Some customers are paying a premium for grain free of genetic modifications
Last fall, farmers hauling corn to the Consolidated Grain and Barge (CG & B) elevator in Naples, IL, were greeted by a sign indicating a ¤0.02/bu. premium for non-Bt corn. Other CG & B elevators in the Corn Belt offered up to a ¤0.05 premium for corn that growers certified did not contain genetically modified organisms (GMOs).
In central Illinois, DuPont Ag Enterprise gave growers a ¤0.25/bu. premium to grow and identity-preserve conventionally bred STS soybeans for its wholly owned subsidiary Protein Technologies International (PTI), the world's largest producer of protein isolates. About 130,000 acres were in the program in 1998, with more expected in 1999. Many of PTI's European customers are interested in non-GMO soybeans, especially with the European Union's (EU) passage of a law requiring foods to be labeled as containing GMOs or as being GMO-free. From 50 to 60% of processed food in the United States and Europe contains soya.
DuPont recognized an opportunity. Its STS soybeans were bred without GMO technologies to resist Synchrony herbicide. And the use of Synchrony on the field would kill any GMO rogue beans. "We felt we could safely assure there were no GMOs in the beans," says Mike Ricciuto, spokesperson for DuPont Ag Enterprise. "This year, we'll expand our program to other soybean processors besides PTI."
He acknowledges that the program puts the company in an awkward position. DuPont is a proponent of biotechnology. It markets a genetically modified high oleic soybean produced through biotechnology and plans to offer many more biotechnology products. "We support GMOs and believe their safety for consumers is assured. However, if the market offers a premium for a non-GMO product, why not satisfy that customer?" asks Ricciuto. He notes that the identity-preserved process used for non-GMO soybeans is similar to what the company will use to identity-preserve GMO beans, such as the high oleic soybean it also expects to export to Europe.
U.S. exports hurt by GMOs. Foreign demand for corn and soybeans that do not contain GMOs has created niche markets for some exporters, but as a whole it has threatened traditional high-volume export markets.
U.S. corn growers were shut out of a ¤200 million European export market in 1998 because they could not guarantee that Bt corn hybrids not yet approved in Europe were not in U.S. export channels. "We basically lost a marketing year for exports of corn," says Ryland Utlaut, chairman of the National Corn Growers Association.
"It was another nail in the coffin," adds Tim Galvin, U.S. special assistant to the secretary for trade. "Very little of the 1997 corn crop was exported to Europe because of delays in the approval process there.
"We hope to regain those sales this year. Unfortunately, a number of new Bt events are again not approved in the EU. We have worked with seed companies to develop programs that will keep these varieties out of export channels. By sharing this information with EU officials, we hope to convince them it's not a significant problem with this year's harvest," says Galvin. Unapproved varieties were planted on less than 2 million acres, and growers have signed agreements to ensure the grain is used domestically.
The American Soybean Associa-tion (ASA) has taken a tough stance with seed companies wanting to commercialize GMO products. "We've told biotech seed companies not to plant it here until it's approved over there. It's not a popular stance, but it's the right one," says Kim Nill, ASA's deputy director of international marketing. "We don't want companies interfering with our export markets. We prefer not to be barred from overseas markets!"
Mike Yost, farmer and president of the ASA, adds, "We're concerned about the introduction of AgrEvo's LibertyLink soybeans [which are approved in the United States, but not in Europe]. We don't want to lose our European markets." The stakes are high: Half of the U.S. soybean crop is exported each year, with 15% of exports going to Europe. "We haven't had any real problems with Roundup Ready soybeans because they are registered and approved for import in all relevant markets," says Nill.
AgrEvo is considering a limited launch of genetically modified LibertyLink soybeans for planting in 1999. LibertyLink soybeans were approved for sale in the United States in January 1997, but international regulatory approvals are still pending and aren't expected in time for the 1999 harvest. The company is developing a stewardship initiative that would require growers interested in purchasing LibertyLink soybean seed to sign a contract that requires delivery of all LibertyLink soybean grain to specific processors that have agreed to keep the soybeans in domestic channels. Growers would receive a premium for their efforts, according to Rick Mohan, soybean market manager for AgrEvo. "This program is an outgrowth of our desire to move forward with this technology and yet protect the export markets for U.S. soybean farmers," says Mohan.
European consumers wary of GMOs. Even with regulatory approv-als in place, GMO grain faces challenges abroad. Greece, Austria, Luxembourg and France have banned or imposed moratoriums on imports of GMO crops, acting in defiance of the European Commission. When Monsanto launched an ad campaign in Europe to convey the message that biotechnology will help feed a growing population, environmental groups counterattacked.
Dr. Thomas Hoban, a sociologist with North Carolina State University, explains, "Some European consumers are fearful of genetically modified foods, in part because they don't trust their governments to adequately protect them. This is not surprising considering the mad-cow disease outbreak and the aggressive campaigns by activist groups like Greenpeace. However, surveys show that most consumers have little understanding of what biotechnology is. In fact, most do not see it as an important issue - especially relative to other concerns, such as the economy."
Surveys show that North American and Japanese consumers are much more positive about biotechnology than are consumers in Europe.
"Historically, between two-thirds and three-quarters of North American and Japanese consumers support biotechnology and are willing to accept food enhanced by biotech techniques," notes Hoban, who has conducted research on this topic for the past 10 years. "There has been little consumer reaction to or concern about food products from biotechnology that have been introduced in these countries. It's a dynamic environment in Europe. It is not clear whether many European consumers will actually pay more for GMO-free foods that are substantially equivalent to other foods. Over the long term, biotechnology should become more acceptable worldwide as new beneficial products enter the marketplace."
U.S. companies and farmers are hopeful that European consumers' attitudes will change as new biotechnology products offer tangible benefits. "The consumer backlash on GMO soybeans abroad will take a while to resolve. It will take long-term education plus the introduction of biotech products that consumers want," says ASA's Yost. "I imagine European consumers will be more accepting of a soybean that prevents heart disease than a soybean that provides production benefits to U.S. farmers."
In the future, a GMO label or seal could mean a premium product to the consumer. Right to know or barrier to trade? Cultures are clashing over the labeling of genetically modified (GM) foods. U.S. officials believe in assuring food safety and labeling a GM food only when it is significantly different than its conventional counterpart. Many other countries take a "consumer's right to know" stance toward labeling GM foods.
At World Trade Organization sessions, the United States and Canada have objected to current EU labeling regulations, arguing that GM products are equivalent to their conventional counterparts in terms of safety and consistency. "It is an unnecessary barrier to trade," says Galvin. Japan is currently considering whether to introduce mandatory or voluntary labeling rules for foods containing GM products. Environmental groups are mounting an e-mail campaign in support of labeling.
Another stumbling block for U.S. exports could be the international Convention on Biological Diversity. More than 170 countries are members of the convention. The United States is not a member but participates in the discussions. The convention is considering a protocol that would require an exporter to submit an "advance informed agreement" before exporting any modified living organisms to another country. This would give governments the chance to refuse imports that could negatively impact biodiversity.
"Our biggest problem is we've let them tag the GMO name on it; it should be called genetically improved," says Mark Lambert, communication director for the Illinois Corn Growers Association.
"European and Japanese customers who want non-GMO soybeans will go to other countries to buy them if we can't provide them. We've already seen that happen," says Michael Rokala, senior soybean merchandiser, CG & B. "With our bulk handling system, segregating the grain is expensive. We're experimenting with selling GMO-free beans and GMO-free corn, but the risks are tremendous [if a shipload of grain is rejected because it doesn't meet GMO tolerance levels]. The market is there for us if we can figure out how to identity-preserve the grain and increase the reliability and confidence of GMO tests."
GMO testing."At this point virtually every major grain exporter is addressing this demand for non-GMO grain," contends Dr. John Fagan, chief scientific officer for Genetic ID, Fairfield, IA. "Because of sustained demand for GMO-free grain in the EU and Japan, even the large suppliers have recognized a market opportunity and have begun to sell into that market. A year ago, many people thought the GMO issue would go away, but now anyone aware of the scene internationally realizes it's not going away."
Providing GMO-free grain is challenging for U.S. exporters because one-third of the U.S. soybean crop and one-fourth of the U.S. corn crop are genetically engineered. Keeping the level of GMOs below 2% (a tolerance level being considered in Europe) is a challenge with the industry's bulk grain-handling system.
Genetic ID says it is the only firm in the United States doing widescale GMO testing of grain. It offers a DNA-based, semi-quantitative test that identifies the presence and level of GMOs for ¤365/sample. The test can be done in 24 hrs., but has a standard turnaround time of three days. The company offers follow-up tests to identify which specific GMOs are present. "In Europe there are many labs doing GMO testing, but there is a wide range of quality and reliability," says Fagan. "We take tremendous care to provide accurate results and avoid false positives and false negatives, both of which can be a disaster for the shipper."