Literature and Insights Editorial

You might not have expected this topic, but I think management accounting can encompass a view of agricultural output, especially as it engages with public demand for products, or resistance of them.

What is being produced and how is part of the picture, together with whether we have sufficient say in what we consume. It is a story, then, of tradition and nature, science and marketing, and always numbers. I am going to look at genetic modification (GM) of animals and plants.

“Landline”, a program of the Australian Broadcasting Commission, recently looked at genetic modification of dairy cattle (Slezak, 2020, online).

In their natural state, most dairy cattle have horns. From the farmers' perspective, that poses a risk of injury to humans and the animals themselves. Horns take up space too, making feedlot farming that is prevalent in the US less efficient, so it is a cost issue in that respect.

When the calves are about eight weeks old, farmers remove the horns at the bud stage, before they attach to the skull. This disbudding is painful for the calves and worse when sedation is not possible. It is also time-consuming and hard work for the farmers. It is expensive too.

Acceligen, a subsidiary of US company Recombinetics, “tweaked the genome” of hornless (aka “polled”) beef cattle in order to produce high-yield dairy livestock without horns. Two bulls were born; one named Buri. Acceligen argued that the genome alteration was so slight that it should not be regarded as gene editing at all but “precision breeding”. A likely reason was to sidestep regulatory controls and thus allow the dairy products to be marketed without being labelled as GM. You would not be told you were consuming GM products. Why would they want to do so? It is cheaper not to spend time dealing with a regulator, and it means less oversight.

As it happened, the company made a major procedural mistake of contamination in the laboratory:

The bacterium was partly antibiotic-resistant; not a desirable quality in animals routinely dosed with antibiotics. What effect would the DNA have? Could it be passed on? The answers were not known, and were potentially scary.

It was reported that no country outside the US had received any of the affected semen. Brazil ceased its plans to import semen from the project as a result of the error and the “gene editing” project was halted in America, at least for the time being. Semen was sent to Australia before the mistake was discovered, however, without public attention until now. How that occurred would be another story worth investigating.

“Landline” reported that of the 11 calves born from the sperm, six inherited the bacterial gene and were destroyed. The rest were isolated and are regarded as genetically modified organism (GMO) animals.

Recombinetics says there is no risk with this outcome. In fact, they predict much more GM production of animals and plants, especially if regulations are relaxed. Check the BBC article by Daniel Cossins referenced below for what I would call a supporting view, albeit written before the bacterium drama (Cossins, 2015, online). Under the eye of the Office of the Gene Technology Regulator (OGTR), within the Depart of Health, regulations are indeed being relaxed in Australia.

Another GM tale now; this time somewhat condensed. The government of the state of South Australia has lifted the moratorium on planting of GM canola on the mainland. Only Kangaroo Island will be excluded due to demand for its non-GM produce, for which it has an enviable reputation in Australia and overseas. Despite claims that this action is necessary to ensure higher crop yields, that is not the case. So, where did the truth go? Nor are prices higher; in fact, they are about 7% lower for GM canola.

There are other financial risks for the GM seed makers. The perils include cross-contamination, which cannot be undone, and consequent lawsuits. Bayer AG's CropScience unit reached a settlement to pay US$750m to farmers in 2011 in relation to cross-contamination of rice that caused futures prices to drop dramatically (Bloomberg News, 2011, online).

Stronger herbicides are being used in relation to GM crops. In 2020, spray drift of the poison dicamba from one of these resulted in seed-maker Bayer being ordered to pay US$265m in damages and costs to a nearby non-GM peach farmer. Many other farmers are waiting on the outcome of their similar cases (Feeley et al., 2020, online).

Promoters of GM seed are apparently looking for government protection from such accountability in some areas, but at what financial cost to the community, let alone the health cost? And why provide that immunity for only around 2% of the South Australian canola volume that is prospectively to use GM seed? As the dollar figures above show, there is a significant monetary element at play too, and that is complicated by another legal aspect in this country, for example:

The genie is out of the bottle in many other places and cannot be put back. What approach should be taken in this country?

Collectively, then, GM raises a number of issues. Some quite obviously revolve around ethics and animal welfare. Others concern the public right to know what they are consuming and to have a clear understanding of, and input to, both the nature and extent of regulation of the relevant industries' activities. Is the OGTR the right kind of authority to have jurisdiction, and how is that even measurable? Who determines the OGTR's powers and the constitution of its management. It is presently answerable to the Minister for the relevant Department of Health.

Critically, there is also the question of whether consumers are willing to accept GM products (Slezak, 2020, online). A recent survey by Health Focus International indicates that around 87% are not (Watson, 2015, online). Public perceptions and scientific backing for claims that non-GM foods are healthier do matter. The economic advantage of higher pricing of non-GM foods could, therefore, be lost where products are contaminated. Why bother producing GM foods in that case? Typically, it is argued that it lowers costs and increases disease-resistance, but, as you have seen above, things are not that simple.

An often overlooked aspect is the impact on the health of bees, which play a role in most of what we eat. Their cross-pollination of crops is also a factor to be considered in the uncontrollable spread of GM plants. Currently, the onus is mainly on commercial hive operators to place hives well away from GM crops. Is this the right way around? Does it happen? Bees can range over an area with a radius of five kilometres, although they tend to stay where is appropriate pollen.

In the sea of statistics that describes both the historical and the predicted outcomes associated with use of GM products, there is a role for management accountants to take a dispassionate, educated, cautious and timely approach to informing the public and their elected representatives. That should extend to assessing the quality of the evidence put forward for the pros and cons, and in fact-checking. Or is that outside our brief?

You are probably looking for some light relief now and we have it! Lelys Maddock comes to the rescue with her poem, “A satire about an accountant”. The situation she describes may be painfully familiar. Plain words, succinctly expressed are much to be prized.

Your own creative contributions can be submitted via ScholarOne (see below), and your email correspondence is always welcome, of course, at: steve.evans@flinders.edu.au.

Accounting, Auditing and Accountability Journal (AAAJ) welcomes submissions of both research papers and creative writing. Creative writing in the form of poetry and short prose pieces is edited for the Literature and Insights Section only and does not undergo the refereeing procedures required for all research papers published in the main body of AAAJ.

Author guidelines for contributions to this section of the journal can be found at: http://www.emeraldgrouppublishing.com/products/journals/author_guidelines.htm?id=aaaj