Starlink--Market Impacts?

							                         StarLink : 3/6/01 Tm




     Source: Kan Ham, ISU Agronomy Dept.

• By Dr. Robert Wisner
• University Professor of Economics
• Iowa State University
  StarLinktm--Crisis in the
       CornMarket?
• U.S. Corn Exports & outstanding
  export Sales, 3/01/01:
  –Japan             -17%
  –South Korea -43%
  –Taiwan            +1%
  –Africa            -4%
  –W. Hemisphere +5%
  –All destinations -10%
  –Pre-StarLink Proj. +13 to 17%
Normal Shares of U.S. Corn
         Exports
 • Japan          31%
 • S. Korea       13%
 • Taiwan          9%
 • 3-mkt. Total   53%
               Starlink, Cont.
• EPA in October approved Starlink exports
  for feed, if segregated from other corn
• Not approved for export for food
 anywhere, or for feed in Japan
• Nov.: EPA outside panel reviewed new
  Aventis data for possible acceptance as food
• Cry9C protein was found in blood stream
  of Norway rats, with immunologic
  response
• Medical panelists: some persons may have
  experienced allergenic reactions from
  Cry9C
 Industry/USDA Efforts to Deal With
            the Problem
• Food & feed export certification
  programs
• Sampling problem: Japan & Korea
  finding StarLink
• Avg. contamination: fraction of a %
• The future: Problem for at least another
  year problem (co-mingled stocks)
• Possible 400-700 (000) units of
  contaminated non-StarLink seed for
  2001 (USDA to buy this from small
    StarLinktm or Cry9C Cont.:
• Was Grown in 1999 & 2000
• Center for Disease Control
  testing alergenic reactions from
  StarLink
• Japan testing StarLink for
  possible feed approval
• Farmers: Important to control
 volunteer StarLink in StarLink &
 neighboring fields
Corn Refiners Assoc. Release 10/9/00
• Ethanol is produced by CRA members
  in same facilities with food production
• StarLinktm in their facilities violates
  U.S. govt. registration for the product
• Also, gluten goes to export markets
• Limited number of dry-milling plants
  may use StarLinktm for ethanol, where
  by-products are only for feed
   EPA Announcement 3/7/01

• Wet Milling Eliminates (or
 nearly eliminates) Starlink
 Protein

• Immediate change in processor
 acceptance of Starlink of food
 approval not expected
Elevator Price Impacts (Varies over Time)
• Jan. 12, 01 example, N. Iowa if
  rejected @ ADM, next market is feed
  exports
   –Non-Starlink bid to elevator -$0.36
    March
   –StarLink bid:-$0.50 March if open
    river could be found
   –Earlier, poultry mkt in Arkansas
    was ok, but saturated in January
   –Local feed mill: best outlet if enough
    demand
  – Source: Dr. Marty McVey, Agri-Industries,
    Des Moines, IA 1/12/01
Source 10/18/00:
Http://www.us.cropscience.aventis.com/AventisUS/:

             Estimated Acres of Starlink Corn
                                                  Based on seed ordered
              WA
                                      MT                                                                            ME
                                                    ND
           OR                                       1170         MN                                            NH
                            ID                                                      MI
                                                     SD         35691     WI                        NY         MA
                                                                          5271     234                   120
                                       WY           34290
                                                                   IA                           PA      NJ
                                                     NE          134910                                 87
                NV                                                                        OH  1782MD DE
                                 UT                 41529                     IL    IN
                3                                                                                  690 18
        CA                                 CO                               17466 3564 1632 WV           DE
                                                       KS              MO                      VA
                                           1038                                        KY        792
                                                      21390           18702             9690
                                                                                               NC
                                                                                     TN          384
                            AZ                           OK                      5856
                                       NM                1308          AR                    SC
                                       60                                                GA
                                                                             MS    AL
                                                                             183   546   192
                                                    TX
                                                                        LA
                                                    2310
                                                                                               FL
  Estimated Acres of Starlink
      0 to 99
     100 to 999
     1,000 to 9,999
     10,000 to 19,999
     20,000 to 99,999
     100,000 to 1,000,000
                                      0.5% of U.S. crop, 1.1% in Ia (Highest co. 9.1%)
     None reported                                     Total Acres: 340,908
                                      0.6% in Minn., 0.5% in Nebr., 0.6% in KS.
           The Future?
• EU-unapproved varieties: another
  StarLinktm waiting to happen?
• ADM and Staley caution
  farmers: plant only varieties
  approved world/wide
• At stake: the EU gluten mkt.
  (About 60% of output)
• Some companies plan to target sales
  to livestock areas (Similar strategy
  to StarLink)
 Illinois Dept. of Agriculture &
        Land Stewardship
• For 2001, requests that
 seed companies sell only
 varieties approved for all
 markets world-wide
• So far, no similar
  response from other
      Future Implications, Cont.
• StarLink acres, % of U.S. 2000 corn crop:
  Approximately 0.5%
• % of U.S. corn acres with varieties not
  approved world-wide in 2000: 7.0%
• Channels at Risk: Wet-millers, & Exports
  to EU
• Can we channel it & keep it separate?
  Co-mingling, cross pollination,
  marketing?
    EU Unapproved Corn Varieties
– Markets at risk
– Wet millers: Approximately 18% of
     total demand for U.S. corn
  (StarLink affected 30-38% of
  demand)
– European Union: 1-2 million bushels
  (starting to recover a little)
– Asian market acceptance, so far not a
  problem
– S. Korea began GMO labeling March
  1, 2001
EU Super Markets Going 100%
Non-GMO Livestock Products
•   Tesco (Late 2001)
•   Asda (Late 2001)
•   Iceland (Already doing it)
•   Marks & Spencer (Already doing it)
•   Safeway (No date)
•   Sainsbury (No date)
•   Summerfield (No Commitment on
    GMO -free meat)
• Fast food: Mc Donalds, Burger King
                              Source: National Corn Growers Assn.

          Products Not Approved for EU
                                   Product
                                   Registrant
    Event    Characteristic        Trade Name
    MonGA2 Glyphosate herbicide Monsanto
    1        tolerance             Roundup
                                   Ready
    Mon810 + Corn borer            Pioneer
    T25      resistance &          YieldGuard/
             glufosinate tolerance LibertyLink             **
    Mon810 + Corn borer            Monsanto
    GA21     resistance &          YieldGuard/
             glyphosate herbicide Roundup
             tolerance             Ready
*Pioneer YieldGuard/LibertyLink: no sales for 2001
      New Foreign GMO
         Regulations
• EU: could bring expanded GMO
  approvals, but will take time,
  requires major testing
• EU is expected to provide for
  traceability (Consumer Demand)
• UN panel: Encourages labeling
   Future GMO Developments
• Countries adding GMO labeling:
• Japan April 2001
• S. Korea March 2001
Those without specific dates:
• Philippines
• Australia
• New Zealand
• Thailand
• Malaysia
• 2000 Global Biosafety Protocol Treaty to
  encourage labeling