Grain merchants in the US are paying farmers a premium for export-bound non-GMO soybeans despite the higher storage and handling costs involved, reports Reuters. The merchants, who declined to be identified, said they were trying to keep up with end-user demand. "Bids for non-GMO cash soybeans are generally structured at about a 10-cent premium," said one. According to another Midwest merchant, "I have heard anywhere from 8 to 15 cents a bushel premium on corn and 20 to 30 cents for non-GM soybeans." He added that he wasn't sure what he would pay yet. Food processors overseas want to label their products as non-GMO, he explained. It is estimated that Japan alone will require 700,000 metric tonnes of non-GM soybeans.

The US grain industry was shaken this month when Archer Daniels Midland Co., a major exporter and processor, formally warned its suppliers to keep its GM grains separate from conventional ones. ADM has more than 500 grain elevators and 355 crop processing plants. The company said that some customers were basing their purchases on the genetic origins of the crops and told suppliers to segregate to preserve crop identity. European sources told Reuters the US could boost sales if stateside suppliers would segregate their crops. "ADM did this because they see a good premium for non-GMO grains and oilseeds," said one Swiss trader.

Competitor Cargill Inc. announced it would be taking a different approach. "We are not asking our customers at this point to do what ADM is suggesting in terms of segregating," said a spokeswoman. The company is, however, asking its customers to indicate when they are bringing in any corn varieties not yet approved in the EU. Cargill anticipates that the grain industry will eventually become more specialized, with farmers producing designer crops for niche markets.

One type of soybean is already earning a 20- to 30-cent per bushel premium at Consolidated Grain and Barge Co. The variety is called Synchrony Tolerant Soybeans and was bred, not genetically engineered, by DuPont Co. to resist the company's Synchrony herbicide. CGB paid more than $3 million in farmer premiums for specialty grains last year and will be paying premiums for various types of non-GMO grains this year. However the company says, premiums are determined by local elevators and in accordance with supply, demand and location.

A US farmer posted the following notice on the internet, in which Consolidated Grains said it would be contracting this coming year for conventional soybeans and corn. The notice further said, "Segregating non-GMO grains on farms will pay dividends this coming year. Please be sure when switching from GMO varieties to non-GMO varieties that you clean combines, trucks and wagons, conveying equipment and especially bins. The testing standards and tolerance levels will be very tight and any contamination, no matter how trivial it may seem, will lead to a positive test and will be rejected for 'non GMO' premiums . . . As suppliers we have to be responsible in meeting the needs of our customers."

While some believe non-GMOs will be the new niche market, others say reliable crop segregation cannot be guaranteed. Industry sources say to be cautious of any crops from the US claiming to be genetically pure. They note it is impossible to keep the wind from spreading GM pollen and almost impossible to segregate grains in rolling trucks, silos and aboard ships. Nor have the US or the EU established procedures to certify genetic makeup or decided on minimum thresholds for GM content. Said one wary trader, "You can't take some guy's word on it."

Deutsche Bank Says Sell Biotech

Europe's largest bank has told its biggest investors to sell their shares in biotech companies developing GMOs. Deutsche Bank issued a report advising its institutional investors, including government pension funds, that "growing negative sentiment" is creating problems for the biotech companies. "It appears the food companies, retailers, grain processors and governments are sending a signal to the seed producers that 'we are not ready for GMOs'," the Bank said. Since the report was circulated to several thousand large investors, shares in agri-biotech companies have fallen against a rising trend in stock markets generally.

The Deutsche Bank first started expressing concern nine months ago. Frank Mitsch and Jennifer Mitchell, based in Washington, predicted the biotech industry would go the way of the nuclear industry in the US. They now say, "We count ourselves surprised at how rapidly this forecast appears to be playing out." In its first research report, dated 21 May, the Duetsche Bank warned that GMOs could become a liability to farmers and far outweigh any economic benefit in growing the crops. It called the concerns of European consumers "real" and observed that "hearing from unsophisticated Americans that their fears are unfounded may not be the best way of proceeding."

The US Tries Persuasion

The United States is hoping that the European Union's new executive Commission, which was sworn in this month and is headed by Romano Prodi, will take a fresh look at the controversial issues surrounding GMOs. "I hope the new Commission will take a new look and that it will help us resolve some issues," said David Aaron, the US Undersecretary of Commerce. On a recent tour of European capitals he tried to dispel fears about GM foods and urged EU leaders to develop a comprehensive policy on biotechnology that would include creating institutions to reassure the public.

Although US officials have threatened a trade war over the EU's reluctance to accept genetically modified foods, they have decided to try persuasion and scientific argument first. But Aaron warned, "At some point, when there's been a debate, our trade rights could come into play . . ." He then referred to the $117 million in sanctions that were imposed on exports from Europe after the US appealed to the World Trade Organization over a decade-long ban on imports of hormone-treated beef.

Aaron accused European governments of being afraid to speak out against opponents of GM foods, according to the Reuters report. He pointed to years of experience in the US showing that biotech foods presented no safety risks beyond those of their "natural" counterparts. In a speech to the European Policy Center, a Brussels think tank, Aaron accused the EU of having no functioning approval process. He also said current labeling regulations for GMOs did not work. EU officials have been working on new standards, but there are wide differences of opinion and debate is expected to be heated. According to Aaron, too few leaders were "making an effort to dispel the reservoir of public ignorance through education on the subject." He then called on officials to find "a little wellspring of courage" to deal with public attitudes over food supply questions. US officials are getting pressure from the biotech industry back home not to let European resistance spread to the United States.

The US has vowed to put agriculture at the heart of the so-called Millennium Round of trade talks, which will take place under the auspices of the World Trade Organization this November in Seattle. The EU's 15 agricultural ministers held informal meetings in Finland this month to consolidate the EU's position on the issues. The Finnish paper noted that farmers and consumers were suspicious of the new biotech crop strains, but said the GM crops could offer benefits. "The precautionary principle should be applied," the paper concluded. After meeting with their EU counterparts throughout the summer, US trade officials, who are trying to convince Europe to speed it up, say progress "is very slow right now."

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