Nov. 27 (Bloomberg) -- Australia's New South Wales and Victoria states will end four-year bans on genetically modified canola crops, opening up the market in the world's third-largest exporter of the oilseed to Monsanto Co. and Bayer AG.

Genetically modified, or GM, canola will be available for planting in New South Wales for the 2008 growing season on a limited basis, Ian Macdonald, the state's minister for primary industries, said today in a statement. Victoria will remove its ban next year, the state government said in a separate statement.

Opening the market may pressure South Australia and Western Australia to end restrictions in those states. Monsanto won a sales license for its Roundup Ready canola and Bayer won for its InVigor canola in 2003 before the growing bans were imposed.

``It will significantly lift production, it won't surprise me at all that we start to see on a per hectare basis, yield increases in canola of 20 percent or so,'' Rick Roush, dean of the faculty of land and food resources at the University of Melbourne, said today in a phone interview. ``It's a long overdue boost for Australian agriculture.''

Western Australia's ban on GM canola runs until February 2009 and South Australia's is due to expire in April. Victoria's ban will end in February. The nation already produces genetically modified cotton and carnations.

Increase Risks

``If Victoria, New South Wales and South Australia lift their GM moratoria, it will increase the risks to Western Australia and Tasmania's GM-free agriculture and threaten Australia's overseas markets,'' Kim Chance, Western Australia's agriculture minister and David Llewellyn, Tasmania's primary industries minister, said yesterday in a joint statement.

GM crops are already grown in 22 countries by more than 10 million farmers, New South Wales' Macdonald said. Growing GM canola will add A$115 million ($101 million) to Victoria's economy, Premier John Brumby told reporters in Melbourne.

Supporters of growing GM canola in Victoria include ABB Grain Ltd., GrainCorp Ltd., eastern Australia's biggest grain handler, the Victorian Farmers Federation and the Australian Dairy Industry council, Brumby said.

Victoria is expected to be the nation's second-largest canola producer this year, while drought will cut output in New South Wales, expected to be the smallest grower this harvest.

``The state government's decision to end the four-year moratorium on genetically modified canola crops is a win for the future prosperity of agriculture,'' the New South Wales Farmers' Association said in a statement sent by e-mail.

To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net

Last Updated: November 27, 2007 02:20 EST