Reuters | November 18, 1999 | By Greg Frost
PARIS - European and Japanese consumers have, according to this story, balked at the safety of genetically modified (GM) crops, but Japan is ahead of Europe in building a two-tiered market that prices GM-free food at a premium to gene-altered varieties.
Farmers in the United States, the story says, where nearly 60 percent of soybeans and 40 percent of maize are genetically altered, began segregating GM from non-GM crops this year in response to foreign opposition.
Indeed, grain dealers in the U.S. Midwest last month reported premiums of up to 10 cents a bushel, or $3.68 per tonne, were being paid for non-GM maize and soybeans.
Already, the story adds, Japanese trading firms have started importing non-GM maize and soybeans, either from major grain companies that operate crop segregation systems in the United States or from farmers who have contracts to produce non-GM crops.
Japanese traders were cited as saying cargoes of non-GM, U.S.-grown maize were bought at premiums of 40-50 cents a bushel ($14.70-$18.38 per tonne) over the cost of unsegregated varieties.
Moreover, the story notes, non-GM soybeans from the U.S. states of Indiana, Ohio and Michigan were purchased at premiums of 50-60 cents a bushel ($18.38-$22.05 per tonne) over soybeans that have not been kept separate.
Some Japanese food processors say they will pass on the higher cost to consumers while others say they will leave product prices unchanged by cutting other costs.
While the idea seems to have caught on in Japan, a two-tiered pricing system has yet to emerge in the European Union - although it is being studied.
European trade sources were cited as saying no cargoes of guaranteed GM-free maize or soybeans have arrived in Europe this year even though U.S. producers are trying to segregate their merchandise and despite the fact that soybeans sourced from Brazil are still regarded as genetically unmodified.
Ignace Debruyne, marketing manager for the American Soybean Association in Brussels, was cited as saying not a single bulk shipment of identity-preserved soybeans has come to Europe in the last four years, although smaller cargoes have arrived for niche markets.
The story notes that the absence of a two-tiered system is partly due to the logistical problems of maintaining the identity of grains and oilseeds in a transport system that treats one corn kernel or one soybean no differently from another.
There is also the issue of regulation. EU oilseeds crushing and food industries have not yet demanded GM-free shipments because GM soybeans are authorised for processing in the 15-member trade bloc and no declaration of contents is necessary under the present EU labelling system.
But most importantly is the issue of what the story calls price elasticity - namely, are consumers prepared to pay up for food that has not been tampered with at the genetic level and that, at least in terms of taste, is no different from lower-priced alternatives?
Debruyne was cited as saying he reckoned the animal feed industry will have to bear the brunt of any premium paid for non-GM soybeans and meal - and that makes it likely the premium would be passed on to the consumer in the form of higher meat and poultry prices.
One European oilseeds trader was quoted as saying, "The European trade is dipping its toes in the water, trying to see whether people are willing to pay up for non-GM food ... I'm not sure that consumers in supermarkets are showing a definite preference."
European soybean crushers were cited as saying they have been swamped with enquiries from food producers as well as compounders, but traders have said there were no plans yet to produce GM-free soymeal and soyoil, with one quoted as saying, "Every day you find people talking about that and people willing to buy GM-free material. But the problem is that segregating it and handling it, if you can crush it separately, will cost a lot of money. We are not selling any GM-free stuff, but you would be a fool if you did not look at it."
Another trader was cited as saying no premium has been established yet because the feed industry does not want to pay higher prices, adding, "Lots of compounders are willing to talk GM-free feed, but it's really not possible to do that. The Brazilian season is more or less over and the beans you can buy there which are supposedly GM-free are way too expensive. The compound feed industry wants it GM-free at the same price as the normal soy and that doesn't work. The demand is not there so it's not offered."
