AgDM Special Feature newsletter article, April 2000

Frequently asked questions regarding the production of transgenic crops

The transgenic crop, also known as genetically modified organism (GMO), debate has created many new issues for production agriculture. Most are not unique to transgenic crops, they are just the beginning of differentiated markets based on a wide range of new traits.

The Iowa Grain Quality Initiative has assembled this question/answer checklist to help you with planting decisions. Look for more updates and information throughout the 2000 season.

Marketing Questions

Roger Ginder Bob Wisnerby Roger Ginder, retired extension economist, ginder@iastate.edu; and Robert Wisner, 515-294-6310, rwwisner@iastate.edu

I have heard that premiums are being offered for non-GMO grain, but no elevator in my area offers one.

Premiums may not be offered in all areas. Premiums are most likely to be offered with grain bound for export or processors who wish to certify non-GMO co-products to foreign or domestic markets.

What areas are getting premiums?

Premiums are not assured in any area, but currently areas near the river export terminals and some processing plants are more likely to offer premiums.

Am I likely to be able to market non-GMO crops directly from the field for a premium at harvest?

That may vary from buyer to buyer, but in most cases your best opportunity to find markets for nonGMO crops is likely to be after harvest. Many elevators are not currently set up to segregate crops by genetic origin at harvest.

Will I be able to market GMO corn and soybeans without a discount?

At this time, major grain exporters and processors have announced that they are currently buying approved GMO hybrids and varieties in the cash market at no discount. Most have announced that they will write forward contracts for future delivery of biotech grain. These contracts are being offered for dates up to the end of Calendar 2000. Some have stated that they will assist producers who deliver unapproved GMO grain to move it into acceptable channels. Since channeling programs for unapproved GMO hybrids may differ, it would be helpful to ask how such assistance will occur.

Does this mean that there will be no discount on 1999 or 2000 crop?

Not necessarily. Grain can be sold for cash today or for future delivery if it is contracted. Grain companies cannot guarantee that there will be no discounts in the future unless a contract is written and risk management is possible.

Why won't grain companies and processors write contracts beyond 2000?

Risk management and hedging become very difficult beyond that point.

Is there a marketing risk if I plant GMO corn and soybeans?

Some markets currently are not accessible with GMO grain-in particular, EC food markets and food markets in some far-east markets. About 80 percent of corn utilization and soy meal utilization are for feeding. These markets are currently accessible to GMO grains in the U.S. and some export markets.

Can I avoid risk by planting non-GMO seeds?

Non-GMO grains would carry reduced risk against market changes and new policies, however, for nonGMO grain to be priced differently from GMO, it must usually be identity preserved. This typically involves extra costs and management effort. Unless a contract is written, there is no assurance that the producer will receive a premium at all or (if he or she does receive a premium) that it will cover these costs.

Is there any way to reduce the risk of planting nonGMO for a premium?

Producers who think there is a possibility that premiums will be offered later in the growing season can plant nonGMO seed, clean out the planter, and isolate the field. These represent a small proportion of the costs associated with the identity preservation of grain. If an opportunity presents itself over the growing season, these producers will be in position to take advantage of it.

What paperwork and testing may be required if I have a market for non-GMO crops?

Exact requirements may vary with the buyer. Be prepared for documentation of details on the seed you planted, including variety, where obtained, where planted, and lot numbers, and that you have taken at least normal care to clean bins and equipment. Also, expect testing or sample retention for GMOs at the point of sale.

How can I handle the risk of cross-pollination from neighboring fields?

This risk is mainly for corn, and is one that cannot be completely eliminated. You may want to contact neighbors to find out what type of corn they will be planting in fields bordering yours. Also, check with agronomists to determine how far into your field there is a high risk of cross pollination, and plan to harvest and feed or market this portion of the crop as GMO corn if it borders a GMO corn field.

If I have a market for non-GMO corn or soybeans, will 1 have risks of getting a price discount if one or more loads does not measure up to required standards?

That may vary from one buyer to another. In the Eastern Corn Belt last winter, some buyers merely bought the disqualifying load at the GMO price, with no premium and no penalty. At least one major buyer in that area reportedly had a sizable penalty for each load that did not meet standards.

Will it be important to let my grain buyer know if I have planted GMO corn varieties that are not approved for export to the European Union?

It could become more important to do this in the year ahead. The EU is by far the largest market for corn gluten products produced by the U.S. corn processing industry, and processors will not want to risk losing that very important market. Prospects for the EU to approve currently unapproved varieties look to be quite limited.

 

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