By Treena Hein for FCC Express
While identity preserved genetically modified high-quality food grade soybeans are in demand for export, Dwight Gerling, managing director and owner of grain marketing firm DG Global in Toronto, says several factors are limiting the potential for growth.
Buyers find IP GMO soybeans attractive because the premiums are about one fifth that of IP non-GM soybeans. Most buyers are in Asian countries outside Japan and simply can’t afford IP non-GM soybeans, Gerling recently noted, but still want high-quality soybeans for manufacturing soy food products.
However, growth in the IP GM market has been stifled for three reasons:
1. A dearth of food-grade GM soybean varieties for Canadian farmers to plant
2. The need for a stronger commitment to contracts by both customers and Ontario soybean growers. In Gerling’s view, overseas buyers of IP GM soybeans generally haven’t seen the point of arranging contracts. “Customers can sometimes think there is an endless supply of soybeans, and we are gradually helping them understand that in order not to be disappointed again next year, you need to pre-contract,” Gerling says.
3. Buyers break pre-contracts.
Gerling notes, especially if prices of GM and non-GM food grade soybeans are fairly close near purchase time, buyers instead purchase non-GM soybeans at the eleventh hour since there’s a significantly improved opportunity to sell and a better profit margin.
Growers also need to meet contract quality specifications and follow through on delivery, he says.
“It’s completely understandable that sometimes, due to weather, growers must go ahead and harvest,” Gerling says. “The premium for IP GMOs isn’t high enough to outweigh the risk of not having the beans meet the contracted quality specifications.”
Gerling suggests that in order for the industry to grow, exporters must also work on building trust with foreign markets.