HONG KONG (Reuters) - South Korea and Japan could soon begin buying genetically modified soy beans for use in the food chain as the growing price premium on non-GMO crops forces more consumers to compromise on safety concerns, industry sources say.
By Nao Nakanishi
HONG KONG (Reuters) - South Korea and Japan could soon begin buying genetically modified soy beans for use in the food chain as the growing price premium on non-GMO crops forces more consumers to compromise on safety concerns, industry sources say.
On Tuesday, South Korean starch and sweetener makers said they had bought U.S. GMO corn for use in foodstuffs for the first time. U.S. traders said there were signs that Japanese importers could soon do the same, saving $50 a ton versus non-GMO corn.
And that premium could grow as China, one of the last major producers of non-GMO soy and corn, looks set to stop grain exports this year to ensure it has sufficient stocks to feed its people and to keep a lid on quickening food inflation.
!ADVERTISEMENT!At the same time demand for non-GMO products has risen in line with a preference among the health-conscious middle class for more tofu or soymilk manufactured from non-GMO soybeans.
"There's a shortage of non-GMO products in Korea, Japan and Europe," said Chuk Ng, managing director of Naturz Organics (Dalian) Co, an exporter of organic food.
"The world market for non-GMO product is very limited. But China has been a strong supplier. Now the government does not want to allow exports."
Traders and officials say premiums for non-GMO corn from the United States have more than trebled from $10-$15 a ton a year ago, when China was exporting nearly 5 million tons a year.
In the soy market, premiums for contracting farmers for conventional soy doubled to $3 a bushel for the 2008 crop to be planted in the United States or Canada in a few months.
Traders and industry officials say soy suppliers are struggling to execute even signed contracts following Beijing's moves on grains exports.
"All of us are now in talks about the 2008 soy crop. The prempremiumsims have jumped, doubled," said another trade in Tokyo.
"There will be those that can't afford it. It is also becoming difficult to come by non-GMO soy, almost impossible."
Though China is the world's top soy importer, its exports of non-GMO soy totaled 456,469 tons last year, up 20.4 percent. It also sells products, like corn flour, manufactured from non-GMO domestic crops.
Until recently, China looked to continue small exports of its conventional crops to cash in on the niche premium market, even as its bulk grains imports grow.
Now, Beijing is set to stop grains exports altogether, including soy, as it struggles with soaring vegetable oils prices that helped lift China's inflation to an 11-year high by January.
"It is becoming clear you can no longer acquire non-GMO products unless you contract farmers," said Nobuyuki Chino, president of grain trader Unipac Grain Ltd in Tokyo.
He said the South Korean manufacturers were forced to switch after nobody offered non-GMO corn at its tenders in January.
For the moment, the soy industry remains resistant, but economics may yet overcome consumer concerns.
"We don't have any plans to import GMO soybean for food use anytime soon because consumers are obviously worried about GMO products," said Kang Hyung-mo, manager at state-run importer Agricultural and Fishery Marketing Corporation.
(Reporting by Nao Nakanishi and Angela Moon in Hong Kong; Editing by Jonathan Leff)
