APPENDIX 1
Memorandum submitted by Northern Foods
plc (R 1)
Like most UK food companies, Northern Foods
has never specified the use of GM ingredients in its foods. Inclusion
of GM ingredients in our products arose from the use of American
soya and maize by our suppliers of various food ingredients such
as soya protein, soya lecithin, maize starches and maize (corn)
oil.
Soya and maize are commodities. The supply chain
is set up to handle huge quantities of materials. The USA soya
crop in 1997 was 70 million tons. For economy of scale, the transport
and storage systems are on a vast scale with storage silos being
operated on an area basis not a farm basis. The silos range from
5,000 tonne to over 100,000 tonne capacity. Twenty thousand tonnes
of soya will be carried in a single boat from area storage silos
to the crushing mills or for onward transportation.
Commodity markets accept there will be cross
contamination in the supply chain. Seed is normally guaranteed
only 99 per cent. pure. When buying a commodity, 98 per cent.
purity is normally accepted. So a consignment of wheat could contain
2 per cent. barley or maize, a non-GM maize could be mixed with
2 per cent. GM maize.
American farmers saw no reason to segregate
GM and non-GM varieties which may be grown on the same farm and
on adjacent fields. They are currently harvested without any attempt
to segregate GM and non-GM varieties. However, even if the GM
and non-GM varieties were to be segregated at harvest, the transport
and storage systems do not exist for dedication of equipment to
either GM or non-GM varieties. This would require duplication
of assets which is currently not economically viable.
All the major soya processors have established
non-GM soya protein products in small quantities for niche markets.
However, this is possible only when the end product has a high
value which can carry the additional costs of the segregation
and auditing schemes.
The edible oils and animal feed markets cannot
bear these costs and so no attempt is made to manufacture these
from a non-GM feedstock.
About 55 per cent of the USA soya crop is GM.
To ensure a high purity non-GM bean, the best choice is DuPont's
Synergy soyabean. This has been developed by conventional plant
breeding to be tolerant to a particular herbicide but this herbicide
kills the Monsanto Roundup Ready bean. However, the Synergy bean
carries a cost premium and the management and audit systems to
ensure integrity of the non-GM supply chain also adds cost. To
dedicate a UK soya mill to Synergy beans would increase the costs
by £11 per tonne of beans. Of these beans, 80 per cent could
be used for animal feed, 20 per cent for edible oil and 0.5 per
cent for lecithin. The UK farmer will not pay the on-cost on animal
feed when the industry is, at best, only marginally profitable.
The edible oils industry is suffering the lowest prices for 11
years and an increase in soya oil prices will result in users
switching to other oils such as rape, corn or sunflower oil. That
means that the £11 per tonne on-cost would have to be borne
by the lecithin (an emulsifier used in chocolate and fats and
hard to replace), an on-cost of £2,200 per tonne of lecithin!
Recently, environmental groups have been lobbying
for animal feed to be non-GM. This will mostly affect the poultry
and pig industry where soya is an important part of the diet,
and to a lesser extent, beef. Soya is an excellent and cheap source
of protein in the animal diet. Replacing it will increase the
cost of animal feed by as much as 20 per cent and the typical
cost of rearing the animal by 10 per cent. These costs can only
cause the UK food industry to use less UK origin meats and import
more in order to remain competitive and continue to offer value
for money.
In summary, segregation of the USA soya and
maize crops will only be effected by the development of a non-GM
market that is prepared to pay the additional costs. We are a
long way from that.
We have learnt in Europe that the consumer is
not interested in commodity crops which may have environmental
benefit in the USA but have no direct consumer benefit. For GM
crops to be established in Europe, they will have to offer a real
consumer benefit. In such a case, the added value nature of the
crop will mean that the growers and processors will have an incentive
to segregate so that the added value crop is not "contaminated"
by the conventional crop.
28 September 1999
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