Building new food systems with GM crops

Source: LOIM. For illustrative purposes only.

Changing climate: a sustainability challenge

The frequency and intensity of extreme weather events is increasing as a direct consequence of climate change. These threaten the stability of our planet’s food supply, given the negative impacts on both crop yields and productivity. 

For example, climate change has increased hydrological variability, which manifests as flooding, droughts and storms. A case study from McKinsey investigated how African agricultural practices, in which 95% of livestock and cropping systems are rain-fed, will have to adjust to increasing hydrological variability. Africa is particularly vulnerable because many of the crops grown on the continent are at the edge of physical thresholds beyond which yields decline.

Between 2008 and 2018, extreme weather events were linked to USD 108 billion in crop and livestock production losses in developing countries. Rising global atmospheric CO2 concentrations may trigger adverse, yet uncertain, effects on crop physiology, while climate-induced migrations of crop pests and diseases is set to multiply agricultural losses.


Weather events. Drought intensification rates have rapidly increased, and during the past 64 years there has been a transition toward more flash droughts over 74% of the global regions identified by the Intergovernmental Panel on Climate Change Special Report on Extreme Events. Kenya, for example, has faced a severe water shortage caused by four consecutive failed rainy seasons amid one of the harshest droughts the East African region has seen in four decades. The Food and Agriculture Organization of the United Nations (FAO) reported that floods have collectively accounted for the second gravest agricultural disaster, next to droughts, as they were responsible for USD 21 bn in crop and livestock losses from 2008 to 2018 in the developing world.

Pathogens. Diseases specific to plants are already responsible for significant pre-harvest losses every year, with smallholder farmers proving particularly vulnerable. Fungal pathogens can induce up to 30% in crop-yield loss. Research has shown up to nearly 50% of beans and maize farmers surveyed in Central America and nearly 50% of potato farmers surveyed in South America have experienced yield losses as a consequence of plant disease. Climate change further increases outbreak risks by altering pathogen evolution, host-and-pathogen interactions and facilitating the emergence of new pathogenic strains. 

Pests. The FAO estimates that as much as 40% of global crop production is lost to pests every year. Invasive insects cost the global economy at least USD 70bn annually. A number of the more damaging insects are dependent on a warmer climate. Fall armyworm and tephritid fruit flies, for example, are spreading to new areas as the global temperature rises. The world's most destructive migratory pest, the desert locust, is anticipated to change migration routes in response to climate change. Not only is the prevalence of these pests expected to increase, farmers which have had little to no experience of dealing with these threats may soon find themselves exposed.

Weeds. Weeds compete with crop plants for water, light, and nutrients. Consequently, the presence of these plants has a negative impact on crop yields.  Climate change leads to altered environmental conditions that are favourable to arable weeds. For example, aggressive species of tropical and subtropical origins are anticipated to expand northward in the event of a warmer global climate. The diverse gene pool and physiological plasticity of weeds mean that they are likely to be more resilient and adapt better to changes in CO2 concentrations and temperatures than crops. Climate change then may actually prove advantageous for weeds at a time when crops come under greater pressure.

 

GM Crops: a sustainability solution

Advancements in agricultural science and technology have brought about a GM crop revolution. Manipulation of the genetic material in plants has enabled greater resistance to insects, herbicides and a number of viruses specific to flora. The resulting GM crop technology has led to a direct increase in yields through improved control of pests and weeds. This technology is linked to an additional 330 mn tonnes of soybeans, 595 mn  tonnes of maize, 37 mn tonnes of cotton lint, 15.8 mn tonnes of canola and 1.9 mn tonnes of sugar beet since its introduction in 1996.

Drought resistance. Droughts can be devastating to crop yields. But advancements in biotechnology stand to contribute to global food security through the development of drought-tolerant crops. These crops have the potential to improve plant growth and productivity, and to increase the area of arable land worldwide. Recent studies have started to bear fruit on the molecular mechanisms of drought-stress responses and, in parallel, tests of GM crops with drought tolerance have also shown promising results that can be ultimately applied to agriculture. 
 

Source: GM Crops Food. For illustrative purposes only.
 

Virus protection. Climate change can alter the geographic distribution, biology, pathogenicity, host specificity or life cycle of a pathogen. Rising temperatures can not only affect the survival of pathogens during colder periods, but can also lead to earlier spore release. Consequently, epidemics are expected to increase in severity and spread geographically as climate change continues. 

Crops can be genetically modified to become resistant to known diseases. The rainbow papaya, for example, is less vulnerable to the ringspot virus, which previously threatened Hawaiian papaya crops. 

Pest control. Insect-resistant plants have the potential for higher yields and require less in the way of pesticide application. Between 1996 to 2020, insect resistant (IR) crop technology used in cotton and maize increased yields by an average of 17.7% and 14.5%, respectively. Commercial soybean farmers in South America have seen an average 9.3% increase in yields since 2013 through the use of this same technology. Cumulatively since 1996, there has been a 92.1 mn kg reduction in maize insecticide active-ingredient use and a 288 mn kg reduction in cotton insecticide active-ingredient use. The fuel savings associated with a decrease in insecticide use feeds into farmers’ bottom line and leads to emissions reductions. 

Aligned companies

Companies are creating new profit pools by developing or providing solutions that drive the growth of GM crops. Below are examples of specialist companies in these industries. They are provided as information only and are not necessarily held in our portfolio or represent investment recommendations.

Sources

1 Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or securities. It should not be assumed that the recommendations made in the future will be profitable or will equal the performance of the securities discussed in this document.