Abstract
This paper discusses the introduction of genetically modified (GM) seeds in agriculture and their impact on the modus operandiof international trade of agricultural commodities. The central argument in this paper is that the commercial rejection by some markets, especially in the European Union, resulted in broad market share restructuring of the three largest international soy exporters: the United States, Brazil, and Argentina. These findings came as a result of trade flow analysis, taking into account the source and destination of soy in the soy trade using the quantitative Constant Market Share method. Taking into account that at the time of the study there were no legal trade barriers put up by the European Union, which was resistant to the use of Monsanto’s herbicide-tolerant soy (GTS-40-3-2), it is assumed that the effects resulting from its commercial rejection were due to demand factors and not for any official trade ban. It is concluded that technology adoption caused changes in factors that led to export growths. However, despite changes in market share, the globalization effect prevented exporters from incurring greater trade losses since they always had the option of moving their products to markets with lower levels of “hatred”.
Highlights
According to data from FAO collected in 2013, soybean’s share of harvested area of the world’s primary agricultural crops increased from 2.5% in 1961 to over 7% in 2010
International trade became an arena of great conflict between producers and importers of agriculture products, well-represented by two large economies with conflicting positions toward genetically modified (GM)-food/feed production and commercialization3: The United States of America (USA) and the European Union (EU)
This paper shows that the commercial rejection of GMOs initially caused a strong and accelerated restructuring of trade flows, changing market shares of the largest global producers in terms of source and quantity
Summary
According to data from FAO collected in 2013, soybean’s share of harvested area of the world’s primary agricultural crops increased from 2.5% in 1961 to over 7% in 2010. In 2010, absolute figures of worldwide harvested area of soybeans exceeded 102 million hectares. On the one hand, being a large agricultural producer and exporter as well as a major player in farming technology, the USA advocated for wide and free diffusion of GM seed technology and trade of its products. Made up of Member States that are net importers of food, the EU has opposed the unrestricted adoption and trade of GM-food/feed, declaring that the high level of uncertainty involved required precautionary measures. This conflict is reflected in trade sanctions that stem from different countries’ regulatory posture
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