The seed sector is highly regulated in most countries with variety registration, seed quality controls and phytosanitary rules. It has been increasingly affected by policies that are not directly focused on it. The need for the restauration of nature and the conservation of biodiversity produced the CBD and Nagoya Protocol that affects the sector greatly, even after the important ‘repairs’ of the International Treaty. Environmental policies affect seed treatment, the most effective use of pesticides. And now the whole world seems to be forgetting the benefits of free trade, starting a trade war by introducing tariffs far beyond what has been experienced during the existence of WTO or even GATT. Will that significantly affect the whole seed sector?
The seed sector is a globally integrated sector. Varieties have to be optimally adapted to the specific geography in which they are grown and local consumer preferences. But they often arise from broad public or private breeding programmes. Full-fledged breeding programmes need a sufficiently large market to thrive. Next is that seed production has to take place in areas where the biophysical and economic conditions are optimal.
Seed production is not necessarily best in the region where the crop is popular to be grown, because diseases will be common there, and, notably for wind or insect pollinators, isolation distances cannot be guaranteed. Moreover, an economy of scale requires seed production of most vegetable and flower seeds to be concentrated in a limited number of locations in the world. And filling gaps in e.g. forage seed supply is needed when a production area is hit by bad weather.
No country is independent from foreign genetic resources, nor from breeding programmes and seed production facilities in other countries. Seeds thus have to cross borders and minimal hindrances of seed movement are essential for effective crop production and food security. New tariffs don’t fit in that picture!
But will tariffs be a major hindrance? Of course they increase seed prices, but the cost of seed is only a tiny percentage of the total cost of crop production and are not likely to increase consumer prices much. This is however less so for crops with a low multiplication factor such as some legumes and root/tuber crops, and indeed for the gap-filling mentioned above. So, for most crops even 25% import duty is not likely to excessively change the demand for the best varieties and high-quality seed. The signalling of the departure from the policy of free trade may strengthen the reality that food is a strategic commodity, and that in turn, seeds are an essential element of a country’s capability to produce it. So, more and more countries would like to become less dependent on others and may think that they can produce the seeds that they need themselves – and even do breeding of all crops within their borders. Tariffs thus may instil other measures that make seeds crossing borders increasingly difficult, including further phytosanitary blockages and increased variety registration rules. Import restrictions have been increasing over the past few years, notably using phytosanitary requirements based on political economy rather than science. For most countries it proves unrealistic to be autonomous on seeds of all crops, but policy makers seem to be less and less concerned about such realities.
An indirect, but not less important aspect of current policy directions is the effect of tariffs and other trade restrictions on agricultural commodities. If international trade of food products is restricted, then that will affect the demand for seed. If winter-imports of vegetables would be heavily taxed by the USA and Europe, then the seed demand in countries like Mexico and Morocco will likely go down much more than a tariff on the seed itself. Also, the pressure on development cooperation budgets will severely affect food aid. This puts food security in several regions at risk, but it also greatly affects farming in countries that produce the food for the World Food Programme and others. Farmers in such supplying countries may have to shift gears to other crops – and thus change their seed use.
The seed sector has benefitted for a long time from the free trade policies that have dominated the world for a long time. Seed companies are known to be very strategic. Those companies that have not done that yet urgently need to strategize how they will deal with the quickly changing world order. But fear is commonly a bad advisor, including during a global trade war.
Niels Louwaars is a Seed World Europe columnist and Seed Systems Specialist.
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