StarLink Corn Weighs on U.S. Farmers

Reuters 8mar01

WASHINGTON - Foreign wariness over StarLink biotech corn -- never approved as a food -- was cutting into U.S. corn sales and depressing prices, U.S. Agriculture Department said Thursday.

In a monthly report on crops and food demand worldwide, USDA shaved 50 million bushels from its forecast of corn exports ``because some importers, like Japan, are expected to minimize purchases of varieties of corn not approved for some, or all, uses,'' a description fitting StarLink.

More than 300 foods were pulled from U.S. grocery store shelves last year following the discovery that StarLink, approved only as a livestock feed, had seeped into the food chain. Tests sponsored by the environmental group Greenpeace found traces of StarLink in meat-free corn dogs produced by a Kellogg Co. (K.N) subsidiary, it was reported on Thursday.

Exporters have endured repeated jitters over assuring that shipments would comply with foreign refusal to buy any cargo with StarLink kernels in it.

Japan, the No 1 market for U.S. agricultural exports, briefly suspended purchases of U.S. corn last fall until testing began to assure purity of its shipments.

StarLink was genetically altered to produce a natural pesticide that would drive away harmful insect pests.

On Wednesday, USDA said it would pay seed companies for bags of hybrid seed tainted with the StarLink protein.

In its report on crops, USDA projected that farm-gate prices for corn would average $1.85 a bushel, the lowest since the farm recession of the mid-1980s.

``There's just too much corn around,'' said the consulting firm World Perspectives. ``Also, questions on StarLink have weighted the market for some time now.''

USDA said a flood of soybeans from South America would dent U.S. soybean prices even with China importing 9.3 million tons of soybeans, 700,000 tons more than earlier forecast.

Farm-gate prices for U.S. soybeans were projected to average $4.55 a bushel for the marketing year ending Aug 31, the lowest in 28 years and down 10 cents from a February estimate.

Brazil was in the early stages of a harvest forecast for 35.5 million tons of soybeans, 1.5 million tons more than a year ago. Argentina was forecast to reap a record 25 million tons, 3.9 million tons more than the preceding crop.

U.S. cotton growers faced pressure as well, with exports slowing and U.S. textile mills cutting back on usage. The U.S. stockpile would reach 4.8 million bales, each weighing 480 pounds, this summer, the largest surplus in 12 years.

Private consultant John Schnittker said the report made trivial changes in the farm outlook while attention was turning toward the spring planting season. The government will report March 30 on likely sowings of major crops.

Farm groups were calling on Congress to provide $9 billion in ``market loss'' payments this year to offset the effect of persistently low prices. Lawmakers have enacted more than $24 billion in farm bailouts since late 1998.

Analysts commonly expect the March 30 Prospective Plantings report by USDA to show a continued shift by farmers into soybeans while cutting back on corn and wheat plantings. Cotton seedings would hold steady.