July 10, 2006

Premiums for non-GMO soybeans declining in Canada's Manitoba

Premiums for non-genetically modified soybeans in Manitoba have been quietly deteriorating for quite some time and will continue to erode as production is meeting demand, and end-users also become more comfortable with GM varieties.

"The premium is definitely being eroded," said one Manitoba-based merchant who deals with identity preserved soybeans. He said that farmers who were once able to sell their non-GM soybeans for C$1.00 per bushel over the price of GM soybeans were now seeing premiums closer to 60 cents per bushel.

The soybean dealer did not think the reduction in premiums had to do with a downturn in demand. Rather, he thought there were more growers looking to meet the non-GM market, causing supplies to increase.

Farmers have to go through more "hoops and hurdles" to produce non-GM soybeans and ensure there is no contamination, said the soybean dealer. As a result, some form of premium is necessary to get people to grow the crop.

While GM soybeans are also seeing increased interest from Manitoba farmers, due to their weed control advantages, he thought the premiums for non-GM soybeans were still large enough that farmers would continue to plant the crop.

Niche markets were originally set up to cater to consumers who did not want GM soybeans in their food products, said Chris Beckman, an oilseed analyst with Agriculture and Agri-Food Canada.

He thought the end-users were getting more accustomed to eating GM soybeans. Beckman added that the Asian market in particular has eased its stance on accepting GM soybeans.

While the opportunities for GM soybeans may be increasing, the soybean dealer thought the two crops were still at different ends of the market spectrum. He said the customers for non-GM soybeans are generally looking for a higher end product and are not afraid to pay up. Meanwhile, GM soybeans typically move into the lower quality animal feed and vegetable oil markets, he said.