Should biotech farmers pay for "contamination"?
"I have a right not to have my fields contaminated by genetically modified crops," declared organic wheat farmer Robert Quinn. Quinn, who operates the Quinn Farm and Ranch in Big Sandy, Montana, made this assertion at a recent conference on agriculture and the environment sponsored by the Political Economy Research Center.
By the end of the conference, Quinn, a charming man and passionate proselytizer for organic farming, had me convinced that he was right. If pollen from genetically enhanced crops drifts onto his fields and intermingles with his organic crops, he will lose his markets. That's because organic standards, now codified by the U.S. Department of Agriculture in 554 pages of the National Organic Program, declare that organic crops are not supposed to contain "transgenes"—genes that have been spliced into crop plants by biotech seed breeders to confer advantages such as pest and disease resistance.
Since organically grown crops command as much as a 30 percent premium in the marketplace, commingling with genetically enhanced crops could cost Quinn a lot of money. He argued that he should be able to sue biotech farmers for any losses he suffered as a result of "contamination" from their crops.
I found Quinn's argument initially persuasive, not least because it involves the protection of property rights. But after doing a bit more research, I'm not so sure.
First, let's consider what economics Nobelist Ronald Coase would have to say about who has what rights in this situation. In his brilliant essay "The Problem of Social Costs," Coase notes that, in order to maximize output and achieve economic efficiency, property rights should be arranged to reward the rights holder who can avoid a harm at the lowest cost (the "lowest cost avoider").
Consider a steel mill making a profit of $100. It emits air pollution that cuts a downwind farmer's profits by $50. The mill could stop the emissions for $20, reducing its profits to $80 and increasing the farmer's profits by $50. That would raise overall profits by $30. At first glance, it seems clear that the farmer should be able to force the steel mill to spend $20 on emission controls.
But what if the farmer could switch to a less sensitive crop for $10 and make an additional $40? In that case, the steel mill could pay the farmer $10 to switch to hardier crops and still take home $90 in profit. The net gain in total profits would still be $30. So does the steel mill have the right to emit, or do farmers have a right to crop-enhancing air? How the rights are allocated determines who ends up paying whom.
If the steel mill has the legal right to emit, it behooves the farmer to pay the steel mill $20 for emission controls. Then the steel mill makes $100 profit, and the farmer makes $30 more than he otherwise would. But if the farmer has a right to clean air, the steel mill will pay the farmer to switch crops. The overall profit remains the same, but the distribution of wealth changes. Once property rights are allocated, the participants bargain around them to achieve the most efficient allocation of resources.
So does Robert Quinn have a right to fields uncontaminated by pollen from genetically enhanced crops? Drew Kershen, a law professor at the University of Oklahoma, has been thinking about issues like this one for years, and he concludes that Quinn has no such right.
First, Kershen points out that organic standards are process standards, not product standards. Organic crops receive certification because of the way they are produced: no chemical fertilizers, no synthetic pesticides, and so forth. Saying a product is organic does not mean it is totally free of chemical fertilizers and synthetic pesticides. Organic farmers already experience accidental pesticide drift and the admixture of conventional seeds. They can still obtain organic certification, provided they conscientiously follow all the rules specified by the National Organic Program. The same standard could easily apply to organic farmers whose crops have experienced minor interbreeding with transgenic crops.
Second, Kershen notes that U.S. law generally does not allow those with special sensitivity to an activity to declare that they have been harmed by it. It is their responsibility to protect themselves from the activities they dislike. "You do not have a claim based on your assertion of increased sensitivity," Kershen explains. "If you don't like to hear rock music, you can't prohibit your neighbors from playing it at reasonable levels. You have to protect yourself. Stay away from concerts. Soundproof your home." Similarly, organic farmers could perhaps grow borders that would insulate their crops from their neighbors' pollen flow.
Robert Quinn's most persuasive argument is that he will lose money because his customers will reject his product if they think it is "contaminated" with genes from genetically enhanced crops. Kershen says that argument won't wash either. He offers an example in which a tattoo parlor legally opens between a florist and a Christian bookstore, advertising a special on satanic tattoos. Customers offended by the tattoo shop begin avoiding the florist and bookstore. Under American common law, the florist and the bookstore do not have a cause of action, because "economic expectation is not recoverable." (Of course, Coase would say the bookshop and florist might want to buy the tattoo owner out.) Similarly, an organic farmer who expected to sell his crop at a premium would nevertheless be able to sell it at market rates as a conventional crop; he loses only the premium he expected to gain.
Kershen makes the further point that those who have created a niche market should be the ones responsible for protecting it. "After all, they are the ones trying to differentiate their products in order to obtain higher profits," he notes. "Therefore, the rest of us who don't care shouldn't be saddled with the costs of defending their self-imposed standards and labeling." That would be akin to forcing conventional meat packers to carry "non-kosher" labels on all their meats for the benefit of kosher meat producers.
One method of dealing with the problem faced by Quinn and other organic farmers is to set reasonable tolerances. Many activists and organic farmers advocate "zero tolerance" standards that in effect would outlaw genetically enhanced crops. Since every scientific body that has ever looked into the safety of biotech crops has found them safe, this would be an absurd requirement.
Crops have exchanged pollen for millennia, and they will continue to do so. Seed breeders have decades of experience in setting tolerances for seed purity. As Mark Condon, vice president for international marketing at the American Seed Trade Association, recently explained, "seed purity certification standards were commonly set at 98 percent to 99 percent varietal purity levels or a standard of 1 percent to 2 percent adventitious genetic impurity." It should be possible to maintain similar standards for organic crops. Since organic farmers set their own standards, they could easily adopt these tolerances and save themselves and conventional farmers a lot of trouble.
Another possibility is that biotechnology itself may come to the aid of organic farmers. Already researchers have developed a way to make genetically enhanced crops sterile, which would limit the spread of transgenes. Other researchers have spliced transgenes into chloroplasts, which are cellular organelles that do not occur in pollen and so cannot spread. It might turn out that technical fixes like these make biotech farmers the low cost avoiders in this case and thus shift the balance in favor of organic farmers' claims. You'd think organic farmers would be clamoring for such technical fixes, but so far as I know they have remained silent on this issue.
Kershen suggests that organic farmers could be viewed as another special interest group asking the government to shield it from competition. "Organic farmers are afraid that their markets and their high profit margins will disappear in the next 15 years," he says. Transgenic farming is already matching or beating what can be achieved environmentally by organic farming. Today's transgenic crops use less pesticide, cause less fertilizer runoff into waterways, and reduce soil erosion. And researchers are planning to give biotech crops a nutritional content superior to those of conventional or organic varieties. "Once consumers realize that transgenic crops are as good or better nutritionally, and are as environmentally friendly as or even more environmentally friendly than organic crops," predicts Kershen, "they'll stop buying organic."
According to this view, when organic farmers demand protection of their property, they are really demanding protection of their profits. I hope that is not what the very pleasant and earnest Robert Quinn is up to.