NSW lifts ban on genetically modified crops

For the last 18 years, NSW has imposed a blanket prohibition on the commercial cultivation of all genetically modified food crops, except those that have been specifically approved. On 1 July 2021, this moratorium will lapse, catalysing a new agricultural era.

The regulatory landscape

In Australia, the regulation of genetically modified (GM) crops is governed by the Gene Technology Agreement 2001 (Agreement). The Agreement, signed by the Commonwealth and all Australian states and territories, established a nationally consistent regulatory system for gene technology.

In 2003, under the Agreement, federal, state and territory ministers agreed to issue a policy principle recognising the rights of the state and territory governments to designate zones for GM and non-GM crops. In response, several states and territories issued prohibitions on the commercial cultivation of GM crops, with limited exceptions such as canola, cotton and safflower. However, over the past decade these prohibitions have been progressively removed.

The moratorium

In NSW, the commercial cultivation of GM crops (with limited exceptions) was prohibited under the Gene Technology (GM Crop Moratorium) Act 2003 (Act). Initially, the Act was set to expire on 3 March 2006. However, it was subsequently extended on three separate occasions, first to 3 March 2008, then to 1 July 2011 and finally to 1 July 2021.

Consistent with the actions of many other states, the NSW Government has recently decided not to further extend the moratorium. This means that on 1 July 2021, the Act will expire, lifting the state’s 18-year moratorium on GM crops. As a consequence, Tasmania, the ACT and Kangaroo Island in South Australia, will be the only regions in the country with a moratorium on growing GM crops.

Potential rewards and risks

The adoption of GM technology is expected to deliver up to $4.8 billion in benefits to NSW primary industries over the next decade. The NSW Department of Primary Industries has indicated that allowing farmers to grow GM crops could decrease their overheads by up to 35%, while boosting production by almost 10%. The removal of the moratorium was also supported by the Productivity Commission White Paper 2021, which found that removing the moratorium will ‘encourage greater private investment in GM technology and facilitate innovation’. Despite the potential financial and agronomic benefits of lifting the ban, there are matters that will need to be closely monitored as a consequence of the moratorium being lifted.

Loss of certification

In Australia, organic certification is not legally required in order to label a product ‘organic’. However, if a business wishes to label its product as ‘certified’ organic, bio-dynamic, or in-conversion then the product must be approved by a certifying organisation. According to the National Standards for Organic and Bio-Dynamic Produce (National Standards), in the event that a certified crop is contaminated by a GM product, the certification will be withdrawn. This means that if improperly managed, the lifting of the moratorium could lead to farmers losing their organic, bio-dynamic, or in-conversion certification.

Put simply, the problem is one of contamination. As farmers begin to grow GM crops, adjoining organic farms face the risk of their fields being contaminated by windblown seed and pollen from GM crops, threatening their organic accreditation.

In Australia, there is a paucity of data on how many farmers are affected by GM contamination.[1] The reason for this is simple, there is no department responsible for collecting such data. This makes it difficult to evaluate both the risk and cost of contamination. Nonetheless, given that Australia accounts for 40% of the world’s total certified organic agricultural land,[2] the risk of contamination requires careful management.

The issue of contamination is further complicated by the fact that those farmers who lose their certification may not be compensated unless it can be shown that the contamination of their organic crops was the result of negligence. Neither the Commonwealth Gene Technology Act 2000, nor the state-based Gene Technology (New South Wales) Act 2003, make provision for compensation to farmers for GM contamination. Instead, organic farmers must rely on the common law torts of private nuisance and negligence to seek compensation. These causes of action can be difficult to establish in the context of GM contamination.

Case study: Marsh v Baxter

In the 2015 leading judgment of Marsh v Baxter[3], Marsh brought two main causes of action against Baxter, one for common law negligence and the other for the tort of private nuisance, after Baxter’s GM canola seeds escaped onto Marsh’s organic crops causing Marsh to lose his NASAA ‘certified organic’ status. Marsh’s property, located in the south-west of Western Australia had been certified organic since January 2006. In December 2010, after notifying NASAA of the contamination, more than half of Marsh’s paddocks were decertified.

In the initial judgment[4], the Supreme Court dismissed all of Marsh’s claims. For the claim of private nuisance, the Court assessed that it had not been shown that there had been any unreasonable interference by Baxter in Marsh’s use and enjoyment of his property. This conclusion was based on the finding that Baxter could not have reasonably anticipated or expected the GM contamination to occur, as it was the result of an unexpected series of strong winds.

For the claim of negligence, the Court found that Marsh’s claim for pure economic loss was without precedent, and there was no evidence to suggest that Baxter had acted in an unreasonable or negligent manner in harvesting his GM crop.

Upholding the decision of the Supreme Court, the majority of the Western Australia Court of Appeal dismissed Marsh’s subsequent appeal.

It is important to recognise that the de-certification decision against Marsh was made by NASAA and not the Court. In fact, the Supreme Court considered the decision by NASAA to remove Marsh’s certification to constitute an erroneous application of the governing standards applicable to organic operators. The Court even went so far as to call it ‘something of an overreaction’.[5]

In October 2013, following a three-year decertification period, Marsh’s organic certification was reinstated. Ultimately, the reinstatement had little bearing on the outcome of the case, as the Court was only required to determine whether Marsh was entitled to damages for the loss of his certification, not whether the certification itself should be reinstated.

Mitigating certification issues

As the ban in NSW is lifted, it may be appropriate that the Gene Technology (New South Wales) Act 2003 be updated to provide a compensation regime for organic farmers who may be impacted by the introduction of GM crops in proximity to their operations, in circumstances where the common law thresholds for negligence cannot be satisfied, but there is evidence of impact or loss.

Organic certification standards could also be reviewed to ensure that thresholds for the sale of products as in-conversion, organic or biodynamic reflect evidence-based indications of harm that may be caused by GM materials. Currently, some domestic certifiers take a zero tolerance approach to GM material in Australian organic products when applying the National Standards. However, other countries tolerate a certain amount of GM material in their organic products. For example, the European Union has adopted a threshold of 0.9% presence of GM material in organic products.[6] This provides a precedent for Australia to consider the merits of moving away from the zero tolerance approach that is currently taken.

Potential liability for unknowingly growing GM crops

Under the Act, non-GM farmers have enjoyed special protection from liability arising from the presence of GM food plants in their crops, where it is introduced without their knowledge.

This is intended to protect farmers who unknowingly grow GM crops (as a result of windblown pollen) from being sued by the agricultural biotechnology companies who hold the intellectual property rights to the GM seeds. However, when the Act expires on 1 July 2021, so too will this protection, unless a last minute change is made to incorporate the provision.

When the protection was introduced in 2007, there was a widespread belief that farmers would be sued en masse for unintentionally growing GM crops. Although the potential liability of farmers appears to be less threatening than first thought, the Federal Department of Agriculture, Fisheries and Forestry has acknowledged in the past that “…[f]armers affected by the unintended presence of GM plant or plant parts in their crops may…face potential liability."

Conclusion

While support for lifting the ban on GM crops is strong, a number of issues remain to be carefully monitored in order to ensure that farmers who do not grow GM crops are adequately protected in circumstances where GM contamination may occur and loss is suffered as a consequence.

---