NAEGA

Biotechnology In Grain Trade Practical Issues for Global

Trade

December 5, 2003North American Export Grain Association

NAEGA

North American Export Grain Association

• Membership: Cooperative, Public and Private grain exporters and supporting companies

• Mission:  Promote and sustain the development of commercial export of grain and oilseed trade from the United States.

The National Grain and Feed Association and NAEGA coordinate policy and government representation on trade-related issues that affect the economic prospects of the US grain handling industry.

NAEGA

PRINCIPLES With regard to all NAEGA policy the following principles

apply:

1.  Commercial solutions are the most effective and preferable means to meet customer needs for the agricultural commodities traded internationally by our members.

2.  US grain export industry should participate as appropriate in relevant national and international proceedings where policies and regulatory action affecting the industry will be promulgated, negotiated or discussed.

NAEGA

NAEGA Policy Priorities Integrity and Reliability of Supply

Neutral, Balanced Approach to Biotech, Quality and Product Safety

Competitive and Open Markets, International Rules and Discipline

Customer Driven Markets

NAEGA

PRECEPTS to address biotechnology:

I. NAEGA believes that US Government regulatory procedures and statutory authority need to be thoroughly reviewed and updated on an ongoing basis to ensure that regulatory decisions reflect sound science, foster increased consumer confidence, and support a competitive commercial response to changing market conditions.

NAEGA

Biotech Precepts II

• Best way to overcome global controversy and trade disruption in bulk commodity shipments due to products derived from modern biotechnology is the adoption of comprehensive, harmonized, global 1. Regulatory approval process;2.Standards for testing methodology.

NAEGA

Biotech Precepts – III&IV

• Prior to any exposure to food crops all modifications to crops commercially used for food or feed must have a completed regulatory approval for use as food and feed.

• The US Government should provide leadership in appropriate national and international fora in the development of workable threshold levels that address the many complex issues related to the adventitious presence of products derived from modern biotechnology.

NAEGA

Biotech Precepts V

The global trading system, foreign governments and international organizations must recognize the reality that any and all bulk commodity shipments “may contain” some coincidental amounts of commodities derived from modern biotechnology

NAEGA

Biotech Precepts - VI• Support the a regulatory philosophy that labeling

of products should provide useful information and be credible and only mandatory when health and safety concerns warrant such information. Mandatory process based labeling is not appropriate.

• In no case should governments impose mandatory traceability requirements on the production and marketing process simply to gather information that may, or may not, be used for labeling purposes.

NAEGA

Biotech Precepts - VII• Mandatory sampling and testing of commercial grains and

oilseeds for genetic content most often unnecessarily increases costs, decreases competitiveness, and restricts liquidity of US origin production in global commodity markets and should be avoided.

• If foreign governments dictate that such testing occur, then the US government role is to use Federally appropriated funding to develop and gain international acceptance for sampling and testing procedures that do not impede commercial grain and oilseed export operations.

NAEGA

Biotech Precepts - VIII

• It is the primary responsibility of the life science industry to undertake a comprehensive educational effort to inform the public of the benefits and risks, if any, of modern biotechnology.

• NAEGA will continue to provide fair and balanced information to domestic and foreign audiences.

NAEGA

Traceability / Identity Preservation

EU seeking impossible farm to fork tracking of commodities derived from modern biotechnology. (Adventitious Presence recognized but approach is not feasible.)

Classic Example of a regulatory mandate that could restrict and impede commercial response.

? May discriminate against certain origins?

NAEGA

Traceability / Identity Preservation

US Export industry serving “Identity Preserved” commodity requests on commercial terms. Customer must find adequate value to cover the additional costs for extraordinary handling and opportunity losses.

(Under IP terms, no agreement to meet a zero tolerance is implied or expressed.)

NAEGA

Traceability / Identity Preservation

Identity preservation costs vary significantly depending upon the level of purity desired, crop, growing conditions, production environment, sampling and testing regime and logistics system.

Private Canadian Study for shipment to Mexico: One crop shows a range of $3.00/ ton for 95% purity

to $40.00/ton for 98% purity.

NAEGA

Traceability / Identity Preservation

Competitive advantages can be inadvertently created by inappropriate regulatory measures. Agricultural commodities are produced and handled in different ways, under different laws, in different countries – such variability easily leads to important commercial advantages.

NAEGA

Summary Observations1. Crop Biotechnology is vulnerable to additional

sensational contamination stories, which must be avoided at all cost.

2. Appropriate international standards – necessary prerequisite for adequate consumer acceptance of Biotechnology.

3. Consumer acceptance is absolutely necessary prior to introduction of Biotech Wheat.

4. Inappropriate Government intervention in the food chain may preempt the development of commercial systems to handle crops derived from modern Biotechnology.

NAEGA

ConclusionWhile the entire supply and demand chain must

cooperate, the success of any introduction of Biotechnology will ultimately depend on Consumer acceptance.

Trade has much at stake in the innovation of Biotechnology - as the primary customers of the grain trade, THE WORLD’S CONSUMERS’ acceptance is the paramount criteria.

NAEGA

Working together to keep trade moving.

Thank You

NAEGA