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Countries set aside rivalries for common goalBy Jennifer M. Latzke In every industry, there is competition--that's just the nature of a free market system. The global wheat export business is no exception. For many years, the international wheat market has been dominated by three major competitors; the United States, Canada and Australia. A recent announcement by the major wheat organizations of all three countries, though, has put those rivalries on a backburner, if only for a moment. On May 14, the three countries announced their grower groups will work toward a synchronized commercialization of biotech traits in wheat, in order to minimize market disruption. While there is no commercial production of genetically modified wheat in the world, yet, the statement of this goal was a major step forward in the eventual path to commercialization of a biotech wheat variety. The argument for biotech The mere issue of biotech traits being added to wheat has been a hot subject in recent years. However, multiple factors are now in place that mean wheat producers--no matter their nationality--may want to consider genetically modified wheat varieties in their future business decisions. For example, in 2008 the price of wheat on the Chicago Board of Trade rose 13 percent, and ended the year at about $10.50 per bushel. Despite a slow economy and rising prices, demand for wheat products continues to rise. The U.S. Department of Agriculture has predicted wheat stocks in the United States to decrease by 40 percent by this June. However, wheat yields have remained stagnant and both public and private research--historically vital to advancements in wheat--is being set aside in some instances for more lucrative research into biotech crops. That increasing competition from biotech crops, such as corn and soybeans, has also reduced the acres devoted to wheat production all across the country. Farmers can bring in more net return on the same acres with biotech corn and soybeans than they can with non-biotech wheat. Even in the breadbasket of Kansas, winter wheat plantings were down in 2008. The National Agricultural Statistics Service estimated 9.9 million acres of winter wheat were planted in Kansas, down 5 percent from 10.4 million acres planted in 2007. While the arguments for developing a biotech wheat variety are many, there are just as many complications for after its introduction. Chief among the worries of American growers is how a biotech introduction will affect the international export market, specifically the markets of Europe and Asia, which have been strongly sensitive to biotech crops. Without proper planning and foresight, even a beneficial biotech trait developed in wheat could throw the export markets into tailspin. The first steps As part of that planning, the membership of the National Association of Wheat Growers soon realized the future introduction of any biotech wheat variety would affect not only American growers and their export partners, but their competitors in Canada and Australia as well. Daren Coppock, CEO of the National Association of Wheat Growers, explained how NAWG first approached Canadian producer groups like the Grain Growers of Canada, with which they'd previously worked on smaller issues regarding pesticide usage in wheat and such. He and former NAWG President John Thaemert, of Kansas, then approached Australian wheat grower groups in 2007, visiting Sydney and Canberra in a series of meetings. Coppock returned to Australia in 2008 to speak at the Australian Grains Industry Conference. "This is a huge strategic issue that can benefit producers if we approach it right," Coppock said. "We have much better odds of success if we linked arms and worked together." Two years later a document was drafted, circulated, and agreement was reached on the specific wording of the document. The agreement followed a list of priorities that had been set with input from the Wheat Summit Biotech Working Group and Canadian and Australian growers. The recent wheat grower petition from NAWG also played a role in crafting the research priorities. Coppock explained that growers in all three countries put drought tolerance traits at the top of their priority lists. Input was also gathered from flour millers and other wheat stakeholders. An agreement to synchronize Still, the most significant part of this agreement is the synchronization component, according to Coppock. "This is carefully worded," he said. "We want to bring these first traits to the market in close proximity to one another so one country is not out in front of the others. Of course, there will be at least six months of non-synchronicity because Australia harvests in December and Canada and the U.S. harvest in June through August or September. There will be a small lack of synchronization because of where countries are located on the globe. "We didn't want anyone to be two to four years ahead of the others and thus create an incentive for one of us to say, 'we don't have GM stuff,'" Coppock added. The goal is to release biotech traits to the commercial market in an orderly fashion. The whole process was delicate. Coppock gave an example of just how specific the wording had to be in the final document. "One of the groups believes the word 'transgenic' meant the same thing as Roundup Ready, so we changed the phrasing from transgenic to 'biotech,'" he said. A friendly understanding Remarkably, an agreement of this magnitude was done without the U.S. Trade Representative's office, nor the WTO, nor any other government intervention. And, while this agreement is more of an aspiration, Coppock said, it is still a worthy target to work toward. "If something happens and political decisions stop biotech wheat in other countries, there will be no sanctions or harm or fault for anyone. This is an understanding that this is the direction we want to go and we'll work together." Coppock explained the politics of any of the countries may change at some time before a commercially viable biotech wheat variety is released. Country X, for example, could have a legislature that banned biotech crops, while Countries Y and Z had biotech wheats commercially available. Despite Country X's political situation, Countries Y and Z would still be able to release their biotech wheats into the commercial system. "No one has a veto over the others and we have that in there just in case the political wheels fall off in one of the countries, or a group or organization stops progress toward biotech wheat in one of the countries," Coppock said. "We don't want this agreement on synchronization to make us subject to the political whims in other countries." Markets at stake These three countries are the dominant players on the world wheat market, especially in the sensitive Pacific Rim. Coppock explained biotech wheat is not just about growers, or about millers, or about bakers even. Rather, it's a long-term competitive issue for the worldwide wheat industry. "In the U.S. and in the prairies of Canada, we already see we're planting less wheat and more biotech crops because the returns are better," Coppock said. "Australia has more drought than not and they may lose their wheat industry if they don't figure out how to raise wheat without a lot of water." There are other countries that may come on board to the agreement in the future, he added. The reason why NAWG approached Canadian and Australian growers first was logical--the three countries share common customers. "To have us all on the same page is remarkable," Coppock said. This shows tech providers that growers around the world are ready for biotech wheats and that they can proceed with costly research and still have a market for their varieties, he added. "Collectively, we are all taking this to the customers in markets we sell to and telling them that this is what is driving our decisions," Coppock said. "We are committed to this, and we want to address their concerns. If they want non-biotech wheat, of course it will be raised." Competition in business will always exist, and the international wheat market is no different. But, for wheat growers in the United States, Canada and Australia, the hope is that setting aside competition for just a moment will ultimately help everyone in the long-term. They're counting on it. Jennifer M. Latzke can be reached by phone at 620-227-1807, or by e-mail at jlatzke@hpj.com.
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