Western Australian growers of genetically modified crops may be held liable if they contaminate non-GM properties and produce in future.

An upper house standing committee parliamentary inquiry is examining compensation mechanisms for farmers who lose money because of contamination from genetically modified material.

Earlier this year, Greens MLC Diane Evers tabled a petition calling for farmer protection legislation to compensate any non-GM farmer who suffers a loss from GM contamination.

The petition was sparked by the Marsh versus Baxter case, where an organic farmer unsuccessfully sued his neighbour for GM canola contamination.

Opponents of GM crops rally outside the WA Supreme Court in support of organic farmer Steve Marsh. ( ABC: Courtney Bembridge )

Ms Evers said she hoped the inquiry would protect the premium that farmers received for non-GM produce.

"It is apparent from the case of Kojonup farmer Steve Marsh that the rights of non-GM farmers in WA, who outnumber farmers growing GM, are not sufficiently protected by law," she said.

"WA farmers should not lose their right to sell non-GM crops at a higher price, due to the actions of another grower."

Sharing the risk

Minister of Agriculture Alannah MacTiernan has supported the inquiry and said one of the issues considered would be if strict liability needed to be imposed.

"It just seems to be common sense that where we want GM and non-GM farming to co-exist there needs to be a device whereby we can share the risk of cross contamination," she said.

"I think it is important that we have a look at whether or not the existing common law provisions are adequate or whether or not we need to embrace strict liability on cross contamination as we find in a number of European Union states."

However Duncan Young, from lobby group WA Farmers, believed the Federal Government's 2005 review into GM gene technology addressed the issue of liability.

"It is already covered under common law so why do we need to change something," Mr Young said.

"You have also got to remember that GM canola is a legal and safe crop, so why are we making that an example?

"I am still wondering what the ulterior motives are here," Mr Young said.

Farmers may feel threatened

Chair of the Pastoralist and Graziers grains committee Gary McGill said farmers were used to sorting out problems between neighbours informally.

Steve Marsh unsuccessfully sued his neighbour over GM contamination. ( ABC News: Rebecca Trigger )

He believed the inquiry was designed to make farmers feel nervous about growing GM canola.

"They are trying to create this circumstance to make farmers hesitant to use it and try and get it to be seriously reduced or eliminated because farmers might feel threatened by something," he said.

"Go ahead and make my day is what I say, because we know that we would welcome an opportunity for this to be taken to the courts. We are also going to welcome the opportunity for this review."

Public submissions to the Environment and Public Affairs Committee will be accepted until February 16 next year.