Nov 29, 2005

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When will growers of GM crops get liability insurance?

“The occurrence of loss must be fortuitous.”

Farmers who grow GM cops are liable for financial losses resulting from GMO contamination of neighbouring fields. At the present time there is no insurance available for this. The new German government has promised to revise the Genetic Engineering Act and in so doing to amend the terms of liability which apply to the cultivation of GM crops. In the long term the act aims to provide an insurance solution for GMO farmers. GMO Safety spoke to Nils Hellberg from the Gesamtverband der Deutschen Versicherungswirtschaft (German Insurance Association) about this issue.

GMO Safety: Under the terms of the current Genetic Engineering Act, insurance companies are unable to offer liability insurance to farmers who grow GM crops. Why is this?

Nils Hellberg: This can be explained by the definition of liability as per section 36a of the current Genetic Engineering Act. According to this section, farmers who grow GM crops are jointly and severally liable, even if the GMO inputs in a field were caused not by the immediate neighbour but by a third party. In other words, it is enough to simply presume that the neighbour who grows GM crops is responsible for the loss. The GMO farmer faces a hard-hitting combination of joint and several, strict liability, compounded by reversal of the burden of proof. Even if he has actually done everything correctly, he has no chance in reality of exonerating himself.

As several European studies have confirmed, with certain plant species, the originator cannot avoid unintentional crossing or GMO contamination of neighbouring fields. The loss therefore occurs inevitably without the GMO farmer being able to prevent it. Within the scope of liability insurance, however, we can on principle offer insurance cover only for fortuitous loss. Under the terms of the Genetic Engineering Act, GMO inputs constitute an inevitable loss and are therefore regarded as a business risk. The GMO farmer must bear this himself; he cannot offload it at the expense of the risk industry.

GMO Safety: The new German government has undertaken to amend the Genetic Engineering Act in the coalition agreement. In your opinion, what conditions would have to be met to make liability insurance a reality?

Nils Hellberg: Initially the basic requirement is to ensure that we get liability rules where the occurrence of loss is fortuitous. In other words, a farmer who grows GM crops would be liable only if he failed to comply with the rules of good professional practice – which have yet to be defined. We would then be dealing with fault-based liability only if the liability were associated with a breach of the duty of care.

A return to the principle of proof of causation instead of the current presumption of causation, would represent another key step. The idea that the potential injured party must prove who is responsible for the loss is a cornerstone of German civil law.

GMO Safety: It is also important to distinguish between crop species, isn’t it? There have been several studies of pollen drift and GMO contamination of maize. We know that there is a high probability that at ten to twenty metres the level of contamination will be below the threshold values. Does that figure in your deliberations?

Nils Hellberg: We believe that when designing fault-based liability rules it is essential to establish reliable and practical criteria for good professional practice. Different rules will be developed for different crop types, e.g. rules regarding separation distances. However, these rules must also be scientifically indisputable, and at present we seem to be some way from achieving this.

GMO Safety: In your view what losses could a GMO farmer cover himself against? According to the Genetic Engineering Act, GMO content of up to 0.9 percent does not need to be labelled and is therefore not regarded as an economic loss. What happens if a conventional farmer undertakes vis–à-vis his consumers to observe more rigorous thresholds?

Nils Hellberg: It is not at all clear whether the Genetic Engineering Act does in fact only regard GMO inputs above 0.9 percent as an economic loss. A clear ruling as the basis for asserting claims for loss of earnings would be desirable. There is a need for a reliable threshold value. Contractual agreements below this threshold would not be sufficiently objectifiable, and any corresponding loss of earnings could not be covered by insurance.

GMO Safety: In the long term the new government is aiming for an insurance solution to replace the planned compensation fund. Has anything specific been put forward yet? How do you see the timescale for an insurance solution?

Nils Hellberg: We are aware of the desire of seed manufacturers and crop growers to find an insurance solution. For a long time now we have been conducting intensive talks, with politicians too. In the interests of the insurance industry we are obviously considering offering an insurance solution in the medium- and long-term. However, this cannot be envisaged until a host of requirements have been met. Modifications to the liability rules, which are currently being discussed, are definitely a step in the right direction, but are unlikely to be enough to bring an insurance solution within reach. At this stage it is too early to say when the compensation fund could be replaced by an insurance solution. First we will need to know the details of the planned modifications to the liability rules. Further research is also needed to increase our knowledge of outcrossing and crossing behaviour of GM plants.

GMO Safety: Thank you for talking to us.