During 20-30 recent years, most leading countries faced the need to make a choice in determining their positions concerning legalization of genetically modified commodities, which are more commonly known as GMOs. Every country made its own choice, and Russia was no exception in the sphere.
However, it is beforehand to discuss the final determination of Russiaon the issue -there are too many features inthe sphere. Therefore,to date we can talk only aboutthe outlined vectorson the market, which are still likely to change. Although, it is clear that Russia started movingtowards the total ban of GMproducts.
It is reasonable to brieflyrecall the history of the issue in Russia,and try to specify the main decisions of the country in the GMissue.
The first legislative decree, which provided the right to Russia for some regulation of genetically modified objects, appeared on July 5, 1996. It was the Federal Law #86-FZ "On State Regulations in the Field of Genetic Engineering", signed by Boris Yeltsin, First President of Russia. In fact, the reporting document was the first one in Russia introducing the concept of "GMOs" and "transgenic organisms", and provided the approximate steps, which the Government was ready to made, due to appearance of new agricultural crops and food products on the market.
For example, the Lawspecified howto realize the general availability of information on the safety of GMOs.Of course, to date it looks likesome naive, but 19years ago the company, engaged in creation of GMOs, should have provided any information about the productonly "at the request of concerned parties". For the first time, it was legallyspecified thatGM productsin Russia should pass through mandatory standardization, certification and declaration.
During the following 10 years after adoption of the Law, there were made many amendments, but they had more theoretical than practical character. In fact, the history of commodities containing GMOs, started in 2006, after signing of the “letter of exchange" on regulation of modern agricultural biotechnologies by Herman Gref, Minister of Economy and Trade of Russia, and Susan Schwab, US Trade Representative. Signing of the letter was occurred within frames of the bilateral agreement between the countries on the Russia's accession to the WTO. In fact, signing of the letter of exchange made Russia not to counteract to introduction of GMOs to the domestic agricultural sector, and agreed with accessing of foreign GM products on the domestic market.
Onecan say that it was a certain pressureon the positions ofRussia, which did not plan to completelyopen its markets totransgenic products.But according to the WTO rules, the country can notrefuse from GMOssupplies while joining theorganization, andthe World Trade Organizationhas the right to punish the countries whichcreated one or anothertrade barrier. In addition, the Russia's path to the organization was ratherlong and complicated, and it is unlikely that Russia will show any commitment to principles in the issue.
However, after Russia assumed the reporting obligations, quite a long period passed until Russia became the complete member of the World Trade Organization in August 2012 only. By that time, both state authorities, businesses, and Russian society already received the common information on GM technologies and GM products. But the reporting information was quite controversial, since to date the issue on their benefit or harm is not still solved in the world. Generally, the supporters of GMOs gave the following reasons for its legalization in Russia: usage of genetic engineering in agriculture allows creating plants and animals with useful features, making them more resistant to pests, diseases, etc. In addition, they believe there is no reasonable evidence of GMO harm to humans and the environment. But the opponents of GMOs argue that the consequences of GMOs usage were insufficiently studied. Also, at that time in Russia there was no required legislative regulation and effective control on the production and sale of various GM products.
But despite the ongoing discussions, GM crops continued coming on the Russian market, and as of the beginning of 2014, there were officially registered 22 lines of GM products (some varieties of corn, potato, soybeans, rice and sugar beets), which imports to the territory of Russia was officially authorized. It should be noted that at that time (and even to date) the commercial cultivation of GM products in Russia is illegal. But it is the official data only. According to the Russian Grain Union, in March 2014 the illegal planted areas of biologically engineered crop varieties in Russia totaled nearly 400 thsd ha (while the planted areas under all agricultural crops totaled 70 mln ha). Some other experts said that transgenic varieties form nearly 5% of the cultivated corn and soybeans areas. Thus, it became clear that the problem really escalated, and it should be solved at the state level.
On September 23, 2013, Dmitry Medvedev, Prime Minister of Russia, signed the decree of the Government of the Russian Federation #839 “On the State Registration of Genetically-Engineered-Modified Organisms Intended for Release into the Environment as well as Products Derived from the Use of Such Organisms or Containing Such Organisms”. The decree approved the rules of registration of genetically engineered organisms and products, and these rules came into force on July 1, 2014.
As for the key provisions of the document,since its entry into force the Government allowedthe targeted use ofGMOs for production of drugsfor medical application, food raw materials andfood products, feeds and feed additives for animals, as well as for breeding orcultivation of plants,animals, and microorganisms for agricultural purposes.
Dependingon the designated purpose, the decree defined functions of various government agencies in registration and oversight of GMOs: the Ministry of Health of Russia,the Federal Service for Surveillance in the Sphere of Public Health, The Federal Service for Surveillance of Consumer Rights Protection and Human Welfare, and the Federal Service for Veterinary and Phytosanitary Surveillance.
Also,the decree specifies the procedure for the first release of GMOs into environment for the further production in Russia, and the order of its state registration. In addition, the document introduced the single consolidated state register of GMOsand the products containing such organisms, and defined by the Federal agency responsible for conducting and monitoring of theregister - Ministry of Healthof the Russian Federation.
It would seem that adoption of such decreecreated a kind of "road map" in Russia, which determines the position and operating procedures for opening of the Russian market for GM products.But it did not appear to develop in such way.
Adoption of the reporting decreecaused hot discussions in the Russian society. Some secrecy of adoption of the "weak and dangerous document for the country", andthe actual ignoringof numerous commentsfrom the scientific society and business, became the main arguments of the opponents of GMtechnologies.
Nevertheless, on March 27, 2014, Vladimir Putin, President of Russia, summed up the peculiar results ofsuch discussion, andsaid that the Government shouldprotect its citizensfrom usage of foods derived from genetically modified organisms, and it can be donein compliance with the country's obligations under the WTO.
It is obviously that such statement would be considered as a "new road map" on the issue, although it includes much less information than the one proposed by the Government. But in the middle of 2014 the Government decided to postpone the entry into force of the decree #839 to 2017. And on February 4, 2015, the Government provided the draft law to the State Duma "On Amendments to Certain Legislative Acts of the Russian Federation with regard to improving the state regulation in the field of genetic engineering", which actually witnessed the radical change of the state attitude to the issue.
In particular, the draft law proposedto impose the total ban oncultivation and breeding of geneticallymodified plants and animals at the territory of Russia, except for its usage for expertiseand scientific-researchworks.
Also,the document provided introduction ofthe certain control procedures forrelease of GMorganisms into the environment,and monitoring the impactof genetically modified organisms and products on humans and the environment, as well as extension of the obligations for passage of the necessary registration procedures to importersof the relevant GM organisms and products.
In addition, the draft law provided administrative responsibility for usage of GMorganisms with violations of the authorized species and terms of use.
The reporting draft law was enthusiastically met inthe lower house of the State Duma, who promised to consider and adopt itas soon as possible. However, onlythe first readingof the draft law was quickly passed, while during preparations for the second reading the deputies started raising some questions.
So, on March 26, 2015, the Committee for Security and Anti-Corruption of the State Duma expressed its opinion that the text of the draft law does not specify “what kind of government body would be responsible for monitoring the effects of GMOs on humans and the environment, its criteria and organizational basis". According to the Committee, it is necessary to establish the single state register for all types of GMOs operating at the territory of Russia, and its official publication in the Internet. Also, it was suggested to hold further discussions with involvement of experts during the second reading of the draft law.
Thus, to date it was rather difficult to name the actual dates of adoption and entry into force of the reporting draft law. One can only confirm that to date the authorities chose the way towards imposition of the total ban on production and usage of GM products. In order to estimate the new direction of the GM products market, APK-Inform Agency asked opinions of the market participants, especially participants from the market segments of corn and soybeans.
According to the polling results, the majority of our respondents, growing the reporting agricultural crops, support the possible imposition of the total ban of GM seeds. The possible negative impact of GM components on the human and animal health was called as the main reason for such position development. In addition, many respondents find it possible to work without any imported seeds, including not only GMOs but also all imported hybrids, but only in terms of qualitative development of the domestic seed industry.
At the same time, the market participants consider that imposition of the complete ban, and stoppage of any supplying of imported seeds, would be quite wrong: such decisions should be taken after careful consideration, and not spontaneously, not to cause serious damages to the agricultural sector of Russia.
Also, nearly one third of the questioned agrarians expressed the extreme contrary opinion on the possibility of GMOs presence on the market. Several companies noted that the negative impact of GMOs on living organisms has not been officially proved yet; therefore it is not necessarily to impose any ban. In addition, in recent years the domestic production of seeds for grains has been irrevocably ruined, and it will take decades to completely cover all needs of the market. Of course, it is likely that achieving of the same results as the imported seed producers, will be impossible at all. As for the possibility of production of hybrid crops, they are practically at zero level, and it is almost impossible to cover requirements of the Russian market in hybrids.
Thus, to date there are many both opponents andsupporters of the banon GM seeds among Russian agricultural producers. The market operators who supportthe ban, are confident that in terms of the required state funding (and it isthe major barrier in development of the domestic seed industry), itis possible to raise the market to the required level in the shortest possible time.
In addition, opponents ofthe ban believethat such decision will not lead to any positive changes, since the market will losenot only GMseeds, but also other hybrids, which is impossible to replace with domesticones. In such case, agrarianswill have to reduce the planted areas of such crops: sunflower seed, soybeans,corn, etc.So, such ban will cause the deficit of the reporting crops offerson the market and the need to import them.
Also, participants of the Russian market, specializing in processing and exports of corn, expressed their opinion on the subject. The majority of them believe that during several recent seasons the situation with production, trading and processing of GM corn in Russia did not significantly change. The GM grain was actually non-demanded on the domestic and export markets. Therefore, any increasing of its production volumes is inappropriate. They note that the Government tightly controls the flow of GM products on the market, because its selling on world markets will be more difficult than one, which does not contain GMOs. As for the grain-producing sector, there is virtually no control on the presence of GMOs in purchased grains, because there is almost no such raw material on the market to date.
Participants of the Russian market of soybeans have completely different estimation of the situation. Yevgeny Trofimov, General Director of TARGET AGRO LLC, provided most objective opinion on the issue:
"To date, the soybean market of Russia faces rather complex situation. Russia does not completely provides itself withthe required soybean volumes, that is why we are significantly dependent on the oilseed imports. Due to the growth of USD/RUR exchange rates, the price for imported soybeans and soybean meal significantly increased, which also led to growing of prices for domestic soybeans. It provided rather positive effect at farming enterprises, however, the processors and final consumers of soybean meal and oil faced the increased costs for feed stuff. As a result, later it will hit the costs of Russian consumers.
To date, GM soybeans really present on theRussian domestic market. Oilseed processorsimport the raw materialmainly from Brazil and Argentina.According to our estimations, the market of GM soybean consumptionin Russia totals at least 50% of the general soybeanconsumption. It is forbidden to grow soybeanscontaining GMOs,in Russia, butnevertheless, there areoften some farmers whoare trying to plant GMseeds.
But if the Government imposes the complete ban on GM soybeansusage, it will lead to some kind of disaster. There will be a very large-scale deficit of the oilseed, which will lead to the colossal growth of feed prices. The raw material will be almost absent, because all foreign countries grow GM soybeans. Therefore, in my opinion, it is necessary to allow cultivating of GM soybeans in Russia, because the observed situation is quite absurd: consumption of the oilseed containing GMOs is allowed, but its production - not. As a result, we lose to the import soybeans in both quality, and yield.”
Also, we asked VladimirPetrychenko, GeneralDirector of ProZernoLLC, to express his opinion on the issue:
"To date, there is no authorization for production of GMOs in Russia. But at the same time, there is no forbiddance on the processing and usage of GM crops, and it is allowed to import certain strictly specified and resolved lines of GM organisms, both in soybeans and corn. Therefore, the situation is not quite logical: it is impossible to produce, but it is allowed to process certain crop groups. It is clear that the industry requires establishing some order. But the process in Russia is at dead-center position.
Does Russia illegally produce GM crops to date? It is not officially confirmed, and if the fact exists, the production is mainly low-scale. I would like to argue against the widespread belief on rather sufficient presence of the seeds containing GMOs on the Russian market. The leading producers of seeds confirm that they do not import, and do not use the seeds, which are banned. In fact, Russia has high genetic engineering, good selection rates, but not GM seeds. It is possible that there are some individual companies whose products contain GMOs, but certainly not large-scale companies.
The market segment does not have any monitoring system. Therefore, I believe that, first of all, the Government has to restore order in the industry,and of course, make control of the whole process."
In our opinion, it is the current situation with GM products on the Russian market. How can it develop in the nearest future? It is quite difficult to answer the question, due to recent changes of the "road map" in the industry. One has to wait for the final adoption of the above mentioned draft law on improvement of the state regulation in the field of genetic engineering, to see the final version of its text, to find out the terms of its entry into force, etc. And, of course, one has to learn the reaction of the WTO on such decision of Russia, which will come into serious conflict with rules of the organization.
Therefore,we can summarize thatRussia has taken the path of GMObanning. But it is too early to determine the finalresults ofsuch decision.
Alexander Pryadko,
APK-Inform Agency
