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7-Business: Australia non-GM grains cash in winning trade hand

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TITLE:  Australia non-GM grains cash in winning trade hand
SOURCE: Reuters, by Michael Byrnes
DATE:   August 18, 2000

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Australia non-GM grains cash in winning trade hand

SYDNEY - Australia's big grains export industry has begun cashing in 
on worldwide consumer fears about genetically modified (GM) food by 
selling canola to Europe with a non-GM price premium. The sales 
involve about 150,000 tonnes of canola, for shipment early next year 
at a non-GM premium of about US$5 a tonne, well-placed industry 
sources told Reuters. This was a clear-cut example of how Australia, 
which has so far resisted following Canada and the U.S. into 
genetically modified food crops, was making hay while the sun shines, 
analysts say.

A perceptual advantage which Australia was clearly beginning to enjoy 
over its North American GM-producing rivals was reinforced by United 
States farmers virtually giving up on strict separation of 
genetically modified (GM) grains from conventionally produced grains, 
analysts and traders also said. "Problems being experienced in the 
U.S. of separating GM grains could have short-term benefits for 
Australia," national wheat exporter AWB Ltd said in a statement 
issued to Reuters through its spokeswoman. "We have GM-free products 
and if they've experiencing problems in providing GM-free product, 
that gives us an obvious advantage in the short-term," she said.

Neither Australia nor the U.S. presently produce GM wheat, but U.S. 
problems with separating GM from non-GM corn and soybean crops was 
giving Australia a perceptual advantage on export markets, the AWB 
spokeswoman said.


Australia's non-GM canola competes directly with Canadian GM canola 
on export markets, and here consumer resistance, strengthened by the 
U.S. inability to separate all GM grains from non-GM grains, was 
boosting Australian sales, traders said. "We believe that we're 
starting to see the early stages of the much-waited premium for non-
GMO canola," one well-positioned grains trade source told Reuters, 
requesting anonymity.

New crop forward business had been done between Australia and Europe 
for the new crop canola, to large crushing companies. This was for 
shipment January onwards at a time and price indicating a premium on 
current Canadian sales to China, he said. It was hard to gauge the 
exact premium because currencies, freight rates and futures all came 
into play. But the premium appeared to be up to US$5 a tonne on the 
current stable market of around the mid-US$190s fob, the source, with 
one of Australia's leading grains export boards, said. Shipments were 
expected to involve around three Panamax loads of 50,000 tonnes each, 
he said.

An admission this week by the National Grain and Feed Association in 
the U.S. that less than 10 percent of the U.S. grains industry was 
segregating GM from non-GM grains in the present record harvest year 
has also confirmed sneaking suspicions held by consumers and in 
Australia's non-GM farmers. "Less than 10 percent of the industry is 
engaged in segregation and we don't anticipate a strong need for it 
this fall," Thomas O'Connor, National Grain and Feed Association 
director of technical services, told Reuters in Chicago.


While the U.S. dilemma is advantageous to Australia at present, AWB's 
spokeswoman said yesterday that Australia could be facing similar 
issues in the longer-term. "We're GM-free now. We may not always be," 
she said. The Australian industry was taking a very serious look at 
the matter and adopting a coordinated approach, she said.

Australia so far produces no GM grains, with first production of its 
first modified grain crop, canola, at least two years away. Wheat is 
Australia's leading grain, holding a share of almost 20 percent of 
the world market. "Who knows?" the AWB spokeswoman said when asked if 
Australia would be producing GM wheat in the future. "It's still a 
few years away."


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