bt corn (2% of total GM) in 2011. 49

Macroeconomic Effects of GM Corn. Incremental Net Farm Income Preharvest Labor Savings Indicator Incremental Income from Seed Sales Incremental Income from Fertilizer Sales Postharvest Labor Income Multiplier TOTAL OF ALL FIVE INDICATORS Macroeconomic Effects in Million Peso GM Corn vs OH Corn Total of Three Bt HT Bt/HT GM Corn 85 438 6,422 6,945 12 117 645 774 69 502 4,139 4,710 33 535 2,848 3,416 22 134 1,177 1,333 221 1,726 15,231 17,178 50

CONCLUSIONS SIKAP/STRIVE, INC. More than ten years of GM corn commercialization, particularly Bt corn adoption, in the Philippines indicated positive microeconomic farm level impacts, environmental impacts, and macroeconomic effects. 51

RECOMMENDATIONS 1. Create a multidisciplinary team of independent monitors to evaluate the socio-economic, environmental and aggregate macroeconomic impacts of GM corn. Should be composed of: experts in agriculture, environment and social sciences corn farmers users of GM corn products 52

RECOMMENDATIONS 2. Establish strategic alliances among stakeholders that can support an agri-biotechnology development policy framework advocating for the following: Soft infrastructures: technical extension services sustainable credit schemes 53

RECOMMENDATIONS Hard infrastructures: Farm-to-market roads Irrigation systems Postharvest, processing and trading facilities ( e.g. multistage processing system for corn grains) Enhancement of public research expenditure on agri-biotechnology and strategic homegrown GM products. 54

RECOMMENDATIONS 3. Fast track the adoption of GM corn technologies to enhance global competitiveness in the ASEAN and ASEAN +3 markets. This should be reflected in the Philippine yellow corn industry road map. 55

RECOMMENDATIONS 4. Develop strategic linkages in GM corn communities with livestock-poultry production areas Establishments of Model Integrated Feed Corn-Livestock and Poultry Farms This will be consistent with the implementation of the ASEAN Economic Community (AEC) 56

RECOMMENDATIONS 5. Advocate for quality standards for corn Need to produce high quality corn with aflatoxin levels of less than 20 parts per billion (ppb) making it a Class A quality food-feed grain Need for BAFPS and NFA to adopt quality corn standards 57

SOCIO-ECONOMIC IMPLICATIONS OF THE SUPREME COURT RULING ON THE Bt TALONG Background a) On May 17, 2013, the Court of Appeals permanently enjoined the conduct of field trials of genetically modified (GM) eggplant or Bt Talong. b) Subsequently Petitions/Interventions were filed to the SC to reverse the Court of Appeals decision. 58

SOCIO-ECONOMIC IMPLICATIONS OF THE SUPREME COURT RULING ON THE Bt TALONG Background c) On December 8, 2016, the Supreme Court ruled on the consolidated petitions as follows: 1. The conduct of the assailed field testing of Bt Talong is hereby PERMANENTLY ENJOINED; 2. Department of Agriculture Administrative Order No. 08, Series of 2002 is declared NULL AND VOID; and 3. Consequently, any application for contained use, filed testing, propagation and commercialization, and importation of genetically modified organism is TEMPORARILY ENJOINED until a new administrative order is promulgated in accordance with law. 59

SOCIO-ECONOMIC IMPLICATIONS OF THE SUPREME COURT RULING ON THE Bt TALONG Background d) The SC ruling was so encompassing that it stopped all activities related to GMOs: Applications for contained use, field testing, propagation and commercialization. Importations of GMOs for food, feed, and for processing. 60

SOCIO-ECONOMIC IMPLICATIONS OF THE SUPREME COURT RULING ON THE Bt TALONG 1. CORN SECTOR Negative impact on: Productivity; Cost Efficiency; Profitability; Global Cost Competitiveness; and Food Security Overall production will decline. 61

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Area Planted (ha) 1,400,000 1,200,000 1,000,000 800,000 SIKAP/STRIVE, INC. 3.A Trends in Area Harvested to Non-GM Yellow Corn and GM Yellow Corn. 1995: 1.02 M ha Non-GM Yellow Corn GM Yellow Corn 2000: 0.94 M ha 2005: 0.95 M ha 2010: 1.16 M ha 53% 2013: 1.28 M ha 43% 600,000 400,000 100% 95% 57% 200,000 47% 0 5% Note: In 2013, Total Corn Area Harvested: 2.56 M ha White: 1.28 M ha Yellow: 1.28 M ha Source of basic data: SIKAP/STRIVE, Inc. Corn Survey, 2004, 2005, 2008 and 2012; BAS Secondary Data on Yellow Corn, 2013.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Corn Production (mt) 6,000,000 5,000,000 4,000,000 SIKAP/STRIVE, INC. 3.B Trends in Production of Non-GM Yellow Corn and GM Yellow Corn*. Non-GM Yellow Corn GM Yellow Corn * GM corn production projected estimates using socioeconomic surveys of SIKAP/STRIVE, Inc. 2010: 4.21 M mt 2013: 5.25 M mt 33% 3,000,000 2,000,000 1995: 2.27 M mt 2000: 2.62 M mt 2005: 3.00 M mt 93% 37% 67% 1,000,000 100% 100% 63% 0 7% Note: In 2013, Total Corn Production: 7.38 M mt White: 2.13 M mt Yellow: 5.25 M mt Source of basic data: SIKAP/STRIVE, Inc. Corn Survey, 2004, 2005, 2008 and 2012; BAS Secondary Data on Yellow Corn, 2013. 63

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Area Planted (ha) 3,000,000 2,500,000 SIKAP/STRIVE, INC. 3.C Trends in Area Harvested to White Corn, Non-GM Yellow Corn and GM Yellow Corn. White Corn Non-GM Yellow Corn GM Yellow Corn 2005: 2.44 M ha 2010: 2.50 M ha 2013: 2.56 M ha 2,000,000 61% 54% 50% 1,500,000 1,000,000 25% 22% 500,000 37% 22% 28% 0 2% Note: In 2013, Total Corn Area Harvested: 2.56 M ha White: 1.28 M ha Yellow: 1.28 M ha Source of basic data: SIKAP/STRIVE, Inc. Corn Survey, 2004, 2005, 2008 and 2012; BAS Secondary Data on Yellow and White Corn, 2013.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Corn Production (mt) 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 SIKAP/STRIVE, INC. 3. D Trends in Production of White Corn, Non-GM Yellow Corn and GM Yellow Corn*. White Corn Non-GM Yellow Corn GM Yellow Corn * GM corn production projected estimates using socioeconomic surveys of SIKAP/STRIVE, Inc. 2005: 5.25 M mt 43% 2010: 6.38 M mt 34% 24% 2013: 7.38 M mt 29% 23% 2,000,000 53% 48% 1,000,000 42% 0 4% Note: In 2013, Total Corn Production: 7.38 M mt White: 2.13 M mt Yellow: 5.25 M mt Source of basic data: SIKAP/STRIVE, Inc. Corn Survey, 2004, 2005, 2008 and 2012; BAS Secondary Data on Yellow Corn, 2013. 65

SOCIO-ECONOMIC IMPLICATIONS OF THE SUPREME COURT RULING ON THE Bt TALONG 2. Feed milling Sector Major ingredients to date to commercial feeds are GM corn, GM soybeans, and byproducts. Negative impact on their operation. Domestic prices of yellow corn will go up including import prices. Higher prices of commercial feeds. 66

SOCIO-ECONOMIC IMPLICATIONS OF THE SUPREME COURT RULING ON THE Bt TALONG 3. Poultry Livestock Sectors Negative impacts on: Cost efficiency and profitability of animal production due to higher feed costs, thus increasing prices of animal products. Global cost competitiveness under Asian Economic Community (AEC) Framework. 67

SOCIO-ECONOMIC IMPLICATIONS OF THE SUPREME COURT RULING ON THE Bt TALONG 4. Consumers Negative effects on food security. High prices of poultry and livestock products will adveresely affect the low income groups (poor). 68

RECENT DEVELOPMENTS ON THE SUPREME COURT RULING ON THE Bt TALONG 1. DOST-DA-DENR-DOH-DILG Joint Department Circular (JDC) No. 1 Series of 2016, has already been drafted and signed by the five department secretaries. 69

RECENT DEVELOPMENTS ON THE SUPREME COURT RULING ON THE Bt TALONG 2. Subject of the JDC Rules and Regulations for the Research and Development, Handling and Use, Movement, Release into the Environment, and Management of Plant Products Derived from the use of Modern Biotechnology. 70

RECENT DEVELOPMENTS ON THE SUPREME COURT RULING ON THE Bt TALONG 3. The JDC is consistent with the Cartagena Protocol and the National Biosafety Framework (NBP) under EO 514, and provides guidelines for biosafety decisions. 71

RECENT DEVELOPMENTS ON THE SUPREME COURT RULING ON THE Bt TALONG 4. The JDC also provides the administrative guidelines for the role of National Agencies (DA, DOST, DENR, DOH and DILG) under the NBF, and formation of four biosafety committees (DOST- BC, DA-BC, DENR-BC, DOH-BC) 72

RECENT DEVELOPMENTS ON THE SUPREME COURT RULING ON THE Bt TALONG 5. The JDC is a more comprehensive and collaborative operationalization of the National Biosafety Framework. 73

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