WASHINGTON - The nation's agricultural industry - from farmers to food processors - is bracing for the latest and possibly most far-reaching repercussion of the introduction of bioengineered foods: lucrative export markets closed to unapproved crops grown in North America.

 Monsanto Co. announced last week that it had recalled hundreds of tons of bioengineered canola seed from Canadian farmers because the shipments may have contained genetic material not approved for consumption in Japan, one of the leading export markets for Canada and the United States.

 A spokesman for Monsanto said the St. Louis-based company is trying to find out how the  mistake happened. But experts contend that such mistakes are likely to occur more often and become more costly as long as biotech seeds grown in North America remain banned in markets like Europe and Japan.

“The problem is very serious and it's something we're not prepared for,'' said Neil Harl, an economics professor and farm expert at Iowa  State University. ''It's already hurting us on the export side.”

 The danger to the United States's nearly $52 billion food export market has prompted even supporters of biotechnology - most recently, the North American Millers Association - to urge a reform in the way federal agencies regulate biotech and what seeds biotech companies market.

 Adding urgency to those calls are the mounting number of food processors that are insisting their ingredients contain no biotech material.

 Genetically engineered crops - mainly corn, cotton and soybeans - entered the market five years ago. Their benefits were obvious to many: Some varieties could tolerate pesticides or even  produce their own insecticides. As a result, their use skyrocketed, in particular in the Midwest.  Nearly two thirds of this year's soybean crop is expected to be genetically engineered, up from  just over half in 2000. A similar portion of the cotton crop relies on biotech seeds, while just under a quarter of American corn is genetically engineered.

 The problem, though, is that many varieties are not approved in other countries. Of 16 bioengineered varieties of canola, for instance, 14  are approved in Canada, but only 10 are sanctioned in Japan and three  in the European Union. Corn, whose exports earn the United States  nearly $4.5 billion a year, is similar: While 16 varieties are allowed in the United States, only 10 have received approval in Japan and just four in the EU.

 That poses the requirement, by default, of separating crops intended for export overseas - a growing challenge for the industry, which admits that the sheer bulk of harvests means they are often freely mixed. In markets where varieties are not approved, the tolerance is zero, and even one kernel could be grounds for rejecting a shipment.

  ''Zero is a really low number,'' said James Bair, vice president of the millers association, a Washington-based trade group that represents 45 milling companies in 37 states. ''The US  system developed over 100 years to handle massive quantities of grain which are basically interchangeable in their suitability for all end uses,'' he said. ''That system is fantastic in its ability to do that. But it's not very nimble when it comes to satisfying special needs.''

 His group urged the government last week to coordinate with other countries the licensing of  biotech seeds. Unless those seeds are approved in all major markets, it said, they should be kept  off US farms. It also urged companies to stop selling seeds that lack ''broad international  approval.''

 That topic was a focus of attention at a meeting in April of the USDA's Advisory Committee on Agricultural Biotechnology, formed in January 2000 to advise the federal government on  biotech issues. Some participants raised concerns that the US farm system is increasingly vulnerable to the mixing of biotech and non-biotech crops as well as the risk of bioengineered plants like corn passing their genetic traits through cross-pollination.

 Both are likely factors in the resilience of StarLink, a variety the government approved only for   animal use out of concern that it might cause allergic reactions in people. It was planted on just a fraction of farmland but has showed up in food ranging from taco shells to corn dogs, forcing  the costly recall of more than 300 products. ''That illustrates what happens with bulk commodities,'' said Charles Hurburgh, an Iowa State University professor and director of the Iowa Grain Quality Initiative. ''If one farmer plants it, then everyone has to test.''

 Such testing could become more important.

 Fearing consumer backlash, McDonald's has told its suppliers it doesn't want genetically engineered potatoes. Other food processors have made similiar demands, including Frito-Lay Co. and Novartis AG, maker of Gerber baby food. In April, sugar refiners told farmers to avoid bioengineered sugar beets.

 While sugar beets are a minor crop, the decision was the latest setback for biotechnology companies like Monsanto and Aventis SA, which are already struggling with the looming need for segregated crops. ''It's a challenge that we'd rather not have,'' said Loren Wassell, a Monsanto spokesman.

 Wassell said Monsanto has sought uniform global standards for biotech products, creating a market with little distinction between genetically engineered and conventional varieties. He said the company would not market seeds unless they were approved in both the United States and Japan, which imports more than $9.3 billion in US farm products.

 Without uniform standards, US farmers risk losing more exports. Already, US shipments of  corn to Europe have evaporated over the use of bioengineered seeds, closing a $200 million-a-year market.

 The Illinois Department of Agriculture has urged seed companies not to sell varieties not approved overseas. And, worrying US farmers, some countries like Brazil are beginning to market soybeans and other products as free of genetically altered material, playing on consumer fears.

 ''The American farmer loses out on this,'' said Hurburgh. ''This is going to be a running battle for quite some time.''

 Anthony Shadid can be reached by e-mail at This email address is being protected from spambots. You need JavaScript enabled to view it..

This story ran on page C04 of the Boston Globe on 5/2/2001.

  © Copyright 2001 Globe Newspaper Company.