7-Business: Pressure on prices as China readies first GMO rice

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TITLE:  Pressure on Prices as China Readies First GMO Rice
SOURCE: Reuters, by Sambit Mohanty
DATE:   3 Jun 2005

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INTERVIEW - Pressure on Prices as China Readies First GMO Rice

SINGAPORE - As the leading exporter of rice, Thailand is bracing for a
slump in global prices once China gives the go ahead to commercialise the
world's first genetically modified rice.

World rice prices are hovering at multi-year highs, or 30-40 percent over
last year's levels, thanks to a drought in the growing nations in Asia.

But Vichai Sriprasert, president of the Thai Rice Exporters' Association,
said that China will sharply reduce its imports and could even become a
exporter with the introduction of GMO rice, which can double yields.
China is already the biggest producer and consumer of rice on the planet.

"We are going to see another major breakthrough after many decades.
Potentially, we are talking about yields doubling. That will obviously be
price depressing," Vichai told Reuters in a telephone interview.

China's average rice yields for non-GMO rice are about 2.5 tonnes per
acre, which is among the highest in the world. Yields in Thailand are
only about 1 tonne per acre.

Scientists believe China could give the green light as early as this year
for a transgenic variety, called Xa21, which contains a gene from an
African wild rice. But government officials remain tight-lipped on the timing.

The Xa21 strain, developed through publicly funded international
research, is resistant to bacterial blight -- a leading crop disease in
Africa and Asia, which can devastate yields as it spreads in water droplets.

The Philippines and India are also holding field trials for GMO rice, and
are closely watching for consumer reaction before taking the plunge
themselves.

"People who are thinking of launching GMO rice have to be somewhat
cautious. It can take quite some time for consumers to start feeling
comfortable with it," Vichai said.


SCYTHES SHARPENED

When GMO production in China begins it will be the world's first large-
scale plantation of a major transgenic crop for human consumption. Last
year, Monsanto Co. halted plans to introduce the world's first GMO wheat
in Canada and the United States after widespread protests.

But the ride for GMO rice is unlikely to be any smoother, with non-
governmental organisations already sharpening their scythes for the grain
which they say threatens health and the environment.

Last month, Greenpeace advertised in leading Asian newspapers for an
agriculture expert having "demonstrable track record of opposition to
genetically engineered rice".

But Vichai said GMO rice would take China a step closer to its goal of
becoming self-sufficient in grains.

"There will be some opposition to GMO rice but I don't think people have
a choice," Vichai said. "Those who cannot catch up with the technology
will suffer. The opposition might not be there if China sells all its GMO
rice domestically. But if it starts to export, it could be a different story."

China, until recently a major rice exporter, imported 761,000 tonnes rice
last year after poor weather cut its harvest in 2003 to around 160
million tonnes, the lowest in many years. Output in 2004 recovered to
around 185 million tonnes but the country is still expected to import
some cargoes in 2005.

Asia is a net food grain importer and analysts have said poverty in many
Asian nations would win over consumers to GMO rice, which will likely
sell at a cheaper price.

Vichai said plans by the Philippines to launch a GMO rice would depend on
how international prices move after China commercialises the transgenic
variety.

"If prices fall sharply, the Philippines would be looking to import," he
said. "Importing could be cheaper than growing, which involves a long
process."

He added that Thailand has no plans on GMO rice, but added that the
country might have to look at growing it on a limited scale in the future.

"There are many other things which we can do to improve yields, which are
very low in Thailand. If we develop the central plains, our production
levels can rise significantly," he added.




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