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Detrimental Social and Trade Impacts due to Adventitious Presence

(AP): case study of GM Flax

A paper for presentation at:

The Centre for Society and Genomics’ “Ten Years After: Mapping the Societal
Genomic Landscape” Conference

May, 2010

Authors/Presenters: Camille D. Ryan and Stuart Smyth

Institutional Affiliation: University of Saskatchewan, Canada

Extended Abstract:

Introduction: This paper examines the social, economic and governance aspects of adventitious
presence (AP) of Triffid flax in seed, food and feed markets; outlines the historical timeline of
Triffid from its development to its current detection in Canadian and global markets; maps the
Canadian and EU flax supply chain to ascertain potential gaps wherein leaks occurred, and
conducts a systematic analysis to estimate costs associated with AP.

Conceptual Framework: The Liability Analysis Framework (LAF) provides an effective

framework for stakeholders to evaluate and mitigate liabilities both quantitatively and
qualitatively. The LAF is based upon three interconnected/overlapping spheres: contractual
legal issues, legislative/regulatory issues and common law/statutory attributes. The
Framework, with is broad scope, is grounded in governance and legal principals and is useful for
dealing with containment in the face of a market failure such as AP.

Method: The detection of Triffid in flax supply chains has obviously had market impacts in not
only Canada, but also in Europe, especially Belgium. Not only are there costs associated with
loss of trade, the opportunity costs associated with securing substitute export markets and the
high testing costs for the Canadian industry but there are also high social and economic costs
associated with loss of a key natural Omega-3 source for both human and livestock health for
the EU.
The methodology of this research will involve gathering data on the economic costs regarding
the detection of Triffid flax in Europe as well the data on testing costs all along the value chain
in the Canadian market. Transaction cost analysis (TCA) measures the cost of participating in a
market, or more simply, the cost of a specific transaction. Utilizing TCA will allow us to divide
the flax supply chain into specific compartments and then compare the cost of testing and
exporting flax presently against historical flax export data, identifying the cost differences. The
comparison against historical transaction data will provide a concise assessment of the total
increase in cost due to the AP of GM flax in non-GM flax exports.
This research represents a case study of the entire supply chain for flax, from the fields of
Canada through to the final products available internationally in the EU and its export markets.
Stakeholders include, but are not limited to: trade commissioners; transportation and port
authorities; commodity brokers; industrial associations and affiliated actors; processors;
certified seed growers; and producers.

Results: More than 15 countries have filed a total of one hundred notifications in the EU’s
Rapid Alert System for Food and Feed since early September when Triffid was first identified in
the EU food supply chain. Products, in the form of nuts and seeds, feed materials, and cereal
and bakery products, were distributed to 45 countries. Most (as of February 2010) identify
Canada (68%), Belgium (49%) and Germany (28%) as originating countries of unauthorized
FP967-contaminated material.

Based upon preliminary analyses, costs are estimated conservatively at CDN$10 Million. These
costs include demurrage, quarantine costs and testing costs incurred along the Canadian supply
chain. However, actual costs are expected to be in the tens of millions across the broader
supply chain (including EU and Canadian markets).