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7-Business: US trade prepares for segregation

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TITLE:  A) GMO U.S. grain tests still seeking "magic bullet"
        B) U.S. exporters say non-GMO grains yours for a price
SOURCE: both Reuters, A) by Julie Ingwersen, B) by K.T. Arasu
DATE:   A) August 17, 2000
        B) August 18, 2000

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A) GMO U.S. grain tests still seeking "magic bullet"

CHICAGO - Genetically modified crops such as corn and soybeans have 
gained fast acceptance in the U.S. grain market in just a few years - 
faster than the means to track the crops through the food chain. U.S. 
exporters want to meet the demands of customers in Europe and 
elsewhere who want their grain free of genetically modified (GMO) 
organisms. But traders and analysts agree that the current means of 
testing for GMO content are imperfect. Experts also say there is no 
"magic bullet" test to certify the absolute absence of GMOs.

"There's clearly a need to have a single test that would give us 
accurate, affordable and timely results, but right now there really 
isn't one single test that does that," Thomas O'Connor of the 
National Grain and Feed Association said. Moreover, even as 
scientists try to develop the "magic bullet" to detect GMO traits, 
the booming biotech industry is posing new challenges to test makers 
by developing even more seed varieties, some with multiple genes 
"stacked" together.


Currently, grain merchants who want to know - and certify - what's in 
their bins have to choose between simple portable test kits that 
generally check for only a single genetic trait at a time, or a type 
of DNA analysis called PCR that provides more information but costs 
more and takes several days. The simplest "dipstick" tests check for 
the presence of a protein expressed by a particular gene. Users crush 
a small sample of grain - for corn, about 50 to 60 kernels - and mix 
it with water, then dip a treated test strip in the solution. After a 
few minutes, either one or two dark lines appear on the strip, 
depending on the presence of the protein.

At a cost of less than $10 per test, manufacturers say such kits are 
popular among operators of small grain elevators and others who need 
quick information to make marketing decisions. Nicholas Phillips, of 
Delaware-based test maker Strategic Diagnostics Inc., said that while 
the strip tests may not provide a thorough analysis, "It's enough for 
the risk management decisions to be made." But because the strip 
tests are so specific, it helps to know what to look for. Phillips 
said SDI collects information on what GMO crops are grown where, so 
elevator operators have a rough idea of which tests they will need.

Far more sensitive than strip tests is the process known as 
polymerase chain reaction, or PCR, which analyses a crop's actual 
DNA. PCR requires a larger grain sample of at least 5 or 6 pounds of 
soybeans or corn. The sample is taken to a laboratory at a typical 
cost of about $200 to $450 per test, according to the U.S. Department 
of Agriculture's Economic Research Service. Results are available in 
two to 10 days.

How practical that is for grain traders needing to handle a record 10 
billion bushels of corn and three billion bushels of soybeans this 
autumn at harvest remains to be seen. But PCR can quantify the GMO 
content in a grain sample and can detect the presence of several 
traits in a single test. One U.S. testing company, Genetic ID Inc. of 
Fairfield, Iowa, claims its technology can detect as little as two 
molecules of DNA.

Genetic ID spokesman Jeffrey Smith says that unlike the dipstick 
tests, PCR also works on many processed foods. He said his company's 
clients include food ingredient suppliers, manufacturers and large 
farmer cooperatives, among others.Genetic ID announced last week that 
all of its testing methods for GMOs had been accredited by the United 
Kingdom Accreditation Service, an independent organisation that has 
multilateral agreements with counties on five continents.


The USDA outlined plans in May to begin evaluating test kits and 
accrediting laboratories that perform GMO detection. The agency said 
it plans to open a reference laboratory for the effort in Kansas 
City, Missouri, by the end of the year. Those steps were welcomed by 
Leah Porter of the American Crop Protection Association. She says the 
ACPA, whose members include biotech companies, is concerned about the 
accuracy of some of the test kits out on the market. "You have to 
realise the kit is only as good as the reference material that it was 
developed from," she said. "That's why we're very encouraged by what 
the USDA is doing with validation programmes. You're talking about 
some high-volume products being moved from the United States to other 
markets, and there's a lot riding on the potential for false 
negatives or positives."


B) U.S. exporters say non-GMO grains yours for a price

CHICAGO - U.S. grain exporters, faced with demands for sorting 
billions of bushels of genetically modified (GMO) grains from non-GMO 
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-

Grain traders say non-GMO corn and soybeans are fetching premiums of 
30 to 40 (U.S.) cents per bushel in the United States. A cargo of 
25,000 tonnes of non-GMO soybeans was sold to South Korea food 
processors in June for $26 per tonne 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-GMO 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.


The United States 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 GMO 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 
tonnes for the marketing year that ends this month, down from 137,100 
tonnes 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 GMO grains, EU imports of 
U.S. soybeans for its processing plants have risen to 7.1 million 
tonnes compared to 6.2 million the prior year, according to the U.S. 
Agriculture Department's weekly export sales reports.


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, 
GMO labeling rules go into effect in April, 2001. U.S. corn sales to 
Japan this year so far total 16.5 million tonnes, up from 16.2 
million a year ago. Not all of that grain has been GMO varieties. 
Traders say that Japan is building non-GMO 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-GMO soybeans were put off 
by the price. "We have buyers from Europe making inquiries for non-
GMO 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 GMO 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-GMO 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-GMO crops will go down," he said, adding that current 
testing cost about $400 for every barge load of about 55,000 bushels.


Many American grain farmers and handlers are already involved in 
segregating crops due to growth of contracts for speciality grains 
from millers, snack makers and other food companies. Such value-added 
grains as white corn for Tortilla chips, tofu-grade soybeans, or high-
oil corn for livestock feeds demand premiums and get them. "As value 
added traits become more popular, and broader in use, they will be 
segregated in order to deliver the unique trait to the consumer," 
said James Borel, president of DuPont Crop Protection, a unit of 
chemical giant DuPont Inc .


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