Some Grain Companies Dissuade Farmers From Using Biotech Seed

SCOTT KILMAN / WALL STREET JOURNAL 20nov00

Bruised by recalls of food containing Starlink corn, some giant grain processors are discouraging Midwest farmers from raising some other types of bioengineered crops.

• ConAgra Pulled Some Items Last Month Due to Possible Presence of Starlink Corn (Nov. 17)
• Corn-Recall Cost Could Reach Into the Hundreds of Millions (Nov. 3)
• Biotech-Corn Problems Lead to Recall of 300 Products, Disrupt Farm Belt (Nov. 2)
• Federal Officials Blame Aventis for Biotech Corn Found in Food (Oct. 27)

The resistance from the processors, coming as the seed-selling season is just ramping up, could hurt the crop biotechnology industry.

It clouds the bright predictions for seed sales to regain the momentum lost earlier this year when antibiotechnology groups managed to spook U.S. farmers during spring planting. Another disappointing sales season would dent the ability of the biotech industry to recoup its staggering research costs.

The strongest warning was issued by A.E. Staley Manufacturing Co., the U.S. corn-processing unit of British commodity concern Tate & Lyle PLC. In a Nov. 15 letter to the farmers who supply its four U.S. corn mills, the Tate & Lyle unit comes closer than any major grain company to suggesting farmers consider raising only conventional crops.

The problem for grain processors is that some genetically modified varieties grown in the U.S. don't have regulatory approval in all export markets.

The industry, which handles millions of bushels of grain daily, isn't well-equipped to prevent bioengineered grain from going to the wrong place. Tests for identifying genetically modified organisms, or GMOs, in grain are expensive and time consuming.

"The only truly safe seed selection will be seed corn free of any genetic modification," the Tate & Lyle letter tells farmers. Short of that, farmers are advised to avoid bioengineered crops that aren't approved by the European Union, a big market for the Tate & Lyle unit.

Much of the American farm belt switched to bioengineered corn and soybeans a few years ago. The fallout over Aventis SA's Starlink corn is prompting the tougher line now.

Starlink is one of several corn varieties grown in the U.S. that are modified to make their own insecticide. Starlink, however, is the only one that isn't approved for use in U.S. food.

Regulators haven't been able to confirm that the unique Starlink toxin isn't a potential food allergen. Starlink growers are supposed to feed it to livestock, but some instead sold it to grain processors.

U.S. food companies have recalled hundreds of products, ranging from taco shells to baking ingredients, during the past two months because they contain Starlink corn.

Bio-Acres at Stake

Percentage of all corn-planted acres sown with genetically modified seeds, based on a June survey.
Source: National Agricultural Statistics Service

Archer-Daniels-Midland Co., Decatur, Ill., is beginning to air ads on 24 Iowa and Illinois radio stations warning farmers that ADM mills will buy only crops "that have full feed and food approval world-wide." ADM quietly adopted that policy a few years ago, but after Starlink, the company is going to far greater lengths to enforce it. "We don't want another Starlink," said Larry Cunningham, an ADM spokesman.

ADM and Tate & Lyle are creating a headache for Monsanto Co., the St. Louis biotechnology concern. One of the seeds that it markets grows into a corn plant able to tolerate exposure to the company's Roundup herbicide. Roundup Ready corn is approved for human consumption in the U.S., but the European Union has yet to clear its import.

Hugh Grant, Monsanto chief operating officer, said Friday he is confident sales of Roundup Ready corn seed will increase significantly this selling season -- despite the moves by ADM and Tate & Lyle -- because farmer satisfaction with the line is high. He criticized the two firms, saying: "I think it is a shame to confuse farmers."

Roundup Ready corn is a small yet important business for Monsanto, which is 85%-owned by Pharmacia Corp. Monsanto generates less than $20 million annually in gene fees from that seed, which is planted on just 3% of U.S. corn acres.

But Monsanto has hopes the seed someday will be as big as Roundup Ready soybeans, used by U.S. farmers to produce roughly half their soybean crop and is approved for export to Europe.