By Jane Wardell and Colin Packham
SYDNEY, Feb 7 (Reuters) - Two neighbouring farmers, a field of canola and a gust of wind are at the centre of a landmark court case in Australia that could have consequences for the controversial growing of genetically modified crops in the country.
Steve Marsh is suing former childhood friend Michael Baxter after harvested seed heads from Baxter's genetically modified canola crop blew onto Marsh's farm in the state of Western Australia, court documents said, contaminating land used for his organic oat and wheat crops.
Marsh, stripped of his organic certification and export licence for his oats, is claiming unspecified damages for loss of income in the civil negligence case, which opens on Monday in the West Australian Supreme Court.
It is the first time in Australia one farmer has sued another for negligence over contamination of organic crops by genetically modified organisms (GMO) and will set a precedent for future cases, lawyers said.
The case also illustrates the challenge Australia faces developing its agribusiness sector as it looks to become a "food bowl" for Asia amid rapidly growing demand for everything from grains to beef.
"People around the world are going to be looking at this," said Michael Blakeney, a law professor at the University of Western Australia who does advisory work for the United Nations Food and Agricultural Organization. "It is testing whether a GMO farmer has a duty of care to a neighbour that's growing organic crops not to contaminate them."
Baxter's lawyer, Brian Bradley, declined to comment ahead of the trial, which is expected to last three weeks. Marsh and Baxter both declined to speak to Reuters. The former friends have not spoken to each other since the row erupted, local media have reported.
Baxter bought the seeds from Monsanto Co, the world's largest seed company.
After getting legal advice, Marsh opted not to sue the U.S. firm because of a non-liability contract Monsanto signs with all farmers who buy its seeds, said Scott Kinnear, director of the Safe Food Foundation, an organic farming advocacy group collecting donations to help fund Marsh's suit.
The case is likely to lead to regulations outlining boundaries between farms producing genetically modified crops and organic farms, lawyers and agribusiness experts said, potentially reducing the land available for cultivation. It could also change Australia's unique zero tolerance status for contamination of organic crops, they said.
Unlike the United States, the European Union and Japan, which allow trace amounts of GMO in organic foods in acknowledgement of contamination by wind or pollen transfer, Australia maintains a zero threshold.
"If the organic people don't win the case, there will be a lot of pressure brought to bear for a change to the organic standard and that might remove some of the difficulties of co-existence," said Joe Lederman, managing principle at FoodLegal, a Melbourne law firm specialising in food and agribusiness, which has represented both businesses and farmers in the past.
Kojonup, a wheat and sheep district some 250 km (156 miles) south of the West Australia state capital Perth, is a quiet, tight-knit community of farmers.
But the case brought by Marsh, 49, is splitting loyalties in the pastoral area where many farmers have turned to cutting-edge GMO production.
GMO critics say the spread of genetically modified crops hurts the environment, most notably by fostering herbicide-resistant weeds, and that food made with the crops can harm humans. Proponents say the crops are proven safe and that the proper use of the chemicals associated with the crops by farmers can mitigate environmental problems.
Marsh's decision to sue Baxter, 48, has garnered support from celebrity chefs and gardeners. Law firm Slater and Gordon is working pro bono, on the basis the case has broad public interest.
"We believe it's his right to be able to farm GM-free and have a degree of protection," said Kinnear, whose Melbourne-based group is collecting money for Marsh's other expenses, such as payments to experts and travel costs.
Marsh's lawsuit alleges that harvested seed heads from Monsanto's laboratory-created Roundup Ready canola seed blew from Baxter's property across a dirt lane and over a boundary fence in November 2010, re-germinating on Marsh's land in January 2011.
Canola is grown for its seed, which is crushed for the oil used in margarine, cooking oils, salad oils and edible oil blends.
After an inspection by the National Association for Sustainable Agriculture Australia (NASAA), a certifying agency for the government-backed regulator Standards Australia, Marsh lost organic status for produce from 70 percent of his farm.
In the other corner, the Pastoralists and Graziers Association of Western Australia is giving financial support to Baxter.
"This is nothing more than anti-GM publicity," said PGA Western Graingrowers chairman John Snooke, who is also acting as a spokesman for Baxter. "Michael and PGA of Western Australia both believe in the farmers right to choose what he grows."
MONSANTO SAYS SITUATION REGRETTABLE
An interim ruling from the Supreme Court allowed Baxter to go ahead with his 2013 GMO canola crop, provided he harvest by a more direct method than the so-called swathing that led to the alleged contamination.
Monsanto declined to comment on whether it was giving financial assistance to Baxter for the legal action, an accusation leveled by Marsh's supporters, saying only it was not a party to the case.
Its non-liability contracts were made to "ensure that growers comply with the agreed use of our products, industry stewardship standards and regulatory requirements", Adam Blight, a Monsanto spokesman in Australia, said by email.
Monsanto was not making any preparations in light of the possible outcomes of the case, he said.
"This is a regrettable situation and it has been a difficult case for the farmers and communities involved," Blight added.
Organic farmers see the threat from the hearing on two fronts.
In the event Standards Australia does not change its zero tolerance policy, farmers risk losing organic certification due to contamination, particularly as GMO production increases.
Alternatively, an easing of the policy would result in Australia losing its position on world markets as a strict organic producer as demand for GMO-free food increases around the world, particularly in Asia.
Demand for safe and nutritious food is forecast to soar across Asia over the next five years, with consumer spending predicted by the Economist Intelligence Unit to rise to $3.7 trillion from $2.8 trillion in 2012.
Yet laws governing GMO production and contamination are opaque, varying from Australian state to state and crop to crop.
Confusing matters further, there are no regulations on buffer zones between GMO and organic crops, with Standards Australia recommending a minimum of 15 metres, compared with the 5 metre minimum recommended by Monsanto.
Lederman from FoodLegal said the case was likely to result in more formal and homogenous regulations on buffer zones.
In the United States, where more biotech crops are grown than anywhere else in the world, rising cases of contamination by GMO crops led the Organic Seed Growers and Trade Association to last week issue new guidelines and protective practices for organic growers.
Those cases have centered around the issue of intellectual property and involved Monsanto directly, rather than the farmer vs farmer negligence issue in the Australian case.
Monsanto has routinely sued U.S. farmers who it says intentionally plant its biotech seeds without paying for the technology.
As those cases have increased in number, the U.S. organic association sought pre-emptive protection for farmers whose fields were inadvertently contaminated with crops containing the company's genetic modifications.
But legal action by the association to try to force Monsanto to issue a "blanket covenant" to promise not to sue for inadvertent contamination was rejected last month by the U.S. Supreme Court, allowing the company to continue to bring lawsuits on a case-by-case basis.