Argentina's GM wheat may shift Brazil to US, Ukraine

The start of transgenic wheat cultivation in Argentina is provoking a backlash in neighboring Brazil, potentially boosting Brazil's wheat imports from countries such as the US, Canada, and Ukraine

Argentina has planted an estimated 55,000-60,000 hectares with a wheat variety that has been genetically modified (GM) to better withstand drought. Considering Argentina's average productivity, the first transgenic wheat harvest could reach 200,000 metric tonnes.

Argentina last year authorized the commercialization of GM wheat for the domestic market. Export authorization is awaiting approval from Brazil, which typically buys 46pc of the country's wheat production.

The main groups representing Brazilian importers and mills said they fear a negative reaction from Brazilian consumers should imports be allowed, as transgenic wheat is not yet authorized for human consumption in any country. They are urging Brazil's National Technical Commission for Biosafety (CTNBio) to reject an application to allow human and animal consumption of the GM wheat variety, and they are asking Brazil's Ministry of Agriculture to establish rules to block the entry of transgenic wheat into the country, Brazilian Wheat Industry Association (Abitrigo) president Rubens Barbosa told Argus.

If Argentina allows full commercial cultivation and exports of GM wheat, Brazilian mills may suspend imports from the neighboring country, Barbosa said. For this reason, Abitrigo is pressing CTNBio to reject the request. The commission postponed until November its decision on a commercialization permit for the wheat variety, HB4, which is produced by Argentina company Bioceres and represented in Brazil by TMG, a Brazilian company that also develops its own GM crops.

Argentina is unlikely to move forward with GM wheat exports without Brazil's approval, since it runs the risk of losing the Brazilian market, Barbosa said. There are many other countries that can supply Brazil with wheat, in particular the US, Canada and Ukraine, he said. Brazil in 2010 imported 4 million tons of North American grain due to weather problems in Argentina, Barbosa said.

Market participants are worried, as Brazil consumes between 12mn-13mn t of wheat a year and has been importing between 6mn-7mn t/yr.

Importing wheat from the northern hemisphere is viable for northeastern Brazil, which is closer and has more accessible shipping with competitive prices, said Marcelo De Baco, owner of one of the main wheat brokers in southern Brazil. But in Brazil's main consuming regions, especially in the southeast, the reality is different. A restriction on wheat purchases from Argentina probably would increase prices, raising consumer food costs at a time when wheat prices are already elevated amid low stocks and falling production in some countries, De Baco said.

The GM wheat variety can boost the productivity of water-stressed crops by 40pc, according to data included in TMG's application to CTNBio. However, there are few studies on the safety of consuming the grain. While GM soybeans and corn are planted widely in the world, critics note the production is mostly used for animal feed, with human consumption largely in the form of processed foods such as high fructose corn syrup.

Even if Brazil's government blocks imports of transgenic wheat, recent history shows that it may be difficult to keep the country's farmers away from the drought-resistant crop. At the end of the 1990s, when Argentina farmers started planting GM soy, producers from the south of Brazil imported seeds from the neighboring country and expanded cultivation - before Brazil authorized the crop. Some in the sector fear the scenario could repeat, this time with GM wheat.

By Alessandra Mello