REUTERS | November 2, 1999 | Story by Aya Takada
TOKYO - Japanese have recently bought corn and soybeans grown exclusively from non genetically modified (GM) seeds, at premiums roughly 40-50 percent higher than those for mixed GM and non-GM crops, traders said.
Premiums for non-GM, U.S.-grown corn were purchased at premiums of 40-50 cents a bushel more than the cost of genetically mixed varieties. As for soybeans grown in the U.S. states of Indiana, Ohio and Michigan (IOM) that contain higher protein and are suitable for food use, non-GM soybeans were purchased at premiums of 50-60 cents a bushel over unsegregated IOM soybeans.
Soybeans for crushing have not been segregated on the basis of genetic origin as Japanese oilseed crushers are exempt from government GMO labelling requirements that take effect in April 2001, traders said.
"Japanese food companies will start receiving non-GM corn deliveries from the U.S. this month. The volume of imports (of non-GM U.S. corn to Japan) will likely reach 70,000-80,000 tonnes by the end of this year," said a trader at a grain trading house.
"The imports are mainly for use in beer production. Premiums are 50 percent higher (than unsegregated U.S. corn prices)," he added.
Soybean traders expect that out of total Japanese demand for food soybeans of 800,000 to one million tonnes in the 1999/2000 year, 500,000-600,000 tonnes will be non-GM varieties.
"Japanese are buying non-GM soybeans with high premiums. This will probably be taken as an incentive for U.S. farmers to increase planting of non-GM soybean varieties next year," said a trader at a major Japanese trading house.
HIGH COSTS TO BE PASSED ON TO CONSUMERS
Non-GM U.S. corn premiums are 43 to 54 percent higher than the current premiums for unsegregated U.S. corn for January-March shipment, which are 93 cents a bushel cost and freight Japan over the March contract on the Chicago Board of Trade (CBOT), traders said.
Non-GM IOM soybean premiums on a c&f Japan basis are 37 to 44 percent higher than premiums for unsegregated IOM soybeans. Premiums for the latter are 135 cents a bushel over CBOT's January contract.
The non-GM corn/soybean premiums are for bulk transportation, traders said. Japanese trading houses charge additional premiums if end-users ask them to transport crops in containers or bags so as to reduce the risk of adulteration.
During bulk transportation, non-GM crops could become mixed with genetically altered varieties, which could end up accounting for about five percent of the total bulk, traders said.
Accord to results published Monday of a survey conducted by Japan's leading economic daily, 66 percent of food companies polled by the paper had decided or were considering switching to non-GM ingredients.
Some 43 percent of the companies will pass on the increased purchasing costs, totally or partially, to consumers as higher product prices, according to the survey conducted last month by the Nihon Keizai Shimbun. Some 323 of the 472 companies polled responded to the survey.
As for domestic business, Japanese end-users have covered about 20 percent of their corn needs for January-March shipment. In the soybean market end-users are looking for January shipment, but high premiums made them wary of covering their needs quickly.
U.S. Gulf-Japan freight rates for Panamax-class vessels were little changed from week-ago levels at $24.50-$25 a tonne for December shipment and $25-$25.50 a tonne for January shipment.
