Archer-Daniels-Midland Co., in a move that could dent farmer interest in biotechnology, warned its grain suppliers to begin segregating genetically modified crops from conventional crops.
The statement by one of America's biggest millers, which is being faxed to grain elevators throughout the Midwest, is the clearest sign yet that the consumer backlash over genetically modified crops in Europe and Asia is rattling American exporters, as well as creating some opportunities.
Practically speaking, there isn't enough time for any big changes this year because the Midwest harvest starts in a few weeks. Roughly half of the soybean fields maturing in U.S. fields are genetically altered, and almost all of that crop will be mixed with conventional soybeans.
Install Testing Equipment
But the statement by the Decatur, Ill., grain processor is clearly intended to warn Midwest grain elevators and farmers to prepare to do business differently next year. Many of the hundreds of grain elevators that supply ADM might need to install testing equipment that identifies gene-altered crops. Potentially thousands of farmers will have to build new storage bins in order to keep their crops apart.
"This should be a wake-up call to the industry," an ADM spokesperson said.
Although ADM said it "remains supportive of the science and safety" of genetically engineered crops, the company said it wants to be in a position to supply a growing number of overseas customers who are leery of genetically modified crops.
ADM's biggest rivals have yet to follow its lead. But farmer groups reacted angrily Wednesday because they fear the move could lead to an industrywide two-tier pricing system that would penalize their members for growing the new crops.
Introduced three years ago, the first wave of genetically modified plants have been wildly popular with U.S. soybean, corn and cotton farmers because they are easier to grow than their conventional cousins. The plants are genetically altered so that they resist pests and tolerate exposure to herbicides.
'Profitability Problems'
The National Corn Growers Association said in a statement that ADM's new policy "undoubtedly adds to the many profitability problems that growers are experiencing this year with low prices and drought conditions."
Leon Corzine, an Assumption, Ill., corn and soybean farmer who sells crops to ADM, said he and his neighbors will be less likely to plant genetically modified crops because of the company's policy. "I guess the new technology has just outrun consumer acceptance," he said.
Monsanto Co., one of the biggest suppliers of genetically modified seed, had already expected U.S. sales of its genetically modified lines to grow somewhat more slowly next year, in large part because the product already penetrated much of the farmer market.
While grain officials said ADM's move could damp demand by some farmers for genetically engineered seed, the St. Louis biotechnology company expects "continued adoption of the technology by farmers," said Nicholas Filippello, a Monsanto economist, adding: "We don't expect a significant impact on our financial results."
In New York Stock Exchange composite trading Wednesday, Monsanto rose 12.5 cents a share to close at $41.25 a share.
New Products From Grain
Most grain processors have been loath to handle genetically modified crops any differently. They don't want to give any ammunition to groups critical of a technology the processors hope might some day permit them to make new products and chemicals from grain.
Cargill Inc., for example, reiterated Wednesday that it hasn't any plans to require that farmers segregate the crops it buys from them on the open market. The Minneapolis commodity company, which has a biotechnology joint venture with Monsanto, said that if consumer demand for conventional crops became strong enough it would instead contract with farmers to grow them.
ADM is taking a different tack in part because it has less invested in crop biotechnology than its rivals. Another reason is that ADM makes soybean-based veggie burgers; vegetarians seem particularly concerned about crop biotechnology.
ADM had already warned farmers earlier this year that some of its U.S. mills wouldn't accept some lines of insect-proof corn because they hadn't been cleared by European Union regulators for import into Europe.
ADM also formed a joint venture with DuPont Co. in April that contracts with farmers to grow conventional soybeans. DuPont, the Wilmington, Del., chemical company, used conventional breeding techniques to develop soybean plants able to tolerate exposure to one of its herbicides.
In New York Stock Exchange composite trading Wednesday, ADM rose 12.5 cents to close at $13.125 a share.
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