Value-added crops keep farmers in the field, despite protests abroad

By Gene Linn
May 3, 2000
Journal of Commerce

The current furor over genetically modified crops obscures the long-term importance of adding value to grain and soybean exports, agricultural experts said.

Biotechnology and breeding will increasingly add traits to crops to meet market requirements, they said. And farmers and grain middlemen will guarantee that specific traits reach end-users through a process called identity preservation.

Growing demand to create value will replace some of the traditional reliance on commodity sales of different varieties blended to meet average standards for protein and other qualities, according to industry participants.

"In the long term, we're looking at a new business relationship," said Bob Neal, specialty grains manager at Cargill Inc., Minnetonka, Minn.

For now, news reports focus on resistance to genetically modified (GMO) crops exported by the United States to Europe and Japan. Consumer groups in those countries warn that modifying the genetics of food is a potentially dangerous step into unknown territory. They say that eating food that has been genetically changed might lead to health problems, and they insist on receiving non-GMO products.

Actual demand for non-GMO foods, however, is still relatively small, industry experts said.

"It appears some niche markets are opening up," said an analyst at the Foreign Agricultural Service of the U.S. Department of Agriculture, who declined to be identified.

Archer Daniels Midland Co., Decatur, Ill., supplies non-GMO corn to Japan's Kirin Brewery and edible soy protein to processors for some big supermarket chains in Europe, said Larry Cunningham, ADM senior vice president for corporate affairs.

Using the identity preservation process, farmers start with seeds guaranteed to have the desired trait, but which are not genetically modified. Farmers clean planting and harvesting equipment to make sure the crops are not contaminated by GMO plants. They have to use separate fields for non-GMO products and ensure that the crops are not contaminated by cross pollination from nearby fields.

Farmers and ADM also clean storage facilities and trucks and other means of transportation. Each step is documented so the end-user can be sure of the traits in a specific crop. In the end, ADM tests the crops to make sure they are not genetically modified.

Cargill gives farmers manuals and videos to teach identity preservation techniques. The company also recently sent five farmers to Japan to learn about market demands there. It is expected to become more common for farmers to produce for a specific end-user.

Cargill's acquisition of Continental Grain Co.'s Commodity Marketing Group last year provides assets such as grain elevators that will make it easier to implement identity preservation, Neal said.

Cunningham said the demand for non-GMO crops probably will last a few more years and then subside. "Scientific evidence is there is no (health) difference in GMO crops," he said.

Cargill's Neal asserted that in the future the GMO issue "will look like a speed bump."

One reason the issue is important now is that the first genetic modifications have benefited farmers by making the crops easier to grow, he said. Consumers see no direct benefits and focus on potential harmful effects. That will change, Neal said.

"We'll start getting into output traits (for processors and end-users) that are exciting," he said.

The GMO controversy is a "short-term transition" to more-widespread use of value-added crops and identity preservation, he said.

Among the output traits predicted by industry experts are soybeans with more vitamin E and more-nutritious rice that will help feed poor people in Asia and Africa. Crops may be produced without trans-fatty acids harmful to health.

Some corn varieties may be genetically engineered with an amino acid profile suited especially for chickens, while another will be designed for hogs.

Cargill is in almost daily contact with customers to find out what specific needs they have, Neal said. Part of the new business relationship will be determining these traits. The cost of the higher-value product will be agreed on based partly on the degree of purity required. Japan now requires a non-GMO purity level of 95 percent, Neal said.

He and other industry experts said that although biotechnology will put the sizzle in value-added crops, traditional breeding techniques and identity preservation already have added value to some varieties and will continue to do so.

Cargill, for example, recently negotiated with two farmer cooperatives in Kansas for separating and preserving the identity of hard white winter wheat required by some end-users.

Mike Boland, agricultural economist at Kansas State University, said the United States lags behind export competitor Australia in breeding useful traits and getting them to consumers through identity preservation.

"Our competitors are able to differentiate themselves from us," he said.

For example, he said, Australia has a centralized wheat-breeding program that has eliminated an enzyme that turns noodles black. The new product is popular in Asia.

Commodity crops will continue to be important, experts said. But even if the GMO controversy subsides, value-added crops and identity preservation will become increasingly important.

Jerry Barr, chief economist at the National Council of Farmers Cooperatives in Washington, D.C., said, "If crops are co-mingled, it will reduce their value or eliminate some potential markets."