Some simple economics of GM food

Public opposition to the genetic engineering of food crops (GM food) has not been based solely on concern about biological risks. Economic risks have been widely cited too: the fear that the world's food supply will be concentrated in the hands of a few large firms, the fear that such firms will engage or are already engaging in anti-competitive practices, and the fear of the transfer of ownership rights over genetic resources to the private sector. Are these fears justified? We argue that the GM food industry may be on course for further consolidation, and this could be anti-competitive. In fact, policymakers face a dilemma: a stringent regulatory approval process enhances food safety, but at the cost of increasing market concentration. We argue also that the integration of seed and agri-chemical manufacturers may bias the introduction of GM traits in undesirable directions. Some business practices (such as tie-in contracts between seeds and complementary products such as herbicides) may have an exclusionary motive that warrants scrutiny on anti-competitive grounds, while some other practices (such as the use of terminator genes) appear more benign. Finally, we argue against granting patents on genes or even on gene 'functions'. Doing so may delay the development of socially beneficial applications.