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Archer Daniels Midland (ADM) to offer another non-GMO premium

Lyle Niedens / FWN Financial 10oct01

"Soybean productivity in Brazil surpassed that of the United States this year, thanks to technological advances in agriculture which did not include the use of genetically modified crops."

Bear in mind Cargill's financial connections with Monsanto

While the European Commission considers lifting a moratorium on the approval of new genetically modified organisms, the biggest U.S. soybean processor soon will offer a new price premium for non-GMO soybeans at its largest processing facility. U.S. grain market sources have confirmed that beginning Dec. 1, Archer Daniels Midland, the Decatur, Ill.-based agribusiness behemoth, will pay a 20-cent-per-bushel premium for non-GMO soybeans to crush at its Decatur processing plant. That means if producers and other grain deliverers can prove their soybean loads contain no GMO ingredients, they'll receive 20 cents per bushel more than ADM's standard bid for soybeans delivered to Decatur. Lew Batchelder, an ADM marketing official, would not comment on the new program. But he acknowledged that ADM already pays more for non- GMO grain in myriad cases. "We have premium programs under way all the time," Batchelder said. ADM currently pays a 10-cent-per-bushel premium for non-GMO soybeans at many of its ADM/Growmark river elevators. ADM's alliance with Growmark, dating to 1985, includes 40 interior elevators and four export terminals totaling 70 million bushels of storage. In addition, ADM generally pays a premium of 6-12 cents per bushel for non-GMO corn at many at of its river terminals.

ADM's practice of offering premiums for grain without non-GMO grain stems from the preference of some customers.

Those buyers desire processed food ingredients without the perceived taint of biotech ingredients. Hain Celestial Foods, maker of Celestial Seasonings teas and Terra Chips, is perhaps the highest-profile U.S. food company proclaiming its products contain no GMO ingredients. Given the difficulty many farmers and grain elevators have in segregating non-GMO grain loads from biotech grain, many large food companies have expressed skepticism at Hain's claim that it is entirely GMO-free. Several companies, including Strategic Diagnostics of Newark, Del., sell kits that test for even traces of GMO ingredients. But those tests usually review only a small sample of a truck trailer or railcar full of grain. Some biotech seeds protect crops from a variety of predators, such as insects and other pests, whereas others protect against post-emergence herbicide and pesticide applications. The Food and Drug Administration has approved most biotech grain for human consumption, and no documented sicknesses from eating food with GMO ingredients has occurred since biotech grain seeds first hit farmers' hands in the mid-1990s. However, critics charge that biotech seed companies, including Monsanto Co., rushed their products to market without adequately researching how they might affect consumers and the environment. Europe, in particular, has revolted against biotech food. Its concern led ADM and other grain processors to start segregating grain two years ago.

Although the U.S. has approved 40 genetically modified crops, the European Commission has approved just 21. That soon could change, though. The Wall Street Journal reported Monday that the EU is willing to lift a 3-year-old ban on approving new GMO products -- as long as the U.S. doesn't resist strict EU labeling rules for food containing biotech ingredients. But food processors on both continents oppose the EU's proposal. Meanwhile, ADM's newest premium further marks a distinction between the company and its largest soy processing rival, Minneapolis- based Cargill Inc., which does not offer premiums for non-GMO grain. Combined, the two agribusiness giants control a little more than half of the U.S. soybean processing market, with ADM crushing about 1.7 million bushels of soybeans each day and Cargill processing another 1.1 million daily. But Cargill officials claim they do not need to offer premiums to secure non-GMO soybeans or reassure customers. "We do not grant any discounts for non-GMO products," said Bill Brady, a Cargill spokesman. "However, some of our customers are willing to pay a premium for products made with non-GMO crops. We work with our suppliers to make sure they have the opportunity to capture those premiums. "The bottom line is that each individual farmer must decide whether it is worth his or her time and effort to preserve the identity of non-genetically enhanced crops for a market that may or may not develop any size or momentum. Niche markets are not for everyone, and premiums in these types of markets can change quickly and significantly."

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