The document discusses South Australia's unique food system and the government's decision to extend the moratorium on genetically modified grain production until 2019. It notes that preserving uniqueness through differentiated food production is important for South Australia's economy, particularly in integrating food and tourism. However, information is lacking about GM grain for stakeholders and consumers. The moratorium provides time to better understand the impacts and value of GM grain within South Australia's food system.

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Introduction
South Australia is unique. Globally, the region is a remote economic outpost. It is also the
driest State on the driest continent in the world. This means developing strategies that allow
its industries to create or access profitable markets; in particular, its food industry. Is
preserving South Australia’s uniqueness an option? The South Australian Government seems
to think so. In 2013 the Government extended a moratorium halting the production of
genetically modified (GM) grain until 2019. It then announced a ‘Premium Food and Wine
from our Clean Environment’ strategic priority, melding food production into tourism.
Preserving uniqueness means challenges, compromises and consequences; there are winners
and losers. Unique food systems are rare; so will it pay to preserve South Australia’s? There
is much to consider but stakeholders in South Australia’s food system are disadvantaged by
lack of information. It is therefore appropriate for the Government to intervene with a
moratorium whilst this disadvantage is removed from the decision-making process to avoid
moral hazard and inefficient markets (GLA Economics, 2006). This article examines key
segments of South Australia’s food system that are lacking information about GM grain,
against the backdrop that policy and what people buy, shapes industry and markets.
The big picture
The State Government has adopted an integrated approach to growing South Australia’s
economy by integrating food and the environment with tourism; announcing food-tourism as
a strategic priority. Symbolically, it was the Minister for Tourism that announced a five-year
extension of the moratorium on GM grain production, not the Minister for Agriculture. In
public and industry response to a 2013 Discussion Paper introducing the ‘Premium Food and
Wine from our Clean Environment’ strategic priority, ‘respondents noted that mutual
interdependence of food and tourism is becoming more pronounced in South Australia’
(PIRSA, 2013).
The South Australian Government quickly developed, prioritised and committed itself to a
range of programs that have been presented to industry in a top-down management style.
Some farm-gate requests have not been met in order to achieve a ‘greater-good’ for South
Australia’s economy; including the ability to grow GM grain.

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There is a ground-swell of opinion within the downstream food industry and broader
community that for economic growth, South Australia must dare-to-be-different and use this
to build an individual sense-of-place.
Over the next five years, it is vital South Australia’s grain sector demonstrates how their
wishes to grow GM grain can be integrated into a greater economic vision for South Australia
already underway. The moratorium is an important period allowing grain producers to view
themselves as part of the broader economic community in South Australia, or risk being
further isolated from future decisions.
This means understanding their multifunctional role in regional South Australia. Food
production may be defined as multifunctional when ‘it has functions in addition to its primary
role of producing food’ (Bernardo et al, 2004). Policy makers stress the importance of multi-
functionality as an economic goal.
Managing opinion
The current discussion about growing GM grain in South Australia is polarised. Stakeholders
and supply chain agents are heatedly debating issues that have minor relevance to the actual
business outcomes they seek. Alarmist media headlines are not helping the situation and
serve only to inflame peoples’ emotions.
The current debate about whether to allow GM grain into South Australia’s food system is
anchored on the science of food safety. In Australia, we have kept consumers in the dark
about GM grain and consequently, their voice is missing.
In 1996 GM grain first entered the United States food system. Seventeen years later in the
highly acclaimed documentary GMO OMG (2013), food consumers were asked what the
acronym GMO stands for. Most respondents did not know.
Science does not influence the purchasing behaviour of a typical household consumer. Their
decisions are based on other norms. Consumers have developed simple binaries when
choosing food ‘based on experience, society, religion, traditions and culture’ (Ankeny and
Bray, 2014).

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Nor are Australians intimidated by science. For generations Australia has been at the
forefront of many scientific discoveries and innovations. People are aware that science
achieves great things such as curing their family and friends from life-threatening diseases.
At the point-of-purchase, whether or not GM is safe scores quite low because consumers are
indifferent.
Lack of information causes ignorance and ignorance breeds indifference. Indifference creates
a vacuum at the consumer end of the supply chain. Vacuums are filled by activists who
purport to be the voice of consumers. Activists can only survive if there is an information
vacuum in the supply chain. Activists do not benefit consumers; they only confuse, frustrate
and misrepresent them.
Is food safety really the catalyst for a moratorium? It is critical that South Australia’s grain
industry uses the moratorium to fill the information void for consumers.
Pandering to ignorance
Advocates have failed in their bid to halt a moratorium on the production of GM grain in
South Australia not because of what they have said; because of what they haven’t said. It is
critical that South Australia’s grain industry uses the moratorium to help fill an information
void for consumers. That is, how will the introduction of GM grain into South Australia’s
highly-differentiated food system add value?
Keogh (2011) states ‘consumer concerns about the safety of GM crops are better addressed
through segregation, identity preservation and education, rather than bans.’ In South
Australia, the Government has adopted the mantra of premium food produced to the highest
standards, to provide consumers and tourists of our food system with an authentic experience.
This can be achieved because contrary to popular opinion, whether or not GM grain is safe is
not the issue. In the absence of any information to help them understand these new
production systems, it is the view of consumers that GM grain is not premium quality or an
authentic eating experience – safe or otherwise.
The vacuum created by poor consumer education also creates another form of activism –
retail activism. Retail activism is when food companies and retailers us their influence to
hijack the discussion about GM foods, by taking extreme measures to differentiate their
business for the sole purpose of competing.

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An example of this occurred when Chipotle, one of the largest fast-restaurant chains in the
United States, completed a highly-publicised two-year project to eradicate all traces of GM
food from their menu. Chipotle’s share price jumped immediately. The next day, faced
with increased competition and falling sales, McDonald’s announced a number of ‘health-
conscious’ changes to its menu.
Consumers always benefit from greater awareness and understanding of the important trends
occurring in food production. There needs to be increased effort in this area as consumers are
genuinely interested to hear.
Explaining policy
Understanding markets over which Governments preside is the foundation to any strong
policy agenda. To consider policy outcomes, Governments require a lot of information.
Since announcing an extension of the current moratorium until September 2019, the Minister
for Agriculture has been drawn into public debate with advocates about food safety. Again,
this has only served to confuse the issue further within South Australia’s food system and
broader community. Leaving people misinformed or uninformed creates the perception that a
moratorium on growing GM grain is big on philosophy, but lacking in pragmatic policy
direction; and consequently open to attack. It’s about deliberately targeting food tourists
using differentiated points-of-value to boost the State’s economy. The Minister for
Agriculture should understand that to halt the production of GM grain in South Australia is
not a safety-centric policy; and instead engage advocates on the important multifunctional
role of food production in the State’s economy.
The era of guilt free
So what do modern consumers value and what do they choose to buy? Consumers want to
know the value of eating GM grain and the environmental value of these new production
systems; something not explained to them.
At the point-of-purchase consumers are bombarded with salient cues about origin, quality and
authenticity. These include messages about provenance, sustainability, organic, fresh,
ethical, healthy, natural, and so on; and of course price. A recent study conducted by The

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University of Adelaide (Consumer Demand for Quality, 2015) identified that ‘consumers are
confused about the benefits of food claims.’ Simply, food consumers seek ‘guilt-free’
choices delivered to them by a guilt-free system; and want to visit the places where this
occurs.
In the era of guilt-free food is there a value proposition for GM grain entering the system? Is
GM grain more nutritious? Is the production of GM grain kinder to the environment?
If GM grain production and consumption does not score highly for guilt-free, then preserving
uniqueness may be the correct decision for South Australia’s economy. If advocates want to
grow GM grain, they must become world-best at explaining the value of eating them and
visiting places where they are grown. Otherwise, South Australia continues to teach people
to rely on it because of its uniqueness. That’s a guilt-free story people are willing to pay for.
The productivity debate
South Australian grain producers have been groomed as consumers of land, inputs and
technology; and the credit required to fund it. Debt levels in the sector are described as an
economic crisis, as the industry laments the disappearance of the traditional family farm. To
be a willing participant in the demise of your own business is a bitter pill to swallow. This
phenomenon is known as the technology treadmill and has had a dramatic impact on the
structure of the South Australian grain industry. In 1958 agricultural economist Willard
Cochrane developed the treadmill theory. Central to Cochrane’s theory is the suggestion that
‘because demand for food is relatively inelastic, production increases reduce the price
received. The result is farmers must constantly increase yields simply to maintain existing
revenues’ (Howard, 2009).
The treadmill phenomenon breaks-down traditional production models of diversity and
renewability, moving producers into a cycle of debt accumulation and reduced wealth. More
information is needed to determine if the adoption of GM grain in South Australia will push
input costs beyond the productive value of farms; as this technology may have little impact
on farm-gate returns over time. The social impact of farm closures in regional communities
is not just economic.

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GM grain was first introduced to America’s food system in 1996. Today, many grain
producers are stepping-off the GM treadmill. The Wall Street Journal (2015) reports that
the total area planted to GM grains is shrinking quickly due to ‘high input costs,
decreasing commodity prices (corn down 50%, soybeans down 35%) and falling farm
profits.’ The report cites premiums of 14% for non-GM grain. According to market
research conducted by Nielsen (Wall Street Journal, 2015), ‘consumers are seeking out
non-GM foods which are perceived as healthier and friendlier to the environment.’ Retail
sales of non-GM foods have increased 15% in the last twelve months (Wall Street Journal,
2015). In response, the United States Department of Agriculture has launched a
certification and labelling program for non-GM food.
For advocates, a request to grow GM grain in South Australia is a call-to-arms for increased
production and profitability. Growing GM grain means South Australian producers will sell
undifferentiated food commodities at world parity prices. Economically, this strategy is
unrealistic as much of the growing demand for food is at the highly-contested and
competitive, price-driven end of world markets (McKinna, 2014). If South Australian grain
producers are to truly profit, they need to target high-end, premium food segments by the
growing of differentiated products built around the brand values of provenance and
authenticity.
Conclusion
It’s important the South Australian grain industry uses the moratorium wisely and adopts a
systems-based approach to gathering the information needed, to assess the impact of
producing GM grain and allowing it to enter the State’s already highly-differentiated food
system. In the meantime the Government has adopted a top-down approach to policy
development involving this issue. Unless the question of value and environment can be
answered for markets and consumers, South Australia cannot risk growing GM grain from a
food-tourism perspective. Should we allow farmer choice at the expense of consumer
choice? Information brings transparency to the issue and with transparency comes scrutiny.
If GM grain is not experientially sound and the production process not environmentally
sound, markets and consumers will not approve. They simply see no value in changing the

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food system, which is a vote to preserve uniqueness. As a remote outpost in the driest State
on the driest continent why would anyone rely on South Australia to feed them? Preserving
uniqueness does pay. It may not achieve a premium; but with a collaborative attitude it may
save South Australia’s markets and economy.

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References
Ankeny, R. A., Bray, H. (2014). Making a meal of GM food labelling. The Conversation.
Retrieved from https://theconversation.com/making-a-meal-of-gm-food-labelling-
28339
Bernardo, D., Valentin, L., & Leatherman, J. (2004). Agritourism: if we build it, will they
come? Retrieved from www.agmanager.info/events/risk_profit/2004/Bernardo.pdf
Bunge, J. (2015, February 2). Fields of Gold: GMO-Free Crops Prove Lucrative for Farmers.
Wall Street Journal. Retrieved from http://www.wsj.com/articles/fields-of-gold-gmo-
free-crops-prove-lucrative-for-farmers-1422909700
GLA Economics. (2006). The rationale for public sector intervention in the economy.
London, UK: Greater London Authority.
GMO OMG. (2013). Retrieved from http://www.gmofilm.com/default.aspx
Howard, P. (2009). Visualising Consolidation in the Global Seed Industry: 1996-2008,
Sustainability 1, 1266-1287. doi:10.3390/su1041266
Keogh, M. (2011). Food Security, Food Reality and Australian Agricultural Opportunity.
Australian Farm Institute: Farm Policy Journal, 8(4), Summer Quarter 2011.
McKinna, D. (2014, January 5). Australian agri-food producers are behaving more and more
like miners. Retrieved from
http://jlofbalak.blogspot.com.au/2014/01/australian-agri- food-producers-are.html
Primary Industry and Regions SA. (2013). Premium Food and Wine from our Clean
Environment: Consultation Summary Feedback Report. Retrieved from
http://pir.sa.gov.au/premium_food_and_wine/strategic_priority/the_plan
Umberger, W. (2015). Consumer Demand for Quality. ABARES OUTLOOK 2015.

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Retrieved from http://www.agriculture.gov.au/abares/outlook-
2015/Pages/Program.aspx