August 15, 2002

At its summer board meeting, the U.S. Wheat Associates Board of Directors was told there's no room in Europe for genetically modified wheat. USWA says the message came from "some of the most important millers in Europe and America."

Last year, the European Union was the fourth largest customer of U.S. wheat, importing 2.16 million tons, and General Mills was one of largest domestic wheat buyers, purchasing one out of every nine bushels of U.S. wheat sold domestically.

From the largest miller in Italy, who uses 11 million metric tons of wheat annually, came this: "The European milling industry will simply not buy one more kilo of any U.S. wheat at all" if Roundup Ready wheat is commercialized. "In a situation with ample and cheap alternative supplies and a general, strongly convinced public opinion against genetically modified organisms, we will have no alternative," said Antonio Costato, CEO of Grandi Molini.

And from the wheat buyer at Rank Hovis, which controls 30% of the milling and the baking industries in the United Kingdom: "I am going to ask you not to grow genetically modified wheat until we are able to sell in our market the bread made from the flour made from that wheat. I cannot tell you how to run your business, but if you do grow genetically modified or enhanced wheat, we will not be able to buy any of your wheat, neither the GM nor the conventional, the latter because we will not be able to guarantee the integrity of even the conventional to zero content of GM."

"This has nothing to do with principle, or trade barriers," explained Peter Jones from Rank Hovis. "We just cannot sell it."

Ron Olson, a vice president at General Mills, agreed with his European colleagues about the importance of building and maintaining brand integrity, pointing out that about half of the wheat used domestically is used in branded products, which carry higher risks if consumer confidence is lost. Corporations must protect brand integrity for their stockholders and "we will not do anything to erode consumer confidence," Olson said.

Every study of U.S. consumers had found a persistent 7-10% who say they would not buy a product if it contained a genetically modified ingredient, Olson told the USW board. "When you come to a company like ours, which is a wheat-based organization, and we run the risk that we will lose 7-10% of our business if we change a product and it becomes an issue... I don't think that's a risk our corporation would take."

Olson further explained the problems that will 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."

Each of the customers made it clear that there is a likely future for biotechnology in wheat when traits are developed that will provide consumer benefits and when consumers are convinced of the safety of the food. But they made it equally clear that they did not believe that time for GM wheat had arrived.

The U.S. Wheat board also heard from Jerry Slocum, the chairman of the technology committee of the United Soybean Board, who has been working unceasingly on this issue in world markets. Basing his observations on the experience of the soy industry since 1997, Slocum advised the USW board that "if there's going to be bio-engineered wheats, and the export market is important to us -- and I'm a wheat grower -- you've got to keep unapproved varieties out of your export channel. You've either got to keep them from being planted, or if they are planted you have to make sure they're handled in a way that they cannot get into that channel."

Michael Doane, Monsanto's spokesman at the USW meeting, informed the board that the company anticipates making Roundup Ready wheat regulatory submissions in the United States, Canada and Japan this year. However, he assured the board, "the bald facts, folks, are we're never going to sell a seed of biotech wheat until we know we have a demand out there for the grain. That's just the way it works. We know that's a reality of our product development, and that's a commitment that we can make to the industry."