Not only does this report from an Iowa State University grain market analyst firmly refute claims that US wheat acreage is falling because of GM wheat not being available, it also sounds a sombre warning about the potentially dire economic impact of GM crops.

There have long been complaints from the US of the loss of its corn export market to the EU - said to be costing US farmers hundreds of millions of dollars a year, but this report points out that US soybean exports to the EU have also now "dropped to almost economically insignificant levels. Historically, the EU has been the largest overseas customer for U.S. soybeans and often has been its largest foreign buyer of soybean meal."

The report concludes, "Loss of the U.S. corn export market in EU and the sharp downward trend in US soybean and soybean meal exports to EU are strong cautions to the wheat industry that GM issues in that market should be taken seriously."
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Updated Report Says Industry Still Not Ready for Biotech Wheat Farm Futures
September 6 2006 [url at end]

Segregating biotech and non-biotech wheat supplies in marketing channels is still a major stumbling block in market acceptance of genetically modified wheat, according to an updated analysis from Iowa State University grain market analyst Bob Wisner.

"If a low-cost acceptable segregation system could be developed, that would increase the likelihood of market acceptance of GM wheat. With the low tolerances allowed for GM food ingredients in some foreign markets, effective market segregation to meet those low tolerances would be important if negative impacts on export demand from commercializing GM wheat at this time are to be avoided," Wisner writes in his update to his October 2003 report, Market Risks of Genetically Modified Wheat.

Exports account for 56% of the market for U.S. hard red spring wheat, making export market acceptance vital to the U.S. wheat industry's economic health. Wisner warns introduction of biotech wheat could risk the loss of one-fourth to one-half of U.S. hard red spring and durum wheat export markets and up to a one-third drop in price, as earlier reports have found.

The acreage shift

A number of organizations and businesses associated with the U.S. wheat industry as well as wheat growers have become concerned about the long-term downward trend in U.S. wheat planted acreage and the declining U.S. share of world wheat exports. At a recent industry meeting, these groups made commitments to encourage the development of biotech wheat, with the view that this technology will create technological developments making U.S. wheat more competitive in world markets.

At the same time, the wheat industry participants stressed that careful attention will be given to ensuring that resulting products are accepted by consumers. At this stage, there is no way of knowing for certain whether genetically modified varieties of wheat would halt or reverse the decline in U.S. wheat acres.

"The decline has occurred in response to major government policy changes, as well as accelerated growth in demand for alternative crops and development of varieties of alternative crops more suited to the short growing season of the Northern Plains," Wisner reports. "It also has been influenced by a sharp increase in wheat exports from former Soviet republics. By western standards, wheat yields in these countries are not very impressive. But the shift to a market-oriented economy has encouraged farmers in the region to produce crops for which they have a comparative advantage in world markets."

Comparing to other crops

Wisner says in the next several years, U.S. government incentives for production of biofuels from corn and soybeans almost certainly will cause these crops to provide intense competition with wheat. "Genetic improvements in wheat - if the resulting varieties are acceptable in international markets - could somewhat moderate the intensifying competition," he says.

So far in the September 1, 2005-August 31, 2006 soybean marketing year (through August 17, 2006), U.S. cumulative soybean export sales to the EU were down from the same period a year earlier by 54%. U.S. soybean meal exports to the EU during the same period were down 56% from the previous year's low level and have dropped to almost economically insignificant levels. Historically, the EU has been the largest overseas customer for U.S. soybeans and often has been its largest foreign buyer of soybean meal.

"U.S. soybean exports to the EU in the next few years could be an important lead indicator of potential market acceptance of GMO wheat," Wisner says. "Loss of the U.S. corn export market in EU and the sharp downward trend in US soybean and soybean meal exports to EU are strong cautions to the wheat industry that GM issues in that market should be taken seriously."

The report was prepared by Wisner for the Western Organization of Resources Councils and the Dakota Resource Council. Read the report online at Potential Market Impacts from Commercializing Roundup Ready Wheat, September 2006 Update http://www.worc.org/pdfs/Market%20Risks%20Update%20Final%208-06.pdf

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