GE to cause food prices to go up?

Only a day after my last post about a bizarre argument against GE wheat that argued that Australian non-GE wheat producers would need to be protected from prices being lowered by a hypothetical frost-free wheat, the opposite is reported in the UK. The Daily Express reports that GM crops could send food prices rocketing. Wha?
In order to understand this claim, you have to take into account the market and regulatory environment in the United Kingdom. As far as I know, the only GE crop that can currently be grown in the UK is Bt maize, although there is talk of more crops being approved in the near future. They also import most of the soybeans used in animal feed from South America, which is growing more and more GE soy each year. Although GE soy can be imported into the UK, it appears that there are still restrictions on these imports that make it difficult for much of this soy to get into the country.
Currently, also, foods derived from genetically engineered crops must be labeled as such in the UK, as noted here, some food manufacturers and fast food chains source their soy from non-GE farms. Although it appears that people in the EU don’t care or don’t even read the labels, there is a substantial market for non-GE soy for producers who do business in the UK. Meat from animals fed GE crops, however, do not have such labeling requirements, but they still must source most of their soy from imports, of the few that are available and legal to be imported.
This seems to present a market problem for those meat producers, as acreage of soybeans in Latin America increasingly switch to GE varieties, this reduces the availability of soy that can be imported into the UK, especially the non-GE soy. As supply reduces and demand stays the same… what happens to prices?
Now the article:

UK animal feed, which is made mainly from soya, could quadruple in price within two years if growers in Brazil and Argentina produce more genetically modified soya, which is banned in Europe, according to government research.

Non-GM soya would rocket in price, making animal and poultry feed more expensive and ramping up UK meat and poultry costs by around a fifth. Farmers are worried they face unfair competition from countries which allow GM crops.

The National Farmers’ Union director of policy Martin Haworth warned: “There is a very real danger that livestock producers, both here and across the EU, will be unable to compete.”

The GM Crops And Foods report has been published jointly by the Department for Environment Food and Rural Affairs and the Food Standards Agency. It says Britain’s livestock farms rely on Brazil and Argentina for 90 per cent of imported soya used in feed for poultry, cattle and pigs.

Defra’s research outlines a worst-case scenario in which British farmers cannot buy soya from either Argentina or Brazil if they only grow GM crops – the use of which is banned here.

Feed costs would soar by 300 per cent, while UK pork and poultry production would plunge by up to 68 per cent. As a result, the report suggests, shop prices for meat and poultry would jump by up to 20 per cent.

Prices would go up. It is interesting to note that the meat producers are not in the non-GE soy market, per se, they would probably source their soy from whatever is available, including GE. However, restrictions on GE soy imports (and growing, to I suppose) are for the most part forcing meat producers to be in the non-GE soy market, competing against other non-GE soy buyers in the UK, driving the prices up. It is not surprising that meat producers have argued for reducing those restrictions.

So it is misleading to suggest that GE crops alone would be responsible for those rising prices, without giving the context of the importation restrictions that are setting up this market issue. There is also the context of labeling and perceived consumer attitudes to consider, which is helping to drive this trend. But there is one more thing that is odd about the way this story is being presented: why are only the food prices being mentioned?

If the price of non-GE soy skyrockets, then that means that two things happen: Food prices for non-GE food products made from them go up, but this is also matched by an increase in the price that farmers can get for non-GE soybeans. The latter would be considered by many anti-GE orgnizations to be a boon – a cause for celebration because it would ensure that some farmers will grow non-GE soybeans just to get that higher price, but why is only one aspect being reported in this case?

Similarly, for the hypothetical GE wheat discussed in the previous post, if the cost of wheat goes down, that also means that the price of foods containing wheat will also go down. It becomes very difficult for people to understand what the real effects genetically engineered crops will be on the economics of farming and of food if only one half of the equation is selectively reported – only the potential downsides to individual groups caused by changes in GE acreage. These two stories taken together might seem to suggest the absurd notion that genetic engineering will cause crop prices to plummet and put farmers out of business, while making food prices skyrocket beyond control!