US genetically modified wheat stokes fears, Japan cancels tender

Reuters May 30 2013

Naveen Thukral

Singapore/Tokyo: A strain of genetically modified (GM) wheat found in the US fuelled concerns over food supplies across Asia on Thursday, with major importer Japan cancelling a tender offer to buy US grain.

Other top Asian wheat importers South Korea, China and the Philippines said they were closely monitoring the situation after the US government found genetically engineered wheat sprouting on a farm in the state of Oregon.

The strain was never approved for sale or consumption.

Asian consumers are keenly sensitive to gene-altered food, with few countries allowing imports of such cereals for human consumption. However, most of the corn and soybean shipped from the US and South America for animal feed is genetically modified.

“We will refrain from buying western white and feed wheat effective today,” Toru Hisadome, a Japanese farm ministry official in charge of wheat trading, said.

The US Department of Agriculture (USDA) on Wednesday said the wheat variety was developed years ago by biotechnology giant Monsanto Co. It was never put into use because of worldwide opposition to genetically engineered wheat.

Wheat, long known as the staff of life, is the world’s largest traded food commodity and it is used in making breads, pastries, cookies, breakfast cereal and noodles.

Asia imports more than 40 million tonnes (mt) of wheat annually, almost a third of the global trade of 140-150mt. The bulk of the region’s supplies come from the US, the world’s biggest exporter, and Australia, the No. 2 supplier.

The USDA said there was no sign that genetically engineered wheat had entered the commercial market, but grain traders warned the discovery could hurt export prospects for US wheat.

“Asian consumers are jittery about genetically modified food,” said Abah Ofon, an analyst at Standard Chartered Bank in Singapore. “This is adding to concerns that already exist on quality and availability of food wheat globally.”

In 2006, a large part of the US long-grain rice crop was contaminated by an experimental strain from Bayer CropScience, prompting import bans in Europe and Japan and sharply lowering market prices. The company agreed in court in 2011 to pay $750 million to growers as compensation.

Buyers cautious, seek details

A major flour miller in China, which has been stocking US wheat in recent months, said importers will tread carefully.

China has emerged as a key buyer of US wheat this year, taking around 1.5mt in the past two months. Chinese purchases in the year to June 2014 are estimated to rise 21% to 3.5mt, according to the USDA, with most shipments coming from the US, Australia and Canada.

Japan’s Hisadome said the government has asked US authorities to provide more details of their investigation and Japan will stop buying the wheat concerned, at least until a test kit is developed to identify genetically modified produce.

There is no US-approved test kit to identify genetically engineered wheat. The USDA has said it is working on a “rapid test” kit.

The Philippines, which buys about 4mt of wheat a year and relies mainly on US supplies, is waiting for more details from the USDA before acting, an industry official in Manila said.

An agriculture ministry source in South Korea said the government is reviewing the discovery, adding the country thoroughly inspects products from the US as part of safety checks.

“I won’t be surprised if other countries start cancelling or reducing their purchases of US wheat, particularly Asian countries, putting pressure on wheat demand,” said Joyce Liu, an investment analyst at Phillip Futures in Singapore.

The benchmark Chicago Board of Trade wheat futures eased half a per cent on Thursday after rallying in the previous session.

GM crops cannot be grown legally in the US unless the government approves them after a review to ensure they pose no threat to the environment or to people.

Monsanto entered four strains of glyphosate-resistant wheat for US approval in the 1990s but there was no final decision by regulators because the company decided there was no market.

The St. Louis-based firm downplayed the incident in a statement posted on its website. “While USDA’s results are unexpected, there is considerable reason to believe that the presence of the Roundup Ready trait in wheat, if determined to be valid, is very limited,” it said.

Still, importers are not in a position to shun wheat from the US, which accounts for about a fifth of the global supplies, analysts and industry officials said.

 

Karl Plume in Chicago, Niu Shuping in Beijing, Erik dela Cruz in Manila, Jane Chung in Seoul and Yayat Supriatna in Jakarta contributed to this story.

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