Description
This stakeholder group includes wheat grower groups, the National Association of Millers, and technology providers. Monsanto tried to bring GM wheat to market several years ago but withdrew its application for commercialization in 2004 because of negative foreign consumer sentiment towards GMOs.
A Review of the
Potential Market Impacts
of Commercializing
GM Wheat in the U.S.
January 2010
by Dr. E. Neal Blue, Consultant
for the
Western Organization of Resource Councils
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www.worc.org.
A Review of the Potential Market Impacts
of Commercializing GM Wheat in the U.S.
January 2010
by Dr. E. Neal Blue, Consultant
1
for the
Western Organization of Resource Councils
1
President, Neal Blue Consulting, Columbus, OH Views expressed herein are solely the author’s.
2
Executive Summary
In 2009, as this study is being conducted, a coalition of stakeholders in the wheat industry from
Australia, Canada, and the U.S. have agreed to pursue the eventual commercialization of Roundup
Ready® wheat and other genetically modified (GM) traits as they become available. This
stakeholder group includes wheat grower groups, the National Association of Millers, and
technology providers. Monsanto tried to bring GM wheat to market several years ago but
withdrew its application for commercialization in 2004 because of negative foreign consumer
sentiment towards GMOs. The first GM crop ready to be introduced was Roundup Ready® hard red
spring wheat.
Several things have motivated this push for GM wheat, including high prices in 2007-2008, and the
perception that GM wheat is needed as one of the tools to restore U.S. wheat competitiveness. The
U.S. share of the world wheat export market and the U.S. wheat acreage have trended downward
for 30 years.
Is the wheat industry ready for GM wheat? A survey of the popular press and industry
pronouncements says, “not yet”. There is a belief in the industry that GM wheat will not reach the
market for another 10 years. The whole industry effort is predicated on foreign consumer
acceptance.
A review of current consumer attitudes indicates that the EU and Japan are not ready for GM wheat.
In addition, Asian countries such as South Korea and Taiwan are also reticent about importing GM
wheat. The major customers of the US, particularly the EU and Japan, have labeling and
traceability requirements, which make it difficult to sell GM wheat. In Europe the level of
tolerance for an unapproved GMO is zero. The Canadian Wheat Board (CWB) has stated publicly
that it will not support the adoption of GM wheat unless key conditions are in place, including
assurances that its overseas markets would accept the crop. The CWB also wants to see a greater
benefit, such as resistance to fusarium disease or improved yield and quality. In addition, the CWB
said that, as the merchandising system currently stands, there is no way to effectively segregate GM
wheat from non-GM wheat, another condition the board wants satisfied.
Identity preserved (IP) systems have been proposed as a way to segregate GM and non-GM wheat
if the U.S. introduces GM wheat. Estimated IP costs for such systems are 3 to 6 cents per bushel.
Current IP systems analyses do not incorporate liability costs and other associated costs arising
from IP system failures. Hartley Furtan and Richard Gray of the University of Saskatchewan have
pointed out that introducing a perceived inferior product such as GM wheat without an affordable
IP segregation system will create a market for “lemons” that will result in the loss of export
markets. The existence of this market externality removes any first mover advantage from adopting
GM wheat.
U.S. wheat acres and the U.S. world wheat export shares have gone down since 1960. Trends in US
wheat exports indicate that hard red spring (HRS) wheat and durum wheat are most “at risk” of
export loss if the U.S. approves Roundup Ready® or another variety of genetically modified wheat.
Exports to Japan and the EU would likely be curtailed because of foreign consumer concerns. The
combined EU and Japanese export losses would likely be 35 and 50 percent for HRS and durum
wheat, respectively. The corresponding price drop would be 41 and 57 percent for HRS and durum
wheat, respectively. If more countries in addition to the EU and Japan curtail their purchases of
HRS and durum wheat, the U.S. export declines would be even higher. The routing of lost export
wheat into the feed wheat markets would limit the price drops to the level of the corn market.
If the U.S. loses its HRS and durum wheat export markets due to GM wheat introduction, Russia
and the Former Soviet Union (FSU) countries would likely make up the difference – as indicated by
their growing world wheat export market share. As the U.S. world wheat export share is going
down over time, the Russian/FSU world wheat export share is going up.
3
A review of the wheat breeding literature suggests that, in addition to the traditional planting
breeding and GM transformation techniques, marker assisted selection (MAS) is being used to
generate non-GM trait development in wheat. Non-GM trait development has recently focused on
wheat varieties resistant to rust, drought, and salt. In addition, mutagenesis has been used to create
non-GM herbicide-resistant wheat sold commercially today.
Depending on the trends for labeling and changing consumer sentiment, there is a mixed outlook
for the marketing of GM wheat. Currently there are no commercial GM wheat varieties grown in
the world. Some promote GM technology as one of the tools that can reverse the decline in the
competitiveness of the wheat sector. However, the concerns of major foreign consumers about GM
wheat and the lack of affordable identity preserved segregation make the U.S. introduction of GM
wheat a risky proposition.
4
Table of Contents
1.0 Introduction…………………………………………………………………………………… 6
2.0 Consumer Preferences in the EU, Japan, Korea and Taiwan………………………………….. 7
2.1 European Union (EU)…………………………………………………….…………… 7
2.2 Japan………………………………………………………………………………….. 8
2.3 Korea…………………………………………………………………………………. 8
2.4 Taiwan………………………………………………………………………………… 9
3.0 European GM Regulations, 1990-2009………………………………………………………. 9
4.0 Implications of EU Traceability Rules on Exports of GM Wheat…………………………… 11
4.1 Segregation and Identity Preservation (IP) - Innovations and Costs………………….. 11
4.2 Segregation and Risk – Canola Example……………..……………………………… 13
5.0 USDA Certificates For Grain Shipments……………………………………………………. 13
6.0 Wheat Industry Stakeholders Positions on the Possible Introduction of GM Wheat………… 13
7.0 Wheat Production……………………………………………………………………..……… 15
7.1 U.S. Production and Yields…………………………………………………………… 15
7.2 U.S. Exports and Export Shares……………………………………………………… 17
7.3 U.S. Hard Red Spring and Durum Wheat Exports to Japan, Korea,, Taiwan, EU
and North Africa………………………………………………………………. 18
7.4 U.S. Hard Red Spring and Durum Wheat Exports to Latin America,
Oceania (South Pacific), Asia, and Africa (South and Central)………………… 19
7.5 Russian and Former Soviet Union Countries………………………………………… 20
7.6 U.S. Exports At Risk if GM Hard Spring Wheat is Introduced……………………… 20
7.7 Trends in US wheat Acres and Wheat Competitiveness vs Corn and Beans………… 23
7.8 Trends in US wheat Acres and Wheat Competitiveness vs Corn and Beans…. 25
8.0 Biotech Development of Wheat………………………………………………………………. 26
9.0 Organic Segregation from GM wheat………………………………………………………… 27
10.0 Summary..…………………………………………………………………………………… 28
11.0 References…………………………………………………………………………………… 29
List of Tables
Table 1. The Cost of Implementing an IP System for GM/non-GM Wheat in Canada…………… 12
Table 2. Summary of the Six Known Unauthorized Releases of Regulated GE Crops
into the Food and Feed Supply of the U.S., 2000-2008…………………………………. 14
Table 3. Export losses in the U.S. HRS wheat sector caused by GM HRS introduction…………. 23
Table 4. Export losses in the U.S. durum wheat sector caused by GM HRS introduction………… 23
List of Appendix Tables
Appendix Table 1A. US Wheat Export Destinations……………………………………. 34
Appendix Table 1B. US Wheat Export Destinations……………………………………. 35
Appendix Table 2. Countries Requiring GMO Labeling………………………………. 36
Appendix Table 3. World and U.S. Wheat Production, Exports and Ending Stocks…….. 37
5
List of Figures
Figure 1. US Total Wheat Production and Exports, 1960-2009 (Source: USDA-ERS)………….. 15
Figure 2. U.S. Wheat Production by Wheat Type, 1984-2009 (source: USDA-ERS)……………. 16
Figure 3. U.S. Wheat, Harvested Acres, 1980-2008. (Source: USDA-NASS)…………………… 16
Figure 4. U.S. Wheat Yield, 1980-2008. (Source: USDA-NASS)………………………………… 16
Figure 5. U.S. Wheat Exports by Wheat Type, 1984-2009. (Source: USDA-ERS)………………. 17
Figure 6. U.S. Export Share of World Wheat Exports, 1960-2009 (Source: USDA-ERS)……….. 17
Figure 7. U.S. Hard Red Spring Wheat Exports to Countries Likely to Label or Reject GM
Wheat, 1996-2008. (Source USDA-FAS)…………………………………………………………. 18
Figure 8. U.S. Durum Wheat Exports to Countries Likely to Label or Reject GM Wheat,
1996-2008. (Source USDA-FAS) ………………………………………………………………… 18
Figure 9. U.S. Hard Red Spring Wheat Exports to Countries Likely to Accept GM Wheat,
1996-2008. (Source: USDA-ERS) ………………………………………………………………… 19
Figure 10. U.S. Durum Wheat Exports to Countries Likely to Accept GM Wheat,
1996-2008 (Source: USDA-ERS). ……………………………………………………………….. 19
Figure 11. World Wheat Export Shares of North America and the Former Soviet Union,
1980-2009 (Source: USDA-FAS). ……………………………………………………………….. 20
Figure 12. U.S. Hard Red Spring Wheat Use by Type, 2007/08 Marketing Year.
(Source: USDA-ERS) …………………………………………………………………………….. 21
Figure 13. Shares of US Hard Red Spring Wheat Exports by Destination, 2007/08.
(Source: USDA-ERS) ……………………………………………………………………………. 21
Figure 14. U.S. Durum Wheat Use by Type, 2007/08 Marketing Year.
(Source: USDA-ERS) …………………………………………………………………………….. 22
Figure 15. Shares of U.S. Durum Wheat Exports by Destination, 2007/08.
(Source: USDA-ERS) …………………………………………………………………………….. 22
Figure 16. U.S. Hard Red Winter Wheat Use by Type, 2007/08 Marketing Year
(Source: USDA-ERS) ……………………………………………………………………………. 23
Figure 17. Shares of U.S. Hard Red Winter Wheat Exports, 2007/08,
(Source: USDA-ERS). …………………………………………………………………………… 24
Figure 18. U.S. Soft Red Winter Wheat Use by Type, 2007/08 Marketing Year
(Source: USDA-ERS). …………………………………………………………………………… 24
Figure 19. Shares of U.S. Soft Red Winter Wheat Exports by Destination, 2007/08,
(Source: USDA-ERS). …………………………………………………………………………… 24
Figure 20. U.S. White Wheat Use by Type, 2007/08 Marketing Year,
(Source: USDA-ERS). …………………………………………………………………………… 24
Figure 21. Shares of U.S. White Wheat Exports, 2007/08, (Source: USDA-ERS)……………… 25
Figure 22. U.S. Wheat, Harvested Acres, 1980-2008. (Source: USDA-NASS) ………………… 25
Figure 23. Wheat, Corn, and Soybean Shares of Total Crop Acres Harvested in the US,
1980-2008. (Source USDA-NASS)……………………………………………………………… 25
6
1.0 Introduction
In 2004, after several years of research and development, Monsanto withdrew its application for
Roundup Ready®
2
hard red spring wheat both in Canada and the US. Concerns about the loss of
U.S. and Canadian exports and stringent European Union rules on import, traceability, and labeling
of GM food products lead to the withdrawal.
In 2009, a coalition of stakeholders in the US wheat industry agreed to go forward to pursue the
eventual approval of GM wheat. The stakeholders included the North American Millers'
Association, the National Association of Wheat Growers, U.S. Wheat Associates, Grain Growers of
Canada, Western Canadian Wheat Growers Association, Alberta Winter Wheat Producers
Commission, Grains Council of Australia, Grain Growers Association, and Pastoralists and
Graziers Association of Western Australia (US Wheat, newsletter of US Wheat Associates, 5-14-
09). Several wheat summits were held from 2006 to 2009 to address the state of the wheat sector
in the US. Out of these meetings, several reports were put forth addressing the lack of
competitiveness of the wheat crop sector vis a vis the corn and soybean sector. A report entitled
“The Biotech Case for Wheat” was released by a wheat industry coalition composed of the
following groups: National Association of Wheat Growers, U.S. Wheat Associates, North
American Millers’ Association, Independent Bakers Association, and the Wheat Foods Council. In
the U.S., wheat acres have declined for 30 years and the world share of US wheat exports has gone
down. The report said that if GM wheat were available as a production tool it could stem the
decline in the competitiveness of wheat with other grains.
While there has been consensus among these stakeholders of the wheat industry to go forward on
the eventual adoption of GM wheat, other major industry players are reticent about the adoption of
GM wheat. The Canadian Wheat Board (CWB) has stated publicly that it will not support the
adoption of GM wheat unless key conditions are in place, including assurances that its overseas
markets would accept the crop. The CWB also stated that it wanted a greater benefit of any GM
trait adopted in wheat, such as resistance to fusarium disease or improved yield and quality. The
CWB said that as the merchandising system currently stands, there is no way to effectively
segregate GM wheat from non-GM wheat. Effective segregation is another key condition the board
wants satisfied (Reuters, 5-15-09). In 2000, the Australian Wheat Board (AWB) expressed concern
about GM wheat because of foreign consumer concerns about GM wheat (Reuters, March 17,
2000). However in 2007, the AWB softened its concern. “AWB supports the development of
agricultural biotechnology under controlled conditions because of the potential benefits to farmers
and the community,” the group said in a statement (Australian Wheat Board, June 2007).
In May 2009, a coalition of 15 farm groups from Australia, Canada, and the U.S. released a
statement joint statement of opposition to GMO wheat. This followed the statement of the wheat
industry stakeholder declaration of support for GMO wheat. Concerns were voiced that farmers
would be economically hurt by the introduction of GMO wheat. The groups signing the joint
statement included the Network of Concerned Farmers in Australia, National Farmers Union,
Canadian Biotechnology Action Network, the Organic Federation of Australia, Biological Farmers
of Australia, Greenpeace, and the U.S.-based Organic Consumers Association. (Reuters, June-1-
2009). In addition to the loss of foreign markets, other concerns about Roundup Ready® wheat
center on the evolution of glyphosate resistant weeds, and the loss of farmer saved seed (Ogg and
Jackson 2001; Van Acker et al. 2003).
This report updates the work completed by Dr. Robert Wisner in 2003 and 2006. In light of the
recent actions of the stakeholders of the wheat industry in pursuing GM wheat, this report evaluates
the current state of the GM wheat debate. This report covers several broad areas: consumer
attitudes in the European Union (EU), Japan, Korea, and Taiwan; EU GM traceability and labeling
2
Roundup Ready® (RR) wheat: GM wheat wherein Monsanto has inserted a gene that allows the plant to tolerate applications of
Roundup (Monsanto’s trade name for the broad-spectrum herbicide glyphosate).
7
regulations; grain merchandiser concerns; U.S. wheat production and exports trends; Former Soviet
Union wheat exports; effect of GM wheat on US exports; Biotech development of wheat; and
impacts on organic wheat production.
2.0 Consumer Preferences in the EU, Japan, Korea and Taiwan.
Currently there are no commercially available GM varieties of wheat or rice, the two largest
directly consumed grains in the world - this at a time when other GM field crops such as corn,
soybeans, cotton, and canola have been widely adopted. One oft-cited reason for this phenomenon
is the fact that the widely adopted GM crops are highly processed before consumption or fed to
livestock. Wheat and rice are more directly consumed. For this reason many foreign consumers
around the world are reticent about consuming GM wheat and rice.
Based on the regulatory environment of certain importing countries and the responses of importing
countries to unintended releases of GMOs, it is expected that many countries will severely reduce
or cease imports of US wheat if GM wheat is approved in the U.S. Much of this is driven by
foreign consumer sentiment. This section details consumer attitudes toward GM foods and crops
in the European Union, Japan, Korea and Taiwan. These are major consumers of U.S. wheat. The
determinant of whether GM wheat will be deregulated for food products and crop production is
consumer attitudes in a particular country. Consumers from the EU are generally opposed to
consuming GMOs. In Asia there is also consumer opposition to the consumption of GMOs,
however, the sentiment is not as strong as seen in the EU. Representatives for Chinese, Korean, and
Japanese wheat buyers surveyed said they would not buy or use Roundup Ready® wheat. Eighty-
two percent of buyers from Taiwan and 78 percent of buyers from South Asia said they would
reject the wheat, (Gillam, 2002).
2.1 European Union (EU)
The adoption of GM crops has been dependent on the regulatory and legal environment of a
particular country. The adoption of GM crops has proceeded rapidly in Argentina, Brazil, China,
and India and South Africa (James, 2008). However, in the European Union (EU), adoption has
been so very low. The oft-cited reasons for the low adoption are consumer sentiment, sociological
attributes of the citizens of the various countries in the EU (Zechendorf, 1998), and the regulatory
environment based on the precautionary principal (Kogan, 2005). Others attribute the slow
adoption of GM crops in the EU to trade barriers erected to protect EU agribusiness and producers
(Anderson, et al., 2004).
Several surveys taken by the European Union from 1996 to 2007 detail the consumer attitudes of
the various countries in the EU. Consumer attitudes toward GM crops and food have changed over
time. Support for GM crops in the EU declined from 1996 to 1999. The pattern for public approval
of GM food followed a similar trend. After 1999, the majority of the EU countries showed an
increase in support of GM food (Eurobarometer, 2002). In spite of these trends, the 2002
Eurobarometer survey indicated that a majority of Europeans did not support GM foods. For the
EU, the most persuasive reason for buying GM foods is the health benefit of lower pesticide
residues followed by an environmental benefit. In addition, price was the least incentive for buying
GM foods. Depending on the country in the EU, 30 to 65 percent of Europeans reject all reasons
for buying GM foods.
The 2005 Eurobarometer (Eurobarometer, 2005) survey showed that, overall, Europeans think that
GM food should not be encouraged. The fact that a particular GM food is approved by relevant
authorities, or may be cheaper than a non-GM food, are not convincing to the public. The EU
public, however, had wider support for non-food uses for biotechnology, such as nanotechnology,
pharmacogenetics, and gene threrapy. The introduction of new regulations on the
commercialization of GM crops and GM food labeling regulations (Directive 2001/18/EC) has done
little to allay the European public’s anxiety about GM food biotechnology.
8
In the most recent Eurobarometer survey (2007), 58 percent of Europeans declared that they were
opposed to the use of GMOs, while 21 percent supported their use. Nine percent of respondents
had never heard of GMOs. An absolute majority of respondents in most countries within the EU
were opposed to the use of GMO’s. Respondents who feel they lack information on GMOs are
significantly more concerned about the use of GMOs in farming than those who do not feel they
need additional information.
2.2 Japan
There is broad opposition to GM foods in Japan. Several surveys taken from 2002 to 2007 have
detailed Japanese consumer attitudes towards GM foods. In 2002, the Japanese Ministry of Public
Management, Home Affairs, Posts and Telecommunications conducted a public opinion poll on
GM labeling of food (MPHPT, 2002). The results showed that 80 percent of Japanese consumers
demanded stricter GM labeling and that they were unsatisfied with the current GM labeling
regulations. In addition, 84 percent of the surveyed consumers said that “…labeling is necessary
whatever … amount of GMO has been used in a food.”
McCluskey et.al (2003) evaluated the Japanese consumer’s willingness to pay for GM food
products. Japanese consumers were willing to purchase GM noodles at a 60 percent discount and
GM tofu at 62 percent discount. These results suggest that non-GM foods command a premium
over GM labeled foods.
In 2003, a Japanese Ministry of Agriculture, Forestry, and Fisheries internet survey of 600
consumers (MAFF, 2003) found that 60 percent of respondents said that they were unwilling to buy
GM foods due to safety concerns. 68 percent of the respondents mentioned that they would not
purchase GM foods even if they were priced cheaper than non-GM equivalents. It should be noted
that internet surveys are not based on a random sample, but merely reflect the views of those who
choose to respond.
A survey by the Pew Global Attitudes Project (PEW, 2003), conducted in 2002 and released in June
2003, showed that Western Europeans and Japanese were overwhelmingly opposed to scientifically
altered fruits and vegetables because of health and environmental concerns. Japanese women were
more opposed to genetically altering foodstuffs than men.
2.3 Korea
Korea is an importer of biotechnology crops and products. GM crops and foodstuffs must undergo
a safety assessment for human consumption by the Korean Food and Drug Administration. Major
GM crop imports are corn and soybeans – most of which are further processed. Both processed and
unprocessed GM food products must be labeled. Most non-GM labeled unprocessed crops must be
certified indicating a GM free status (USDA-FAS, 2005).
A 2001 survey of Korean consumers and a 2003 survey of Korean professors revealed that both
groups had concerns about GM food products. 52 percent of the professors believed that GM food
was safe for consumers. However, only 21 percent of consumers believed GM food to be safe. Just
14 percent of consumers said they would purchase GM food products (USDA-FAS, 2005).
In 2008, the Korea Biosafety Clearing House (Korea BCH, 2008) conducted an opinion poll (1,000
adults) to find out their awareness and attitudes towards live modified organisms (LMOs) and
biosafety. 83.3 percent of respondents had heard of or were aware of LMOs. 70.7 percent of
respondents reported they felt uneasy about LMOs used in food and agricultural uses. However,
relatively fewer people expressed concerns about the use of LMOs in medical, pharmaceutical,
environmental purification, industrial biotech and energy sectors.
9
An awareness survey conducted by the Korean Food Industry Association in October 2008 showed
that 42 percent of respondents would likely buy GMO derived food. This result was 5 percentage
points higher than the result in a previous survey. Those who would not buy GM food were 30
percent of the respondents. This was a down from the 42 percent result reported in an earlier
survey.
A Korean Consumers Union survey of 154 Korean lawmakers and 64 members of the Seoul
Municipal Assembly showed that 76 percent felt that food products should be labeled if they
contained GM ingredients (Korea BCH, 2008).
2.4 Taiwan
Chern and Rickertsen (2002) performed a study on consumer attitudes of GMOs in Japan, Norway,
Taiwan, and the U.S. Students were surveyed for their willingness to pay for non-GM alternatives.
In doing the research, Chern and Rickertsen cited increasing concerns by Taiwan consumers over
GM foods. They found that while only 6 percent of U.S. students ranked GM foods as “very risky,”
the percentages were higher in Norway (11%), Japan (10%) and Taiwan (17%). While only 17
percent of Japanese students were “somewhat” or “very willing” to consume GM foods, the figure
was 79 percent for Taiwanese students. The students in the four countries were willing to pay
premiums ranging from around 60 percent in Norway to about 20 percent in Taiwan for non-GM
vegetable oil. The preference against GM foods is reduced when some benefits associated with
them are introduced into the questions suggesting that GM foods have a potential to become more
popular. Reduced use of pesticides and improved nutritional qualities are perceived as more
important potential benefits than reduced price. Health concerns are apparently more important than
ethical or religious concerns in explaining the negative attitudes towards GM foods. The support for
mandatory labeling is overwhelming in the student as well as public surveys.
Early in this decade, the Taiwanese government was closely monitoring the development of GM
food regulation in Japan. Taiwan implemented a GM food law in 2001 stipulating that foods
containing more than 5 percent GM ingredients must be labeled as containing GMOs. There is still
a concern about GMOs in Taiwan. In 2009, the Taiwan Council of Agriculture (COA) issued a
statement that countered an official from the Department of Health about accepting GM rice from
the U.S. “The COA will not take the liberalization measure that would allow such rice from the
United States to enter Taiwan,” COA Minister Chen Wu-hsiung said. “I will step down if imports
of U.S. genetically engineered rice are permitted. The COA has `absolutely no plans' to allow such
opening,” (South China Post, 10-28-09.)
Surveys of consumer attitudes in the EU, Japan, Korea, and Taiwan, all major export markets for
US wheat, suggest that foreign consumers have a mistrust of GM crops and foods. Consumer
attitudes have changed little since 2004 when Monsanto withdrew its planned introduction of GM
wheat. The main driver for this withdrawal was the foreign consumer mistrust of GM foods.
3.0 European GM Regulations, 1990-2009
The EU has the most stringent regulations in the world regarding the labeling and traceability of
GM crops, feed, and food. This section details the development of the regulation of GMOs in the
EU from 1990 to 2009.
The European Union has regulated GM crops, food, and feed since the time GM crops were
introduced in the U.S. in 1996. In the 1990’s, the EU promulgated two sets of rules, one for GM
crops and one for GM food.
In 1990 EU Directive 90/220/EC established a process for assessment and approval of GM crops
and seeds destined for environmental release. Before 1998, 14 GM plants including 11 crops were
approved for release. In 1997, the EU adopted a second set of laws (Regulation EC No 258/97)
10
designed to address labeling of novel food products containing GMOs or produced from GMOs. In
addition, the regulation created a simplified approval process for products derived from but not
containing GMOs such as refined soybean oil or corn syrup. A producer bringing a GM food to
market had to show that it was “substantially equivalent” to existing foods. After Regulation
258/97/EC went into effect, a number of GM products entered the EU market.
In the mid-1990s, several food safety scares, including the BSE (bovine spongiform encephalo-
pathy) outbreak and dioxin tainted meat in Belgium, caused an increased wariness of GM foods and
crops. In the consumer attitude surveys discussed in the previous, consumers’ opinions of GMOs
became more negative. The food scares greatly eroded consumer’s trust in government regarding
food safety regulations. The erosion of trust occurred at same time as GM crops were being
introduced into the EU. Consumers began to trust non-government organizations more than
governments.
In the late 1990s, several EU member states began to ban the use of approved GM crops. In 1998
many EU member states blocked approval of European Commission approved GM crops unless
existing labeling and safety regulations were further tightened. From 1998 to 2004, no new GM
foods or crops were approved. This amounted to a defacto moratorium on GMOs. At this time, the
EU began to develop EU-wide regulations more acceptable to member states.
In 2001, EC directive 2001/18/EC on the deliberate release into the environment of genetically
modified organisms was approved. This is the basic legal act for the authorization of GMOs for
marketing throughout the EU, including commercial cultivation. It repealed and replaced Directive
90/220/EEC, aiming at strengthening the control of risks from the deliberate release of GMOs into
the environment. The key features of the Directive include a harmonized approach to risk
assessment, post-market monitoring, traceability and labeling, consultation with and information to
the public, predictability and transparency of decision-making, and time-limited consents.
In 2003, the EU approved a regulation, EC1830/2003, governing approval of GM food and feed
commercialization. The new directive expanded labeling requirements, established traceability
requirements, and streamlined the approval process for new GM products. Under EC 1830/2003,
all food and feed consisting of GMOs or produced from GMOs were required to be labeled. In
addition, highly refined products that were, heretofore, not labeled, were also required to be labeled
as being produced from GMOs. Labeling was now required if a food product or crop contained
more than 0.9 percent adventitious presence of GMOs. In addition, GM feed was also required to
be labeled.
Products such as meat, milk, and eggs produced from animals fed GM crops were not required to be
GM labeled. Products such as beer and cheese produced with enzymes made from GM
microorganisms also do not need to be labeled.
Regulation 1829/2003/EC added traceability requirements for all GM crops and foodstuffs within
the EU. Businesses that grow, store, and process GM products are required to track them
throughout the supply/logistics chain – from farm to dinner plate. Trace records must be held for 5
years.
Lastly, the EC 1829/2003 directive streamlines the approval process of GM crops and foodstuffs. A
developer of GMOs can file a single application for all intended uses of the GMO – cultivation,
importation, and processing. The application goes to the member state where the GMO will be
marketed. The European Food Safety Agency will conduct a scientific risk assessment. After that,
the European Commission will draft a proposal granting or denying authorization. The draft
proposal is submitted for approval by a qualified majority of member states within the Committee
on the Food Chain and Animal Health. If the committee approves the draft proposal then the
European Commission approves the proposal.
11
In 2008, the EU adopted Directive 2008/27/EC, which empowered the European Commission to
adopt the measures necessary for the implementation of Directive 2001/18/EC.
In spite of the EC 1829/2003 directive, many member states banned GM crop varieties that had
been previously approved by the European Commission. This was done by invoking the “safeguard
clause” which allows a member state to provisionally restrict a GMO.
4.0 Implications of EU Traceability Rules for Exports of GM Wheat
The labeling and traceability rules specified in the EC directives tightly dictate how GM products
are sold in the EU. The traceability rules specified within the EC directive allow up to 0.9 percent
adventitious GM material in a food product labeled as being non-GM. The adventitious GM must
be one that was authorized by the EU. There is zero tolerance for any level of unapproved GM
events in food imports. Since GM events in wheat are not currently approved in the EU, no GM
wheat could be exported to the EU today.
In order to get around the zero tolerance of unauthorized GMOs in wheat, the US will have to
insure that wheat GMOs are approved by the EU. A US export shipment could then get shipped as
a non GMO shipment as long as the adventitious GM level stays below 0.9 percent. The upshot of
this regulation is that an identity preservation system will have to be implemented that keeps GM
and non-GM crops separated. In essence, since the EU is a major importer of food stuffs, it is in
effect exporting its traceability regime to the rest of the world.
4.1 Segregation and Identity Preservation (IP) - Innovations and costs
Many who promote GM wheat say that identity preservation regimes within the grain
merchandising system can be used to keep GM and non-GM wheat separate. The development of
genetically modified crops is challenging the functions of the grain marketing system with many
participants arguing for identity preservation systems prior to release of GM varieties (Wilson and
Dahl, 2002). The Canadian Wheat Board (CWB) has said that as the merchandising system
currently stands, there is no way to effectively segregate GM wheat from non-GM wheat, a
condition of CWB acceptance of commercial release of GM wheat (Reuters, 5-15-09). This section
reviews identity preservation and developments that would be needed to reduce the risks of
comingling GM and non-GM wheat.
What is identity preservation and how can it be used to handle both GM and non-GM wheat?
Identity preservation is a system of production and delivery in which grain is segregated, based on
intrinsic characteristics such as variety or production process, during all stages of production,
storage, and transportation. Grain growers are interested in IP because of niche marketing,
technological innovations, customer demand for a specific grain, and organic production.
In the current grain merchandising system, the traditional bulk system has been designed to
comingle grain from many different sources. The comingling of grain occurs in four stages: 1) farm
to elevator, 2) elevator to rail/barge, 3) rail/barge to terminal, and 4) terminal to ship. The current
system of bulk movements of grain engenders large economies of scale in costs of moving grain.
IP systems have been evolving as information technology systems, biotech grain testing, and
logistics have improved to meet customer demands.
Several innovations have greatly improved IP systems in terms of contamination risk and improved
logistics. Containerized shipping, biotech testing, and information technology are components of an
evolving IP system that will play a role in GM/non-GM segregation. In a review of Cargill’s IP
strategies, Michael Boland (2003) detailed what an IP system would entail in terms of logistics and
testing. IP marketing channels are more complicated than simply keeping crops segregated
throughout all phases of transportation and storage. IP channels also require that producers separate
fields to avoid mixing pollen and or seeds during planting and harvesting. Clean equipment and on-
12
farm storage are also a necessity. At the elevator level, the manager has to develop strict standards
to maintain identity to the end user. In the transport of IP grain, railcars and trucks would have to be
sealed to avoid contamination. Testing and keeping track of the chain of custody add to the cost of
moving the grain. The cost would vary depending on the level of tolerances.
Containerized shipping of grain is a small but growing area of grain merchandising. In 2001, one
percent of U.S. grain was moved in containers. It is expected that the volume of grain moved by
containers will grow over time to meet a growing demand for specialty products (Vachal and
Reichert, 2001). Reichert and Vachal (2003) discussed IP using containerized grain shipments in
which grain is shipped in a freight container that can be place placed on a semi truck, rail, or ship.
A containerized shipping IP system has advantages for grain shipping: 1) grain is handled less, 2)
theft problems are reduced, and 3) ease of movement from truck to rail, and from rail to ship. The
only disadvantage is higher costs. However, in recent years costs have declined. Richert’s
calculation shows that container shipping comes in slightly more expensive than train shipping
(container $65.23/ton, truck $133.38/ton, single rail car $59.33/ton, and unit train $57.28/ton).
Wilson and Dahl (2002) go into great detail on the costs and risks of an IP system for GM wheat.
The authors estimated total segregation costs with an optimal strategy at 3.36 cents per bushel,
testing every fifth load of incoming grain. The main assumption of the Wilson and Dahl study is
that some sort of tolerance will have to be built into the IP system for it to work.
A paper by Huygen et al. (2003) details the costs of three IP systems including a containerized
system at tolerance levels of 5 percent, 3 percent, 1 percent, 0.5 percent, and 0.1 percent. The three
IP systems were 1) elevators segregate GM from non-GM wheat at the point of delivery, 2)
elevators are designed solely to handle either GM or non-GM wheat, and 3) a container system
where shipments are sealed at the farm. Elevator systems 1 and 2 were close in cost estimates with
the containerized system costing more.
Table 1. The Cost of Implementing an IP System for GM/non GM Wheat in Canada.
Tolerance Level (%)
IP 5 3 1 0.5 0.1
System Cost/tonne
Elevator System 1 194.66 194.68 196.39 199.19 201.09
Elevator System 2 194.56 194.57 196.10 198.68 200.37
Container System 216.68 216.69 218.19 220.67 222.09
Taken from Huygen et al, 2003.
The estimated costs of these systems at 1 percent tolerance, which is close to the EU standard for
approved GM events of 0.9%, are as follows: 1) elevator system 1, 5.89 cents/bushel; 2) elevator
system 2, 5.41 cents/bushel; and 3) container system, 6.01 cents/bushel. The authors in this paper
say that these estimates do not include risks and liabilities that might be associated with system
failure.
Until now IP systems have been used for specialty grains where the value of the specialty grain is
higher than regular grain run through the merchandising system. Furtan et al (2005) say that
introducing GM wheat without an affordable IP segregation system is one that can be likened to
creating a market for “lemons” that will result in a loss of export markets. In any proposed IP
system for GM wheat, GM wheat, a commodity that could be considered inferior to non-GM wheat,
is being introduced into the grain marketing system. Furtan et al. (2003) say that the existence of
market externality removes the first-mover advantage for wheat producers from the approval of GM
wheat. In addition, there are large distributional effects: wheat producers loose economic surplus,
while the consumers and the technology provider gain economic surplus.
13
4.2 Segregation and Risk – Canola Example
With the introduction of GM crops, genetic contamination has become a major concern. Initially,
when GM canola was introduced to Canada in 1995-96, a voluntary identity preservation,
production and marketing (IPPM) system was developed to contain the GM canola to the North
American market. This was done in response to the fear that Japan, the largest export market at the
time, would interrupt trade until they had time to study the GM technology. A closed loop system
to keep GM canola in North American markets operated for two years. The IPPM system was then
abandoned when Japan approved new varieties for importation. Although the IPPM system
worked, it was costly. The estimated costs were C$33 to C$41/tonne, which added 12 to 15 percent
to the cost of producing and transporting conventional canola (Smyth and Phillips, 2001).
Ultimately, the IPPM system was abandoned because of the opportunity costs of limited marketing
opportunities and freight inefficiencies. Smyth and Phillips (2001) suggested that these two costs
could have been reduced had the grain merchandising system acted collectively to establish IPPM
standards.
Even though IP systems are currently being used for various specialty grains, much work remains to
create an IP system to segregate GM and non-GM wheat in a cost effective way. The Canadian
Wheat Board is on record saying that under the grain merchandising system as it currently stands,
there is no way to effectively segregate GM wheat from non-GM wheat, one of several conditions
the board would want satisfied before it approved commercial release of GM wheat (Reuters, 5-15-
09).
5.0 USDA Wheat GM Status - Certificates For Grain Exports
For several years, the USDA Grain Inspection, Packers and Stockyards Administration (USDA-
GIPSA) sends out a statement on its letterhead with every inspection certificate stating that “there
are no transgenic wheat varieties for sale or in commercial production in the United States at this
time.” As of December 15, 2009, this is still the case. This certificate accompanies approximately
50% of US wheat exports, at the request of buyers (Wilson et al., 2003).
6.0 Wheat Industry Stakeholder Positions on the Possible Introduction of GM Wheat
Stakeholders in the wheat industry have convened several wheat summits between 2006 and 2009.
This group includes wheat millers, bakers, and grower groups from Australia, Canada, and the US.
This group put forth a document agreeing to pursue the eventual commercialization of GM wheat.
Given the rapid adoption of GM canola, corn, cotton, and soybeans, wheat has received intense
scrutiny as it has undergone experimental development.
Although these stakeholders of the wheat industry have agreed to support the commercialization of
GM wheat, some within the wheat industry have concerns arising from the lack of foreign customer
acceptance. One miller of note, the King Arthur Milling Company, has announced on its website
(http://www.kingarthurflour.com/) that it will not sell any products containing GM wheat. In 2002
Ron Olsen, vice president of General Mills, said that consumer confidence would be lost if GM
wheat were used in his company’s food products. Olsen expressed concern about alienating General
Mills customers (US Wheat Associates Aug. 28, 2002). Olson further explained the problems that
would be experienced up the food chain, beyond the grower, noting a traditional economic concept:
“When you inject a supply driven concept into a demand driven market, it’s a recipe for failure.”
Currently, the General Mills product line includes Gold Medal Organic Flour.
The Canadian Wheat Board (CWB) has stated publicly that it will not support the adoption of GM
wheat unless key conditions are in place, including assurances that its overseas markets would
accept the crop. The CWB also stated that it wanted to see a greater benefit from any trait
introduced to wheat through genetic engineering, such as resistance to fusarium disease or
improved yield and quality. The CWB said that as the merchandising system currently stands, there
14
is no way to effectively segregate GM wheat from non-GM wheat, another condition the board
would want satisfied (Reuters, 5-15-09).
In 2000, the Australian Wheat Board (AWB) expressed concern about GM wheat because of
foreign consumer concerns about GM wheat (Reuters, March 17, 2000). However, in 2007, the
AWB went on record saying “AWB supports the development of agricultural biotechnology under
controlled conditions because of the potential benefits to farmers and the community” (Australian
Wheat Board, June 2007).
The Western Canadian Wheat Growers made a presentation to the Canadian National Millers
Association on September 15, 2009, promoting the use of GM wheat, "Toward Commercialization
of Biotech Wheat". The presentation acknowledged the negative factors impacting the acceptance of
GM wheat: 1) market acceptance, 2) segregation issues, 3) liability issues, and 4) political
acceptance. The presentation also acknowledged that GM wheat would not be accepted today.
One theme that emerges is that consumers would buy into GM wheat if the product had more
consumer benefits and consumers were convinced of its safety. Another theme is that all sectors of
the wheat industry acknowledge that now is not the time to introduce GM wheat. The broad
coalition approach to GM wheat exhibited by the wheat stakeholders may be an outgrowth of
consequences arising from unintended releases of GM crops in the US (GAO, 2008, see Table 2)
and in Canada. These unintended releases resulted in product recalls (Starlink Corn) and export
losses (LL601, LL604 Rice).
Table 2. Summary of the Six Known Unauthorized Releases of Regulated GE Crops into the Food
and Feed Supply of the U.S., 2000-2008 (GAO, 2008).
_______________________________________________________________________________________________________________________
Year Product Crop Trait Cause Detection
_______________________________________________________________________________________________________________________
2000 StarLink Corn Insect Resistance Cross-pollination, Third party testing
and herbicide commingling of
tolerance corn after harvest
_______________________________________________________________________________________________________________________
2002 Prodigene Corn Pharmaceutical Cross-pollination USDA inspection
protein and uncontrolled
volunteers
_______________________________________________________________________________________________________________________
2004 Syngenta Bt10 Corn Insect resistance Misidentified seed Third-party testing
_______________________________________________________________________________________________________________________
2006 Liberty Link Rice 601 Rice Herbicide tolerance Not determined Third-party testing
_______________________________________________________________________________________________________________________
2006 Liberty Link Rice 604 Rice Herbicide tolerance Not determined Third-party testing
_______________________________________________________________________________________________________________________
2008 Event 32 Corn Insect resistance Under Developer testing
investigation
_______________________________________________________________________________________________________________________
The two most prominent unintended releases, Starlink corn and Liberty Link Rice, resulted in
economic losses to farmers. The release of Starlink was done under a dual use label. Starlink corn
was only approved for use as livestock feed. It got into the U.S. food system. Schmitz, et al.
(2004) estimated that StarLink caused U.S. corn producers to lose between $26 and $290 million in
revenue. Blue (2007) estimated that world-wide losses caused by the accidental release of LL601
GM rice ranged from $741 million to $1.285 billion.
In 2001 a genetically modified (GM) flaxseed developed at the University of Saskatchewan was
taken off the market because of European fears the variety would contaminate other flax produced
in Canada. The last of the 200,000 bushels of Triffid flaxseed, worth at least $2.5 million, was
rounded up from farms across the Prairies and crushed, and the variety was deregistered. On
October 30, 2009 the EU Rapid Alert System for Food and Feed (RASFF) had reported finding
contamination by an unapproved genetically modified flax/linseed variety in cereal and bakery
products in over 30 countries (EC, 10-30-2009).
15
The fears of the Canadian Wheat Board about losing export customers and the coordinated actions
of the wheat industry stakeholders on the issue of GM wheat suggest an air of caution is appropriate
for the U.S. wheat industry towards commercial release of GM wheat , as long as consumers
overseas prefer non-GM wheat. The critical question is whether consumer attitudes will change
before GM wheat becomes a reality.
7.0 Wheat Production
7.1 U.S. Production and Yields
As a part of the investigation of the effects of GM wheat introduction, the US and World wheat
market are reviewed. This review is done to identify the wheat export pools that would be at risk if
GM wheat is introduced. Until its withdrawal I 2004, Monsanto was seeking approval for hard red
spring (HRS) wheat genetically modified with the Roundup Ready® gene. A majority of the hard
red spring wheat is grown in Western Canadian Provinces and the US states including South
Dakota, North Dakota, Montana, Idaho, Washington, Oregon, and California. If GM HRS wheat
were introduced, exports from this region of the U.S. would be at risk. The HRS wheat growing
region overlaps substantially with durum wheat growing areas
3
. Exports of these two classes of
wheat would be at risk given the state of the grain merchandising system. Given the GM testing
and labeling regimes of the EU, Japan, South Korea, and Taiwan, durum wheat exports would also
be at risk for possible contamination and export loss. Exports of the other three classes of wheat —
hard red winter wheat, soft red winter wheat and white wheat – are less at risk if GM HRS wheat is
adopted. This is due to the fact that their growing areas have substantially less growing area
overlap with HRS wheat
4
and their exports go to countries that are less likely to reject GM wheat.
In addition, the export share of soft red winter wheat is low compared to the other classes of wheat.
In this section, wheat acreage and production of the various types of wheat are shown, followed by
US exports of various wheat classes. Lastly, US wheat exports are compared to world wheat
exports. This information will be used in a later section detailing the decline of US wheat sector
competitiveness.
The U.S. is one of the major wheat exporters in the world. The other major wheat exporters are
Canada, Australia, and Black Sea nations that are termed as the “Former Soviet Union.” Figure 1
details total U.S. wheat production and exports.
Since 1960, 40 to 70
percent of U.S. wheat
production has been sold
into the export market. In
2009, the US produced
2.216 billion bushels of
wheat. Wheat production
rose in the 1960’s and
70’s, reaching a peak in
1981. Since that time, US
wheat production and
exports have trended
downward.
Figure 2 details US wheat
production by production
type. Hard red winter wheat is the largest production class, followed hard red spring wheat, soft red
3
White Wheat is grown Montana, Idaho, Washington, Oregon, and Michigan. Durum wheat is grown in South Dakota, North Dakota, and Montana.
4
Hard Red Winter Wheat is grown throughout the Great Plains – from Texas to North Dakota and Washington State. Soft red winter wheat is grown
in the Eastern US – from the Gulf of Mexico to the Great Lakes Region.
Figure 1. US Total Wheat Production and Exports, 1960-
2009 (Source: USDA-ERS)
0
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Production Exports
16
Figure 2. U.S. Wheat Production by Wheat Type, 1984-2009
(source: USDA-ERS)
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(
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HRW
HRS
SRW
White
Durum
Figure 3. U.S. Wheat, Harvested Acres, 1980-2008. (Source:
USDA-NASS)
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20,000
30,000
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60,000
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(
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)
Winter
Spring
Durum
winter wheat, white
wheat, and durum wheat.
The number of acres of
U.S. producing the levels
of wheat shown in Figures
1 and 2 have been
declining over time. In
particular, winter and
spring wheat acres have
declined over time since
1980. Durum wheat acres
have remained steady
(Figure 3). Wheat yields
have gone up over time
particularly in winter and
spring wheat classes.
However, durum wheat
yields have stagnated over
the past 20 years (Figure
4).
Figure 4. U.S. Wheat Yield, 1980-2008. (Source: USDA-
NASS)
15
20
25
30
35
40
45
50
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)
Winter
Spring
Durum
17
7.2 U.S. Exports and Export Shares
U.S. wheat exports have declined over time. Figure 5 shows US wheat exports by wheat class type.
Export markets are highly volatile particularly the HRW export markets. Both HRW and HRS
wheat exports have declined since the 1990/91 marketing year. In 2009, 37 percent of hard red
winter production, 39 percent of hard red spring wheat, 32 percent of spring wheat, 71 percent of
white wheat, and 50 percent of Durum were exported.
Relative to the world
wheat export markets, the
US share of world exports
has gone down. In 1973
the US had 50 percent of
the total world wheat
export market. Since that
time, the US wheat export
share has declined to 19
percent. (Figure 6).
5
It is against this backdrop
that the wheat industry
stakeholders say that the
wheat industry must take
measures to restore
competitiveness. One of
the solutions put forth is
to allow for the
introduction of wheat
with GM traits.
In the next section, wheat
use and exports for the
various classes of wheat
are evaluated to determine
which classes are most at
risk should GM wheat be
introduced.
5
See Appendix Table 3 for world wheat production and exports.
Figure 5. U.S. Wheat Exports by Wheat Type, 1984-2009 (Source:
USDA-ERS)
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(
m
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)
HRW
HRS
SRW
White
Durum
Figure 6. U.S. Export Share of World Wheat Exports, 1960-2009
(Source: USDA-ERS)
0
10
20
30
40
50
60
1
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18
7.3 U.S. Hard Red Spring and Durum Wheat Exports to Japan, Korea,, Taiwan, EU and North
Africa.
The EU, Japan, Korea, Taiwan and North Africa are likely to restrict wheat imports from the US if
HRS wheat is introduced. In addition, since durum wheat is grown in the same areas and marketed
through the same
channels, it, too is at
risk for export loss if
GM HRS wheat is
introduced.
The U.S. Export trends
for these countries are
presented for hard red
spring wheat and durum
wheat types (Figures 7
and 8). HRS wheat
exports to Japan and the
EU have trended up
over time. Exports to
Taiwan, South Korea,
and North Africa have remained stable over time. In 2007/08 U.S. HRS wheat exports to Japan,
South Korea, Taiwan, North Africa, and the EU amounted to 51 percent of total U.S. HRS wheat
exports.
In 2007/08, U.S. durum wheat exports to Japan Taiwan, the EU, and North Africa were 75 percent
of total US durum
exports (Figure 8).
The high export
shares of HRS and
durum wheat to
countries that are
likely to reject or
curtail exports of
GM HRS wheat
place these exports
at risk.
Figur e 7. U.S. Har d Re d Spr ing Wheat Expor ts to Countr ies Likely to Label or
Re ject GM Whe at, 1996-2008. (Sour ce USDA-FAS)
0
10,000
20,000
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40,000
50,000
60,000
70,000
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B
u
s
h
e
l
s
(
0
0
0
)
Japan
South Kor ea
Taiw an
Nor th Afr ica
EU
Figure 8. U.S. Durum Wheat Exports to Countries Likely to Label or Reject GM Wheat,
1996-2008. (Source USDA-FAS)
0
5,000
10,000
15,000
20,000
25,000
30,000
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E
x
p
o
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t
s
(
0
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h
e
l
s
)
Japan
Taiwan
North Africa
EU
19
7.4 U.S. Hard Red Spring and Durum Wheat Exports to Latin America, Oceania (South Pacific),
Asia, and Africa (South and Central)
Lower income countries are more likely to accept GM wheat (Wisner, 2003). Figure 9 presents
U.S. HRS wheat exports to Latin America, Oceania, Asia, and Africa. Of the 4 regions presented in
Figure 9, only HRS wheat exports to Latin America are trending upward. Should HRS wheat
exports be lost to the EU, Japan, Taiwan, North Africa, and Korea due to GM wheat introduction,
the lower income countries could take up the slack. However, export adjustments often take several
years once a shock is introduced in to the world export markets. In 2007/08, HRS exports to the
regions shown in
Figure 9 were 49
percent of total US
HRS wheat exports.
Overall, US HRS
wheat exports are
balanced evenly
between countries
that are likely to
reject GM wheat and
countries that are
more likely to accept
GM wheat.
For Durum wheat,
export shares to
countries that will
likely reject GM
wheat dominate total
U.S. durum wheat
exports. Figure 10
shows durum wheat
exports to Latin
America and Africa.
In 2007/08 U.S.
exports of durum to
Latin America and
Africa were 24
percent of total
durum exports. In
comparison to HRS
wheat, U.S. durum
wheat exports are
more at risk should
GM wheat be
rejected.
Since both HRS and durum wheat exports wold be at risk if the US adopts GM wheat, other sources
of wheat will have to come from somewhere to fulfill the demand for wheat in countries hesitant to
import GM wheat. That source could be the Former Soviet Union.
Figure 9. U.S. Hard Red Spring Wheat Exports to Countries Likely to Accept GM
Wheat, 1996-2008. (Source: USDA-ERS)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
1
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/
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9
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/
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Latin America
South Pacific
Asia
Africa (Central+South)
Figure 10. U.S. Durum Wheat Exports to Countries Likely to Accept GM
Wheat, 1996-2008. (Soruce: USDA-ERS)
0
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30000
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20
7.5 Russian and Former Soviet Union (FSU) Countries – Growth in Export Share
In the last several years, world wheat export shares of Russia and Former Soviet Union (FSU)
countries have been increasing. As pointed out earlier, the US share of world wheat exports has
steadily gone down since the 1960s. Figure 11 shows that the North American wheat export share
of total wheat exports has gone down over time. The world wheat export share of Russia and the
FSU has gone up from 10 percent in 2000 to almost 30 percent in 2008/09. The US has
approximately 60 percent of North American wheat exports.
Russia and the Former Soviet Union countries present a challenge to the US dominance in wheat
exports. If the EU and Japan reject or curtail GM wheat from the U.S., they could go to Russia and
Ukraine to purchase wheat. Given the proximity of Russia and the Former Soviet Union countries
to the EU, it is very likely their exports to the EU could replace US wheat exports. Given the cold
war animosities of the past and the closer political alignment of the EU and Russia/FSU, this is not
beyond the realm of possibilities.
7.6 U.S. Exports At Risk if GM Hard Spring Wheat is Introduced
To identify the export wheat pools at risk should GM HRS wheat be introduced, USDA-FAS data
were used to identify the export destinations for all classes of wheat. Once these risky wheat pools
are defined the level of pooled risky exports are compared to the total production class pool. This
data is then used in the price impact analysis to determine the degree of farm level price risk. For
the 2007/08 crop year, the Appendix Table 1A and 1B details the US exports to all country
destinations in the world for all wheat classes.
Which exports are at risk? Given the regulatory approaches of the various countries in the world
towards GM crops, various exports to certain countries are more at risk than others. Given the
controversies caused by the various unintended GM releases
6
and the export and price responses
that occurred, one can get a good idea of the economic response that may occur if the U.S. approves
GM wheat.
Appendix Table 2 details a list of countries that have some sort of a labeling regime for GM food
ingredients. As of this writing there are 48 countries that have some sort of a labeling regime. This
list was taken from Robert Wisner (personal communication). In addition to the list drafted by
Wisner, more countries were added to the list. As time has passed by, the number of countries
6
Starlink corn - 2000, LibertyLink rice – 2006, Triffid Flax – 2001, 2009.
Figure 11. World Wheat Export Shares of North America and the Former Soviet Union,
1980-2009. (Source: USDA-FAS)
0
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70
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North America Former Soviet Union - 12
21
Figure 12. U.S. Hard Red Spring Wheat Use by Type,
2007/08 Marketing Year. (Source: USDA-ERS)
Domestic
Use
45%
Exports- GM
Labeled
39%
Exports-
Other
16%
considering some form of labeling regulations has increased. Part of this is driven by consumer
sentiment. The other reason is the trend towards greater traceability in certain countries especially
the EU and Japan. This list is used to outline which exports are at risk.
Hard Red Spring Wheat and Durum Wheat – Exports at Risk
Figure 12 details the use share of US HRS wheat in 2007/08. Exports of HRS wheat are 54 percent
of total production. Exports to countries that label GM products or reject GM products are 39% of
US HRS total production.
Figure 13 details the export destinations of US HRS wheat. A majority of the exports go to
countries that label or limit the commerce in GMOs. Only 28 percent of the exports go to
nonlabeling countries. Japan and the EU account for 36 percent of total U.S. exports. Since Japan
and the EU have indicated a willingness to severely curtail HRS GM wheat, these exports are at
risk.
Durum wheat could be most at risk should GM wheat be adopted in the U.S. The growing areas for
HRS wheat and durum wheat overlap. Even if the durum wheat were not GM, the commonality of
growing area and grain merchandising systems with HRS wheat would present a risk. At the least,
GM testing will have to be implemented on U.S. durum wheat exports to satisfy the concern of
foreign buyers.
Figure 13. Shares of US Hard Red Spring Wheat Exports
by Destination, 2007/08. (Source: USDA-ERS)
Japan
19%
EU
17%
South Korea
5%
Other
Labelers
14%
Non Labelers
28%
Philippines
10%
Taiwan
7%
22
A majority of the Durum wheat produced
in the U.S. is consumed domestically. 25
percent of production goes to GM labeled
exports while 8 percent goes to
nonlabeling countries (Figure 14). While
the amount of durum wheat exports
relative to production is small, the
exports predominantly go to countries
that have stringent GM rules or label GM
food products.
51 percent of U.S. durum wheat goes to
the EU and 24 percent goes to North
Africa (Figure 15). These countries have
indicated that they intend to curtail U.S.
purchases of wheat if it contains GM
events. The export patterns shown in
Figure 15 suggest that durum wheat is
more at risk than HRS wheat should GM
wheat be approved in the U.S.
To determine the export loss and price effects from the introduction of GM HRS wheat, export
pools of HRS and durum wheat going to countries that restrict GMOs or have GM labeling rules
were identified. This analysis was done for the 2007/08 marketing year. This analysis tested two
likely scenarios that could occur if the U.S. introduces GM HRS wheat first in the world.
Scenario I was completed assuming that only the EU and Japan shut down U.S. imports and the rest
of the world remains indifferent to GM wheat. Scenario II assumes that the EU and Japan shut
down U.S. imports and 40 percent of the exports to other labeling countries were shut down. The
wheat in the exports that would be lost after GM introduction is assumed to be priced as feed wheat.
Feed wheat is priced close to corn because it is a close substitute. The analysis assumes the use of
demand elasticities of -0.3 and -0.2 for the HRS and durum wheats, respectively.
If export wheat could not be devoted to feed wheat use, these elasticities mean that export
shutdowns would generate severe shocks to the system that would result in low prices. However, if
lost-export wheat is devoted to feed wheat, export losses generate negative price effects tied to the
price of corn. This ultimately buffers, or sets a floor under, the price shock. In 2007/08 the price of
HRS and durum wheat were $7.16 and $9.92 per bushel/respectively. The price of corn was $4.20
per bushel in 2007/08. The price difference between HRS wheat and durum wheat and corn was
$2.96 and $5.72, respectively.
Table 3 highlights the export and price impacts that would be caused by GM wheat introduction. In
Scenario I, in which the EU and Japan totally shut down imports of U.S. wheat, the export loss is
106 million bushels. This amount is 35.36 percent of total US exports of HRS wheat. In Scenario I
the 106 million bushel export loss would result in a 41 percent price drop. Scenario II generates a
149 million bushel loss which would amount to a 49 percent export loss.
Figure 15. Shares of U.S. Durum Wheat Exports by
Destination, 2007/08. (Source: USDA-ERS)
EU
51%
North Africa
24%
Other
labelers
0%
Non labeler
25%
Figure 14. U.S. Durum Wheat Use by Type, 2007/08
Marketing Year. (Source: USDA-ERS)
Domestic
Use
67%
Exports- GM
Labeled
25%
Exports-
Other
8%
23
Table 3. Export losses in the U.S. HRS wheat sector caused by GM HRS introduction.
----------------------------------------------------------------------------------------------------------------------------
Hard Red Percent of 2007/08 Percent of 2007/08 Estimated Farm
Spring Export Loss US HRS US HRS, Price Impact on
Wheat (Million Bu.) Exports Lost Demand Lost HRS Wheat (%)
----------------------------------------------------------------------------------------------------------------------------
Scenario I 106 35.36 19.49 -41.34
Scenario II 149 49.79 27.44 -41.34
----------------------------------------------------------------------------------------------------------------------------
Table 4. Export losses in the U.S. durum wheat sector caused by GM HRS introduction.
----------------------------------------------------------------------------------------------------------------------------
Durum Percent of 2007/08 Percent of 2007/08 Estimated Farm
Wheat Export Loss US Durum US Durum Price Impact on
(Million Bu.) Exports Lost Demand Lost Durum Wheat (%)
----------------------------------------------------------------------------------------------------------------------------
Scenario I 20 50.62 16.66 -57.66
Scenario II 24 60.46 19.89 -57.66
----------------------------------------------------------------------------------------------------------------------------
Table 4 shows the impact of export losses on durum wheat prices. For durum wheat, export losses
arising from the introduction of GM wheat have a much greater impact on total exports compared to
HRS wheat. In Scenario I, 50 percent of the durum wheat exports are lost if the EU and Japan shut
down U.S. exports. The price is estimated to drop 57 percent. The reason that price impacts are
larger for durum wheat is because most of the durum wheat goes to countries that are likely to reject
GM wheat.
The price impacts shown in this analysis are higher than shown in Wisner’s 2003 report for several
reasons. From the time Wisner (2003) performed his analysis until 2008, grain prices have
exhibited a dramatic rise. Wheat prices in the 2007/08 crop year reached a peak never before seen.
Wheat prices went up relatively higher than corn prices. In this high price environment the price
shocks will be larger.
7.7 U.S. Use and Export Shares of Hard Red Winter Wheat, Soft red Winter Wheat and White
Wheat.
Hard red winter wheat, soft red winter wheat and white wheat are less at risk for export loss
compared to hard red spring wheat and durum wheat. Hard red winter wheat is grown in the Great
Plains and soft red winter wheat is grown in the Eastern U.S. These two classes of wheat are grown
in areas that have little overlap with the hard red spring wheat growing region.
Hard red winter wheat is the largest class of wheat produced in the U.S. 53 percent of U.S. HRW
wheat production is exported. Only
22 percent of total HRW production
is exported to countries that label or
restrict GM wheat (Figure 16).
Figure 16. U.S. Hard Red Winter Wheat Use by Type,
2007/08 Marketing Year (Source: USDA-ERS)
Domestic
Use
47%
Exports- GM
Labeled
22%
Exports-
Other
31%
24
50 percent of U.S. HRW exports
go to countries that label or restrict
GM wheat. However, the countries
most noted for severely restricting
GM products – EU, Japan, Korea,
Taiwan, and North Africa –
comprise only a small proportion
of HRW wheat exports. (Figure
17).
Soft red winter wheat is grown in the
Eastern US and as such would not be at as
great a risk for export losses should GM
wheat be introduced. 36 percent of SRW
wheat production goes to exports to GM
labeling countries (Figure 18).
Most the exports of SRW in 2007/08 went
to Egypt (Figure 19). Since very little
goes to the EU and Japan, there is little
risk of export loss if GM wheat is
approved. However, if GM SRW wheat
were to be introduced in the future, this
could impact SRW exports.
Most the exports of SRW in 2007/08 went
to Egypt (Figure 19). Since very little goes
to the EU and Japan, there is little risk of
export loss if GM wheat is approved.
However, if GM SRW wheat
were to be introduced in the future, this
could impact SRW exports.
White wheat is grown in the Northwest U.S.
51 percent of white wheat production goes
for export to GM labeling countries (Figure
20). Of the total white wheat exports, 19
percent goes to Japan, and 17 percent goes
to South Korea. These two countries are the
sources of export risk if GM wheat is
approved (Figure 21).
Figure 17. Shares of U.S. Hard Red Winter Wheat Exports, 2007/08,
(Source: USDA-ERS).
Other Labellers
26%
North Africa
9%
Non Labellers
50%
Japan
7%
Taiwan
2%
Korea, Republic
3%
EU
3%
Figure 18. U.S. Soft Red Winter Wheat Use by Type,
2007/08 Marketing Year (Source: USDA-ERS).
Domestic
Use
50%
Exports-
GM
Labeled
36%
Exports-
Other
14%
Figure 20. U.S. White Wheat Use by Type, 2007/08
Marketing Year, (Source: USDA-ERS).
Domestic
Use
30%
Exports-
GM
Labeled
51%
Exports-
Other
19%
Figure 19. Shares of U.S. Soft Red Winter Wheat
Exports by Destination, 2007/08, (Source: USDA-
ERS).
Labellers
19%
Egypt
53%
Non
Labellers
28%
25
7.8 Trends in US wheat Acres and Wheat Competitiveness vs Corn and Beans
As mentioned in the introduction, many wheat industry stakeholders are concerned that the wheat
sector has been losing its competitiveness. The acreage devoted to wheat has been declining since
1980 (Figure 22). As shown
in the previous section,
Ukraine and Russia have
emerged as new competitors
in the wheat market. Many
reasons have been cited for
this decline: 1) farmer
retirement of large portions
of land under USDA’s
Acreage Reduction Program,
2) planting flexibility
provisions introduced in the
1996 Farm Act, 3) farmer
enrollment of land in the
USDA Conservation Reserve
Program, 4) changes in crop
rotations, which lengthened the rotation cycle from two to three years, and 5) biofuel mandates
enacted in the U.S. All these factors favored planting of corn and soybeans in place of wheat (Ali
and Vocke).
Figure 23 shows that total
crop acres devoted to wheat
have been declining while
the acres devoted to corn and
soybeans has been
increasing. In a conversation
with a Kansas State
Cooperative Extension
Agent, reasons were put
forth for the decline of wheat
acres. Besides the reasons
listed at the beginning of this
section, the decline in wheat
acres can be explained in a
macroeconomic sense. In
the international market
North America has remained
Figure 22. U.S. Wheat, Harvested Acres, 1980-2008. (Source:
USDA-NASS)
0
10,000
20,000
30,000
40,000
50,000
60,000
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c
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(
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Winter
Spring
Durum
Figure 23. Wheat, Corn, and Soybean Shares of Total Crop Acres Harvested
in the US, 1980-2008. (Source USDA-NASS)
0
5
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15
20
25
30
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o
f
T
o
t
a
l
C
r
o
p
A
c
r
e
s
Winter Wheat %
Spring Wheat %
Durum Wheat %
Corn %
Soybean %
Figure 21. Shares of U.S. White Wheat Exports, 2007/08,
(Source: USDA-ERS).
Japan
19%
South
Korea
17%
Other
Labellers
16%
Non
Labellers
29%
Taiwan
3%
Philippines
16%
EU
0%
26
as the dominant supplier of corn and soybeans. In the wheat market the U.S. has a much less
comparative advantage in wheat production because there are several major export competitors.
Many in the wheat industry have attributed the loss of wheat acres to corn and soybeans partly to
strong genetic improvements in corn and soybeans, and a slower pace of genetic improvement for
wheat than for corn and soybeans. The reasons cited for this are: 1) genetic complexity and 2)
lower returns to seed companies on investment for breeding wheat. To address this perceived lag,
the wheat industry summits from 2006 to 2009 have put forth the idea that GM wheat is needed as
one of the many tools to restore wheat competitiveness. The introduction of a GM wheat variety
will not in and of itself restore competitiveness to the wheat sector. The fact that GM wheat is not
approved anywhere in the world indicates that U.S. farmers are not at a competitive disadvantage in
terms of wheat genetics. Furtan et al. (2005) make the case that introducing GM wheat in U.S. and
Canada without an affordable segregation system does not confer first mover advantages to the
early adopters of GM wheat. The main reason cited for this result is that major foreign customers
do not want GM wheat. Given the foreign consumer concerns for GM wheat, other methods should
be used to improve wheat genetics and cultural practices. The next section details the biotech
development of wheat and some of the breeding techniques that can boost wheat yields using non-
transgenic techniques.
8.0 Biotech Development of Wheat
Research and development of GM traits in wheat has grown since the early 1990s. Currently, the
only GM wheat that has been close to ready for commercial release is the Roundup Ready® hard
red spring wheat from Monsanto. Many in the wheat industry who opposed Roundup Ready®
wheat, stress that other GM and non-GM traits should be developed that have more end-user
benefit. The Canadian Wheat Board in its public pronouncements on wheat breeding efforts stated
they wanted to see traits that had a greater benefit than Roundup Ready® wheat, such as resistance
to fusarium disease or improved yield and quality. Breeding wheat turned out to be more difficult
than for other crops.
The genetic development of wheat has lagged that found in corn and soybeans for several reasons:
1) wheat genetics are more complex, 2) wheat is a smaller volume crop compared to corn and
soybeans, and 3) competition among exporters is more intense and compounded by radically
different marketing systems (Wilson et al., 2003). The wheat genome is 10 to 20 times larger than
other crop genomes. As a consequence, improving wheat genetics has been more costly and time
consuming.
In general, plants can be changed genetically by 1) transformation, 2) plant breeding selections
based on phenotypic selection, and 3) the use of DNA markers. The process of transformation
involves introducing genes via a vector into the plant. Currently, foreign genes are introduced into
the crop plant using a fungal pathogen such as agrobacterium tumefaciens.
7
Traditional plant
breeding has relied on visual selection of phenotypes and data analysis of morphological
characteristics of the crop plant. Marker assisted selection (MAS) is a relatively new selection
technique that relies on DNA markers. The use of DNA markers allows plant breeders to change
the genome using what is already known about the chromosomes through the gene mapping
process.
As the plant breeding industry goes forward, MAS will become a more important component of
changing genetics. At this time, MAS has had a small impact on variety development, however,
there is optimism that it will be widely adopted in many plant breeding programs (Collard and
Mackill, 2008). Collard and Mackill (2008) discuss in great detail how MAS can be utilized to its
fullest potential. Three factors were discussed as to how this will happen: 1) greater integration into
breeding programs, 2) that current barriers be understood and appropriate solutions developed, and
7
Seehttp://www.bio.davidson.edu/people/kabernd/seminar/2002/method/dsmeth/ds.htm for a description of
agrobacterium tumefaciens mediated gene transfer.
27
3) overcoming the high cost of MAS for certain crop species and developing countries.
Moose and Mumm (2008) discuss the institutional adoption of MAS. Despite the fact that
molecular breeding is an essential component of crop improvements by large companies, the
applicability of the molecular approach remains a source of debate among some plant breeders in
the public sector. Moose and Mumm stress that the grand challenges are identifying gene
combinations that lead to crop improvement and integrating the various disciplines in the plant
breeding area.
In wheat breeding, herbicide tolerance is the main trait under development, followed by product
quality, fusarium resistance, and others. In 2004, Syngenta was developing a GM wheat resistant
to fusarium, a fungus which damages crops and produces dangerous toxins. In 2006 Syngenta was
still working on GM wheat (Food-Navigator.com, 2006). In 2009, however, Syngenta’s chief
executive Michael Mack said that Syngenta was not pursuing GM wheat because of GM consumer
resistance (Reuters, 2-26-2009). In 2002, Dupont pulled out of hybrid wheat development because
the return on investment was not in line with the investments made by Dupont (GENET 3-23-
2002).
In addition to GM wheat development efforts, there are efforts to improve wheat varieties through
non-GM breeding. Most notable is BASF’s Clearfield HRS wheat which was created through
mutagenesis. This wheat has been developed to be resistant to BASF’s Beyond herbicide.
8
Many wheat breeding efforts are currently underway that do not use GM technologies. Jianming
Yu and Rex Bernado at Kansas State University are developing marker assisted selection to
accelerate classical plant breeding techniques (Bernardo and Yu, 2007). Their work focuses on
corn, sorghum, wheat and barley. Other non-GM efforts are focusing on the Ug99 stem rust
(Borlaug Global Rust Initiative, 2009), frost-resistant wheat (USDA-CSREES, 2009), and salt-
resistant wheat (Countryman, 2004).
9.0 Organic Segregation from GM wheat
If GM wheat is approved by the US and Canada, what will happen to organic wheat production?
This question has many facets that must be addressed. No one can say for sure what will happen to
organic wheat production if GM wheat is introduced. However, one can look at what happened to
organic canola production in Canada when GM Canola was introduced. Organic canola production
was always a niche market. Today, organic canola production in Canada is almost nonexistent. The
main reason is that GM events have permeated all canola varieties, even pedigreed seed lines.
A number of studies show that the pedigreed oilseed rapeseed supply is deeply contaminated with
GM events. Researchers at the University of Manitoba conducted a survey of 27 pedigree seed lots
of oilseed rape in 2002 (Friesen et al., 2003). Of the 27 seed lots, 14 had contamination levels
above 0.25% and three seed lots had glyphosate resistance contamination levels in excess of 2.0%.
Oilseed rape breeder Keith Downey suspected that, “There are varieties of certified seed out there,
in which part of the level of contamination was coming right from the breeders’ seed.” (Organic
Agriculture Protection Fund, 2002) Walter Fehr, an agronomist and director of the Office of
Biotechnology at Iowa State University, said that the same was true of other crops, such as
soybeans and maize (Charman, 2003). If the breeder seed supply is contaminated, then the whole
system is contaminated, and it will be hard to find any fields that can be considered GM free.
Another report suggested that even Canadian wheat (the GM version of which has not yet been
approved) may be contaminated, since researchers were testing Roundup Ready® wheat at a
national experimental station alongside plots of wheat destined for commercial seed growers
(Zakreski, 2002). The extent of the penetration of contaminated seed into the canola seed supply is
now so deep that segregating GM from non-GM seed will not help at this point
(http://www.grain.org/front/).
8
See: BASF athttp://agproducts.basf.us/products/beyond-herbicide.html
28
10.0 Summary
This report reviews the U.S. and world wheat industry to evaluate the impact of a possible
introduction of Roundup Ready® hard red spring (HRS) wheat in the U.S. Recently, major
stakeholders of the wheat industry have agreed to support development of GM wheat. The
economic impacts of introducing GM wheat in the U.S. are dependent on foreign consumer
sentiment. A review of the EU, Japanese, Korean, and Taiwanese consumers suggests they will
likely reject GM wheat products or pay substantially less for them. Consumer sentiment against
GMOs is strongest in the EU and Japan. EU regulations dictate strict labeling and traceability
policies for all products sold in the EU.
Identity preserved (IP) systems have been proposed as a way to segregate GM and non-GM wheat
if the U.S. introduces GM wheat. IP costs for such systems are 3 to 6 cents per bushel. At the
current time IP systems analyses have not incorporated liability costs and other associated costs
arising from IP systems failures.
U.S. wheat acres and world export shares have gone down since 1960. Trends in U.S. wheat
exports indicate that HRS and durum wheat are most “at risk” of export loss if the U.S. approves
Roundup Ready® wheat. Exports to Japan and the EU would likely be curtailed because of foreign
consumer concerns. The combined EU and Japanese export losses would likely be 35 and 50
percent for HRS and durum wheat, respectively. In addition, the corresponding price drop will be
41 and 57 percent for HRS and durum wheat, respectively. If more countries in addition to the EU
and Japan curtail their purchases of HRS and durum wheat, the U.S. export declines would be even
higher. The routing of lost export wheat into feed wheat markets will limit the price drops to the
price level of the corn market.
If the U.S. loses its HRS and durum wheat export markets due to GM wheat introduction, Russia
and the Former Soviet Union would likely make up the difference – as indicated by their growing
world wheat export market share.
A review of the wheat breeding literature suggests that in addition to the traditional plant breeding
and GM transformation techniques, marker assisted selection (MAS) is being used to generate non-
GM trait development in wheat. Non-GM trait development has recently focused on rust, drought,
and salt resistant wheat varieties. In addition, mutagenesis has been used to create a non-GM
herbicide resistant wheat that is commercially sold.
Depending on the trends for labeling and changing consumer sentiment, there is a mixed outlook
for the marketing of GM wheat. Currently there are no commercial GM wheat varieties grown in
the world. Some promote GM technology as one of the tools that can reverse the decline in the
competitiveness of the wheat sector. However, the concerns of major foreign consumers about GM
wheat and the lack of an affordable identity preserved segregation make the introduction of GM at
the current time a risky proposition.
29
References
U.S. Wheat Associates. May 14, 2009. Wheat Biotechnology Commercialization: Statement of Canadian, American
and Australian Wheat Organizationshttp://www.uswheat.org/whatWeDo/tradePolicy/biotech/doc/6CCAA47683A286EC85257651005275E5?Open
Document#
Reuters, May 15, 2009. Canadian Wheat Board cautious about GM wheat.http://www.reuters.com/article/idUSTRE54E59X20090515
Reuters, March 17, 2000. Australia's global markets shun GM wheat.
Australian Wheat Board, June 2007. AWB Policy. The Application of Biotechnologyhttp://www.awb.com.au/aboutawb/biotechnology/biotechnology/
“The Biotech Case for Wheat” National Association of Wheat Growers. September 17, 2009.
Ogg, A.G. and P.J. Jackson. 2001. Agronomic benefits and concerns for Roundup-Ready wheat. Proceedings of the
Western Society of Weed Science annual meeting. Pages 80-90.
Van Acker, R.C., A.L. Brûlé-Babel, and L.F. Friesen. 2003. An environmental risk assessment of Roundup Ready
wheat: Risks for direct seeding systems in western Canada. Report prepared for the Canadian Wheat Board,
Winnipeg, MB, Canada. 33 pp.http://www.cwb.ca/en/topics/biotechnology/report/index.jsp Accessed Sept. 19, 2003.
Reuters 6-1-2009. Farm groups counter call for GMO wheathttp://www.reuters.com/article/marketsNews/idUSN0147935920090601
Wisner, Robert, 2003. “Market Risks of Genetically Modified Wheat.” Western Organization of Resource Councils.
October 30, 2003.
Wisner, Robert, 2006. “Potential Market Impacts from Commercializing Round-Up Ready
Wheat - September 2006
Update.” Western Organization of Resource Councils. September 2006.
Gillam, C. (2002, October 9). Asian opposition to biotech spring wheat steadfast. Reuters
James, C. 2008. Global Status of Commercialized Biotech/GM Crops: 2008
The First Thirteen Years, 1996 to 2008. ISAAA Brief No. 39. ISAAA: Ithaca, NY.
Zechendorf, B. 1998. Agricultural biotechnology: Why do Europeans have difficulty accepting it? AgBioForum, 1(1):
8-13.http://www.agbioforum.org.
Kogan, L. A. 2005. Precautionary Preference – How Europe’s New Regulatory Protectionism Imperils American Free
Enterprise. Institute for Trade, Standards, and Sustainable Development, Inc. July 2005. Princeton, NJ.
www.itssd.org
Anderson, K., R. Damania, and L.A. Jackson. 2004. Trade, Standards, and the Political Economy of Genetically
Modified Food. World Bank Policy Research Working Paper 3395, September 2004.
Eurobarometer 2002. Europeans and Biotechnology in 2002. Eurobarometer 58.0. European Commission, March
2006.http://ec.europa.eu/public_opinion/archives/ebs/ebs_177_en.pdf
Eurobarometer 2005. Europeans and Biotechnology in 2005: Patterns and Trends. Eurobarometer 64.3. European
Commission, May 2006.http://ec.europa.eu/research/press/2006/pdf/pr1906_eb_64_3_final_report-
may2006_en.pdf
Eurobarometer, 2007. SPECIAL EUROBAROMETER N°295 “Attitudes of European citizens towards the
environment” European Commission, March 2008.http://ec.europa.eu/public_opinion/archives/ebs/ebs_295_en.pdf
MPHPT 2002, Ministry of Public Management, Home Affairs, Posts and Telecommunications. Japan,
McCluskey, Jill J., Hiromi Ouchi, Kristine M. Grimsrud, and Thomas I. Wahl. "Consumer Response to Genetically
Modified Food Products in Japan. Agricultural & Resource Economics Review 32(2)(2003):321-333.
MAFF 2003, Ministry of Agriculture, Forestry and Fisheries of Japan, Over 60% of Consumers Reject GM Foods on
30
Safety Fears, Japan Economic Newswire, TOKYO, July 22, 2003.
PEW 2003, Broad Opposition to Genetically Modified Foods - Modest Transatlantic Gap, The Pew Research Center for
the People and the Press, June 20, 2003, Retrieved October 17, 2007 fromhttp://people-
press.org/commentary/display.php3?AnalysisID=66
USDA-FAS. 2005. Republic of Korea Biotechnology Agricultural Biotechnology Report. 2005 USDA Foreign
Agricultural Service GAIN Report. Date: 7/15/2005 GAIN Report Number: KS5035
Korea BCH, 2008. Korea Biosafety Clearing House. Korea BCH’s 2008 Awareness Survey.http://bch.biodiv.org/news/info.shtml?postid=49430
Chern, Wen S. and Kyrre Rickertsen. 2002. Consumer Acceptance of GMO:
Survey Results from Japan, Norway, Taiwan, and the United States. Department of Agricultural, Environmental and
Development Economics. The Ohio State University
Working Paper: AEDE-WP-0026-02.
The China Post, October 28, 2009. “COA chief vows no imports of genetically modified rice.” By S.M. Yang and Flor
Wang, CNAhttp://www.chinapost.com.tw/health/other/2009/10/28/230522/COA-chief.htm
DIRECTIVE 90/220/EEC of 23 April 1990 on the deliberate release into the environment of genetically modified
organisms. BELGIAN BIOSAFETY SERVERhttp://www.biosafety.be/GB/Dir.Eur.GB/Del.Rel./90.220/TC.html
Directive 2001/18/EC of the European Parliament and of the Council of 12 March 2001 on the deliberate release into
the environment of genetically modified organisms and repealing Council Directive 90/220/EEC.http://europa.eu/legislation_summaries/agriculture/food/l28130_en.htm
Regulation 1829/2003 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
of 22 September 2003 on genetically modified food and feedhttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:268:0001:0023:EN
DF
Regulation 1830/2003/EC concerning the traceability and labeling of genetically modified organisms and the
traceability of food and feed products produced from genetically modified organisms and amending Directive
2001/18/EC
DIRECTIVE 2008/27/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 11 March 2008
amending Directive 2001/18/EC on the deliberate release into the environment of genetically modified
organisms, as regards the implementing powers conferred on the Commissionhttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:081:0045:0047:ENDF
Wilson, William W. and Bruce L. Dahl. 2002. Costs and Risks of Testing and Segregating GM Wheat. Agribusiness &
Applied Economics Report No. 501. Department of Agribusiness and Applied Economics. Agricultural
Experiment Station. North Dakota State University Fargo, North Dakota 58105-5636
Boland, Michael. 2003. Cargill: Biotechnology and Value Creation in Wheat. International Food and Agribusiness
Management Review. 6(3): 1-18
Vachal, Kimberly and Heidi Reichert. 2001. U.S. Containerized Grain and Oilseed Exports Industry Profile: Phase I.
MPC Report No. 02-132. Mountain-Plains Consortium.http://www.mountain-plains.org/pubs/pdf/MPC02-132.pdf
Reichert, Heidi, and Kimberly Vachal. 2003. IDENTITY PRESERVED GRAIN – LOGISTICAL
OVERVIEW. Symposium presented at: “Product Differentiation and Market Segmentation in Grains and
Oilseeds: Implications for Industry in Transition” Economic Research Service, USDA
And The Farm Foundation. Washington, DC January 27-28, 2003
Huygen, I., Veeman, M., & Lerohl, M. (2004). Cost implications of alternative GM tolerance levels: Non-genetically
modified wheat in western Canada. AgBioForum, 6(4), 169-177.http://www.agbioforum.org/v6n4/v6n4a04-
veeman.htm
Furtan, W.H., R. S. Gray, and J.J. Holzman. 2005. Regulatory Approval Decisions in the Presence of Market
Externalities: The Case of Genetically Modified Wheat. Journal of agricultural and Resoruce Economics
30(1): 12-27.
31
Smyth, S, Phillips, P W B 2001, ‘Competitors Co-operating: Establishing a Supply Chain to Manage Genetically
Modified Canola’, International Food and Agribusiness Management Review, vol. 4, pp. 51-66.
USDA, Grain Inspection, Packers and Stockyards Administration, “Continued Issuance of GIPSA ‘No transgenic
wheat’ Letterhead Statement”, Discussion Paper, Washington, D.C. , March 20, 2003.
Wilson, W.W., Janzen, E.L., & Dahl, B.L. (2003). Issues in development and adoption of genetically modified (GM)
wheats. AgBioForum, 6(3), 101-112. Available on the World Wide Web:http://www.agbioforum.org.
US Wheat Associates Aug. 28, 2002. Press release. European and American Millers Tell U.S. Wheat Associates Board
to Go Slow on GM Wheat.
Western Canadian Wheat Growers - September 15, 2009. "Toward Commercialization of Biotech Wheat”http://www.wheatgrowers.ca/pdf/Presentations/Rutter CNMA slides (2).pdf
GAO, 2008. GENETICALLY ENGINEERED CROPS. United States Government Accountability Office. Report to
the Committee on Agriculture, Nutrition, and Forestry, U.S. Senate. November 2008.
Schmitz, Troy, Andrew Schmitz and Charles B Moss. No 20306, 2004 Annual meeting, August 1-4, Denver, CO from
American Agricultural Economics Association
Blue, E. Neal. 2007. Risky Business. Greenpeace report, November 6, 2007. ISBN: JN 087
EC, 10-30-2009. Detection of flax CDC Triffid (FP967)http://gmo-crl.jrc.ec.europa.eu/flax.htm
Ali, Mir, and Gary Vocke. 2009. Consequences of Higher Input Costs and Wheat Prices for U.S. Wheat Producers.
Economic Research Service - USDA Report: WHS-09c-01 March 2009
Collard, Bertrand C. Y., and David J. Mackill, 2008. Marker-assisted selection: an approach for precision plant
breeding in the twenty-first century.” Philisophical Transactions of the Royal Society B (2008) vol. 363 no.
1491, pp 557-572.
Moose, Stephen P., and Rita H. Mumm, 2008. “Molecular Plant Breeding as the Foundation for 21
st
Century Crop
Improvement.” Plant Physiology, July 2008, Vol. 147, pp. 969–977.
Food-Navigator.com. 2006. Syngenta moves closer to launching GM wheat Lorraine Heller, 15-Mar-2006.http://www.foodnavigator.com/Financial-Industry/Syngenta-moves-closer-to-launching-GM-wheat
Reuters February 26, 2009. Syngenta not actively pursuing biotech wheat: CEO. K.T. Arasuhttp://www.reuters.com/article/idUSTRE51P6HO20090226
GENET 3-23-2002. Du Pont ditches hybrid wheats Source: Farmers Weekly, 22 March 2002 By Charles Abel. Cited in
GENET.http://www.gene.ch/gentech/2002/Mar/msg00125.html
Bernardo, Rex and Jianming Yu. 2007. “Prospects for Genomewide Selection for Quantitative Traits in Maize.” Crop
Sci 47:1082-1090
Borlaug Global Rust Initiative. 2009. Significant progress in developing non-GE wheat resistance against Ug99 stem
rust.http://www.gene.ch/genet/2009/Mar/msg00108.html
USDA-CSREES. 2009. Researchers Identify Gene to Improve Wheat Frost Tolerance. February 9, 2009.http://www.csrees.usda.gov/newsroom/impact/2009/nri/02091_wheat_frost.html
Countryman, 2004. Salt-tolerant wheats yield double SOURCE: Countryman, Australia, by Lara Ladyman, 29 Jul
2004.http://www.gene.ch/genet/2004/Aug/msg00004.html
Friesen, L F, Nelson, A G & Van Acker, R C 2003, ‘Evidence of contamination of pedigreed canola (B. napus)
seedlots in Western Canada with genetically engineered herbicide resistance traits’, Agronomy Journal, vol.
95, pp. 1342-1347.
Organic Agriculture Protection Fund 2002, Organic farmers gain key piece of evidence in class action, June 26, 2002,
Retrieved September 10, 2007 fromhttp://www.cropchoice.com/leadstry0f8a.html?recid=759
Charman, Karen 2003, ‘Seeds of Domination: Don't want GMOs in your food? It may already be too late’, In These
Times, February 10, 2003, Retrieved October 1, 2007 fromhttp://www.inthesetimes.com/article/549/
32
Zakreski, Dan 2002, Secret GM wheat test raises contamination fears, CBC Saskatchewan, March 24, 2002Retrieved
September 10, 2007 fromhttp://sask.cbc.ca/template/servlet/View?filename=gmwheat030324
Grain.org April 2003, Contaminating Canada’s Seed Supply, Retrieved August 27, 2007 fromhttp://www.grain.org/seedling/?id=230
USDA, NASS, Planted Acreage, June 28, 2002, Cr-Pr 2-5, (6-02), Washington, D.C., June 28, 2002.
USDA, ERS, Wheat Data: Yearbook Tables Updates of this data can be found at:http://www.ers.usda.gov/data/wheat/
USDA, FAS. PSD Market and Trade Data Query. Foreign Agricultural Service.http://www.fas.usda.gov/psdonline/psdQuery.aspx
33
Appendix Table 1A. US Wheat Export Destinations.
Hard Red Winter Hard Red Winter Hard Red Spring Hard Red Spring
Afghanistan Korea, Republic Japan Honduras
Algeria Madagascar Spain Tanzania
Bangladesh Malawi Italy Trinidad
Bolivia Malaysia Belgium Bangladesh
Brazil Mauritania United Kingdom Sudan
Chile Mauritius Portugal Vietnam
China Mexico Netherlands Barbados
Colombia Morocco Malta Saint Vincent
Congo (Braz) Mozambique Sweden Cuba
Congo (Kins) Namibia Iceland Tunisia
Costa Rica Nicaragua Korea, Republic United Arab Emirates
Cuba Nigeria Taiwan Guatemala
Djibouti Other West Africa Philippines Ghana
Dominican Republic Panama Mexico Singapore
Ecuador Peru Thailand Cameroon
Egypt Philippines Malaysia Senegal
El Salvador Rep. of South Africa Rep. of South Africa Belize
Ethiopia Saint Vincent Sri Lanka Somalia
Ghana Senegal China, Mainland Chile
Greece Sierra Leone Indonesia Mauritius
Guatemala Somalia Peru Namibia
Guinea Sri Lanka Ecuador Liberia
Haiti Suriname Venezuela Iraq
Honduras Taiwan Colombia
Indonesia Thailand El Salvador
Iraq Trinidad Dominican Republic
Ireland Uganda Morocco
Israel United Arab Emirates Nigeria
Ivory Coast Vanuatu Costa Rica
Jamaica Venezuela Jamaica
Japan Vietnam Panama
Kenya Yemen Nicaragua
34
Appendix Table 1B. US Wheat Export Destinations.
Soft Red Winter White Durum
Japan Japan Italy
Spain Finland Portugal
Italy Belgium Netherlands
Philippines Philippines Switzerland
China, Taiwan China, Taiwan Spain
Korea, Republic China, Taiwan Germany
Egypt Korea, Republic United Kingdom
Mexico Korea, Republic Tunisia
Brazil Thailand Algeria
Peru Sri Lanka Morocco
Ecuador Malaysia Mexico
Rep. of South Africa Mexico Venezuela
Sri Lanka China, Mainland Nigeria
Malaysia Mexico Costa Rica
Indonesia Indonesia United Arab Emirates
Nigeria Egypt Cuba
Colombia Yemen Guatemala
Morocco Yemen Dominican Republic
Chile Pakistan Panama
Venezuela El Salvador
Jamaica Bangladesh
Dominican Republic Singapore
Honduras Afghanistan
Costa Rica Chile
Turkey Ecuador
El Salvador United Arab Emirates
Trinidad Vietnam
Guatemala Vietnam
Panama Peru
Nicaragua Hong Kong
United Arab Emirates China, PR
Mozambique Colombia
Congo (Kins) Eritrea
Belize Ethiopia
Vietnam Ghana
Barbados Guatemala
Congo (Braz) Iraq
Senegal Korea, North
Saint Vincent Mauritania
Pakistan Russia
Mauritania Sudan
Turkey
Uruguay
Uzbekistan
Venezuela
Chad
All other countries
Former Soviet Union
New Zealand
35
Appendix Table 2. Countries Requiring GMO Labeling
-----------------------------------------------------------------------------------------------------
EU – 27
Austria Belgium Bulgaria Cyprus Czech Republic
Denmark Estonia Finland France Germany
Greece Hungary Ireland Italy Latvia
Lithuania Luxembourg Malta Netherlands Poland
Portugal Romania Slovakia Slovenia Spain
Sweden United Kingdom
-----------------------------------------------------------------------------------------------------
Other countries
Switzerland Paraguay Sri Lanka Australia New Zealand
China Thailand Taiwan Philippines South Korea
Japan Mexico Russia Ethiopia South Africa
Malaysia Ecuador Peru Indonesia Eqypt
Brazil
-----------------------------------------------------------------------------------------------------
36
Appendix Table 3. World and U.S. wheat production, exports and ending stocks
Mkt year
/1
World
production
(million
bushels)
U.S.
production
(million
bushels)
U.S. share
(percent)
World
exports
(million
bushels)
U.S.
exports
(million
bushels)
U.S.
share
(percent)
World ending
stocks (million
bushels)
U.S. ending
stocks (million
bushels)
U.S. share
(percent)
1960 8,577.856 1,354.998 15.80 1,611.469 654.001 40.58 3,044.180 1,502.009 49.34
1961 8,085.417 1,233.009 15.25 1,725.080 715.988 41.50 2,566.548 1,420.990 55.37
1962 9,067.613 1,091.986 12.04 1,698.551 649.004 38.21 2,786.863 1,270.010 45.57
1963 8,465.273 1,146.992 13.55 2,140.872 845.987 39.52 2,584.075 993.991 38.47
1964 9,733.813 1,282.980 13.18 2,016.091 723.006 35.86 2,883.610 921.018 31.94
1965 9,528.085 1,282.980 13.47 2,243.791 852.013 37.97 2,231.593 659.991 29.57
1966 11,047.033 1,314.984 11.90 2,145.980 770.993 35.93 3,219.557 513.016 15.93
1967 10,727.253 1,507.007 14.05 1,967.662 765.004 38.88 3,588.538 630.008 17.56
1968 11,896.658 1,557.015 13.09 1,847.033 543.991 29.45 4,457.416 904.006 20.28
1969 11,170.860 1,442.999 12.92 2,050.924 603.001 29.40 3,804.554 982.968 25.84
1970 11,263.086 1,351.985 12.00 2,075.248 741.010 35.71 2,958.934 822.986 27.81
1971 12,644.209 1,618.634 12.80 2,059.852 599.327 29.10 3,279.156 984.989 30.04
1972 12,400.488 1,546.212 12.47 2,381.029 1,116.347 46.89 2,753.133 597.012 21.68
1973 13,450.733 1,710.787 12.72 2,420.198 1,216.952 50.28 3,037.492 339.990 11.19
1974 13,052.321 1,781.923 13.65 2,264.662 1,018.499 44.97 2,989.211 435.009 14.55
1975 12,957.559 2,126.910 16.41 2,457.824 1,172.896 47.72 3,186.378 665.612 20.89
1976 15,224.683 2,148.772 14.11 2,345.461 949.531 40.48 4,679.385 1,113.261 23.79
1977 13,883.390 2,045.522 14.73 2,458.485 1,123.880 45.71 4,012.670 1,177.820 29.35
1978 16,128.358 1,775.530 11.01 2,820.557 1,194.134 42.34 4,954.816 924.104 18.65
1979 15,342.042 2,134.075 13.91 3,145.372 1,375.170 43.72 4,425.890 901.985 20.38
1980 16,015.371 2,380.919 14.87 3,311.564 1,513.841 45.71 4,139.436 989.104 23.89
1981 16,350.767 2,785.357 17.04 3,688.187 1,770.716 48.01 4,135.321 1,159.374 28.04
1982 17,370.185 2,764.964 15.92 3,709.241 1,508.623 40.67 4,774.074 1,515.053 31.74
1983 17,795.236 2,419.831 13.60 3,740.289 1,426.391 38.14 5,341.029 1,398.649 26.19
1984 18,699.352 2,594.767 13.88 3,808.339 1,421.430 37.32 6,177.500 1,425.252 23.07
1985 18,181.192 2,424.130 13.33 3,029.592 909.113 30.01 6,557.650 1,904.978 29.05
1986 19,256.717 2,090.570 10.86 3,280.258 998.510 30.44 7,028.925 1,820.908 25.91
1987 18,312.992 2,107.693 11.51 4,099.312 1,587.879 38.74 5,847.174 1,260.860 21.56
1988 18,189.900 1,812.200 9.96 3,863.638 1,414.853 36.62 4,950.076 701.621 14.17
1989 19,592.628 2,036.630 10.39 3,799.998 1,231.943 32.42 5,020.844 536.458 10.68
1990 21,627.311 2,729.764 12.62 3,815.577 1,069.462 28.03 6,290.046 868.144 13.80
1991 19,961.939 1,980.155 9.92 4,039.897 1,282.319 31.74 5,983.787 475.023 7.94
1992 20,665.985 2,466.789 11.94 4,043.241 1,353.565 33.48 6,491.879 530.653 8.17
1993 20,511.294 2,396.425 11.68 3,810.947 1,227.754 32.22 6,694.961 568.499 8.49
1994 19,205.276 2,320.990 12.09 3,608.784 1,188.292 32.93 5,992.642 506.586 8.45
1995 19,736.370 2,182.723 11.06 3,644.792 1,241.129 34.05 5,717.468 376.035 6.58
1996 21,358.935 2,277.375 10.66 3,928.013 1,001.523 25.50 6,005.796 443.607 7.39
1997 22,413.957 2,481.450 11.07 3,836.521 1,040.398 27.12 7,212.570 722.492 10.02
1998 21,687.828 2,547.331 11.75 3,721.550 1,045.726 28.10 7,635.968 945.930 12.39
1999 21,559.188 2,295.563 10.65 4,168.537 1,086.512 26.06 7,699.277 949.751 12.34
37
Appendix Table 3. World and U.S. wheat production, exports and ending stocks (continued).
Mkt year
/1
World
production
(million
bushels)
U.S.
production
(million
bushels)
U.S. share
(percent)
World exports
(million
bushels)
U.S.
exports
(million
bushels)
U.S.
share
(percent)
World ending
stocks (million
bushels)
U.S. ending
stocks (million
bushels)
U.S. share
(percent)
2000 21,417.872 2,228.175 10.40 3,728.531 1,062.040 28.48 7,618.294 876.191 11.50
2001 21,424.449 1,947.453 9.09 3,884.692 962.318 24.77 7,465.440 777.129 10.41
2002 20,866.018 1,605.884 7.70 3,885.353 850.213 21.88 6,122.825 491.410 8.03
2003 20,358.330 2,344.432 11.52 3,992.314 1,158.309 29.01 4,849.766 546.452 11.27
2004 22,986.020 2,156.782 9.38 4,103.097 1,065.898 25.98 5,519.309 540.096 9.79
2005 22,772.392 2,103.320 9.24 4,284.390 1,002.773 23.41 5,416.941 571.181 10.54
2006 21,883.452 1,808.415 8.26 4,101.921 908.488 22.15 4,688.718 456.136 9.73
2007 22,450.113 2,051.071 9.14 4,306.436 1,262.624 29.32 4,487.068 305.818 6.82
2008 25,071.079 2,499.160 9.97 5,168.481 1,015.486 19.65 6,127.528 656.500 10.71
2009 24,549.171 2,220.165 9.04 4,585.725 900.000 19.63 6,861.263 863.661 12.59
1/ Aggregated based on local marketing years. Latest data may be preliminary or projected.
Source: USDA, Foreign Agricultural Service, Production, Supply, and Distribution Database.
About the Author
Dr. E. Neal Blue was born in Indianoplis, Indiana in 1961 and was raised on a
farm in Xenia, Ohio. After completing his undergraduate work at Purdue University in
1984, Neal went to the University of Nebraska where he received an M.S. degree in
crop science in 1988. He received a Ph.D. in agricultural economics from The Ohio
State University in 1995. From 1995 to 2001, Dr. Blue worked at The Ohio State
University on projects related to preharvest pricing strategies for farmers, crop
insurance analysis, and soil and water conservation issues.
Currently Dr. E. Neal Blue is a private agricultural consultant living in Columbus,
Ohio. As a consultant has worked with universities, nongovernment organizations, and
agribusinesses in the areas of crop insurance, regulatory approaches of genetically
modifed crops, and food quality control.
A Review of the Potential Market Impacts of Commercializing GM Wheat in the
U.S., analyses the likely reaction of foreign customers for U.S. wheat. Wheat buyers in
Europe, Japan, and other Asian countries are likely to switch to other sources of wheat,
in order to ensure they are getting GM-free wheat.
As a result, the introduction of GM Hard Red Spring Wheat would likely cause an
export shutdown to the European Union and Japan. The shutdown would result in a loss
of 35-50 percent of U.S. hard red spring wheat exports and 50-60 percent of U.S. durum
wheat exports. The sudden surplus of wheat in the domestic U.S. market would have to
be sold for livestock feed, driving the price of these premium wheats down to their value
as cattle or chicken feed.
Dr. Blue’s report is the latest update of an October 2003 report, Market Risks of
Genetically Modified Wheat, by Iowa State University Economics Professor Dr. Robert
Wisner. In 2006, Dr. Wisner updated that report, and found that the introduction of
genetically modified wheat would not reverse the declining market share of U.S. wheat
exports, nor will it reverse the downward trend of wheat acres planted.
©2010
Western Organization of Resource Councils
220 South 27th Street, Suite B
Billings, Montana 59101
www.worc.org
doc_828647921.pdf
This stakeholder group includes wheat grower groups, the National Association of Millers, and technology providers. Monsanto tried to bring GM wheat to market several years ago but withdrew its application for commercialization in 2004 because of negative foreign consumer sentiment towards GMOs.
A Review of the
Potential Market Impacts
of Commercializing
GM Wheat in the U.S.
January 2010
by Dr. E. Neal Blue, Consultant
for the
Western Organization of Resource Councils
Western Organization of Resource Councils
WORC, the Western Organization of Resource Councils, is a regional network of
seven grassroots organizations with 10,000 members and 45 local chapters. WORC
helps its member groups succeed by providing training and coordinating multi-state
issue campaigns.
WORC’s mission is to advance the vision of a democratic, sustainable, and just
society through community action. WORC is committed to building sustainable
environmental and economic communities that balance economic growth with the health
of people and stewardship of their land, water, and air resources.
WORC’s member groups are: Dakota Resource Council (North Dakota), Dakota
Rural Action (South Dakota), Idaho Rural Council, Northern Plains Resource Council
(Montana), Oregon Rural Action, Powder River Basin Resource Council (Wyoming),
and Western Colorado Congress.
An online version of this report is available for download at www.worc.org
©2010
Western Organization of Resource Councils
220 South 27th Street, Suite B
Billings, Montana 59101
www.worc.org.
A Review of the Potential Market Impacts
of Commercializing GM Wheat in the U.S.
January 2010
by Dr. E. Neal Blue, Consultant
1
for the
Western Organization of Resource Councils
1
President, Neal Blue Consulting, Columbus, OH Views expressed herein are solely the author’s.
2
Executive Summary
In 2009, as this study is being conducted, a coalition of stakeholders in the wheat industry from
Australia, Canada, and the U.S. have agreed to pursue the eventual commercialization of Roundup
Ready® wheat and other genetically modified (GM) traits as they become available. This
stakeholder group includes wheat grower groups, the National Association of Millers, and
technology providers. Monsanto tried to bring GM wheat to market several years ago but
withdrew its application for commercialization in 2004 because of negative foreign consumer
sentiment towards GMOs. The first GM crop ready to be introduced was Roundup Ready® hard red
spring wheat.
Several things have motivated this push for GM wheat, including high prices in 2007-2008, and the
perception that GM wheat is needed as one of the tools to restore U.S. wheat competitiveness. The
U.S. share of the world wheat export market and the U.S. wheat acreage have trended downward
for 30 years.
Is the wheat industry ready for GM wheat? A survey of the popular press and industry
pronouncements says, “not yet”. There is a belief in the industry that GM wheat will not reach the
market for another 10 years. The whole industry effort is predicated on foreign consumer
acceptance.
A review of current consumer attitudes indicates that the EU and Japan are not ready for GM wheat.
In addition, Asian countries such as South Korea and Taiwan are also reticent about importing GM
wheat. The major customers of the US, particularly the EU and Japan, have labeling and
traceability requirements, which make it difficult to sell GM wheat. In Europe the level of
tolerance for an unapproved GMO is zero. The Canadian Wheat Board (CWB) has stated publicly
that it will not support the adoption of GM wheat unless key conditions are in place, including
assurances that its overseas markets would accept the crop. The CWB also wants to see a greater
benefit, such as resistance to fusarium disease or improved yield and quality. In addition, the CWB
said that, as the merchandising system currently stands, there is no way to effectively segregate GM
wheat from non-GM wheat, another condition the board wants satisfied.
Identity preserved (IP) systems have been proposed as a way to segregate GM and non-GM wheat
if the U.S. introduces GM wheat. Estimated IP costs for such systems are 3 to 6 cents per bushel.
Current IP systems analyses do not incorporate liability costs and other associated costs arising
from IP system failures. Hartley Furtan and Richard Gray of the University of Saskatchewan have
pointed out that introducing a perceived inferior product such as GM wheat without an affordable
IP segregation system will create a market for “lemons” that will result in the loss of export
markets. The existence of this market externality removes any first mover advantage from adopting
GM wheat.
U.S. wheat acres and the U.S. world wheat export shares have gone down since 1960. Trends in US
wheat exports indicate that hard red spring (HRS) wheat and durum wheat are most “at risk” of
export loss if the U.S. approves Roundup Ready® or another variety of genetically modified wheat.
Exports to Japan and the EU would likely be curtailed because of foreign consumer concerns. The
combined EU and Japanese export losses would likely be 35 and 50 percent for HRS and durum
wheat, respectively. The corresponding price drop would be 41 and 57 percent for HRS and durum
wheat, respectively. If more countries in addition to the EU and Japan curtail their purchases of
HRS and durum wheat, the U.S. export declines would be even higher. The routing of lost export
wheat into the feed wheat markets would limit the price drops to the level of the corn market.
If the U.S. loses its HRS and durum wheat export markets due to GM wheat introduction, Russia
and the Former Soviet Union (FSU) countries would likely make up the difference – as indicated by
their growing world wheat export market share. As the U.S. world wheat export share is going
down over time, the Russian/FSU world wheat export share is going up.
3
A review of the wheat breeding literature suggests that, in addition to the traditional planting
breeding and GM transformation techniques, marker assisted selection (MAS) is being used to
generate non-GM trait development in wheat. Non-GM trait development has recently focused on
wheat varieties resistant to rust, drought, and salt. In addition, mutagenesis has been used to create
non-GM herbicide-resistant wheat sold commercially today.
Depending on the trends for labeling and changing consumer sentiment, there is a mixed outlook
for the marketing of GM wheat. Currently there are no commercial GM wheat varieties grown in
the world. Some promote GM technology as one of the tools that can reverse the decline in the
competitiveness of the wheat sector. However, the concerns of major foreign consumers about GM
wheat and the lack of affordable identity preserved segregation make the U.S. introduction of GM
wheat a risky proposition.
4
Table of Contents
1.0 Introduction…………………………………………………………………………………… 6
2.0 Consumer Preferences in the EU, Japan, Korea and Taiwan………………………………….. 7
2.1 European Union (EU)…………………………………………………….…………… 7
2.2 Japan………………………………………………………………………………….. 8
2.3 Korea…………………………………………………………………………………. 8
2.4 Taiwan………………………………………………………………………………… 9
3.0 European GM Regulations, 1990-2009………………………………………………………. 9
4.0 Implications of EU Traceability Rules on Exports of GM Wheat…………………………… 11
4.1 Segregation and Identity Preservation (IP) - Innovations and Costs………………….. 11
4.2 Segregation and Risk – Canola Example……………..……………………………… 13
5.0 USDA Certificates For Grain Shipments……………………………………………………. 13
6.0 Wheat Industry Stakeholders Positions on the Possible Introduction of GM Wheat………… 13
7.0 Wheat Production……………………………………………………………………..……… 15
7.1 U.S. Production and Yields…………………………………………………………… 15
7.2 U.S. Exports and Export Shares……………………………………………………… 17
7.3 U.S. Hard Red Spring and Durum Wheat Exports to Japan, Korea,, Taiwan, EU
and North Africa………………………………………………………………. 18
7.4 U.S. Hard Red Spring and Durum Wheat Exports to Latin America,
Oceania (South Pacific), Asia, and Africa (South and Central)………………… 19
7.5 Russian and Former Soviet Union Countries………………………………………… 20
7.6 U.S. Exports At Risk if GM Hard Spring Wheat is Introduced……………………… 20
7.7 Trends in US wheat Acres and Wheat Competitiveness vs Corn and Beans………… 23
7.8 Trends in US wheat Acres and Wheat Competitiveness vs Corn and Beans…. 25
8.0 Biotech Development of Wheat………………………………………………………………. 26
9.0 Organic Segregation from GM wheat………………………………………………………… 27
10.0 Summary..…………………………………………………………………………………… 28
11.0 References…………………………………………………………………………………… 29
List of Tables
Table 1. The Cost of Implementing an IP System for GM/non-GM Wheat in Canada…………… 12
Table 2. Summary of the Six Known Unauthorized Releases of Regulated GE Crops
into the Food and Feed Supply of the U.S., 2000-2008…………………………………. 14
Table 3. Export losses in the U.S. HRS wheat sector caused by GM HRS introduction…………. 23
Table 4. Export losses in the U.S. durum wheat sector caused by GM HRS introduction………… 23
List of Appendix Tables
Appendix Table 1A. US Wheat Export Destinations……………………………………. 34
Appendix Table 1B. US Wheat Export Destinations……………………………………. 35
Appendix Table 2. Countries Requiring GMO Labeling………………………………. 36
Appendix Table 3. World and U.S. Wheat Production, Exports and Ending Stocks…….. 37
5
List of Figures
Figure 1. US Total Wheat Production and Exports, 1960-2009 (Source: USDA-ERS)………….. 15
Figure 2. U.S. Wheat Production by Wheat Type, 1984-2009 (source: USDA-ERS)……………. 16
Figure 3. U.S. Wheat, Harvested Acres, 1980-2008. (Source: USDA-NASS)…………………… 16
Figure 4. U.S. Wheat Yield, 1980-2008. (Source: USDA-NASS)………………………………… 16
Figure 5. U.S. Wheat Exports by Wheat Type, 1984-2009. (Source: USDA-ERS)………………. 17
Figure 6. U.S. Export Share of World Wheat Exports, 1960-2009 (Source: USDA-ERS)……….. 17
Figure 7. U.S. Hard Red Spring Wheat Exports to Countries Likely to Label or Reject GM
Wheat, 1996-2008. (Source USDA-FAS)…………………………………………………………. 18
Figure 8. U.S. Durum Wheat Exports to Countries Likely to Label or Reject GM Wheat,
1996-2008. (Source USDA-FAS) ………………………………………………………………… 18
Figure 9. U.S. Hard Red Spring Wheat Exports to Countries Likely to Accept GM Wheat,
1996-2008. (Source: USDA-ERS) ………………………………………………………………… 19
Figure 10. U.S. Durum Wheat Exports to Countries Likely to Accept GM Wheat,
1996-2008 (Source: USDA-ERS). ……………………………………………………………….. 19
Figure 11. World Wheat Export Shares of North America and the Former Soviet Union,
1980-2009 (Source: USDA-FAS). ……………………………………………………………….. 20
Figure 12. U.S. Hard Red Spring Wheat Use by Type, 2007/08 Marketing Year.
(Source: USDA-ERS) …………………………………………………………………………….. 21
Figure 13. Shares of US Hard Red Spring Wheat Exports by Destination, 2007/08.
(Source: USDA-ERS) ……………………………………………………………………………. 21
Figure 14. U.S. Durum Wheat Use by Type, 2007/08 Marketing Year.
(Source: USDA-ERS) …………………………………………………………………………….. 22
Figure 15. Shares of U.S. Durum Wheat Exports by Destination, 2007/08.
(Source: USDA-ERS) …………………………………………………………………………….. 22
Figure 16. U.S. Hard Red Winter Wheat Use by Type, 2007/08 Marketing Year
(Source: USDA-ERS) ……………………………………………………………………………. 23
Figure 17. Shares of U.S. Hard Red Winter Wheat Exports, 2007/08,
(Source: USDA-ERS). …………………………………………………………………………… 24
Figure 18. U.S. Soft Red Winter Wheat Use by Type, 2007/08 Marketing Year
(Source: USDA-ERS). …………………………………………………………………………… 24
Figure 19. Shares of U.S. Soft Red Winter Wheat Exports by Destination, 2007/08,
(Source: USDA-ERS). …………………………………………………………………………… 24
Figure 20. U.S. White Wheat Use by Type, 2007/08 Marketing Year,
(Source: USDA-ERS). …………………………………………………………………………… 24
Figure 21. Shares of U.S. White Wheat Exports, 2007/08, (Source: USDA-ERS)……………… 25
Figure 22. U.S. Wheat, Harvested Acres, 1980-2008. (Source: USDA-NASS) ………………… 25
Figure 23. Wheat, Corn, and Soybean Shares of Total Crop Acres Harvested in the US,
1980-2008. (Source USDA-NASS)……………………………………………………………… 25
6
1.0 Introduction
In 2004, after several years of research and development, Monsanto withdrew its application for
Roundup Ready®
2
hard red spring wheat both in Canada and the US. Concerns about the loss of
U.S. and Canadian exports and stringent European Union rules on import, traceability, and labeling
of GM food products lead to the withdrawal.
In 2009, a coalition of stakeholders in the US wheat industry agreed to go forward to pursue the
eventual approval of GM wheat. The stakeholders included the North American Millers'
Association, the National Association of Wheat Growers, U.S. Wheat Associates, Grain Growers of
Canada, Western Canadian Wheat Growers Association, Alberta Winter Wheat Producers
Commission, Grains Council of Australia, Grain Growers Association, and Pastoralists and
Graziers Association of Western Australia (US Wheat, newsletter of US Wheat Associates, 5-14-
09). Several wheat summits were held from 2006 to 2009 to address the state of the wheat sector
in the US. Out of these meetings, several reports were put forth addressing the lack of
competitiveness of the wheat crop sector vis a vis the corn and soybean sector. A report entitled
“The Biotech Case for Wheat” was released by a wheat industry coalition composed of the
following groups: National Association of Wheat Growers, U.S. Wheat Associates, North
American Millers’ Association, Independent Bakers Association, and the Wheat Foods Council. In
the U.S., wheat acres have declined for 30 years and the world share of US wheat exports has gone
down. The report said that if GM wheat were available as a production tool it could stem the
decline in the competitiveness of wheat with other grains.
While there has been consensus among these stakeholders of the wheat industry to go forward on
the eventual adoption of GM wheat, other major industry players are reticent about the adoption of
GM wheat. The Canadian Wheat Board (CWB) has stated publicly that it will not support the
adoption of GM wheat unless key conditions are in place, including assurances that its overseas
markets would accept the crop. The CWB also stated that it wanted a greater benefit of any GM
trait adopted in wheat, such as resistance to fusarium disease or improved yield and quality. The
CWB said that as the merchandising system currently stands, there is no way to effectively
segregate GM wheat from non-GM wheat. Effective segregation is another key condition the board
wants satisfied (Reuters, 5-15-09). In 2000, the Australian Wheat Board (AWB) expressed concern
about GM wheat because of foreign consumer concerns about GM wheat (Reuters, March 17,
2000). However in 2007, the AWB softened its concern. “AWB supports the development of
agricultural biotechnology under controlled conditions because of the potential benefits to farmers
and the community,” the group said in a statement (Australian Wheat Board, June 2007).
In May 2009, a coalition of 15 farm groups from Australia, Canada, and the U.S. released a
statement joint statement of opposition to GMO wheat. This followed the statement of the wheat
industry stakeholder declaration of support for GMO wheat. Concerns were voiced that farmers
would be economically hurt by the introduction of GMO wheat. The groups signing the joint
statement included the Network of Concerned Farmers in Australia, National Farmers Union,
Canadian Biotechnology Action Network, the Organic Federation of Australia, Biological Farmers
of Australia, Greenpeace, and the U.S.-based Organic Consumers Association. (Reuters, June-1-
2009). In addition to the loss of foreign markets, other concerns about Roundup Ready® wheat
center on the evolution of glyphosate resistant weeds, and the loss of farmer saved seed (Ogg and
Jackson 2001; Van Acker et al. 2003).
This report updates the work completed by Dr. Robert Wisner in 2003 and 2006. In light of the
recent actions of the stakeholders of the wheat industry in pursuing GM wheat, this report evaluates
the current state of the GM wheat debate. This report covers several broad areas: consumer
attitudes in the European Union (EU), Japan, Korea, and Taiwan; EU GM traceability and labeling
2
Roundup Ready® (RR) wheat: GM wheat wherein Monsanto has inserted a gene that allows the plant to tolerate applications of
Roundup (Monsanto’s trade name for the broad-spectrum herbicide glyphosate).
7
regulations; grain merchandiser concerns; U.S. wheat production and exports trends; Former Soviet
Union wheat exports; effect of GM wheat on US exports; Biotech development of wheat; and
impacts on organic wheat production.
2.0 Consumer Preferences in the EU, Japan, Korea and Taiwan.
Currently there are no commercially available GM varieties of wheat or rice, the two largest
directly consumed grains in the world - this at a time when other GM field crops such as corn,
soybeans, cotton, and canola have been widely adopted. One oft-cited reason for this phenomenon
is the fact that the widely adopted GM crops are highly processed before consumption or fed to
livestock. Wheat and rice are more directly consumed. For this reason many foreign consumers
around the world are reticent about consuming GM wheat and rice.
Based on the regulatory environment of certain importing countries and the responses of importing
countries to unintended releases of GMOs, it is expected that many countries will severely reduce
or cease imports of US wheat if GM wheat is approved in the U.S. Much of this is driven by
foreign consumer sentiment. This section details consumer attitudes toward GM foods and crops
in the European Union, Japan, Korea and Taiwan. These are major consumers of U.S. wheat. The
determinant of whether GM wheat will be deregulated for food products and crop production is
consumer attitudes in a particular country. Consumers from the EU are generally opposed to
consuming GMOs. In Asia there is also consumer opposition to the consumption of GMOs,
however, the sentiment is not as strong as seen in the EU. Representatives for Chinese, Korean, and
Japanese wheat buyers surveyed said they would not buy or use Roundup Ready® wheat. Eighty-
two percent of buyers from Taiwan and 78 percent of buyers from South Asia said they would
reject the wheat, (Gillam, 2002).
2.1 European Union (EU)
The adoption of GM crops has been dependent on the regulatory and legal environment of a
particular country. The adoption of GM crops has proceeded rapidly in Argentina, Brazil, China,
and India and South Africa (James, 2008). However, in the European Union (EU), adoption has
been so very low. The oft-cited reasons for the low adoption are consumer sentiment, sociological
attributes of the citizens of the various countries in the EU (Zechendorf, 1998), and the regulatory
environment based on the precautionary principal (Kogan, 2005). Others attribute the slow
adoption of GM crops in the EU to trade barriers erected to protect EU agribusiness and producers
(Anderson, et al., 2004).
Several surveys taken by the European Union from 1996 to 2007 detail the consumer attitudes of
the various countries in the EU. Consumer attitudes toward GM crops and food have changed over
time. Support for GM crops in the EU declined from 1996 to 1999. The pattern for public approval
of GM food followed a similar trend. After 1999, the majority of the EU countries showed an
increase in support of GM food (Eurobarometer, 2002). In spite of these trends, the 2002
Eurobarometer survey indicated that a majority of Europeans did not support GM foods. For the
EU, the most persuasive reason for buying GM foods is the health benefit of lower pesticide
residues followed by an environmental benefit. In addition, price was the least incentive for buying
GM foods. Depending on the country in the EU, 30 to 65 percent of Europeans reject all reasons
for buying GM foods.
The 2005 Eurobarometer (Eurobarometer, 2005) survey showed that, overall, Europeans think that
GM food should not be encouraged. The fact that a particular GM food is approved by relevant
authorities, or may be cheaper than a non-GM food, are not convincing to the public. The EU
public, however, had wider support for non-food uses for biotechnology, such as nanotechnology,
pharmacogenetics, and gene threrapy. The introduction of new regulations on the
commercialization of GM crops and GM food labeling regulations (Directive 2001/18/EC) has done
little to allay the European public’s anxiety about GM food biotechnology.
8
In the most recent Eurobarometer survey (2007), 58 percent of Europeans declared that they were
opposed to the use of GMOs, while 21 percent supported their use. Nine percent of respondents
had never heard of GMOs. An absolute majority of respondents in most countries within the EU
were opposed to the use of GMO’s. Respondents who feel they lack information on GMOs are
significantly more concerned about the use of GMOs in farming than those who do not feel they
need additional information.
2.2 Japan
There is broad opposition to GM foods in Japan. Several surveys taken from 2002 to 2007 have
detailed Japanese consumer attitudes towards GM foods. In 2002, the Japanese Ministry of Public
Management, Home Affairs, Posts and Telecommunications conducted a public opinion poll on
GM labeling of food (MPHPT, 2002). The results showed that 80 percent of Japanese consumers
demanded stricter GM labeling and that they were unsatisfied with the current GM labeling
regulations. In addition, 84 percent of the surveyed consumers said that “…labeling is necessary
whatever … amount of GMO has been used in a food.”
McCluskey et.al (2003) evaluated the Japanese consumer’s willingness to pay for GM food
products. Japanese consumers were willing to purchase GM noodles at a 60 percent discount and
GM tofu at 62 percent discount. These results suggest that non-GM foods command a premium
over GM labeled foods.
In 2003, a Japanese Ministry of Agriculture, Forestry, and Fisheries internet survey of 600
consumers (MAFF, 2003) found that 60 percent of respondents said that they were unwilling to buy
GM foods due to safety concerns. 68 percent of the respondents mentioned that they would not
purchase GM foods even if they were priced cheaper than non-GM equivalents. It should be noted
that internet surveys are not based on a random sample, but merely reflect the views of those who
choose to respond.
A survey by the Pew Global Attitudes Project (PEW, 2003), conducted in 2002 and released in June
2003, showed that Western Europeans and Japanese were overwhelmingly opposed to scientifically
altered fruits and vegetables because of health and environmental concerns. Japanese women were
more opposed to genetically altering foodstuffs than men.
2.3 Korea
Korea is an importer of biotechnology crops and products. GM crops and foodstuffs must undergo
a safety assessment for human consumption by the Korean Food and Drug Administration. Major
GM crop imports are corn and soybeans – most of which are further processed. Both processed and
unprocessed GM food products must be labeled. Most non-GM labeled unprocessed crops must be
certified indicating a GM free status (USDA-FAS, 2005).
A 2001 survey of Korean consumers and a 2003 survey of Korean professors revealed that both
groups had concerns about GM food products. 52 percent of the professors believed that GM food
was safe for consumers. However, only 21 percent of consumers believed GM food to be safe. Just
14 percent of consumers said they would purchase GM food products (USDA-FAS, 2005).
In 2008, the Korea Biosafety Clearing House (Korea BCH, 2008) conducted an opinion poll (1,000
adults) to find out their awareness and attitudes towards live modified organisms (LMOs) and
biosafety. 83.3 percent of respondents had heard of or were aware of LMOs. 70.7 percent of
respondents reported they felt uneasy about LMOs used in food and agricultural uses. However,
relatively fewer people expressed concerns about the use of LMOs in medical, pharmaceutical,
environmental purification, industrial biotech and energy sectors.
9
An awareness survey conducted by the Korean Food Industry Association in October 2008 showed
that 42 percent of respondents would likely buy GMO derived food. This result was 5 percentage
points higher than the result in a previous survey. Those who would not buy GM food were 30
percent of the respondents. This was a down from the 42 percent result reported in an earlier
survey.
A Korean Consumers Union survey of 154 Korean lawmakers and 64 members of the Seoul
Municipal Assembly showed that 76 percent felt that food products should be labeled if they
contained GM ingredients (Korea BCH, 2008).
2.4 Taiwan
Chern and Rickertsen (2002) performed a study on consumer attitudes of GMOs in Japan, Norway,
Taiwan, and the U.S. Students were surveyed for their willingness to pay for non-GM alternatives.
In doing the research, Chern and Rickertsen cited increasing concerns by Taiwan consumers over
GM foods. They found that while only 6 percent of U.S. students ranked GM foods as “very risky,”
the percentages were higher in Norway (11%), Japan (10%) and Taiwan (17%). While only 17
percent of Japanese students were “somewhat” or “very willing” to consume GM foods, the figure
was 79 percent for Taiwanese students. The students in the four countries were willing to pay
premiums ranging from around 60 percent in Norway to about 20 percent in Taiwan for non-GM
vegetable oil. The preference against GM foods is reduced when some benefits associated with
them are introduced into the questions suggesting that GM foods have a potential to become more
popular. Reduced use of pesticides and improved nutritional qualities are perceived as more
important potential benefits than reduced price. Health concerns are apparently more important than
ethical or religious concerns in explaining the negative attitudes towards GM foods. The support for
mandatory labeling is overwhelming in the student as well as public surveys.
Early in this decade, the Taiwanese government was closely monitoring the development of GM
food regulation in Japan. Taiwan implemented a GM food law in 2001 stipulating that foods
containing more than 5 percent GM ingredients must be labeled as containing GMOs. There is still
a concern about GMOs in Taiwan. In 2009, the Taiwan Council of Agriculture (COA) issued a
statement that countered an official from the Department of Health about accepting GM rice from
the U.S. “The COA will not take the liberalization measure that would allow such rice from the
United States to enter Taiwan,” COA Minister Chen Wu-hsiung said. “I will step down if imports
of U.S. genetically engineered rice are permitted. The COA has `absolutely no plans' to allow such
opening,” (South China Post, 10-28-09.)
Surveys of consumer attitudes in the EU, Japan, Korea, and Taiwan, all major export markets for
US wheat, suggest that foreign consumers have a mistrust of GM crops and foods. Consumer
attitudes have changed little since 2004 when Monsanto withdrew its planned introduction of GM
wheat. The main driver for this withdrawal was the foreign consumer mistrust of GM foods.
3.0 European GM Regulations, 1990-2009
The EU has the most stringent regulations in the world regarding the labeling and traceability of
GM crops, feed, and food. This section details the development of the regulation of GMOs in the
EU from 1990 to 2009.
The European Union has regulated GM crops, food, and feed since the time GM crops were
introduced in the U.S. in 1996. In the 1990’s, the EU promulgated two sets of rules, one for GM
crops and one for GM food.
In 1990 EU Directive 90/220/EC established a process for assessment and approval of GM crops
and seeds destined for environmental release. Before 1998, 14 GM plants including 11 crops were
approved for release. In 1997, the EU adopted a second set of laws (Regulation EC No 258/97)
10
designed to address labeling of novel food products containing GMOs or produced from GMOs. In
addition, the regulation created a simplified approval process for products derived from but not
containing GMOs such as refined soybean oil or corn syrup. A producer bringing a GM food to
market had to show that it was “substantially equivalent” to existing foods. After Regulation
258/97/EC went into effect, a number of GM products entered the EU market.
In the mid-1990s, several food safety scares, including the BSE (bovine spongiform encephalo-
pathy) outbreak and dioxin tainted meat in Belgium, caused an increased wariness of GM foods and
crops. In the consumer attitude surveys discussed in the previous, consumers’ opinions of GMOs
became more negative. The food scares greatly eroded consumer’s trust in government regarding
food safety regulations. The erosion of trust occurred at same time as GM crops were being
introduced into the EU. Consumers began to trust non-government organizations more than
governments.
In the late 1990s, several EU member states began to ban the use of approved GM crops. In 1998
many EU member states blocked approval of European Commission approved GM crops unless
existing labeling and safety regulations were further tightened. From 1998 to 2004, no new GM
foods or crops were approved. This amounted to a defacto moratorium on GMOs. At this time, the
EU began to develop EU-wide regulations more acceptable to member states.
In 2001, EC directive 2001/18/EC on the deliberate release into the environment of genetically
modified organisms was approved. This is the basic legal act for the authorization of GMOs for
marketing throughout the EU, including commercial cultivation. It repealed and replaced Directive
90/220/EEC, aiming at strengthening the control of risks from the deliberate release of GMOs into
the environment. The key features of the Directive include a harmonized approach to risk
assessment, post-market monitoring, traceability and labeling, consultation with and information to
the public, predictability and transparency of decision-making, and time-limited consents.
In 2003, the EU approved a regulation, EC1830/2003, governing approval of GM food and feed
commercialization. The new directive expanded labeling requirements, established traceability
requirements, and streamlined the approval process for new GM products. Under EC 1830/2003,
all food and feed consisting of GMOs or produced from GMOs were required to be labeled. In
addition, highly refined products that were, heretofore, not labeled, were also required to be labeled
as being produced from GMOs. Labeling was now required if a food product or crop contained
more than 0.9 percent adventitious presence of GMOs. In addition, GM feed was also required to
be labeled.
Products such as meat, milk, and eggs produced from animals fed GM crops were not required to be
GM labeled. Products such as beer and cheese produced with enzymes made from GM
microorganisms also do not need to be labeled.
Regulation 1829/2003/EC added traceability requirements for all GM crops and foodstuffs within
the EU. Businesses that grow, store, and process GM products are required to track them
throughout the supply/logistics chain – from farm to dinner plate. Trace records must be held for 5
years.
Lastly, the EC 1829/2003 directive streamlines the approval process of GM crops and foodstuffs. A
developer of GMOs can file a single application for all intended uses of the GMO – cultivation,
importation, and processing. The application goes to the member state where the GMO will be
marketed. The European Food Safety Agency will conduct a scientific risk assessment. After that,
the European Commission will draft a proposal granting or denying authorization. The draft
proposal is submitted for approval by a qualified majority of member states within the Committee
on the Food Chain and Animal Health. If the committee approves the draft proposal then the
European Commission approves the proposal.
11
In 2008, the EU adopted Directive 2008/27/EC, which empowered the European Commission to
adopt the measures necessary for the implementation of Directive 2001/18/EC.
In spite of the EC 1829/2003 directive, many member states banned GM crop varieties that had
been previously approved by the European Commission. This was done by invoking the “safeguard
clause” which allows a member state to provisionally restrict a GMO.
4.0 Implications of EU Traceability Rules for Exports of GM Wheat
The labeling and traceability rules specified in the EC directives tightly dictate how GM products
are sold in the EU. The traceability rules specified within the EC directive allow up to 0.9 percent
adventitious GM material in a food product labeled as being non-GM. The adventitious GM must
be one that was authorized by the EU. There is zero tolerance for any level of unapproved GM
events in food imports. Since GM events in wheat are not currently approved in the EU, no GM
wheat could be exported to the EU today.
In order to get around the zero tolerance of unauthorized GMOs in wheat, the US will have to
insure that wheat GMOs are approved by the EU. A US export shipment could then get shipped as
a non GMO shipment as long as the adventitious GM level stays below 0.9 percent. The upshot of
this regulation is that an identity preservation system will have to be implemented that keeps GM
and non-GM crops separated. In essence, since the EU is a major importer of food stuffs, it is in
effect exporting its traceability regime to the rest of the world.
4.1 Segregation and Identity Preservation (IP) - Innovations and costs
Many who promote GM wheat say that identity preservation regimes within the grain
merchandising system can be used to keep GM and non-GM wheat separate. The development of
genetically modified crops is challenging the functions of the grain marketing system with many
participants arguing for identity preservation systems prior to release of GM varieties (Wilson and
Dahl, 2002). The Canadian Wheat Board (CWB) has said that as the merchandising system
currently stands, there is no way to effectively segregate GM wheat from non-GM wheat, a
condition of CWB acceptance of commercial release of GM wheat (Reuters, 5-15-09). This section
reviews identity preservation and developments that would be needed to reduce the risks of
comingling GM and non-GM wheat.
What is identity preservation and how can it be used to handle both GM and non-GM wheat?
Identity preservation is a system of production and delivery in which grain is segregated, based on
intrinsic characteristics such as variety or production process, during all stages of production,
storage, and transportation. Grain growers are interested in IP because of niche marketing,
technological innovations, customer demand for a specific grain, and organic production.
In the current grain merchandising system, the traditional bulk system has been designed to
comingle grain from many different sources. The comingling of grain occurs in four stages: 1) farm
to elevator, 2) elevator to rail/barge, 3) rail/barge to terminal, and 4) terminal to ship. The current
system of bulk movements of grain engenders large economies of scale in costs of moving grain.
IP systems have been evolving as information technology systems, biotech grain testing, and
logistics have improved to meet customer demands.
Several innovations have greatly improved IP systems in terms of contamination risk and improved
logistics. Containerized shipping, biotech testing, and information technology are components of an
evolving IP system that will play a role in GM/non-GM segregation. In a review of Cargill’s IP
strategies, Michael Boland (2003) detailed what an IP system would entail in terms of logistics and
testing. IP marketing channels are more complicated than simply keeping crops segregated
throughout all phases of transportation and storage. IP channels also require that producers separate
fields to avoid mixing pollen and or seeds during planting and harvesting. Clean equipment and on-
12
farm storage are also a necessity. At the elevator level, the manager has to develop strict standards
to maintain identity to the end user. In the transport of IP grain, railcars and trucks would have to be
sealed to avoid contamination. Testing and keeping track of the chain of custody add to the cost of
moving the grain. The cost would vary depending on the level of tolerances.
Containerized shipping of grain is a small but growing area of grain merchandising. In 2001, one
percent of U.S. grain was moved in containers. It is expected that the volume of grain moved by
containers will grow over time to meet a growing demand for specialty products (Vachal and
Reichert, 2001). Reichert and Vachal (2003) discussed IP using containerized grain shipments in
which grain is shipped in a freight container that can be place placed on a semi truck, rail, or ship.
A containerized shipping IP system has advantages for grain shipping: 1) grain is handled less, 2)
theft problems are reduced, and 3) ease of movement from truck to rail, and from rail to ship. The
only disadvantage is higher costs. However, in recent years costs have declined. Richert’s
calculation shows that container shipping comes in slightly more expensive than train shipping
(container $65.23/ton, truck $133.38/ton, single rail car $59.33/ton, and unit train $57.28/ton).
Wilson and Dahl (2002) go into great detail on the costs and risks of an IP system for GM wheat.
The authors estimated total segregation costs with an optimal strategy at 3.36 cents per bushel,
testing every fifth load of incoming grain. The main assumption of the Wilson and Dahl study is
that some sort of tolerance will have to be built into the IP system for it to work.
A paper by Huygen et al. (2003) details the costs of three IP systems including a containerized
system at tolerance levels of 5 percent, 3 percent, 1 percent, 0.5 percent, and 0.1 percent. The three
IP systems were 1) elevators segregate GM from non-GM wheat at the point of delivery, 2)
elevators are designed solely to handle either GM or non-GM wheat, and 3) a container system
where shipments are sealed at the farm. Elevator systems 1 and 2 were close in cost estimates with
the containerized system costing more.
Table 1. The Cost of Implementing an IP System for GM/non GM Wheat in Canada.
Tolerance Level (%)
IP 5 3 1 0.5 0.1
System Cost/tonne
Elevator System 1 194.66 194.68 196.39 199.19 201.09
Elevator System 2 194.56 194.57 196.10 198.68 200.37
Container System 216.68 216.69 218.19 220.67 222.09
Taken from Huygen et al, 2003.
The estimated costs of these systems at 1 percent tolerance, which is close to the EU standard for
approved GM events of 0.9%, are as follows: 1) elevator system 1, 5.89 cents/bushel; 2) elevator
system 2, 5.41 cents/bushel; and 3) container system, 6.01 cents/bushel. The authors in this paper
say that these estimates do not include risks and liabilities that might be associated with system
failure.
Until now IP systems have been used for specialty grains where the value of the specialty grain is
higher than regular grain run through the merchandising system. Furtan et al (2005) say that
introducing GM wheat without an affordable IP segregation system is one that can be likened to
creating a market for “lemons” that will result in a loss of export markets. In any proposed IP
system for GM wheat, GM wheat, a commodity that could be considered inferior to non-GM wheat,
is being introduced into the grain marketing system. Furtan et al. (2003) say that the existence of
market externality removes the first-mover advantage for wheat producers from the approval of GM
wheat. In addition, there are large distributional effects: wheat producers loose economic surplus,
while the consumers and the technology provider gain economic surplus.
13
4.2 Segregation and Risk – Canola Example
With the introduction of GM crops, genetic contamination has become a major concern. Initially,
when GM canola was introduced to Canada in 1995-96, a voluntary identity preservation,
production and marketing (IPPM) system was developed to contain the GM canola to the North
American market. This was done in response to the fear that Japan, the largest export market at the
time, would interrupt trade until they had time to study the GM technology. A closed loop system
to keep GM canola in North American markets operated for two years. The IPPM system was then
abandoned when Japan approved new varieties for importation. Although the IPPM system
worked, it was costly. The estimated costs were C$33 to C$41/tonne, which added 12 to 15 percent
to the cost of producing and transporting conventional canola (Smyth and Phillips, 2001).
Ultimately, the IPPM system was abandoned because of the opportunity costs of limited marketing
opportunities and freight inefficiencies. Smyth and Phillips (2001) suggested that these two costs
could have been reduced had the grain merchandising system acted collectively to establish IPPM
standards.
Even though IP systems are currently being used for various specialty grains, much work remains to
create an IP system to segregate GM and non-GM wheat in a cost effective way. The Canadian
Wheat Board is on record saying that under the grain merchandising system as it currently stands,
there is no way to effectively segregate GM wheat from non-GM wheat, one of several conditions
the board would want satisfied before it approved commercial release of GM wheat (Reuters, 5-15-
09).
5.0 USDA Wheat GM Status - Certificates For Grain Exports
For several years, the USDA Grain Inspection, Packers and Stockyards Administration (USDA-
GIPSA) sends out a statement on its letterhead with every inspection certificate stating that “there
are no transgenic wheat varieties for sale or in commercial production in the United States at this
time.” As of December 15, 2009, this is still the case. This certificate accompanies approximately
50% of US wheat exports, at the request of buyers (Wilson et al., 2003).
6.0 Wheat Industry Stakeholder Positions on the Possible Introduction of GM Wheat
Stakeholders in the wheat industry have convened several wheat summits between 2006 and 2009.
This group includes wheat millers, bakers, and grower groups from Australia, Canada, and the US.
This group put forth a document agreeing to pursue the eventual commercialization of GM wheat.
Given the rapid adoption of GM canola, corn, cotton, and soybeans, wheat has received intense
scrutiny as it has undergone experimental development.
Although these stakeholders of the wheat industry have agreed to support the commercialization of
GM wheat, some within the wheat industry have concerns arising from the lack of foreign customer
acceptance. One miller of note, the King Arthur Milling Company, has announced on its website
(http://www.kingarthurflour.com/) that it will not sell any products containing GM wheat. In 2002
Ron Olsen, vice president of General Mills, said that consumer confidence would be lost if GM
wheat were used in his company’s food products. Olsen expressed concern about alienating General
Mills customers (US Wheat Associates Aug. 28, 2002). Olson further explained the problems that
would be experienced up the food chain, beyond the grower, noting a traditional economic concept:
“When you inject a supply driven concept into a demand driven market, it’s a recipe for failure.”
Currently, the General Mills product line includes Gold Medal Organic Flour.
The Canadian Wheat Board (CWB) has stated publicly that it will not support the adoption of GM
wheat unless key conditions are in place, including assurances that its overseas markets would
accept the crop. The CWB also stated that it wanted to see a greater benefit from any trait
introduced to wheat through genetic engineering, such as resistance to fusarium disease or
improved yield and quality. The CWB said that as the merchandising system currently stands, there
14
is no way to effectively segregate GM wheat from non-GM wheat, another condition the board
would want satisfied (Reuters, 5-15-09).
In 2000, the Australian Wheat Board (AWB) expressed concern about GM wheat because of
foreign consumer concerns about GM wheat (Reuters, March 17, 2000). However, in 2007, the
AWB went on record saying “AWB supports the development of agricultural biotechnology under
controlled conditions because of the potential benefits to farmers and the community” (Australian
Wheat Board, June 2007).
The Western Canadian Wheat Growers made a presentation to the Canadian National Millers
Association on September 15, 2009, promoting the use of GM wheat, "Toward Commercialization
of Biotech Wheat". The presentation acknowledged the negative factors impacting the acceptance of
GM wheat: 1) market acceptance, 2) segregation issues, 3) liability issues, and 4) political
acceptance. The presentation also acknowledged that GM wheat would not be accepted today.
One theme that emerges is that consumers would buy into GM wheat if the product had more
consumer benefits and consumers were convinced of its safety. Another theme is that all sectors of
the wheat industry acknowledge that now is not the time to introduce GM wheat. The broad
coalition approach to GM wheat exhibited by the wheat stakeholders may be an outgrowth of
consequences arising from unintended releases of GM crops in the US (GAO, 2008, see Table 2)
and in Canada. These unintended releases resulted in product recalls (Starlink Corn) and export
losses (LL601, LL604 Rice).
Table 2. Summary of the Six Known Unauthorized Releases of Regulated GE Crops into the Food
and Feed Supply of the U.S., 2000-2008 (GAO, 2008).
_______________________________________________________________________________________________________________________
Year Product Crop Trait Cause Detection
_______________________________________________________________________________________________________________________
2000 StarLink Corn Insect Resistance Cross-pollination, Third party testing
and herbicide commingling of
tolerance corn after harvest
_______________________________________________________________________________________________________________________
2002 Prodigene Corn Pharmaceutical Cross-pollination USDA inspection
protein and uncontrolled
volunteers
_______________________________________________________________________________________________________________________
2004 Syngenta Bt10 Corn Insect resistance Misidentified seed Third-party testing
_______________________________________________________________________________________________________________________
2006 Liberty Link Rice 601 Rice Herbicide tolerance Not determined Third-party testing
_______________________________________________________________________________________________________________________
2006 Liberty Link Rice 604 Rice Herbicide tolerance Not determined Third-party testing
_______________________________________________________________________________________________________________________
2008 Event 32 Corn Insect resistance Under Developer testing
investigation
_______________________________________________________________________________________________________________________
The two most prominent unintended releases, Starlink corn and Liberty Link Rice, resulted in
economic losses to farmers. The release of Starlink was done under a dual use label. Starlink corn
was only approved for use as livestock feed. It got into the U.S. food system. Schmitz, et al.
(2004) estimated that StarLink caused U.S. corn producers to lose between $26 and $290 million in
revenue. Blue (2007) estimated that world-wide losses caused by the accidental release of LL601
GM rice ranged from $741 million to $1.285 billion.
In 2001 a genetically modified (GM) flaxseed developed at the University of Saskatchewan was
taken off the market because of European fears the variety would contaminate other flax produced
in Canada. The last of the 200,000 bushels of Triffid flaxseed, worth at least $2.5 million, was
rounded up from farms across the Prairies and crushed, and the variety was deregistered. On
October 30, 2009 the EU Rapid Alert System for Food and Feed (RASFF) had reported finding
contamination by an unapproved genetically modified flax/linseed variety in cereal and bakery
products in over 30 countries (EC, 10-30-2009).
15
The fears of the Canadian Wheat Board about losing export customers and the coordinated actions
of the wheat industry stakeholders on the issue of GM wheat suggest an air of caution is appropriate
for the U.S. wheat industry towards commercial release of GM wheat , as long as consumers
overseas prefer non-GM wheat. The critical question is whether consumer attitudes will change
before GM wheat becomes a reality.
7.0 Wheat Production
7.1 U.S. Production and Yields
As a part of the investigation of the effects of GM wheat introduction, the US and World wheat
market are reviewed. This review is done to identify the wheat export pools that would be at risk if
GM wheat is introduced. Until its withdrawal I 2004, Monsanto was seeking approval for hard red
spring (HRS) wheat genetically modified with the Roundup Ready® gene. A majority of the hard
red spring wheat is grown in Western Canadian Provinces and the US states including South
Dakota, North Dakota, Montana, Idaho, Washington, Oregon, and California. If GM HRS wheat
were introduced, exports from this region of the U.S. would be at risk. The HRS wheat growing
region overlaps substantially with durum wheat growing areas
3
. Exports of these two classes of
wheat would be at risk given the state of the grain merchandising system. Given the GM testing
and labeling regimes of the EU, Japan, South Korea, and Taiwan, durum wheat exports would also
be at risk for possible contamination and export loss. Exports of the other three classes of wheat —
hard red winter wheat, soft red winter wheat and white wheat – are less at risk if GM HRS wheat is
adopted. This is due to the fact that their growing areas have substantially less growing area
overlap with HRS wheat
4
and their exports go to countries that are less likely to reject GM wheat.
In addition, the export share of soft red winter wheat is low compared to the other classes of wheat.
In this section, wheat acreage and production of the various types of wheat are shown, followed by
US exports of various wheat classes. Lastly, US wheat exports are compared to world wheat
exports. This information will be used in a later section detailing the decline of US wheat sector
competitiveness.
The U.S. is one of the major wheat exporters in the world. The other major wheat exporters are
Canada, Australia, and Black Sea nations that are termed as the “Former Soviet Union.” Figure 1
details total U.S. wheat production and exports.
Since 1960, 40 to 70
percent of U.S. wheat
production has been sold
into the export market. In
2009, the US produced
2.216 billion bushels of
wheat. Wheat production
rose in the 1960’s and
70’s, reaching a peak in
1981. Since that time, US
wheat production and
exports have trended
downward.
Figure 2 details US wheat
production by production
type. Hard red winter wheat is the largest production class, followed hard red spring wheat, soft red
3
White Wheat is grown Montana, Idaho, Washington, Oregon, and Michigan. Durum wheat is grown in South Dakota, North Dakota, and Montana.
4
Hard Red Winter Wheat is grown throughout the Great Plains – from Texas to North Dakota and Washington State. Soft red winter wheat is grown
in the Eastern US – from the Gulf of Mexico to the Great Lakes Region.
Figure 1. US Total Wheat Production and Exports, 1960-
2009 (Source: USDA-ERS)
0
500
1,000
1,500
2,000
2,500
3,000
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(
m
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)
Production Exports
16
Figure 2. U.S. Wheat Production by Wheat Type, 1984-2009
(source: USDA-ERS)
0
200
400
600
800
1,000
1,200
1,400
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s
h
e
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s
(
m
i
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o
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)
HRW
HRS
SRW
White
Durum
Figure 3. U.S. Wheat, Harvested Acres, 1980-2008. (Source:
USDA-NASS)
0
10,000
20,000
30,000
40,000
50,000
60,000
1
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A
c
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s
(
1
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)
Winter
Spring
Durum
winter wheat, white
wheat, and durum wheat.
The number of acres of
U.S. producing the levels
of wheat shown in Figures
1 and 2 have been
declining over time. In
particular, winter and
spring wheat acres have
declined over time since
1980. Durum wheat acres
have remained steady
(Figure 3). Wheat yields
have gone up over time
particularly in winter and
spring wheat classes.
However, durum wheat
yields have stagnated over
the past 20 years (Figure
4).
Figure 4. U.S. Wheat Yield, 1980-2008. (Source: USDA-
NASS)
15
20
25
30
35
40
45
50
1
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Y
i
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/
a
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r
e
(
b
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e
l
s
)
Winter
Spring
Durum
17
7.2 U.S. Exports and Export Shares
U.S. wheat exports have declined over time. Figure 5 shows US wheat exports by wheat class type.
Export markets are highly volatile particularly the HRW export markets. Both HRW and HRS
wheat exports have declined since the 1990/91 marketing year. In 2009, 37 percent of hard red
winter production, 39 percent of hard red spring wheat, 32 percent of spring wheat, 71 percent of
white wheat, and 50 percent of Durum were exported.
Relative to the world
wheat export markets, the
US share of world exports
has gone down. In 1973
the US had 50 percent of
the total world wheat
export market. Since that
time, the US wheat export
share has declined to 19
percent. (Figure 6).
5
It is against this backdrop
that the wheat industry
stakeholders say that the
wheat industry must take
measures to restore
competitiveness. One of
the solutions put forth is
to allow for the
introduction of wheat
with GM traits.
In the next section, wheat
use and exports for the
various classes of wheat
are evaluated to determine
which classes are most at
risk should GM wheat be
introduced.
5
See Appendix Table 3 for world wheat production and exports.
Figure 5. U.S. Wheat Exports by Wheat Type, 1984-2009 (Source:
USDA-ERS)
0
100
200
300
400
500
600
700
800
900
1000
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9
B
u
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h
e
l
s
(
m
i
l
l
i
o
n
s
)
HRW
HRS
SRW
White
Durum
Figure 6. U.S. Export Share of World Wheat Exports, 1960-2009
(Source: USDA-ERS)
0
10
20
30
40
50
60
1
9
6
0
1
9
6
4
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P
e
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n
t
18
7.3 U.S. Hard Red Spring and Durum Wheat Exports to Japan, Korea,, Taiwan, EU and North
Africa.
The EU, Japan, Korea, Taiwan and North Africa are likely to restrict wheat imports from the US if
HRS wheat is introduced. In addition, since durum wheat is grown in the same areas and marketed
through the same
channels, it, too is at
risk for export loss if
GM HRS wheat is
introduced.
The U.S. Export trends
for these countries are
presented for hard red
spring wheat and durum
wheat types (Figures 7
and 8). HRS wheat
exports to Japan and the
EU have trended up
over time. Exports to
Taiwan, South Korea,
and North Africa have remained stable over time. In 2007/08 U.S. HRS wheat exports to Japan,
South Korea, Taiwan, North Africa, and the EU amounted to 51 percent of total U.S. HRS wheat
exports.
In 2007/08, U.S. durum wheat exports to Japan Taiwan, the EU, and North Africa were 75 percent
of total US durum
exports (Figure 8).
The high export
shares of HRS and
durum wheat to
countries that are
likely to reject or
curtail exports of
GM HRS wheat
place these exports
at risk.
Figur e 7. U.S. Har d Re d Spr ing Wheat Expor ts to Countr ies Likely to Label or
Re ject GM Whe at, 1996-2008. (Sour ce USDA-FAS)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
1
9
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/
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0
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7
/
0
8
B
u
s
h
e
l
s
(
0
0
0
)
Japan
South Kor ea
Taiw an
Nor th Afr ica
EU
Figure 8. U.S. Durum Wheat Exports to Countries Likely to Label or Reject GM Wheat,
1996-2008. (Source USDA-FAS)
0
5,000
10,000
15,000
20,000
25,000
30,000
1
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E
x
p
o
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t
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(
0
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h
e
l
s
)
Japan
Taiwan
North Africa
EU
19
7.4 U.S. Hard Red Spring and Durum Wheat Exports to Latin America, Oceania (South Pacific),
Asia, and Africa (South and Central)
Lower income countries are more likely to accept GM wheat (Wisner, 2003). Figure 9 presents
U.S. HRS wheat exports to Latin America, Oceania, Asia, and Africa. Of the 4 regions presented in
Figure 9, only HRS wheat exports to Latin America are trending upward. Should HRS wheat
exports be lost to the EU, Japan, Taiwan, North Africa, and Korea due to GM wheat introduction,
the lower income countries could take up the slack. However, export adjustments often take several
years once a shock is introduced in to the world export markets. In 2007/08, HRS exports to the
regions shown in
Figure 9 were 49
percent of total US
HRS wheat exports.
Overall, US HRS
wheat exports are
balanced evenly
between countries
that are likely to
reject GM wheat and
countries that are
more likely to accept
GM wheat.
For Durum wheat,
export shares to
countries that will
likely reject GM
wheat dominate total
U.S. durum wheat
exports. Figure 10
shows durum wheat
exports to Latin
America and Africa.
In 2007/08 U.S.
exports of durum to
Latin America and
Africa were 24
percent of total
durum exports. In
comparison to HRS
wheat, U.S. durum
wheat exports are
more at risk should
GM wheat be
rejected.
Since both HRS and durum wheat exports wold be at risk if the US adopts GM wheat, other sources
of wheat will have to come from somewhere to fulfill the demand for wheat in countries hesitant to
import GM wheat. That source could be the Former Soviet Union.
Figure 9. U.S. Hard Red Spring Wheat Exports to Countries Likely to Accept GM
Wheat, 1996-2008. (Source: USDA-ERS)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
1
9
9
6
/
9
7
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9
9
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/
9
8
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x
p
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t
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(
0
0
0
b
u
s
h
e
l
s
)
Latin America
South Pacific
Asia
Africa (Central+South)
Figure 10. U.S. Durum Wheat Exports to Countries Likely to Accept GM
Wheat, 1996-2008. (Soruce: USDA-ERS)
0
5000
10000
15000
20000
25000
30000
1
9
9
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/
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p
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(
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h
e
l
s
)
Latin America
Africa (Central+South)
20
7.5 Russian and Former Soviet Union (FSU) Countries – Growth in Export Share
In the last several years, world wheat export shares of Russia and Former Soviet Union (FSU)
countries have been increasing. As pointed out earlier, the US share of world wheat exports has
steadily gone down since the 1960s. Figure 11 shows that the North American wheat export share
of total wheat exports has gone down over time. The world wheat export share of Russia and the
FSU has gone up from 10 percent in 2000 to almost 30 percent in 2008/09. The US has
approximately 60 percent of North American wheat exports.
Russia and the Former Soviet Union countries present a challenge to the US dominance in wheat
exports. If the EU and Japan reject or curtail GM wheat from the U.S., they could go to Russia and
Ukraine to purchase wheat. Given the proximity of Russia and the Former Soviet Union countries
to the EU, it is very likely their exports to the EU could replace US wheat exports. Given the cold
war animosities of the past and the closer political alignment of the EU and Russia/FSU, this is not
beyond the realm of possibilities.
7.6 U.S. Exports At Risk if GM Hard Spring Wheat is Introduced
To identify the export wheat pools at risk should GM HRS wheat be introduced, USDA-FAS data
were used to identify the export destinations for all classes of wheat. Once these risky wheat pools
are defined the level of pooled risky exports are compared to the total production class pool. This
data is then used in the price impact analysis to determine the degree of farm level price risk. For
the 2007/08 crop year, the Appendix Table 1A and 1B details the US exports to all country
destinations in the world for all wheat classes.
Which exports are at risk? Given the regulatory approaches of the various countries in the world
towards GM crops, various exports to certain countries are more at risk than others. Given the
controversies caused by the various unintended GM releases
6
and the export and price responses
that occurred, one can get a good idea of the economic response that may occur if the U.S. approves
GM wheat.
Appendix Table 2 details a list of countries that have some sort of a labeling regime for GM food
ingredients. As of this writing there are 48 countries that have some sort of a labeling regime. This
list was taken from Robert Wisner (personal communication). In addition to the list drafted by
Wisner, more countries were added to the list. As time has passed by, the number of countries
6
Starlink corn - 2000, LibertyLink rice – 2006, Triffid Flax – 2001, 2009.
Figure 11. World Wheat Export Shares of North America and the Former Soviet Union,
1980-2009. (Source: USDA-FAS)
0
10
20
30
40
50
60
70
1
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t
North America Former Soviet Union - 12
21
Figure 12. U.S. Hard Red Spring Wheat Use by Type,
2007/08 Marketing Year. (Source: USDA-ERS)
Domestic
Use
45%
Exports- GM
Labeled
39%
Exports-
Other
16%
considering some form of labeling regulations has increased. Part of this is driven by consumer
sentiment. The other reason is the trend towards greater traceability in certain countries especially
the EU and Japan. This list is used to outline which exports are at risk.
Hard Red Spring Wheat and Durum Wheat – Exports at Risk
Figure 12 details the use share of US HRS wheat in 2007/08. Exports of HRS wheat are 54 percent
of total production. Exports to countries that label GM products or reject GM products are 39% of
US HRS total production.
Figure 13 details the export destinations of US HRS wheat. A majority of the exports go to
countries that label or limit the commerce in GMOs. Only 28 percent of the exports go to
nonlabeling countries. Japan and the EU account for 36 percent of total U.S. exports. Since Japan
and the EU have indicated a willingness to severely curtail HRS GM wheat, these exports are at
risk.
Durum wheat could be most at risk should GM wheat be adopted in the U.S. The growing areas for
HRS wheat and durum wheat overlap. Even if the durum wheat were not GM, the commonality of
growing area and grain merchandising systems with HRS wheat would present a risk. At the least,
GM testing will have to be implemented on U.S. durum wheat exports to satisfy the concern of
foreign buyers.
Figure 13. Shares of US Hard Red Spring Wheat Exports
by Destination, 2007/08. (Source: USDA-ERS)
Japan
19%
EU
17%
South Korea
5%
Other
Labelers
14%
Non Labelers
28%
Philippines
10%
Taiwan
7%
22
A majority of the Durum wheat produced
in the U.S. is consumed domestically. 25
percent of production goes to GM labeled
exports while 8 percent goes to
nonlabeling countries (Figure 14). While
the amount of durum wheat exports
relative to production is small, the
exports predominantly go to countries
that have stringent GM rules or label GM
food products.
51 percent of U.S. durum wheat goes to
the EU and 24 percent goes to North
Africa (Figure 15). These countries have
indicated that they intend to curtail U.S.
purchases of wheat if it contains GM
events. The export patterns shown in
Figure 15 suggest that durum wheat is
more at risk than HRS wheat should GM
wheat be approved in the U.S.
To determine the export loss and price effects from the introduction of GM HRS wheat, export
pools of HRS and durum wheat going to countries that restrict GMOs or have GM labeling rules
were identified. This analysis was done for the 2007/08 marketing year. This analysis tested two
likely scenarios that could occur if the U.S. introduces GM HRS wheat first in the world.
Scenario I was completed assuming that only the EU and Japan shut down U.S. imports and the rest
of the world remains indifferent to GM wheat. Scenario II assumes that the EU and Japan shut
down U.S. imports and 40 percent of the exports to other labeling countries were shut down. The
wheat in the exports that would be lost after GM introduction is assumed to be priced as feed wheat.
Feed wheat is priced close to corn because it is a close substitute. The analysis assumes the use of
demand elasticities of -0.3 and -0.2 for the HRS and durum wheats, respectively.
If export wheat could not be devoted to feed wheat use, these elasticities mean that export
shutdowns would generate severe shocks to the system that would result in low prices. However, if
lost-export wheat is devoted to feed wheat, export losses generate negative price effects tied to the
price of corn. This ultimately buffers, or sets a floor under, the price shock. In 2007/08 the price of
HRS and durum wheat were $7.16 and $9.92 per bushel/respectively. The price of corn was $4.20
per bushel in 2007/08. The price difference between HRS wheat and durum wheat and corn was
$2.96 and $5.72, respectively.
Table 3 highlights the export and price impacts that would be caused by GM wheat introduction. In
Scenario I, in which the EU and Japan totally shut down imports of U.S. wheat, the export loss is
106 million bushels. This amount is 35.36 percent of total US exports of HRS wheat. In Scenario I
the 106 million bushel export loss would result in a 41 percent price drop. Scenario II generates a
149 million bushel loss which would amount to a 49 percent export loss.
Figure 15. Shares of U.S. Durum Wheat Exports by
Destination, 2007/08. (Source: USDA-ERS)
EU
51%
North Africa
24%
Other
labelers
0%
Non labeler
25%
Figure 14. U.S. Durum Wheat Use by Type, 2007/08
Marketing Year. (Source: USDA-ERS)
Domestic
Use
67%
Exports- GM
Labeled
25%
Exports-
Other
8%
23
Table 3. Export losses in the U.S. HRS wheat sector caused by GM HRS introduction.
----------------------------------------------------------------------------------------------------------------------------
Hard Red Percent of 2007/08 Percent of 2007/08 Estimated Farm
Spring Export Loss US HRS US HRS, Price Impact on
Wheat (Million Bu.) Exports Lost Demand Lost HRS Wheat (%)
----------------------------------------------------------------------------------------------------------------------------
Scenario I 106 35.36 19.49 -41.34
Scenario II 149 49.79 27.44 -41.34
----------------------------------------------------------------------------------------------------------------------------
Table 4. Export losses in the U.S. durum wheat sector caused by GM HRS introduction.
----------------------------------------------------------------------------------------------------------------------------
Durum Percent of 2007/08 Percent of 2007/08 Estimated Farm
Wheat Export Loss US Durum US Durum Price Impact on
(Million Bu.) Exports Lost Demand Lost Durum Wheat (%)
----------------------------------------------------------------------------------------------------------------------------
Scenario I 20 50.62 16.66 -57.66
Scenario II 24 60.46 19.89 -57.66
----------------------------------------------------------------------------------------------------------------------------
Table 4 shows the impact of export losses on durum wheat prices. For durum wheat, export losses
arising from the introduction of GM wheat have a much greater impact on total exports compared to
HRS wheat. In Scenario I, 50 percent of the durum wheat exports are lost if the EU and Japan shut
down U.S. exports. The price is estimated to drop 57 percent. The reason that price impacts are
larger for durum wheat is because most of the durum wheat goes to countries that are likely to reject
GM wheat.
The price impacts shown in this analysis are higher than shown in Wisner’s 2003 report for several
reasons. From the time Wisner (2003) performed his analysis until 2008, grain prices have
exhibited a dramatic rise. Wheat prices in the 2007/08 crop year reached a peak never before seen.
Wheat prices went up relatively higher than corn prices. In this high price environment the price
shocks will be larger.
7.7 U.S. Use and Export Shares of Hard Red Winter Wheat, Soft red Winter Wheat and White
Wheat.
Hard red winter wheat, soft red winter wheat and white wheat are less at risk for export loss
compared to hard red spring wheat and durum wheat. Hard red winter wheat is grown in the Great
Plains and soft red winter wheat is grown in the Eastern U.S. These two classes of wheat are grown
in areas that have little overlap with the hard red spring wheat growing region.
Hard red winter wheat is the largest class of wheat produced in the U.S. 53 percent of U.S. HRW
wheat production is exported. Only
22 percent of total HRW production
is exported to countries that label or
restrict GM wheat (Figure 16).
Figure 16. U.S. Hard Red Winter Wheat Use by Type,
2007/08 Marketing Year (Source: USDA-ERS)
Domestic
Use
47%
Exports- GM
Labeled
22%
Exports-
Other
31%
24
50 percent of U.S. HRW exports
go to countries that label or restrict
GM wheat. However, the countries
most noted for severely restricting
GM products – EU, Japan, Korea,
Taiwan, and North Africa –
comprise only a small proportion
of HRW wheat exports. (Figure
17).
Soft red winter wheat is grown in the
Eastern US and as such would not be at as
great a risk for export losses should GM
wheat be introduced. 36 percent of SRW
wheat production goes to exports to GM
labeling countries (Figure 18).
Most the exports of SRW in 2007/08 went
to Egypt (Figure 19). Since very little
goes to the EU and Japan, there is little
risk of export loss if GM wheat is
approved. However, if GM SRW wheat
were to be introduced in the future, this
could impact SRW exports.
Most the exports of SRW in 2007/08 went
to Egypt (Figure 19). Since very little goes
to the EU and Japan, there is little risk of
export loss if GM wheat is approved.
However, if GM SRW wheat
were to be introduced in the future, this
could impact SRW exports.
White wheat is grown in the Northwest U.S.
51 percent of white wheat production goes
for export to GM labeling countries (Figure
20). Of the total white wheat exports, 19
percent goes to Japan, and 17 percent goes
to South Korea. These two countries are the
sources of export risk if GM wheat is
approved (Figure 21).
Figure 17. Shares of U.S. Hard Red Winter Wheat Exports, 2007/08,
(Source: USDA-ERS).
Other Labellers
26%
North Africa
9%
Non Labellers
50%
Japan
7%
Taiwan
2%
Korea, Republic
3%
EU
3%
Figure 18. U.S. Soft Red Winter Wheat Use by Type,
2007/08 Marketing Year (Source: USDA-ERS).
Domestic
Use
50%
Exports-
GM
Labeled
36%
Exports-
Other
14%
Figure 20. U.S. White Wheat Use by Type, 2007/08
Marketing Year, (Source: USDA-ERS).
Domestic
Use
30%
Exports-
GM
Labeled
51%
Exports-
Other
19%
Figure 19. Shares of U.S. Soft Red Winter Wheat
Exports by Destination, 2007/08, (Source: USDA-
ERS).
Labellers
19%
Egypt
53%
Non
Labellers
28%
25
7.8 Trends in US wheat Acres and Wheat Competitiveness vs Corn and Beans
As mentioned in the introduction, many wheat industry stakeholders are concerned that the wheat
sector has been losing its competitiveness. The acreage devoted to wheat has been declining since
1980 (Figure 22). As shown
in the previous section,
Ukraine and Russia have
emerged as new competitors
in the wheat market. Many
reasons have been cited for
this decline: 1) farmer
retirement of large portions
of land under USDA’s
Acreage Reduction Program,
2) planting flexibility
provisions introduced in the
1996 Farm Act, 3) farmer
enrollment of land in the
USDA Conservation Reserve
Program, 4) changes in crop
rotations, which lengthened the rotation cycle from two to three years, and 5) biofuel mandates
enacted in the U.S. All these factors favored planting of corn and soybeans in place of wheat (Ali
and Vocke).
Figure 23 shows that total
crop acres devoted to wheat
have been declining while
the acres devoted to corn and
soybeans has been
increasing. In a conversation
with a Kansas State
Cooperative Extension
Agent, reasons were put
forth for the decline of wheat
acres. Besides the reasons
listed at the beginning of this
section, the decline in wheat
acres can be explained in a
macroeconomic sense. In
the international market
North America has remained
Figure 22. U.S. Wheat, Harvested Acres, 1980-2008. (Source:
USDA-NASS)
0
10,000
20,000
30,000
40,000
50,000
60,000
1
9
8
0
1
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8
3
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0
4
2
0
0
7
A
c
r
e
s
(
1
0
0
0
)
Winter
Spring
Durum
Figure 23. Wheat, Corn, and Soybean Shares of Total Crop Acres Harvested
in the US, 1980-2008. (Source USDA-NASS)
0
5
10
15
20
25
30
1
9
8
0
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P
e
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c
e
n
t
o
f
T
o
t
a
l
C
r
o
p
A
c
r
e
s
Winter Wheat %
Spring Wheat %
Durum Wheat %
Corn %
Soybean %
Figure 21. Shares of U.S. White Wheat Exports, 2007/08,
(Source: USDA-ERS).
Japan
19%
South
Korea
17%
Other
Labellers
16%
Non
Labellers
29%
Taiwan
3%
Philippines
16%
EU
0%
26
as the dominant supplier of corn and soybeans. In the wheat market the U.S. has a much less
comparative advantage in wheat production because there are several major export competitors.
Many in the wheat industry have attributed the loss of wheat acres to corn and soybeans partly to
strong genetic improvements in corn and soybeans, and a slower pace of genetic improvement for
wheat than for corn and soybeans. The reasons cited for this are: 1) genetic complexity and 2)
lower returns to seed companies on investment for breeding wheat. To address this perceived lag,
the wheat industry summits from 2006 to 2009 have put forth the idea that GM wheat is needed as
one of the many tools to restore wheat competitiveness. The introduction of a GM wheat variety
will not in and of itself restore competitiveness to the wheat sector. The fact that GM wheat is not
approved anywhere in the world indicates that U.S. farmers are not at a competitive disadvantage in
terms of wheat genetics. Furtan et al. (2005) make the case that introducing GM wheat in U.S. and
Canada without an affordable segregation system does not confer first mover advantages to the
early adopters of GM wheat. The main reason cited for this result is that major foreign customers
do not want GM wheat. Given the foreign consumer concerns for GM wheat, other methods should
be used to improve wheat genetics and cultural practices. The next section details the biotech
development of wheat and some of the breeding techniques that can boost wheat yields using non-
transgenic techniques.
8.0 Biotech Development of Wheat
Research and development of GM traits in wheat has grown since the early 1990s. Currently, the
only GM wheat that has been close to ready for commercial release is the Roundup Ready® hard
red spring wheat from Monsanto. Many in the wheat industry who opposed Roundup Ready®
wheat, stress that other GM and non-GM traits should be developed that have more end-user
benefit. The Canadian Wheat Board in its public pronouncements on wheat breeding efforts stated
they wanted to see traits that had a greater benefit than Roundup Ready® wheat, such as resistance
to fusarium disease or improved yield and quality. Breeding wheat turned out to be more difficult
than for other crops.
The genetic development of wheat has lagged that found in corn and soybeans for several reasons:
1) wheat genetics are more complex, 2) wheat is a smaller volume crop compared to corn and
soybeans, and 3) competition among exporters is more intense and compounded by radically
different marketing systems (Wilson et al., 2003). The wheat genome is 10 to 20 times larger than
other crop genomes. As a consequence, improving wheat genetics has been more costly and time
consuming.
In general, plants can be changed genetically by 1) transformation, 2) plant breeding selections
based on phenotypic selection, and 3) the use of DNA markers. The process of transformation
involves introducing genes via a vector into the plant. Currently, foreign genes are introduced into
the crop plant using a fungal pathogen such as agrobacterium tumefaciens.
7
Traditional plant
breeding has relied on visual selection of phenotypes and data analysis of morphological
characteristics of the crop plant. Marker assisted selection (MAS) is a relatively new selection
technique that relies on DNA markers. The use of DNA markers allows plant breeders to change
the genome using what is already known about the chromosomes through the gene mapping
process.
As the plant breeding industry goes forward, MAS will become a more important component of
changing genetics. At this time, MAS has had a small impact on variety development, however,
there is optimism that it will be widely adopted in many plant breeding programs (Collard and
Mackill, 2008). Collard and Mackill (2008) discuss in great detail how MAS can be utilized to its
fullest potential. Three factors were discussed as to how this will happen: 1) greater integration into
breeding programs, 2) that current barriers be understood and appropriate solutions developed, and
7
Seehttp://www.bio.davidson.edu/people/kabernd/seminar/2002/method/dsmeth/ds.htm for a description of
agrobacterium tumefaciens mediated gene transfer.
27
3) overcoming the high cost of MAS for certain crop species and developing countries.
Moose and Mumm (2008) discuss the institutional adoption of MAS. Despite the fact that
molecular breeding is an essential component of crop improvements by large companies, the
applicability of the molecular approach remains a source of debate among some plant breeders in
the public sector. Moose and Mumm stress that the grand challenges are identifying gene
combinations that lead to crop improvement and integrating the various disciplines in the plant
breeding area.
In wheat breeding, herbicide tolerance is the main trait under development, followed by product
quality, fusarium resistance, and others. In 2004, Syngenta was developing a GM wheat resistant
to fusarium, a fungus which damages crops and produces dangerous toxins. In 2006 Syngenta was
still working on GM wheat (Food-Navigator.com, 2006). In 2009, however, Syngenta’s chief
executive Michael Mack said that Syngenta was not pursuing GM wheat because of GM consumer
resistance (Reuters, 2-26-2009). In 2002, Dupont pulled out of hybrid wheat development because
the return on investment was not in line with the investments made by Dupont (GENET 3-23-
2002).
In addition to GM wheat development efforts, there are efforts to improve wheat varieties through
non-GM breeding. Most notable is BASF’s Clearfield HRS wheat which was created through
mutagenesis. This wheat has been developed to be resistant to BASF’s Beyond herbicide.
8
Many wheat breeding efforts are currently underway that do not use GM technologies. Jianming
Yu and Rex Bernado at Kansas State University are developing marker assisted selection to
accelerate classical plant breeding techniques (Bernardo and Yu, 2007). Their work focuses on
corn, sorghum, wheat and barley. Other non-GM efforts are focusing on the Ug99 stem rust
(Borlaug Global Rust Initiative, 2009), frost-resistant wheat (USDA-CSREES, 2009), and salt-
resistant wheat (Countryman, 2004).
9.0 Organic Segregation from GM wheat
If GM wheat is approved by the US and Canada, what will happen to organic wheat production?
This question has many facets that must be addressed. No one can say for sure what will happen to
organic wheat production if GM wheat is introduced. However, one can look at what happened to
organic canola production in Canada when GM Canola was introduced. Organic canola production
was always a niche market. Today, organic canola production in Canada is almost nonexistent. The
main reason is that GM events have permeated all canola varieties, even pedigreed seed lines.
A number of studies show that the pedigreed oilseed rapeseed supply is deeply contaminated with
GM events. Researchers at the University of Manitoba conducted a survey of 27 pedigree seed lots
of oilseed rape in 2002 (Friesen et al., 2003). Of the 27 seed lots, 14 had contamination levels
above 0.25% and three seed lots had glyphosate resistance contamination levels in excess of 2.0%.
Oilseed rape breeder Keith Downey suspected that, “There are varieties of certified seed out there,
in which part of the level of contamination was coming right from the breeders’ seed.” (Organic
Agriculture Protection Fund, 2002) Walter Fehr, an agronomist and director of the Office of
Biotechnology at Iowa State University, said that the same was true of other crops, such as
soybeans and maize (Charman, 2003). If the breeder seed supply is contaminated, then the whole
system is contaminated, and it will be hard to find any fields that can be considered GM free.
Another report suggested that even Canadian wheat (the GM version of which has not yet been
approved) may be contaminated, since researchers were testing Roundup Ready® wheat at a
national experimental station alongside plots of wheat destined for commercial seed growers
(Zakreski, 2002). The extent of the penetration of contaminated seed into the canola seed supply is
now so deep that segregating GM from non-GM seed will not help at this point
(http://www.grain.org/front/).
8
See: BASF athttp://agproducts.basf.us/products/beyond-herbicide.html
28
10.0 Summary
This report reviews the U.S. and world wheat industry to evaluate the impact of a possible
introduction of Roundup Ready® hard red spring (HRS) wheat in the U.S. Recently, major
stakeholders of the wheat industry have agreed to support development of GM wheat. The
economic impacts of introducing GM wheat in the U.S. are dependent on foreign consumer
sentiment. A review of the EU, Japanese, Korean, and Taiwanese consumers suggests they will
likely reject GM wheat products or pay substantially less for them. Consumer sentiment against
GMOs is strongest in the EU and Japan. EU regulations dictate strict labeling and traceability
policies for all products sold in the EU.
Identity preserved (IP) systems have been proposed as a way to segregate GM and non-GM wheat
if the U.S. introduces GM wheat. IP costs for such systems are 3 to 6 cents per bushel. At the
current time IP systems analyses have not incorporated liability costs and other associated costs
arising from IP systems failures.
U.S. wheat acres and world export shares have gone down since 1960. Trends in U.S. wheat
exports indicate that HRS and durum wheat are most “at risk” of export loss if the U.S. approves
Roundup Ready® wheat. Exports to Japan and the EU would likely be curtailed because of foreign
consumer concerns. The combined EU and Japanese export losses would likely be 35 and 50
percent for HRS and durum wheat, respectively. In addition, the corresponding price drop will be
41 and 57 percent for HRS and durum wheat, respectively. If more countries in addition to the EU
and Japan curtail their purchases of HRS and durum wheat, the U.S. export declines would be even
higher. The routing of lost export wheat into feed wheat markets will limit the price drops to the
price level of the corn market.
If the U.S. loses its HRS and durum wheat export markets due to GM wheat introduction, Russia
and the Former Soviet Union would likely make up the difference – as indicated by their growing
world wheat export market share.
A review of the wheat breeding literature suggests that in addition to the traditional plant breeding
and GM transformation techniques, marker assisted selection (MAS) is being used to generate non-
GM trait development in wheat. Non-GM trait development has recently focused on rust, drought,
and salt resistant wheat varieties. In addition, mutagenesis has been used to create a non-GM
herbicide resistant wheat that is commercially sold.
Depending on the trends for labeling and changing consumer sentiment, there is a mixed outlook
for the marketing of GM wheat. Currently there are no commercial GM wheat varieties grown in
the world. Some promote GM technology as one of the tools that can reverse the decline in the
competitiveness of the wheat sector. However, the concerns of major foreign consumers about GM
wheat and the lack of an affordable identity preserved segregation make the introduction of GM at
the current time a risky proposition.
29
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MAFF 2003, Ministry of Agriculture, Forestry and Fisheries of Japan, Over 60% of Consumers Reject GM Foods on
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Safety Fears, Japan Economic Newswire, TOKYO, July 22, 2003.
PEW 2003, Broad Opposition to Genetically Modified Foods - Modest Transatlantic Gap, The Pew Research Center for
the People and the Press, June 20, 2003, Retrieved October 17, 2007 fromhttp://people-
press.org/commentary/display.php3?AnalysisID=66
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Agricultural Service GAIN Report. Date: 7/15/2005 GAIN Report Number: KS5035
Korea BCH, 2008. Korea Biosafety Clearing House. Korea BCH’s 2008 Awareness Survey.http://bch.biodiv.org/news/info.shtml?postid=49430
Chern, Wen S. and Kyrre Rickertsen. 2002. Consumer Acceptance of GMO:
Survey Results from Japan, Norway, Taiwan, and the United States. Department of Agricultural, Environmental and
Development Economics. The Ohio State University
Working Paper: AEDE-WP-0026-02.
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Wang, CNAhttp://www.chinapost.com.tw/health/other/2009/10/28/230522/COA-chief.htm
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organisms. BELGIAN BIOSAFETY SERVERhttp://www.biosafety.be/GB/Dir.Eur.GB/Del.Rel./90.220/TC.html
Directive 2001/18/EC of the European Parliament and of the Council of 12 March 2001 on the deliberate release into
the environment of genetically modified organisms and repealing Council Directive 90/220/EEC.http://europa.eu/legislation_summaries/agriculture/food/l28130_en.htm
Regulation 1829/2003 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
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DFRegulation 1830/2003/EC concerning the traceability and labeling of genetically modified organisms and the
traceability of food and feed products produced from genetically modified organisms and amending Directive
2001/18/EC
DIRECTIVE 2008/27/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 11 March 2008
amending Directive 2001/18/EC on the deliberate release into the environment of genetically modified
organisms, as regards the implementing powers conferred on the Commissionhttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:081:0045:0047:EN
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Applied Economics Report No. 501. Department of Agribusiness and Applied Economics. Agricultural
Experiment Station. North Dakota State University Fargo, North Dakota 58105-5636
Boland, Michael. 2003. Cargill: Biotechnology and Value Creation in Wheat. International Food and Agribusiness
Management Review. 6(3): 1-18
Vachal, Kimberly and Heidi Reichert. 2001. U.S. Containerized Grain and Oilseed Exports Industry Profile: Phase I.
MPC Report No. 02-132. Mountain-Plains Consortium.http://www.mountain-plains.org/pubs/pdf/MPC02-132.pdf
Reichert, Heidi, and Kimberly Vachal. 2003. IDENTITY PRESERVED GRAIN – LOGISTICAL
OVERVIEW. Symposium presented at: “Product Differentiation and Market Segmentation in Grains and
Oilseeds: Implications for Industry in Transition” Economic Research Service, USDA
And The Farm Foundation. Washington, DC January 27-28, 2003
Huygen, I., Veeman, M., & Lerohl, M. (2004). Cost implications of alternative GM tolerance levels: Non-genetically
modified wheat in western Canada. AgBioForum, 6(4), 169-177.http://www.agbioforum.org/v6n4/v6n4a04-
veeman.htm
Furtan, W.H., R. S. Gray, and J.J. Holzman. 2005. Regulatory Approval Decisions in the Presence of Market
Externalities: The Case of Genetically Modified Wheat. Journal of agricultural and Resoruce Economics
30(1): 12-27.
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Smyth, S, Phillips, P W B 2001, ‘Competitors Co-operating: Establishing a Supply Chain to Manage Genetically
Modified Canola’, International Food and Agribusiness Management Review, vol. 4, pp. 51-66.
USDA, Grain Inspection, Packers and Stockyards Administration, “Continued Issuance of GIPSA ‘No transgenic
wheat’ Letterhead Statement”, Discussion Paper, Washington, D.C. , March 20, 2003.
Wilson, W.W., Janzen, E.L., & Dahl, B.L. (2003). Issues in development and adoption of genetically modified (GM)
wheats. AgBioForum, 6(3), 101-112. Available on the World Wide Web:http://www.agbioforum.org.
US Wheat Associates Aug. 28, 2002. Press release. European and American Millers Tell U.S. Wheat Associates Board
to Go Slow on GM Wheat.
Western Canadian Wheat Growers - September 15, 2009. "Toward Commercialization of Biotech Wheat”http://www.wheatgrowers.ca/pdf/Presentations/Rutter CNMA slides (2).pdf
GAO, 2008. GENETICALLY ENGINEERED CROPS. United States Government Accountability Office. Report to
the Committee on Agriculture, Nutrition, and Forestry, U.S. Senate. November 2008.
Schmitz, Troy, Andrew Schmitz and Charles B Moss. No 20306, 2004 Annual meeting, August 1-4, Denver, CO from
American Agricultural Economics Association
Blue, E. Neal. 2007. Risky Business. Greenpeace report, November 6, 2007. ISBN: JN 087
EC, 10-30-2009. Detection of flax CDC Triffid (FP967)http://gmo-crl.jrc.ec.europa.eu/flax.htm
Ali, Mir, and Gary Vocke. 2009. Consequences of Higher Input Costs and Wheat Prices for U.S. Wheat Producers.
Economic Research Service - USDA Report: WHS-09c-01 March 2009
Collard, Bertrand C. Y., and David J. Mackill, 2008. Marker-assisted selection: an approach for precision plant
breeding in the twenty-first century.” Philisophical Transactions of the Royal Society B (2008) vol. 363 no.
1491, pp 557-572.
Moose, Stephen P., and Rita H. Mumm, 2008. “Molecular Plant Breeding as the Foundation for 21
st
Century Crop
Improvement.” Plant Physiology, July 2008, Vol. 147, pp. 969–977.
Food-Navigator.com. 2006. Syngenta moves closer to launching GM wheat Lorraine Heller, 15-Mar-2006.http://www.foodnavigator.com/Financial-Industry/Syngenta-moves-closer-to-launching-GM-wheat
Reuters February 26, 2009. Syngenta not actively pursuing biotech wheat: CEO. K.T. Arasuhttp://www.reuters.com/article/idUSTRE51P6HO20090226
GENET 3-23-2002. Du Pont ditches hybrid wheats Source: Farmers Weekly, 22 March 2002 By Charles Abel. Cited in
GENET.http://www.gene.ch/gentech/2002/Mar/msg00125.html
Bernardo, Rex and Jianming Yu. 2007. “Prospects for Genomewide Selection for Quantitative Traits in Maize.” Crop
Sci 47:1082-1090
Borlaug Global Rust Initiative. 2009. Significant progress in developing non-GE wheat resistance against Ug99 stem
rust.http://www.gene.ch/genet/2009/Mar/msg00108.html
USDA-CSREES. 2009. Researchers Identify Gene to Improve Wheat Frost Tolerance. February 9, 2009.http://www.csrees.usda.gov/newsroom/impact/2009/nri/02091_wheat_frost.html
Countryman, 2004. Salt-tolerant wheats yield double SOURCE: Countryman, Australia, by Lara Ladyman, 29 Jul
2004.http://www.gene.ch/genet/2004/Aug/msg00004.html
Friesen, L F, Nelson, A G & Van Acker, R C 2003, ‘Evidence of contamination of pedigreed canola (B. napus)
seedlots in Western Canada with genetically engineered herbicide resistance traits’, Agronomy Journal, vol.
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Organic Agriculture Protection Fund 2002, Organic farmers gain key piece of evidence in class action, June 26, 2002,
Retrieved September 10, 2007 fromhttp://www.cropchoice.com/leadstry0f8a.html?recid=759
Charman, Karen 2003, ‘Seeds of Domination: Don't want GMOs in your food? It may already be too late’, In These
Times, February 10, 2003, Retrieved October 1, 2007 fromhttp://www.inthesetimes.com/article/549/
32
Zakreski, Dan 2002, Secret GM wheat test raises contamination fears, CBC Saskatchewan, March 24, 2002Retrieved
September 10, 2007 fromhttp://sask.cbc.ca/template/servlet/View?filename=gmwheat030324
Grain.org April 2003, Contaminating Canada’s Seed Supply, Retrieved August 27, 2007 fromhttp://www.grain.org/seedling/?id=230
USDA, NASS, Planted Acreage, June 28, 2002, Cr-Pr 2-5, (6-02), Washington, D.C., June 28, 2002.
USDA, ERS, Wheat Data: Yearbook Tables Updates of this data can be found at:http://www.ers.usda.gov/data/wheat/
USDA, FAS. PSD Market and Trade Data Query. Foreign Agricultural Service.http://www.fas.usda.gov/psdonline/psdQuery.aspx
33
Appendix Table 1A. US Wheat Export Destinations.
Hard Red Winter Hard Red Winter Hard Red Spring Hard Red Spring
Afghanistan Korea, Republic Japan Honduras
Algeria Madagascar Spain Tanzania
Bangladesh Malawi Italy Trinidad
Bolivia Malaysia Belgium Bangladesh
Brazil Mauritania United Kingdom Sudan
Chile Mauritius Portugal Vietnam
China Mexico Netherlands Barbados
Colombia Morocco Malta Saint Vincent
Congo (Braz) Mozambique Sweden Cuba
Congo (Kins) Namibia Iceland Tunisia
Costa Rica Nicaragua Korea, Republic United Arab Emirates
Cuba Nigeria Taiwan Guatemala
Djibouti Other West Africa Philippines Ghana
Dominican Republic Panama Mexico Singapore
Ecuador Peru Thailand Cameroon
Egypt Philippines Malaysia Senegal
El Salvador Rep. of South Africa Rep. of South Africa Belize
Ethiopia Saint Vincent Sri Lanka Somalia
Ghana Senegal China, Mainland Chile
Greece Sierra Leone Indonesia Mauritius
Guatemala Somalia Peru Namibia
Guinea Sri Lanka Ecuador Liberia
Haiti Suriname Venezuela Iraq
Honduras Taiwan Colombia
Indonesia Thailand El Salvador
Iraq Trinidad Dominican Republic
Ireland Uganda Morocco
Israel United Arab Emirates Nigeria
Ivory Coast Vanuatu Costa Rica
Jamaica Venezuela Jamaica
Japan Vietnam Panama
Kenya Yemen Nicaragua
34
Appendix Table 1B. US Wheat Export Destinations.
Soft Red Winter White Durum
Japan Japan Italy
Spain Finland Portugal
Italy Belgium Netherlands
Philippines Philippines Switzerland
China, Taiwan China, Taiwan Spain
Korea, Republic China, Taiwan Germany
Egypt Korea, Republic United Kingdom
Mexico Korea, Republic Tunisia
Brazil Thailand Algeria
Peru Sri Lanka Morocco
Ecuador Malaysia Mexico
Rep. of South Africa Mexico Venezuela
Sri Lanka China, Mainland Nigeria
Malaysia Mexico Costa Rica
Indonesia Indonesia United Arab Emirates
Nigeria Egypt Cuba
Colombia Yemen Guatemala
Morocco Yemen Dominican Republic
Chile Pakistan Panama
Venezuela El Salvador
Jamaica Bangladesh
Dominican Republic Singapore
Honduras Afghanistan
Costa Rica Chile
Turkey Ecuador
El Salvador United Arab Emirates
Trinidad Vietnam
Guatemala Vietnam
Panama Peru
Nicaragua Hong Kong
United Arab Emirates China, PR
Mozambique Colombia
Congo (Kins) Eritrea
Belize Ethiopia
Vietnam Ghana
Barbados Guatemala
Congo (Braz) Iraq
Senegal Korea, North
Saint Vincent Mauritania
Pakistan Russia
Mauritania Sudan
Turkey
Uruguay
Uzbekistan
Venezuela
Chad
All other countries
Former Soviet Union
New Zealand
35
Appendix Table 2. Countries Requiring GMO Labeling
-----------------------------------------------------------------------------------------------------
EU – 27
Austria Belgium Bulgaria Cyprus Czech Republic
Denmark Estonia Finland France Germany
Greece Hungary Ireland Italy Latvia
Lithuania Luxembourg Malta Netherlands Poland
Portugal Romania Slovakia Slovenia Spain
Sweden United Kingdom
-----------------------------------------------------------------------------------------------------
Other countries
Switzerland Paraguay Sri Lanka Australia New Zealand
China Thailand Taiwan Philippines South Korea
Japan Mexico Russia Ethiopia South Africa
Malaysia Ecuador Peru Indonesia Eqypt
Brazil
-----------------------------------------------------------------------------------------------------
36
Appendix Table 3. World and U.S. wheat production, exports and ending stocks
Mkt year
/1
World
production
(million
bushels)
U.S.
production
(million
bushels)
U.S. share
(percent)
World
exports
(million
bushels)
U.S.
exports
(million
bushels)
U.S.
share
(percent)
World ending
stocks (million
bushels)
U.S. ending
stocks (million
bushels)
U.S. share
(percent)
1960 8,577.856 1,354.998 15.80 1,611.469 654.001 40.58 3,044.180 1,502.009 49.34
1961 8,085.417 1,233.009 15.25 1,725.080 715.988 41.50 2,566.548 1,420.990 55.37
1962 9,067.613 1,091.986 12.04 1,698.551 649.004 38.21 2,786.863 1,270.010 45.57
1963 8,465.273 1,146.992 13.55 2,140.872 845.987 39.52 2,584.075 993.991 38.47
1964 9,733.813 1,282.980 13.18 2,016.091 723.006 35.86 2,883.610 921.018 31.94
1965 9,528.085 1,282.980 13.47 2,243.791 852.013 37.97 2,231.593 659.991 29.57
1966 11,047.033 1,314.984 11.90 2,145.980 770.993 35.93 3,219.557 513.016 15.93
1967 10,727.253 1,507.007 14.05 1,967.662 765.004 38.88 3,588.538 630.008 17.56
1968 11,896.658 1,557.015 13.09 1,847.033 543.991 29.45 4,457.416 904.006 20.28
1969 11,170.860 1,442.999 12.92 2,050.924 603.001 29.40 3,804.554 982.968 25.84
1970 11,263.086 1,351.985 12.00 2,075.248 741.010 35.71 2,958.934 822.986 27.81
1971 12,644.209 1,618.634 12.80 2,059.852 599.327 29.10 3,279.156 984.989 30.04
1972 12,400.488 1,546.212 12.47 2,381.029 1,116.347 46.89 2,753.133 597.012 21.68
1973 13,450.733 1,710.787 12.72 2,420.198 1,216.952 50.28 3,037.492 339.990 11.19
1974 13,052.321 1,781.923 13.65 2,264.662 1,018.499 44.97 2,989.211 435.009 14.55
1975 12,957.559 2,126.910 16.41 2,457.824 1,172.896 47.72 3,186.378 665.612 20.89
1976 15,224.683 2,148.772 14.11 2,345.461 949.531 40.48 4,679.385 1,113.261 23.79
1977 13,883.390 2,045.522 14.73 2,458.485 1,123.880 45.71 4,012.670 1,177.820 29.35
1978 16,128.358 1,775.530 11.01 2,820.557 1,194.134 42.34 4,954.816 924.104 18.65
1979 15,342.042 2,134.075 13.91 3,145.372 1,375.170 43.72 4,425.890 901.985 20.38
1980 16,015.371 2,380.919 14.87 3,311.564 1,513.841 45.71 4,139.436 989.104 23.89
1981 16,350.767 2,785.357 17.04 3,688.187 1,770.716 48.01 4,135.321 1,159.374 28.04
1982 17,370.185 2,764.964 15.92 3,709.241 1,508.623 40.67 4,774.074 1,515.053 31.74
1983 17,795.236 2,419.831 13.60 3,740.289 1,426.391 38.14 5,341.029 1,398.649 26.19
1984 18,699.352 2,594.767 13.88 3,808.339 1,421.430 37.32 6,177.500 1,425.252 23.07
1985 18,181.192 2,424.130 13.33 3,029.592 909.113 30.01 6,557.650 1,904.978 29.05
1986 19,256.717 2,090.570 10.86 3,280.258 998.510 30.44 7,028.925 1,820.908 25.91
1987 18,312.992 2,107.693 11.51 4,099.312 1,587.879 38.74 5,847.174 1,260.860 21.56
1988 18,189.900 1,812.200 9.96 3,863.638 1,414.853 36.62 4,950.076 701.621 14.17
1989 19,592.628 2,036.630 10.39 3,799.998 1,231.943 32.42 5,020.844 536.458 10.68
1990 21,627.311 2,729.764 12.62 3,815.577 1,069.462 28.03 6,290.046 868.144 13.80
1991 19,961.939 1,980.155 9.92 4,039.897 1,282.319 31.74 5,983.787 475.023 7.94
1992 20,665.985 2,466.789 11.94 4,043.241 1,353.565 33.48 6,491.879 530.653 8.17
1993 20,511.294 2,396.425 11.68 3,810.947 1,227.754 32.22 6,694.961 568.499 8.49
1994 19,205.276 2,320.990 12.09 3,608.784 1,188.292 32.93 5,992.642 506.586 8.45
1995 19,736.370 2,182.723 11.06 3,644.792 1,241.129 34.05 5,717.468 376.035 6.58
1996 21,358.935 2,277.375 10.66 3,928.013 1,001.523 25.50 6,005.796 443.607 7.39
1997 22,413.957 2,481.450 11.07 3,836.521 1,040.398 27.12 7,212.570 722.492 10.02
1998 21,687.828 2,547.331 11.75 3,721.550 1,045.726 28.10 7,635.968 945.930 12.39
1999 21,559.188 2,295.563 10.65 4,168.537 1,086.512 26.06 7,699.277 949.751 12.34
37
Appendix Table 3. World and U.S. wheat production, exports and ending stocks (continued).
Mkt year
/1
World
production
(million
bushels)
U.S.
production
(million
bushels)
U.S. share
(percent)
World exports
(million
bushels)
U.S.
exports
(million
bushels)
U.S.
share
(percent)
World ending
stocks (million
bushels)
U.S. ending
stocks (million
bushels)
U.S. share
(percent)
2000 21,417.872 2,228.175 10.40 3,728.531 1,062.040 28.48 7,618.294 876.191 11.50
2001 21,424.449 1,947.453 9.09 3,884.692 962.318 24.77 7,465.440 777.129 10.41
2002 20,866.018 1,605.884 7.70 3,885.353 850.213 21.88 6,122.825 491.410 8.03
2003 20,358.330 2,344.432 11.52 3,992.314 1,158.309 29.01 4,849.766 546.452 11.27
2004 22,986.020 2,156.782 9.38 4,103.097 1,065.898 25.98 5,519.309 540.096 9.79
2005 22,772.392 2,103.320 9.24 4,284.390 1,002.773 23.41 5,416.941 571.181 10.54
2006 21,883.452 1,808.415 8.26 4,101.921 908.488 22.15 4,688.718 456.136 9.73
2007 22,450.113 2,051.071 9.14 4,306.436 1,262.624 29.32 4,487.068 305.818 6.82
2008 25,071.079 2,499.160 9.97 5,168.481 1,015.486 19.65 6,127.528 656.500 10.71
2009 24,549.171 2,220.165 9.04 4,585.725 900.000 19.63 6,861.263 863.661 12.59
1/ Aggregated based on local marketing years. Latest data may be preliminary or projected.
Source: USDA, Foreign Agricultural Service, Production, Supply, and Distribution Database.
About the Author
Dr. E. Neal Blue was born in Indianoplis, Indiana in 1961 and was raised on a
farm in Xenia, Ohio. After completing his undergraduate work at Purdue University in
1984, Neal went to the University of Nebraska where he received an M.S. degree in
crop science in 1988. He received a Ph.D. in agricultural economics from The Ohio
State University in 1995. From 1995 to 2001, Dr. Blue worked at The Ohio State
University on projects related to preharvest pricing strategies for farmers, crop
insurance analysis, and soil and water conservation issues.
Currently Dr. E. Neal Blue is a private agricultural consultant living in Columbus,
Ohio. As a consultant has worked with universities, nongovernment organizations, and
agribusinesses in the areas of crop insurance, regulatory approaches of genetically
modifed crops, and food quality control.
A Review of the Potential Market Impacts of Commercializing GM Wheat in the
U.S., analyses the likely reaction of foreign customers for U.S. wheat. Wheat buyers in
Europe, Japan, and other Asian countries are likely to switch to other sources of wheat,
in order to ensure they are getting GM-free wheat.
As a result, the introduction of GM Hard Red Spring Wheat would likely cause an
export shutdown to the European Union and Japan. The shutdown would result in a loss
of 35-50 percent of U.S. hard red spring wheat exports and 50-60 percent of U.S. durum
wheat exports. The sudden surplus of wheat in the domestic U.S. market would have to
be sold for livestock feed, driving the price of these premium wheats down to their value
as cattle or chicken feed.
Dr. Blue’s report is the latest update of an October 2003 report, Market Risks of
Genetically Modified Wheat, by Iowa State University Economics Professor Dr. Robert
Wisner. In 2006, Dr. Wisner updated that report, and found that the introduction of
genetically modified wheat would not reverse the declining market share of U.S. wheat
exports, nor will it reverse the downward trend of wheat acres planted.
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