Farm Management Specialist
University of Missouri Extension
|April 23, 1999Who Will Buy It and How Much Will They
Archer Daniels Midland (ADM) and A. E. Staley have apparently placed bans on buying GMO (genetically modified organisms) corn not approved by the European Union (EU) for import. This includes Roundup Ready corn, some Bt corns and "stacked" genetically modified varieties. Cargill, Inc. has indicated that, while it will buy EU non-approved corn, the company will move these into the domestic market and not attempt to market them to EU.
There is a lot of resistance to GMO grains in Europe for a number of reasons. Some are just concerned with "tinkering" with nature or have food safety concerns. Others view it as a trade tactic to discriminate against U.S. imports and to support EU policies. Getting GMOs approved also involves "bureaucratic red tape" which delays what eventually is approved. Several GMO grains have been approved including Roundup Ready soybeans and some Bt corn.
The ban on GMO corn raises a number of questions. How will the companies monitor the situation? Testing is time consuming and difficult to do. Evidentially, ADM doesnt plan to check every truck, but use "spot checks" which leaves open the possibility of missing some. Apparently part of Cargills strategy for seeking to buy out Continentals grain business is to acquire facilities that will allow them to segregate identity preserved grains (including GMOs) for specialty markets and export. But keeping GMO grains separate is a difficult task no matter how they go about it.
What does this mean for corn producers? How can a farmer guarantee GMO free corn? The planted acreage of GMO hybrids continues to grow. Some estimate they will account for nearly one-quarter of the corn acres this year. Even if a producer doesnt plant it, what about cross pollination from adjoining fields? If a farmer grows both GMO and non-GMO hybrids, it may mean thoroughly cleaning out planters, combines, grain carts, trucks, augers and dryers along with separate bins. This all adds to increased time, labor, equipment and management costs.
There are two sides to the marketing question. One side says, "Plant what the market wants!" The GMO hybrids offer solutions to difficult insect control or weed problems, creating potential economic benefits from their use. Some, especially those opposed to GMO, argue that producers ignore what the market wants and only plant whatever is more efficient or yields better. They say, regardless of any production benefits, producers should produce for the market and if the market doesnt want GMO, then plant non-GMO for the market.
The other side of the question is what is the market offering for non-GMO? Segregating varieties or producing non-GMO varieties gives up the GMOs production efficiencies and can add inefficiencies resulting from increased handling and management costs. Is the market willing to pay a premium for this? So far, it appears these companies are saying they wont take GMOs. They arent saying anything about paying more for non-GMO!
Its getting to be a complicated question and it
wont be resolved overnight. Will non-GMO get a premium? Will GMO be discounted? Who
will buy what? If they dont test everyone, how can they be sure? Confusing,
isnt it! -- Melvin
Decisive Marketing - April 23, 1999