Voluntary Report - public distribution

**Date:** 5/21/2007

**GAIN Report Number:** SW7006

SW7006

**Sweden**

**Biotechnology**

**GM Crops Good for Swedish Farm Economy**

**2007**

**Approved by:**

![](media/image1.wmf)Roger Wentzel, Agricultural Counselor

U.S. Embassy, Sweden

**Prepared by:**

Asa Lexmon, Agricultural Specialist

**Report Highlights:**

Growing GM crops in Sweden would be economically beneficial for Swedish
farmers, according to a recent report from the Swedish Institute for
Food and Agricultural Economics. Four GM crops that could possibly be
grown in Sweden are covered in the report: rapeseed, corn, potatoes and
sugar beets.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Stockholm \[SW1\]

\[SW\]

#  Gene Technology Beneficial for Swedish Farmers 

There is no cultivation of Genetically Modified (GM) crops in Sweden
today but prospects for future cultivation look good. According to a
recent report from the Swedish Institute for Food and Agricultural
Economics (SLI), cultivating GM crops would be economically profitable
for Swedish farmers. SLI is a government agency commissioned to carry
out economic analyses within the fields of agriculture, foods and
fishing. The report compares the economics of growing conventional crops
versus GM crops. Translated from Swedish, its title is *"*Cultivation of
Genetically Modified Crops- An Alternative for Swedish Farmers?"

Four GM crops that could possibly be grown in Sweden within the next
10-15 years are covered in SLI's report: rapeseed, corn, potatoes and
sugar beets. The markets for these products would be the feed industry
(rapeseed, corn), the starch industry (potato) and the bioenergy
industry (sugar beets, rapeseed and corn).

The report concludes that growing GM crops instead of conventional crops
would result in a 4-12% profitability increase for Swedish farmers. The
largest benefit is noted for potatoes. It is stressed in the report,
however, that possible costs for co-existence measures such as safety
distances between GM and conventional fields are not considered in the
analyses. In order to avoid the unintended presence of GMOs in
conventional and organic products, the European Commission has published
guidelines on co-existence for different types of farming. EU member
states shall, based on the Commission's guidelines, develop national
strategies and best practices for co-existence. The Swedish government
has adopted its national framework for co-existence measures but
detailed rules are yet to be decided by the Swedish Board of
Agriculture. Hence, costs for co-existence measures have not been
considered in the analyses due to lack of data. For the same reason,
possible costs for special regulations on damage compensation have not
been considered. The economic analyses are based on foreign data, mostly
from Canada and the US.

## Rapeseed Analysis

Rapeseed is the most important oilseed in Sweden. Production has been
steadily increasing the past five years and amounted to about 220,000
metric tons in 2006. The rapid growth in Swedish biodiesel production is
expected to further increase the production of rapeseed.

According to SLI's report, growing herbicide tolerant rapeseed in Sweden
would improve the profitability per hectare by 4-8%. Higher costs for
seed would be outweighed by higher yields (6-11%) and reduced cost for
herbicides, please see table 1 below.

Table 1. Profitability Comparison: Herbicide Tolerant Rapeseed -
Conventional Rapeseed

  ----------------- ----------------- ----------------- -----------------
                    Conventional      Herbicide         Impact on
                    Rapeseed          Tolerant Rapeseed Profitability

  Harvest           2,175 kg/ha       2,305 kg/ha       \+ SEK 189-347/ha

  Cost for seed     SEK 580/ha        SEK 928/ha        \- SEK 348/ha

  Cost for          SEK 385/ha        SEK 59/ha         \+ SEK 326/ha
  herbicides                                            

  Difference                                            \+ SEK 167-328/ha
  ----------------- ----------------- ----------------- -----------------

1 USD equals SEK 7.70

## Corn Analysis

Very small acreages are used for corn in Sweden. The small amount of
corn produced is used for farm feed and according to SLI's report,
Swedish dairy farmers are showing increased interest in growing corn for
feed. With current production methods, however, costs for weed control
are high. Reduced costs for weed control would indeed be the largest
economical benefits with growing herbicide tolerant corn in Sweden,
please see table 2 below.

Table 2. Profitability Comparison: Herbicide Tolerant Corn -
Conventional Corn

  ----------------------- -------------- --------------- -----------------
                          Conventional   Herbicide       Impact on
                          Corn           Tolerant Corn   Profitability

  Cost for seed           SEK 1,050/ha   SEK 1,160/ha    \- SEK 110/ha

  Cost for herbicides     SEK 600/ha     SEK 188/ha      \+ SEK 412/ha

  Reduced glyphosate                                     \+ SEK 290/ha
  treatment in following                                 
  crop\*                                                 

  Difference                                             \+ SEK 592/ha
  ----------------------- -------------- --------------- -----------------

1 USD equals SEK 7.70

\* Glyphosate treatment in corn allows for reduced treatment in crops to
follow.

## Potato Analysis

Swedish potato areas amount to about 30,000 hectares. Starch potatoes
are grown on about 30% of these.

Fungus attacks create severe problems for Swedish potato growers.
According to SLI's report, potato cultivation accounts for about half of
total fungicide consumption in Sweden while it accounts for only 3% of
the agricultural area. The biotech company Plant Science Sweden has
developed a fungicide resistant potato through gene technology. Field
trials have been taking place since 2006 but it will take at least ten
years before this variety could be available for commercial growing.

SLI's economic analysis of growing GM potatoes in Sweden is a rough
estimate based on a number of assumptions, e.g., zero fungicide use for
the GM potato. Further field trials are needed in order to get more
accurate data. Nevertheless, SLI's analysis shows that growing fungicide
resistant potatoes in Sweden would improve the profitability per hectare
by 6-12%. The largest benefit comes from reduced cost for fungicides.

Table 3. Profitability Comparison: Fungicide Resistant Potato and
Conventional Potato

  ----------------- ----------------- ----------------- -----------------
                    Conventional      Fungicide         Impact on
                    Potato            Resistant Potato  Profitability

  Cost for seed     SEK 7,500/ha      SEK 8,250/ha      \- SEK 750/ha

  Cost for          SEK               SEK 0/ha          \+ SEK
  fungicides        2,085-3,005/ha                      2,085-3,005/ha

  Cost for spraying SEK               SEK 0/ha          \+ SEK
                    1,120-1,680/ha                      1,120-1,680/ha

  Difference                                            \+ SEK
                                                        3,205-4,685/ha
  ----------------- ----------------- ----------------- -----------------

1 USD equals SEK 7.70

In 1996, Amylogen HB applied for approval of a GM starch potato intended
for industrial use. The Commission has proposed to approve this potato
for cultivation. It was up for voting in the Article 30 Committee in
December 2006 but the necessary qualified majority for or against
approval was not reached. The next step is a Council vote. If the
Council fails to reach a qualified majority, the Commission can then go
ahead and approve the product.

# 

# 

## Sugar Beet Analysis

Swedish sugar production is restricted by EU's quota system. Under this
system, Sweden can produce up to 325,700 metric tons of white sugar.
Currently, the Swedish sugar industry (Danisco Sugar AB) applies a
GMO-free policy but is willing to reconsider its policy should consumers
demand sugar produced from GM beets.

According to SLI's analysis, growing herbicide tolerant sugar beet in
Sweden would improve the profitability per hectare by about 10%.

Table 4. Profitability Comparison: Herbicide Tolerant Sugar Beet and
Conventional Sugar Beet

  ----------------------- -------------- ----------------- -----------------
                          Conventional   Herbicide         Impact on
                          Sugar Beet     Tolerant Sugar    Profitability
                                         Beet              

  Area need\*             100%           90-95%            \+ SEK 481-918/ha

  Cost for seed           SEK 1,600/ha   SEK 1,938/ha      \- SEK 338/ha

  Cost for herbicides     SEK 913/ha     SEK 188/ha        \+ SEK 725/ha

  Cost for spraying       SEK 420/ha     SEK 280/ha        \+ SEK 140/ha

  Reduced glyphosate                                       \+ SEK 290/ha
  treatment in following                                   
  crop\*\*                                                 

  Difference                                               \+ SEK
                                                           1,298-1,735/ha
  ----------------------- -------------- ----------------- -----------------

1 USD equals SEK 7.70

\* The yield increase for GM sugar beets is estimated at 5-10%, which
means that less area would be needed to fill the quota. Estimate
includes saved costs for not growing sugar beets on the released area as
well as the opportunity value for the released area.

\*\* Glyphosate treatment in sugar beet allows for reduced treatment in
crops to follow.

## GM Crops for Industrial Use First Out? 

Based on SLI's economical analyses, Swedish farmers might very well
chose to grow GM crops in the future. The economical incentives seem to
be there. The hindering factor can be fear of negative consumer
reactions, which is also the reason for Swedish farmers' limited use of
imported GM feed. In fact, Swedish farmers imposed a voluntary ban on GM
feed more than 10 years ago. In 2006, however, Swedish livestock farmers
decided to abolish the ban while Swedish dairy farmers chose to maintain
it. This policy shift was attributed to the increasing cost of sourcing
GM-free soybean meal. According to SLI's report, the price per kilo for
GM-free soybean meal is about SEK 0.10-0.15 higher than GM soybean meal.
The price difference might increase as GM-free soybean supplies
decrease, which would further increase the cost for "GM-free" animal
production. However, the first GM crop to be grown in Sweden will most
likely be intended for non-feed and food industries, such as the starch
and bioenergy industries, where consumer attitudes are of less
importance.