November 17, 2003

 

 

USDA Studies Economic, Trade Impacts Of Biotech Wheat

 

The U.S. Department of Agriculture is studying possible impacts that genetically modified wheat may have on foreign trade and the domestic U.S. market in the event it is approved for commercialization, according to government, industry and academic sources.

 

USDA maintains it bases its approval process for biotech products purely on science. However, these studies mark a significant effort by the department to examine the potential global impact a new product could have on markets and trade.

 

"We don't regulate the market," a USDA official said. "We regulate for health and safety reasons."

 

USDA's Economic Research Service has completed an analysis on the likely costs of creating and maintaining an identity preservation system to keep biotech and non-biotech wheat separated in the market place, but the results have not been made public.

 

A government official familiar with the report said it concludes that the level of co-mingling that wheat buyers will tolerate will be key to the success or failure of any wheat segregation system.

 

If wheat millers insist on a "zero tolerance" that prohibits any co- mingling, the official said, complete segregation of biotech and non-biotech will be "extremely difficult," but "if buyers are willing to accept a more reasonable tolerance level (for co-mingling) it could be feasible."

 

Regardless, though, the official said the report concludes segregation will add substantial costs for farmers and millers.

 

The Economic Research Service previewed the preliminary results of the report in a presentation at the annual American Agriculture Economic Association meeting held this summer in Montreal, Canada.

 

One attendee of the meeting, Richard Gray, head of the agriculture economics department at the University of Saskatchewan, confirmed the USDA agency believes segregating wheat after a biotech version hits the market will be very expensive.

 

Gray himself was co-author of a paper that concluded: "Without an affordable segregation system, there is no ... advantage for wheat producers from the approval of new (genetically modified) wheat variety."

 

Shannon Troughton, representing St. Louis-based Monsanto Co., said: "The reality is that there are over 20 different categories of wheat that are segregated by the grain-handling system, and that's done in an effective and orderly fashion ... with no disruption in the marketing of wheat. And there are several economists who have reported that the grain-handling system could add biotech wheat as another category for wheat segregation."

 

Troughton said Monsanto believes that costs of that addition will be "very low."

 

Monsanto is leading the effort to produce biotech seeds to produce Roundup Ready hard red spring wheat.

 

LOOKING TO FOREIGN CUSTOMERS

 

Beyond trying to quantify the costs of marketing and segregating biotech wheat, USDA is also trying to getter a better feel for how foreign buyers will react.

 

USDA's Foreign Agriculture Service is collecting responses to surveys sent to its attache offices around the world in wheat-buying countries, according to USDA and U.S. industry officials.

 

The Foreign Agriculture Service official in charge of the survey would not confirm or deny it was being performed, but other USDA officials said results are already being compiled.

 

If the results of the survey are similar to comments made this year by Japanese and South Korean millers, some of the biggest customers of U.S. wheat, USDA will find strong opposition to biotech wheat.

 

A group of visiting Japanese flour millers told reporters in September they will not buy biotech wheat if it is commercialized regardless of whether Japan's government approves it as safe for food production.

 

Similarly, a delegation of South Korean wheat millers said in May they will boycott biotech wheat when or if it is commercially produced in the U.S. due to strong consumer opposition to genetically modified food.

 

Monsanto will likely seek approval from the Japanese government for the product this year, according to Michael Doane, head of wheat industry affairs for the company, and that would mark the completion of the company's submissions to all three of the countries - the U.S., Canada and Japan - from which Monsanto has pledged to get approval before it commercializes the wheat.

 

In June, USDA said it found one or more deficiencies in Monsanto's petition for approval of biotech wheat, delaying USDA's deregulation of the product.

 

In listing the benefits of Roundup Ready wheat to farmers, Monsanto includes: "broad spectrum weed control, increased crop safety, increased yield, cleaner grain, simplified weed management, conservation-tillage enhancement."

 

 

Source: USDA