American Soybean Association (ASA) Statement

Regarding statements issued by the Archer Daniels Midland (ADM) Company

And Consolidated Grain and Barge Company

September 3, 1999

I. BACKGROUND: ADM Statement To Suppliers Regarding Biotech Crops

The Archer Daniels Midland company issued on August 31, 1999, the following statement regarding biotech crops: "During recent months there have been a series of news reports addressing the issues surrounding crops enhanced through biotechnology. As your trading partner, we want to alert you to a change we are experiencing in consumer demand. While ADM remains supportive of the science and safety of both biotech development and traditional plant breeding methods to improve crops and benefit consumers, ADM's processing business is driven by consumers' desire to have choices. As a key link in the food supply system, we must produce products that our customers will purchase. Some of our customers are requesting and making their purchases based upon the genetic origin of the crops used to manufacture their products. If we are unable to satisfy their requests, they do have alternative sources for their ingredients. We encourage you as our supplier to segregate non-genetically enhanced crops to preserve their identity."

• In general, ADM’s statement is consistent with ASA’s expectations that there will be specialty markets this fall, and in the future, for soybeans grown from non-biotech seedstock. Some consumers desire food products that do not contain ingredients derived from biotech crops, and ASA supports the marketing of Identity Preserved (IP) soybeans to meet that demand.

• Although ADM’s statement does not mention if premiums will be paid for Identity Preserved (IP), non-genetically enhanced crops, ADM has stated that the marketplace will determine the size of premiums. ASA agrees that the size of premiums will be market-driven, and influenced by the tolerance levels allowed for unintentional commingling of biotech with non-biotech varieties that may occur in agricultural production, processing, and transportation chains.

• ASA has worked extensively with those foreign buyers in Europe and Japan desiring non-biotech soybean varieties. ASA, along with U.S. exporters including ADM, have been forthright in informing foreign buyers that identity-preserved, non-biotech soybean varieties will cost more. This is due to the extra costs incurred to maintain the identity of non-biotech soybeans through the food chain.

• Farmers who wish to supply non-biotech crops almost certainly will incur additional handling, storage, and transportation costs in order to preserve their identity. This fact was recognized by ADM this spring in announcing that producers would be paid a premium of 18-cents per bushel for delivering STS soybeans, a non-biotech variety developed by DuPont.

• ASA advises soybean growers to closely calculate the additional costs, as well as any potential liabilities, they may incur in certifying the delivering of non-biotech varieties. Knowing these additional costs and any potential liabilities is an important factor to be used by individual growers as they evaluate the adequacy of marketplace premiums.

• ASA believes it would be useful if ADM clarified its statement to recognize that market-driven premiums will be needed to source and deliver non-biotech crops to customers. Such a clarification would signal that ADM does not intend these additional costs to be borne by growers.

• Such a clarification also would reinforce the market signal to food manufacturers and consumers that premiums will be required to source and identity preserve non-biotech crops and food ingredients, just as premiums are necessary to source and identity preserve organically grown crops and ingredients.

II. BACKGROUND: Consolidated Grain Plans To Pay Premium For Non-GMO Crops

Consolidated Grain and Barge Company announced on September 1, 1999, that it will continue to accept both GMO and non-GMO crops, but it wants to make producers aware that it plans to pay premium prices for non-GMO crops. Consolidated said it is signaling that producers should be alerted to "bin their GMO (genetically modified organism) corn separate from non-GMO." The firm said producers need to be alerted now to make sure they have the ability to "harvest and store separately." Consolidated Grain said that the premiums on non-GMO "will be volatile." To qualify for the premiums, Consolidated said producers should expect to: (a) Provide certification statements that they have controlled the crop and kept it separated from GMO crops. (b) Cleaned their combines, grain carts, augers, etc., to reduce contamination when they switch between types. (c) Discard grain from any borders where they didn't clean the planter last spring. (d) Retain samples because of expectations for requests for purity guarantees.

• The statement by Consolidated Grain and Barge Company is consistent with ASA’s expectations that there will be niche or specialty markets this fall, and in the future, for crops grown from conventional seedstock. Some consumers desire food products that do not contain ingredients derived from biotech crops, and ASA supports the marketing of Identity Preserved (IP) soybeans to meet that demand.

• Although Consolidated did not mention the specific price premium it expects to pay for non-biotech crops, the statement clearly recognizes the additional costs that will be incurred by the grower to deliver non-biotech crops.

• ASA advises soybean growers to closely calculate the additional costs, as well as any potential liabilities, they may incur in certifying the delivering of non-biotech varieties. Knowing these additional costs and any potential liabilities is an important factor to be used by individual growers as they evaluate the adequacy of marketplace premiums.