Potential impacts of biopharming on New Zealand: results from the Lincoln Trade and Environment Model
Date
2008-07
Type
Monograph
Collections
Fields of Research
Abstract
Biopharming is an agricultural technology on the cusp of commercialisation. The technology
uses genetically modified crop plants and animals to produce pharmaceuticals. Biopharm
crops are now grown in the United States and Europe, and biopharm animals are being raised
in New Zealand and elsewhere. The
Agribusiness and Economics Research Unit (AERU)
conducted research on the industry in 2006 and 2007 (Kaye-Blake, Saunders, & Ferguson,
2007), finding that ‘the necessary information to develop a robust economic analysis of these
products is lacking. Much of the information on the relevant dimensions is simply unknown.’
This report builds on the prior AERU study. First, it presents an update on the biopharming
industry and the economics literature on it. Secondly, it presents economic modelling to
estimate the potential impacts of biopharming in New Zealand. This analysis uses the Lincoln
Trade and Environment Model (LTEM) to simulate different market impacts from
biopharming and estimate the net economic impacts. Finally, the ramifications of these
estimates for biopharming in New Zealand are discussed.
The literature on biopharming has not developed appreciably in the last year or two. There
are still a number of unknowns, and its profitability and potential impacts on the wider
agricultural sector depend on the pharmaceutical, crop, and region being studied. Consumer
reactions appear to be a significant factor. Consumer perceptions of biopharming and the
food system are presented in the literature in essentially three ways. One model of
perceptions is ecological: it considers the biopharm organism in an agro-ecological
environment. A second model is genetic, and focuses on the potential for modified genes to
escape the biopharm crop or animal and enter the genome of other organisms. The third
model considers how food is produced and the potential for mixing biopharm material with
food crops and ingredients in the food industry.
A model of international trade in agricultural commodities – the LTEM – was used to analyse
the impact of changes in agricultural markets due to the introduction of biopharming into the
dairy sector in New Zealand. The results provided information about the relative sizes of
potential economic impacts given different future changes in the markets. Biopharming could
have either positive, neutral, or negative impacts on the demand for New Zealand dairy
products. In addition, it may be pursued without any impact on the cost structure of the wider
dairy sector, but it could impose segregation or similar costs on non-biopharm producers.