Previous Issues

Overcoming difficulties for co-existence between GM and non-GM crops: Laws required for improving supply chain segregation

Published: 3 Jul 2008

By Joe Lederman
FoodLegal Lawyers and Consultants
© Lawmedia Pty Ltd, June/July 2008

A response to a request for co-existence

In May 2008, I spoke at the inaugural Australian Genetically Modified Crops Summit on the subject of “GM Crops and Foods, including the legal framework and rights and obligations of growers, their neighbours, suppliers and consumers”. In my address, I gave an explanation of the regulatory framework for GM crops in Australia - I provided an analysis of the common law rights and remedies available for different groups in relation to various GM issues affecting farmers, transport and industry groups, insurers and consumers.

My talk concentrated on legal recourse since I was not there to be an advocate either for or against GM or non-GM products. In any case, I take the view that there are likely to be many different categories and levels of genetic modification and different applications of GM technologies, so it is possibly simplistic to consider every GM product as having the same potential impact on final food products. Nonetheless, for the purposes of writing the following article, I have considered the issue of segregation between non-GM and GM as entire classes. Perhaps, one day, scientists and/or policy makers will determine the need to distinguish between different categories of GMOs.

My article below arises from a question that followed my presentation. A representative of one of Australia’s major supermarket chains had approached me with the following question: Whether and how the laws operating in Australia could be changed to accommodate the desire by that supermarket chain to fulfil the expectations of many of its customers to allow them the choice to select a non-genetically-modified food alternative to a GM canola oil?

The supermarket representative was not necessarily expressing an opposition to GM biotechnology. The supermarket simply wanted to satisfy a very large number of its customers who would be seeking the non-GM product equivalent on their supermarket shelf. The lifting of the moratorium on cultivation of GM canola in Victoria and New South Wales had triggered additional concerns for the supermarket, for reasons that will be outlined in this article further below.

My aim in writing this article is to look at how laws would need to change in Australia if Australians indeed want co-existence and choice for buying non-GM foods. The real issue in the GM debate, at this stage, is not about the technology per se, but about how to implement a successful segregation of GM and non-GM food products in an Australian context throughout the whole length of the food supply chain from the field to the fork.

Segregation is not a new issue in the cropping industry. It goes with the territory. For example, premium quality wheat for milling must be kept segregated from wheat grown for animal feed, or barley for malting (malt for beer-production) must be isolated from barley for animal feed. If GM crops are to be segregated from non-GM crops, the technology already exists to test for very small trace presences of genetically modified organisms (GMOs).

The main contentious issues in GM crop segregation are the arguments over the requirement to accept GM contamination tolerance levels in non-GM equivalents, and whether and how the costs of stricter segregation would be funded and by whom. Current supply chain segregation methods may be able to achieve sufficient segregation to ensure, for example, less than 0.9% unintentional presence (which is the same as the Australia New Zealand Food Standards Code threshold for GM labelling to be required). However a stricter level of supply chain segregation would be required where there is consumer or supermarket-driven demand for zero tolerance of GM, such as where products are to be labelled either as “organic” or “GM Free”.

It is therefore vital to consider several critical control points where GM contamination would need to be tested to ensure that GM-free status has been maintained throughout the supply chain.

Critical control points in the crop supply chain

The licensing for direct intentional release of strains of genetically-modified canola in 2002 caused many Australian States and Territories of to introduce legislation (see, for example, Control of Genetically Modified Crops Act 2004 (Vic) and Genetically Modified Crops Free Areas Act 2003 (WA)) banning the cultivation of such canola within their jurisdiction through temporary moratoriums. These moratoriums have since been lifted upon review in New South Wales and Victoria but moratoriums have been retained elsewhere subject to future review in some other jurisdictions.

The initial concern over the introduction of a GM crop variety was not expressed over similar licences granted previously for GM cotton. This concern with regards to canola was probably attributable to several factors: First of all, canola has a propensity to self-seed or cross-pollinate and result in the cross-contamination that could impact on neighbouring non-GM farmers; secondly, the supply chain itself would be likely to trigger additional incidences of cross-contamination after the crop production stage; thirdly, canola forms a more integral part of Australia’s food chain across a whole range of processed non-GM foodstuffs. For example, canola is used in many brands of potato crisps and other snack foods, in breads, cakes and other baked products, and breakfast cereals, breakfast spreads, soy and rice milks and other non-dairy beverages, and in a wide variety of dairy-related spreads and products.

Critical control points against contamination (or admixture) in the non-GM food supply chain would need to be monitored, such as at the following points or processes of food production:

  1. Seed distribution;
  2. Crop production;
  3. Crop & grain handling, including transport and storage (e.g. in cartage and in silo);
  4. Primary processing;
  5. Food manufacture; and
  6. Food distribution and labelling.

Seed Distribution
Contamination can occur at the seed distribution stage if any seed provider is responsible for the sale of both GM and non-GM seeds. As mentioned above, technology exists to detect the slightest presence of GM varieties in a crop. Any seed provider would need to ensure that strict segregation is maintained if any seeds are to be sold as “non-GM”.

For any person wishing to purchase genetically modified food technology in the form of seeds, those seeds must have already passed through several regulatory processes. For example, the genetically modified variety of plant must be licensed by the Federal Office of the Gene Technology Regulator (“OGTR”) for cultivation and exposure to the environment. Furthermore, if that crop is to be used as food for human consumption (some GM crops are increasingly used for other purposes such as animal feed and bio fuel production), that GM variety must by approved by Food Standards Australia New Zealand (“FSANZ”) as being as safe as the non-GM variety.

After these licences and approvals, the provision of technology is privately regulated, to some extent, by the technology providers themselves through Technical User Agreements and/or the court system using causes of action such as breach of patent against non-authorised persons using the GM technology without proper authorisation from the GM seed provider.

GM technology can also be protected through plant breeders’ rights. The intellectual property in breeding a new variety of plant is protected in Australia through a patent-like system under The Plant Breeder’s Rights Act 1994 (Cth). Plant breeders must ensure that the public have access to the new varieties through a compulsory licensing scheme (whereas with patents there is no forced licensing system). Enforcement of plant breeders' rights is also predominantly private through civil legal actions, similar to protecting provision of GM technology, but infringement of plant breeders' rights can give rise to criminal offences (see sections 74 and 75 of The Plant Breeder’s Rights Act 1994 (Cth)).

For farmers wishing to purchase non-GM seed, the GM technology providers have developed accurate testing methods to ascertain whether or not a seed contains their patented, novel DNA. However there is a hefty expense involved in testing. The question is whether this cost ought to be borne either by the farmers wishing to farm “non-GM” crops or by the seed providers who are responsible for the provision of seed, whether GM or non-GM. There are several reasons why the cost is currently borne mainly by the farmers who are not using GM technology. This is because the law has favoured the introduction of GM technology without requiring the GM technology users to take legal responsibility of ensuring that cross-contamination does not occur. Secondly, as GM technology providers are entitled to royalties for their patented GM seed, non-GM farmers have been forced to test for GM presence in their crop harvest specifically to monitor their legal risk of becoming liable for payment of a royalty to the GM crop supplier even when the GMO presence in their crop has arisen solely by accidental contamination. Thirdly, Victorian and New South Wales governments have on the one hand denied that there would be a price premium paid for a non-GM crop and therefore considered there was no reason to create a segregated, non-GM supply chain, but on the other hand, these governments challenged non-GM producers to bear the extra cost of segregation on the basis of the belief held by the non-GM suppliers that they needed to protect a premium market of their own. Hence, in lifting the moratorium on GM canola, the Victorian government placed the onus on the non-GM farmer to maintain the purity of his or her own non-GM status.

Crop Production
It is possible for seeds from GM canola crops to be transported by the wind and self seed in neighbouring non-GM farmers’ crops. It is also possible for pollen to be transported by wind and therefore GM varieties of canola can breed with neighbouring non-GM varieties. Currently, there is very little regulation of these issues. First of all, the independent Review of the moratorium on genetically modified canola in Victoria recommended against any regulation or legislation being created when recommending the lifting of the moratorium on GM canola in Victoria.

There are many possibilities for further control at this critical control point by law if laws were introduced to cover the following:

  • Farming techniques such as buffer zones could be legally prescribed to reduce the risk of contamination (Australian environmental conditions might also be different from those in Europe and therefore require alternative measures for buffer zones);
  • Non-GM lobby groups have expressed a concern that currently there is no legal obligation for notification (either by the OGTR or any other body) if someone in a region is using a GM variety. The law could prescribe a legal requirement to notify all other farmers within a prescribed radius of areas where GM crops are being grown;
  • Harvester groups could be required to meet prescribed regulatory standards to ensure their machines and cartage vehicles do not accidentally contaminate non-GM crops; etc.

Although the OGTR, mentioned above, has the power to impose conditions on the licences it grants for specific GMOs, there have been cases of GM canola being approved by the OGTR without placing any such conditions in the licences. For example, see the OTGR licences for intentional release.

The GM technology providers also have scope to regulate farming of GM varieties. Often purchase contracts for GM seeds contain Technical User Agreements that the farmers must adhere to. As the GM technology providers are using such Agreements primarily in order to protect their patent, these User Agreements could help ensure at this critical control point that GM crops do not contaminate non-GM crops. However, in reality, since the purpose is not to protect the non-GM crop grower from contamination, the non-GM crops grower is rarely protected through these Agreements. Furthermore, there are international legal precedents by which GM technology providers have obtained a royalty entitlement even from a non-GM crop grower where GM contamination has occurred. Moreover, these Technical User Agreements are not subject to further laws that could compel proper segregation such as through penalties for lack of consciencious compliance with proper segregation practice.

Harvested Crop Handling
Transport and storage of harvested crops between the farm and the next step, be it primary processing, domestic markets or for export, is another critical control point where there is high risk of GM contamination of the non-GM equivalent. As storage silos or transport vehicles may have previously carried a GM grain, without adequate washing down and removal of trace presences, contamination can easily occur. As any product that wishes to be represented as “GM Free” or “Organic” must have no contact with any genetically-modified organism at all, equipment used for transport of both GM grain and non-GM grain would have to be extensively cleaned to ensure that the claims of “GM Free” or “Organic” can be legally made at a retail level.

There is some government regulation on this point: the Office of the Gene Technology Regulator has, in its Guidelines for the Transport of GMOs, set down recommendations and requirements as to how GMOs ought to be transported. These include, among others, regulations for mandatory reporting of loss or spills, labelling of transport or storage containers and decontamination of the outer most container.

The costs of segregation in transport and storage to date, again, have typically been borne by the non-GM farmer. Producers supplying non-GM product are often compelled contractually to indemnify bulk handlers or transport organizations against the existence of any GM contamination in non-GM product before transport will be undertaken by such organizations. Such contracts are extremely onerous against the non-GM crop producer and could, in some circumstances, be tantamount to oppressive commercial conduct. The introduction of legislation might need to redress this imbalance inasmuch as the non-GM producer is currently required to bear the cost of testing and legal risk and financial cost of contamination coming into existence through the actions of the transportation agency itself.

Food Manufacture
The same issues that affect grain transport also affect primary processing and food manufacture. A similar kind of contamination issue is already dealt with by food processors that use the same equipment to process foods containing particular allergens, such as dairy or nuts, and then use such equipment for the processing of food that is not meant to contain such allergens. To ensure that a food can claim not to contain an allergen, the manufacturers must ensure that no trace amounts are transferred from the equipment. The same would be required for maintaining ingredients containing GMOs separately from foods that are not to contain the GMOs.

Food Distribution and Labelling
At the food retail stage, an important issue of segregation relates to packaging and advertising. Various government agencies take responsibility for labelling and advertising of foods. These include: the Australian Quarantine Inspection Service ('AQIS') in relation to compliance of imported food with the Food Standards Code; the Australian Competition & Consumer Commission ('ACCC') with regards to misleading labelling or advertising; and the food compliance enforcement agencies at State or Territory and municipal levels of government.

The labelling requirements of the Australia New Zealand Food Standards Code for GM foods (Standard 1.5.2) must be complied with. It is an offence under State and Territory food legislation to breach the Food Standards Code (see section 16 of the Food Act 1984 (Vic), section 27 of the Food Act 1984 (ACT), section 21 of the Food Act 2003 (NSW), section 21 of the Food Act 2003 (Tas), section 39 of the Food Act 2006 (Qld), section 21 of the Food Act 2001 (SA), section 20 of the Food Act 2004 (NT), and the Health (ANZ Food Standards Code Adoption) Regulations 2001 (WA)). The legal onus for claims about one’s food product rests with both the food producer and the retailer, and consumers must be adequately informed and not be misled. The penalties for not complying with these laws and regulations can be substantial; these can include fines, recalls and corrective advertising among other possible measures.

Single Vision Grains Australia Initiative

Many major players in the Australian grain industry (including bodies such as the Farmers’ Federation from South Australia, Victoria and Western Australia as well as GM technology providers) have become signatories to the Single Vision Grains Australia initiative. This initiative put together a report called Delivering market choice with GM canola which stated that coexistence and segregation were both possible and relatively inexpensive within current grain industry protocols. Their view on market choice and co-existence, however, requires that there be general acceptance of a GM contamination level. The current law has adopted a similar position to that of the GM industry which is that there be allowed the leeway that permits 0.5% contamination in seed and 0.9% contamination in grain.

The European Union situation

In Europe there is still much anti-GM sentiment; several countries have banned cultivation of GM crops, such as a total ban in Upper Austria and France’s ban of one particular strain of GM corn. The European Union Commission has the role of regulating GM foods after they have been approved for cultivation, import or consumption as food; each member country still reserves its right to ban certain varieties where it feels necessary (in fact only one GM crop has EU-wide approval for cultivation).

In 2003, the EU Commission held a policy discussion on the co-existence of GM and other crops. The Commission agreed that co-existence is an economic issue (not a health or safety issue) and has ruled that there should be a 0.9% of unintentionally present GM food threshold for food products to be exempt from GM labelling requirements (although this does not mean that food containing less than 0.9% GM food can be labelled as “GM Free”). The EU Commission has gone even further than that, allowing food that is marketed as organic to have up to 0.9% adventitious (or unintentional) presence of GMOs as of January 2009 (see EU Commission press release).

These policies indicate that the EU position towards solving the segregation or co-existence issue is also to accept a minimum tolerance level of adventitious presence of GMOs in our food. As they have included tolerance levels in their labelling rules for organic produce, this seems to indicate that the EU is not pushing for coexistence that could supply consumers with products that contain 0% GM food.

UK Policy & SCIMAC Redress Charter

The UK government, in response to the legal problems surrounding GM contamination, has issued policies stating that it will compensate any farmer whose crop is contaminated beyond the 0.9% labelling threshold through no fault of his or her own.

An organisation made up of industry stakeholders, Supply Chain Initiative on Modified Agricultural Crops (“SCIMAC”), has lobbied for industry-regulated, market-based redress in its Redress Charter, an answer to the UK Government’s policy commitment to compensation. This Charter provides several options to farmers who have been contaminated, such as:

  • Direct replacement of affected produce (crop substitution);
  • Indirect replacement of affected produce (for example, by ‘virtual’ crop substitution, where provision is made to direct the affected produce to an accepting channel, and treat the claimant’s payment as though the crop were as originally intended);
  • Direct cash compensation;
  • Compensation in other forms (including products or goods of agreed equivalent value);
  • Facilitation of insurance cover.

This compensation would be funded partially by government but also my industry members, both GM users and non-GM users alike in order to further co-existence. It provides a solution for farmers who fall through the common law gaps. However, it is important to note that the Charter and the UK government both only protect from contamination over the 0.9% threshold, not people attempting to maintain a “GM Free” or 0% GM crop as such people would be using a completely separate supply chain.

This system is a novel approach at providing redress, involving all players and encouraging conformity with protocols and coexistence within the supply chain.

Conclusion

The Expert Panel in the Victorian Review of the moratorium on genetically modified canola in Victoria (at page 37) said that the ‘establishment of tolerances […] underpins the grain industry’s ability to achieve coexistence of GM and non-GM crops, and it is a normal part of seed and grain trade globally.’ However, this may not satisfy the supermarket request to fulfil consumer requirements for a non-GM alternative.

It is possible for laws to be introduced in Australia that would protect the existence of non-GM product to a greater degree. The UK precedent for co-existence is an interesting one that might be considered although it would need modification for the differing Australian environmental, logistical and retailing circumstances. Additional laws could be considered to improve segregation at some of the critical control points in the manner outlined in this article.