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7-Business: Japanese traders buy Brazil corn amid StarLink fear



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TITLE:  Japan Grain-Brazil corn bought amid StarLink fear
SOURCE: Reuters, by Aya Takada
DATE:   Feb 25, 2003

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Japan Grain-Brazil corn bought amid StarLink fear

TOKYO - Japanese have bought Brazilian corn in the first import deal with
the South American country since the discovery of banned biotech corn in
a U.S. shipment last year raised food safety concerns, traders said yesterday.

A major Japanese trading company bought about 16,000 tonnes of Brazilian
corn, which will be combined with Argentine corn and milo for shipment to
Japan in April, they said.

"It was an apparent move to avoid the risk of their cargo being
contaminated by (banned) StarLink corn," one trader said.

The name of the company could not be confirmed, traders said.

Some Japanese companies have been considering importing food corn from
countries other than the United States due to safety concerns since
Japan's Health Ministry discovered traces of gene-spliced StarLink corn
in U.S. imports in late December.

StarLink - spliced with a gene that is deadly to the corn borer pest -
has been approved in the United States for feed but not for human
consumption due to concerns that it might cause allergic reactions. It is
not even permitted as feed in Japan.

The discovery of StarLink corn in December was the first by the ministry
since the Japanese food safety authority adopted a zero tolerance policy
on imports of unapproved biotech crops in April 2001.

The discovery surprised Japan's food industry, which believed there was
little chance of contamination after U.S. farmers stopped planting
StarLink corn in 2001.

The volume of bought Brazilian corn represented a small part of total
food corn Japanese have so far purchased for April-June shipment,
estimated at roughly 300,000 tonnes.

Traders said most Japanese buyers remain dependent on U.S. imports for
stable and affordable supplies of high-quality corn.

One trading company official said that in addition to 16,000 tonnes of
Brazilian corn, around 15,000 tonnes of Chinese corn may have been bought
for food use for the second-quarter shipment. But the remaining volume
was seen coming from the United States.

"Most Japanese companies keep buying U.S. corn while checking if it is
safe from StarLink contamination," he said.


NEW RULE PROVIDES LEEWAY

The official also cited a new Japanese rule on feed grain imports, to be
introduced by the Agriculture Ministry in April, as another reason for
most Japanese firms sticking with U.S. corn imports. Under the new rule,
the ministry will allow up to one percent of unapproved genetically
modified organisms (GMOs) in feed grains, recognising that accidental
contamination of grains can occur in production or distribution.

The new rule will open the way for Japanese grain importers to use
cargoes contaminated by StarLink for animal feed, he said. At present,
Japanese importers of food grains must destroy or ship back cargoes if
they find shipments are contaminated by unapproved GMOs.

Japan is the world's largest net corn importer with annual demand of
roughly 16 million tonnes, of which 12 million tonnes are for feed and
the rest for food and other uses.

More than 90 percent of its corn needs comes from the United States, the
world's largest corn exporter.

Japanese feed makers, meanwhile, have remained slow buyers of U.S. corn
in recent weeks due to high U.S. premiums and looming sales of feed
grains from government stockpiles.

Feed makers have so far covered about 40 percent of their corn needs for
April-June, or 1.2 million tonnes, traders said.

U.S. corn C&F premiums for the second quarter stayed high at around 117-
118 cents over the Chicago Board of Trade May futures.

The Mixed Feed Supply Stabilisation Organisation, which holds 670,000
tonnes of corn and 130,000 tonnes of milo in stockpiles with financial
assistance from the Agriculture Ministry, plans to sell 150,000 tonnes of
grain from stock in April.