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Heavy rainfall over the southern provinces of Iraq during early May has potentially reduced Iraqs expected wheat harvest by 25-30% according to a statement by Trade Minister, Dr. Khairallah Hassan Babiker. Initial reports indicate that losses are greatest across Muthanna, Dhi Qar, Maysan and Wasit.
The wheat was developed years ago by biotechnology company Monsanto Co. but never put into use because of worldwide opposition to genetically engineered wheat. The most recent field test of such wheat was in 2005. Roughly half of the U.S. wheat crop is exported and most of the crop is used in making food such as breads, pastries, cookies and noodles. USDA officials said the Food and Drug Administration determined years ago there is no health risk to humans from the strain, though. Hopefully, our trading partners will be very understanding, Michael Scuse, the acting U.S. deputy agriculture secretary, said at a briefing with reporters.
Scuse said trading partners and major customers for U.S. wheat had been informed of the discovery over the past day. Genetically modified crops cannot be grown legally in the United States unless the government approves them after a review to ensure they pose no threat to the environment or to people. Monsanto entered four strains of glyphosate-resistant wheat for U.S. approval in the 1990s but there was no final decision by regulators because the company decided there was no market. The genetically modified wheat sprouted this spring on an Oregon farm, in a field that grew winter wheat in 2012.
When the farmer sprayed the so-called volunteer plants with a glyphosate herbicide, some of them unexpectedly survived. Samples were then sent to Oregon State University and to USDA for analysis. Testing showed the wheat was a Monsanto-developed strain resistant to glyphosate. Monsanto is assisting in the investigation, USDA said. Monsanto tested Roundup-Ready wheat varieties, those resistant to spraying by the widely-used herbicide, in 16 states from 1998 to 2005, said USDA.
Scuse and Michael Firko, who oversees USDA's biotechnology approval process, said USDA was investigating how the strain appeared on the farm when no seeds should have been available for several years. I think it will have a significant impact, said Ronnie Cummins, national director of the Organic Consumers Association, which battled to keep genetically modified wheat out of the marketplace years ago. The U.S. Senate last week rejected by a wide margin a measure to allow states to order labeling of food made with genetically engineered, or GE, crops. Cummins said the discovery of the rogue plants in Oregon would accelerate efforts to require GE food labels.
US Finds Unapproved Genetically Modified Wheat in Oregon
Japan canceled a tender offer to buy U.S. western white wheat and the European Union said it would test incoming U.S. shipments and block any containing genetically modified wheat. U.S. wheat merchants did not report any cancelations of purchases on Thursday, but some analysts feared a potentially damaging blow to the $8 billion export business. Unless there's a quick resolution, this is not going to be good for the export market, said Art Liming, grain futures specialist with Citigroup.
The U.S. Department of Agriculture said nine investigators were collecting evidence in and around Oregon, the West Coast state where the genetically modified, or GM, wheat was found growing. A USDA spokesman said the investigators are taking witness statements, records and samples. We have increased the number of investigators throughout this month to work quickly and carefully to cover as much ground each day to determine what we are dealing with, how it got there, and where it might have gone, he said. The USDA said the GM wheat found in Oregon posed no threat to human health, and also said there was no evidence that the grain had entered the commercial supply chain.
GM crops tolerate certain pesticides, allowing farmers to improve weed control and increase yields. Many consumers are wary of GM food, and few countries allow imports of such cereals for direct human consumption. While most of the U.S. corn and soybean crops come from genetically modified plants, no GM wheat varieties are approved for general planting in the United States or elsewhere, the USDA said. The EU has asked Monsanto, the maker of the GM wheat, for a detection method to allow its controls to be carried out.
Scientists said the wheat found in Oregon was a strain field-tested from 1998 to 2005 and deemed safe before St. Louis-based Monsanto withdrew it from the regulatory process. On Wednesday, Monsanto said there was considerable reason to believe that the presence of its product was very limited. U.S. wheat futures on the Chicago Board of Trade dipped on Thursday. CBOT wheat for July delivery closed 4 cents per bushel lower at $6.98-3/4 per bushel. Asian wheat importers South Korea, China and the Philippines said they were monitoring the situation. The world's biggest wheat importer, Egypt, said it had no fears yet over supplies.
Found in Oregon
The federal civil lawsuit, filed Monday by Ernest Barnes, who farms 1,000 acres near Elkhart in southwest Kansas, seeks unspecified damages to be determined at trial. U.S. Agriculture Department officials said last Wednesday that the modified wheat was the same strain as one designed by Monsanto to be herbicide-resistance that was tested in Oregon and several other states through 2005 but never approved. The USDA has said the Oregon wheat is safe to eat and there is no evidence that modified wheat entered the marketplace. It's believed to be the first lawsuit stemming from the discovery. Similar lawsuits are in the works, Barnes' attorney said, and the cases will likely be consolidated for the purposes of discovery, a process where evidence is investigated and shared among parties.
No genetically engineered wheat has been approved for U.S. farming. Many countries will not accept imports of genetically modified foods, and the United States exports about half of its wheat crop. Since the announcement, Japan one of the largest export markets for U.S. wheat growers suspended some imports. South Korea said it would increase its inspections of U.S. wheat imports. Barnes referred all calls to his attorneys. One of them, Warren Burns, said that the scope of the damage is potentially in the hundreds of millions of dollars. He said the lawsuit seeks to make sure their client is compensated for his losses. "These types of suits serve the purpose of helping police the agricultural system we have in place and make sure farmers are protected," Burns said in a phone interview Tuesday from Dallas.
In a written statement Tuesday, St. Louis-based Monsanto said the report of a few volunteer plants in one Oregon field is the ostensible basis for the lawsuit. "Tractor-chasing lawyers have prematurely filed suit without any evidence of fault and in advance of the crop's harvest," said David Snively, Monsanto executive vice president and general counsel. The company said its process for closing out its original wheat development program was rigorous, government-directed, well-documented and audited. It noted wheat seed, on average, is viable for only one or two years in the soil.
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The consumer staple rose 2.3% in April, currently trading at $7.0875 per bushel for July delivery on the Chicago Board of Trade. In the United States, a drought in Kansas, Texas and Oklahoma, the three largest wheat producing states, led to a dwindling crop supply, causing wheat prices to rise.
According to a report released earlier this week from the U.S. Department of Agriculture, 65% of wheat in Texas and Kansas is rated as poor and very poor. "The Southern Plains has been a peninsula of dryness and the U.S. has produced 20% less wheat compared to a year ago," said Jason Ward, director of grains and energy at Northstar Commodity.
Aside from the drought, geopolitical tensions in Ukraine are fueling the wheat rally, as Ukraine is the world's fifth-largest exporter of wheat. "What's happening in Ukraine is perceived concerns over less wheat getting exported out of the country, which on paper has not materialized," Ward adds.
Still, the situation in Ukraine remains fluid and uncertain. The futures market accounts for such factors and is adding risk premium in current wheat prices over fears that conflicts in Ukraine could escalate to a level that would impact the amount of wheat the country exports. The rise in wheat prices comes at an inconvenient time for consumers, when other breakfast staples such as coffee and orange juice are edging higher, also due to drought conditions in the regions that produce such crops.
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