What was found: Minimal changes in seed purity demands can have a high impact on production costs for U.S. seed companies.
Why it matters: Purity is vital to breeding and seed production. Keeping seeds of conventional crops separate from seeds of crops that are genetically modified is not different. Even when a seed company is meticulous about trying to keep varieties and hybrids apart, there will be some intermingling during production and processing.
Most companies operate with a threshold of 1 percent to 2 percent. The European Union set the threshold for genetically modified content in food and animal feed at 0.9 percent, but it is considering lowering the threshold for seed sold in the EU.
These changes in seed purity levels have an impact on production costs for seed companies, according to research conducted by Nick Kalaitzandonakes, director of MU’s Economics and Management of Agrobiotechnology Center.
Simple practices such as increasing the size of inactive land around a production field and planting the crops so they get pollinated at different times than plants on nearby fields can help prevent cross-pollination, but they lead to increased production costs.
The baseline production cost will increase about 9 percent with 0.9 percent seed purity. If seed purity regulation only permits 0.3 percent of other seeds, the production cost will jump 35 percent from the baseline.
Why it matters: A lower purity threshold affects compliance costs quickly. The regulation also might lead to significant changes in the plant industry because small seed companies might not be able to comply with the regulation.
Where to find more information: This research was originally published in Choices, second quarter 2004, under the title “Biotech Labeling Standards and Compliance Costs in Seed Production.”