By Carey Gillam – Analysis
July 17, 2009

KANSAS CITY (Reuters) – Many U.S. farmers have welcomed renewed efforts by biotech crop leader Monsanto Co to genetically modified wheat, but convincing world markets to embrace genetic alteration of the key food crop remains a high hurdle to overcome.

Monsanto added fuel to a debate over biotech wheat on Tuesday when it announced it was buying WestBred LLC, a wheat germplasm specialist as a platform to develop higher-yielding biotech wheat that would be more tolerant of drought and require less nitrogen.

Along with Monsanto, rival seed technology companies such as Syngenta AG, BASF and Dow AgroSciences, a unit of Dow Chemical Co, are pouring resources into wheat development. Some companies are focusing on transgenic alterations using DNA from other species and some are manipulating genes already found in wheat.

Currently there is no biotech wheat grown on a commercial-scale anywhere in the world due to opposition from consumers and food industry players.

Most notably, Japan, one of the world’s largest importers of wheat and a leading critic of past efforts to introduce genetically altered wheat, remains a steadfast opponent. Many European countries also continue to resist genetically modified crops.

"There is still strong concern and some opposition," said Alan Tracy, president of U.S. Wheat Associates, the industry’s global market development organization that has been working to convince Japan and other countries to accept biotech wheat.

Japan, which imports around 5.5 million tonnes of wheat each year, including about 3 million tonnes from the United States, is starting to acknowledge that there might be a valid argument for biotech wheat. But much work remains to be done before full acceptance, Tracy said.

U.S. Wheat is still working to get Japan and other countries to establish regulatory systems and tolerance levels that would allow for continued imports if biotech wheat is commercialized, he said.

Some U.S. farm groups also remain wary of biotech wheat. They say conventional breeding can bring many of the same benefits without negative market consequences.

These critics also say biotech wheat work is aimed more at improving profits at corporations such as Monsanto than at helping farmers.

Many consumer and environmental groups fear introducing genes from other species into wheat could make it harmful for humans, and say it would be hard to keep biotech wheat segregated from conventional wheat seed and products.

"There has been no change in the opposition and rejection of foreign markets," said Bill Wenzel, director of the Farmer to Farmer Campaign on Genetic Engineering, a grower group based in Wisconsin. "I don’t think that anybody should be rushing in to try to commercialize GMO wheat."

Monsanto, a global leader in biotech corn and soybeans, backed away from commercializing a herbicide-tolerant wheat five years ago as foreign buyers threatened boycotts.

Opponents say a biotech wheat introduction could still deal a significant blow to U.S. markets, recalling how U.S. corn lost European buyers when genetically modified corn was introduced.

But biotech wheat supporters say the global wheat crop needs a technological boost. They note that over the last few years, farmers have reduced wheat acreage in favor of more-profitable, easier-to-grow crops such as corn and soybeans.

They also point to fears mount about global food shortages and a rapid rise in world population. Just last year, shortages drove wheat prices to record highs, and prices remain historically high this year despite ample supplies.

Those factors have prompted corporations and researchers in the United States and Australia to increase development efforts in wheat.

Some farmer groups support commercialization of biotech varieties, saying they will have several years to address buyer fears before any biotech wheat is commercialized.

"We’re always concerned about the marketplace but we’ve pretty much proven we have the ability to deliver the types of grains customers want," said Allan Skogen, chairman of Growers for Biotechnology and a North Dakota spring wheat farmer. "If somebody chooses a nonbiotech grain, we can deliver it."

(Reporting by Carey Gillam; Editing by David Gregorio and Lisa Shumaker)