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StarLink Controversy Destroys US Corn Export Market

US exports hurt by StarLink bio-corn chaos
Nov. 16, 2000
By Christopher Doering

WASHINGTON (Reuters) - American corn exports are feeling a backlash from
overseas buyers who fear shipments may be contaminated with an unapproved
variety of biotech corn, U.S. Agriculture Secretary Dan Glickman said
Thursday.

Glickman's comments marked the first public acknowledgment by the USDA that
StarLink bio-corn -- a variety that turned up in taco shells and chips in
late September -- is hurting U.S. corn exports to big buyers like Japan and
South Korea.

"I can't quantify the amount," Glickman told reporters.

StarLink was approved by U.S. regulators in 1998 only for animal feed after
scientists were unable to determine if the gene-spliced corn might cause
rashes, diarrhea, respiratory problems or other allergic reactions in
humans.

But the corn, made by France and Germany's Aventis SA accidentally got into
other yellow corn earlier this year and triggered a recent recall of 300
brands of taco shells, chips and other U.S. foods.

StarLink was engineered to contain a gene that protects young corn plants
from destructive pests.

NEW DATA SHOWS CORN SALES DOWN

On Thursday, the USDA issued a weekly report showing U.S. corn exports were
39 percent below the four-week average. For the latest week, American corn
exports were 517,700 tonnes, far below market expectations of 550,000 to
750,000 tonnes.

Japan, the single biggest buyer of American corn, has virtually halted its
purchases for the first quarter of 2001 because of fear that some StarLink
corn may taint supplies. Japan does not allow StarLink even in livestock
feed.

Earlier this week, South Korea said it would not consider buying more U.S.
supplies now, due to StarLink worries. Both South Korea and Japan have
turned to China for corn purchases.

Glickman declined to comment on whether the USDA may have to trim its
forecast of 2.275 billion bushels of total U.S. corn export sales this year
due to the StarLink controversy.

"It's an issue that has caused concern among some of our importers. That is
why we have to work hard to make sure that the company involved (Aventis)
does everything they can to get it resolved," Glickman said.

USDA NOW TESTING CORN EXPORTS

To help allay overseas concerns, the USDA on Wednesday began testing
railcars and barges carrying corn for export.

A railcar of yellow corn found with traces of StarLink will be pulled off
and segregated by federal grain inspectors. The contents will then be
earmarked for animal feed or ethanol.

The tests, paid for by exporters, marks the first time the USDA has become
involved in genetic testing. It has historically been an enthusiastic
advocate of bio-engineered crops and viewed them as no different from
conventional ones.

The National Corn Growers Association said it was confident that U.S.
exporters could satisfy the concerns of overseas buyers and preserve
American corn sales.

"A good business takes care of the customer's needs," said a spokesman for
the corn farmers group. "I think they can get this worked out."

Glickman also said Aventis could face steep legal and liability costs over
the contamination. Iowa and 15 other states have demanded that the company
compensate farmers for economic losses, or face a lawsuit.

"There are possibilities that there are going to be losses out there and
somebody is going to have to compensate them," Glickman said. "I would
suspect in terms of legal and compensation issues, they are not out of the
woods yet."

Under USDA supervision, Aventis is trying to buy back as much of the harvest
as possible. Glickman declined to say how much StarLink has been gathered
from farmers so far.

Two weeks ago, the USDA said it had collected about 90 percent of the
StarLink harvest but could not yet account for about 1.2 million bushels of
the corn.

Agrochemicals and pharmaceuticals firm Aventis has said it expected to pay
about $100 million to repurchase the 2000 crop. Some industry experts have
speculated that figure could be much higher if food companies, grain
elevators and other entities in the food supply chain demanded compensation.

Aventis said Wednesday it planned to sell its agricultural chemicals and
seeds business to focus on its faster-growing drugs operations.

The Environmental Protection Agency has scheduled a Nov. 28 meeting to
consider whether StarLink poses a health risk for humans. Aventis says it
has new data that rules out any allergic reactions to the corn. But green
groups say regulators should not be rushed into granting approval for
StarLink in human food simply to limit Aventis' legal liability.

The USDA is responsible for field trials of new bio-crops, while the EPA has
authority over plants that are genetically engineered to act as pesticides.
The Food and Drug Administration oversees food safety and labeling issues.

Glickman said the incident with StarLink shows the government must
scrutinize existing regulations for bio-foods.

"We have to look at our regulatory system, that it is adequate to deal with
these types of problems," he said. "We can't let it happen again."

17:12 11-16-00

***************************************************************

Biotech Corn Hurting U.S. Exports

By PHILIP BRASHER
The Associated Press

WASHINGTON (AP) - The government is reporting a steady drop in exports of
corn, evidence that the mishandling of genetically engineered grain on
Midwest farms is starting to damage U.S. markets overseas.

The Agriculture Department on Thursday reported net sales of 517,700 metric
tons for the week that ended Nov. 9, about half the weekly rate in October.
Japan, by far the biggest U.S. customer, purchased less than 150,000 tons
during the week, less than half its normal amount.

``This is a big drop-off and it is a concern to us and to anyone who wants
high prices for corn,'' said Chris Schaffer, manager of international
operations for the U.S. Grains Council.

A variety of biotech corn not approved for food use prompted nationwide
recalls of taco shells in September and October. The corn also was
discovered in snacks and animal feed in Japan. The Agriculture Department
subsequently reached agreement with Japan for screening U.S. corn shipments.

Purchasers in South Korea, another major U.S. market, have expressed
concerns, too, about the biotech corn known as StarLink.

When the Korean corn processors association earlier this week solicited bids
for corn, the United States was omitted from the list of eligible sellers.
The Korean government has issued a recall for U.S.-made tortillas, although
the manufacturer says there was no corn in the product.

Agriculture Secretary Dan Glickman acknowledged that StarLink is probably a
cause of the export drop. ``That's why we're working to get StarLink out of
the inventory,'' he said.

On Wednesday, his department offered to start testing corn for StarLink at
the request of elevators and other grain handlers. A fee will be charged for
the service.

Federal regulators say there is little, if any, health risk for the corn,
but it was never approved for human consumption because of unresolved
questions about its potential to cause allergic reactions.

The discovery of the corn in the U.S. food supply has so snarled grain
traffic in the United States that the Environmental Protection Agency is
considering a request by the corn's developer, Aventis CropScience, to
temporarily approve it for food use.

No decision by the agency is expected before December.

The Food and Drug Administration disclosed on its Web site this week that a
major food processor, ConAgra Inc., has pulled some of its corn meal and
corn flour from the market because it may contain StarLink. The problem was
reported to FDA in early October. The company told the agency the product
was never distributed.

Corn prices had been dropping for a week on the Chicago Board of Trade and
fell again Thursday morning when the export report was released. Prices rose
later in the day as investors concluded the outlook was not bad enough to
keep pushing the market down.

``There definitely is a StarLink concern,'' said Jason Roose, an analyst for
U.S. Commodities Inc., West Des Moines, Iowa. But he said the corn exports
should turn around as foreign customers gain confidence that U.S. is being
properly screened for the biotech grain.

On the Net: USDA's Foreign Agricultural Service: http://www.fas.usda.gov

Aventis StarLink site: http://www.starlinkcorn.com

U.S. Grains Council: http://www.grains.org

AP-NY-11-16-00 1820EST

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