Melvin Brees
Farm Management Specialist
University of Missouri Extension




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November 17, 2000

Markets and GMO

The use of genetically modified organism (GMO) seeds continues to generate controversy and occasional headlines. The market impact of GMO grain has been difficult to determine. Some contracts have been written and price premiums offered, but the markets haven't signaled (through price) a strong demand for non-GMO or lack of demand for GMO grains.

The most recent headline maker has been StarLink corn--a Bt corn event by Aventis. StarLink corn, only approved for livestock feed, was discovered in taco shells. The taco shells were recalled, but StarLink continues to threaten an impact on the corn market. How the StarLink corn "contaminated" the taco shells and very likely other corn supplies is being debated. Cross-pollination, accidental contamination and unintentional (or intentional) delivery of corn to elevators are among the many possible causes suggested. While most believe that there is little or no risk from human consumption, the fact that StarLink was not approved for food use makes this a very serious issue!

It is creating uncertainty in both the domestic and export markets. Japan, the largest corn importer, does not even allow StarLink for livestock feed use. The Japanese quickly made purchases from other countries (China, South Africa, etc.) to assure that supplies were free of StarLink corn. South Korea, another major importer, doesn't want StarLink and is seeking assurances or tests that imports won't contain it. Some market analysts believe that, for now, market impact may be minimal. While Japan quickly switched to other countries, World corn supplies are tight enough that most importers will still have to come to the U.S. for corn. However, they will likely continue to seek assurances that purchases don't contain StarLink.

What about GMO soybeans? In recent days, the Tokyo Grain Exchange (TGE) Non-GMO U.S. soybean contract has traded for premiums of 50 to 60 cents per bushel over the U.S. Soybean contract (could contain GMO). Remember that these are the premiums for delivery at Japanese warehouses and for relatively small contract quantities. It does represent what the Tokyo market is offering to cover the extra production, segregation, identity preservation and transportation costs of producers, merchandisers and shippers. Among the unanswered questions are whether the volume or premiums offer significant economic incentives for suppliers.

What do the headlines and foreign grain exchanges mean to Missouri farmers? The StarLink issue underscores the importance planting crops for approved uses and segregating any specialty or limited use crops! While the TGE offers non-GMO soybean premiums, the non-GMO market remains limited. Capturing premiums for non-GMO grains or non-StarLink corn will require merchandising skills to find and deliver to segregated market channels. In addition, it will likely require testing or certification to assure buyers that the grain is not "contaminated." Then, each will have to determine--is it worth it? --Melvin

University of Missouri ExtensionDecisive Marketing - November 17, 2000 -- Revised: April 20, 2004