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U.S. grain exporters, faced with demands for sorting billions of bushels of genetically modified grains from non-GM crops for foreign customers, have a simple answer: you get what you pay for.
And they say that some of the biggest buyers of U.S. grains – Japanese, South Koreans and to some extent the Europeans – are doing just that, paying more for cargoes of corn and soybeans that are non-GM.
Grain traders say non-GM corn and soybeans are fetching premiums of 30 to 40 (U.S.) cents per bushel in the United States. A cargo of 25,000 tons of non-GM soybeans was sold to South Korea food processors in June for $26 per ton more than traditionally bred varieties, they noted.
“That works out to an extra 75 cents per bushel to be shared by the farmer, grain handler and the person who put together the export deal,” said Jerry Slocum, a committee chairman for the United Soybean Board, a producer group.
Slocum, a fourth-generation farmer, sees American exporters facing no problems in serving their worldwide clients with non-GM crops. But he said that farmers would need the right price premiums as incentives. “If the marketplace wants to send a message to producers, it needs to send it in the form of price,” he added.
Corn Exports to Europe Down Sharply
The U.S. will produce about 13 billion bushels of corn and soybeans this year, with about 80 percent staying in this country for use in feed and food processing. A quarter of the corn and more than half the soybeans will come from GM seeds, which help farmers and were approved by the U.S. government.
But about three billion bushels of those crops are projected as exports. In Europe, such crops have raised deep suspicions among consumer and environmental groups and led to demands for bans or labeling. U.S. corn imports have slowed to a trickle.
Corn exports to the European Union total only 17,900 ton for the marketing year, down from 137,100 tons shipped in the same period a year earlier.
Doug Robinson, chairman of the U.S. Grains Council, a group of producers that promotes U.S. grain exports, said he expected flows of U.S. grain to Europe to resume growth once the region clearly defines the rules.
“Europeans need to work and decide what the rules really are, and then trade can flow again,” he said.
Even with the past year’s EU consumer protests over importing GM grains, EU imports of U.S. soybeans for its processing plants have risen to 7.1 million tons compared to 6.2 million the prior year, according to the U.S. Agriculture Department’s weekly export sales reports.
Japan a Big Market
In Japan, the world’s top grain importer that gets 80 percent of its soybean imports and 90 percent of its corn from the United States, GM labeling rules go into effect in April, 2001.
U.S. corn sales to Japan this year so far total 16.5 million tons, up from 16.2 million a year ago.
Not all of that grain has been GM varieties. Traders say that Japan is building non-GM buying and contracting channels to assure it can obtain certified shipments.
“The Japanese have found good ways to work within the U.S. system to find whether they want IP non-biotech products or they are willing to take biotech products,” Robinson said.
Identity preservation (IP) of grain differs from segregation in that it is a traceable “chain of custody” that begins with the farmer’s choice of seed and continues through the handling and shipping system.
IP contracts require farmers to prevent inadvertent commingling of grains by paying close attention to field location, wind conditions, and handling. That includes strict cleaning of harvesting equipment and storage bins.
But an exporter said Europeans seeking non-GM soybeans were put off by the price. “We have buyers from Europe making inquiries for non-GM soybeans, but when they hear of how much more they have to pay, they just back off,” he said.
He said the industry was currently seeing no constraints in separating export-bound GM crops from conventional varieties, but added that problems could emerge if quantities increased.
“They are not commingled. But at some point in time you are going to have separate storage and stuff like that. Otherwise you would have to go in and cleanse the entire grain bin. Even when it’s empty, there’s grain all over the place. Costs would be huge. They (storage bins) are big,” the exporter said.
A second exporter said that testing procedures were expensive and time consuming, but greater demand for non-GM crops could result if such negatives were removed.
“If they come up with a testing procedure that is less costly, and much faster, then I think the premium for non-GM crops will go down,” he said, adding that current testing cost about $400 for every barge load of about 55,000 bushels.
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