Farmer organizations voice concerns over market losses

EXCERPT: Abitrigo, citing an internal survey, said 85% of Brazilian millers were not in favor of using the GMO wheat, while 90% of them were willing to halt purchases of Argentinian wheat in case the production commercializes and the wheat is supplied to Brazil.
---

Brazil's Abitrigo warns against Argentina's GMO wheat adoption; some skeptical of move

Author Rohan Somwanshi, Editor Jennifer Pedrick
S&P Global Platts, 14 Oct 2020
https://www.spglobal.com/platts/en/market-insights/latest-news/agriculture/101420-brazils-abitrigo-warns-against-argentinas-gmo-wheat-adoption-some-skeptical-of-move

Highlights

* GMO wheat variety use opposed
* Commercialization contingent on Brazil's approval
* Argentina's 'fast move' a risky one for trade: analyst
* Acceptance difficult due to high segregation costs
* Farmer organizations voice concerns over market losses

Brazil's wheat association Associação Brasileira da Indústria do Trigo, or Abitrigo, Oct. 14 warned in a statement against the conditional approval of a drought-tolerant transgenic wheat variety in Argentina, saying Brazilian millers may halt purchases of Argentina wheat if the crop successfully arrives in the market.

Analysts and traders have also expressed skepticism of the seamless country-wide adoption of the wheat in Argentina, due to high costs associated with maintaining the wheat stocks separately from other wheat varieties, while farmers and exporters may look at market losses and price discounts.

Argentina is a leading wheat producer and exporter, and Brazil buys the majority of its neighbor's exportable supplies.

In 2019, Brazil purchased 5.1 million mt of wheat from Argentina, while its total exports were seen at 11.1 million mt, according to Argentina's agriculture ministry data.

Argentina's agriculture ministry on Oct. 8 approved a genetically modified wheat variety being developed by biotechnology firm Bioceres Crop Solutions.

The "HB4 wheat" variety approval makes Argentina the world's first country to adopt the GMO crop, which is a drought-resistant grade, Bioceres said.

Argentina has been facing severe dry conditions in 2020, which has weighed on its wheat crop prospects for 2020-21, with production estimates lowered from 22-23 million mt to 18 million mt, according to the Rosario Stock Exchange.

Most of the damage has been seen in Cordoba, which grows about 20% of the country's wheat, as lack of soil moisture has caused irreversible damage to yields.

The HB4 seed varieties were seen increasing wheat yields by an average of 20%, during growing seasons impacted by droughts, Bioceres said in an Oct. 8 statement.

However, commercialization of the wheat is contingent on Brazil's approval, Bioceres added.

Between January and August, Brazil imported 3.6 million mt of wheat from Argentina out of total global exports of 8.8 million mt, data from Argentina's agriculture ministry data showed.

Industry voices concerns

Abitrigo, citing an internal survey, said 85% of Brazilian millers were not in favor of using the GMO wheat, while 90% of them were willing to halt purchases of Argentinian wheat in case the production commercializes and the wheat is supplied to Brazil.

The association said it will oppose the commercialization of both GMO wheat and flour in Argentina during the course of a public hearing to be conducted by Brazil's biosafety commission CTNBio on Oct. 22.

Another meeting discussing this issue is expected to be held on Oct. 14, an Argentina-based analyst said. Bioceres could be part of the meeting, but that has not been confirmed.

This "fast move" of Argentina was risky no matter what decision Brazil takes, as national wheat crop have other destinations apart from Brazil, particularly in the December-February window, the analyst said.

"Local farmers do not have a clear opinion on this, as they are used to deal with GMO corn and soybeans," the analyst said, adding that farmer organizations and entities have voiced concerns, fearing "market losses and price discounts."

In Argentina, approval of the GMO wheat is not accepted in the domestic markets due to high segregation costs, a local trader said.

Some 6,200 hectares of the GMO wheat has been planted so far in Argentina, and almost 100% of those hectares are owned by farmers who are members of Bioceres, Argentina-based cereals and oilseed trader Javier Mariscotti said.

"The rest of the farmers who have not planted this wheat were very concerned," he said.

Argentina's wheat association ArgenTrigo opposed the move, saying it can lead to higher economic and commercial costs for all wheat producers, as well as for all segments of commercialization and internal and export processing.