China’s hard line on biotech burns US hay

China’s tough new stance on imports of genetically modified crops is shaking up a little-noticed U.S. industry: hay.

Over the summer China began testing imports to detect the presence of hay made from a biotech alfalfa that Beijing hasn’t approved. Consequently, shipments to China have plunged since midsummer and some deliveries have been rejected.

China’s actions are a sharp blow for shippers of hay, which is produced from alfalfa and other grassy plants and is the fourth-largest U.S. crop by acreage, and valued at US$20 billion a year. U.S. hay prices also have fallen about 12 per cent, in part because the reduced Chinese demand boosted domestic supplies.

With Chinese dairy producers eager to feed high-protein U.S. alfalfa to cows, U.S. exports of alfalfa hay to China had jumped more than eightfold from 2009 to 2013, reaching nearly 785,000 tons, and accounted for a quarter of such exports in the first 10 months of this year. But as exporters scrambled to ensure their cargoes didn’t contain the genetically modified alfalfa, which was developed by Monsanto Co. , shipments tumbled 22 per cent by weight from August to October from a year earlier, according to U.S. Agriculture Department data.

Mountain Sunrise Feed Co., a small hay exporter in Enterprise, Utah, had been shipping half of its product—1,000 tons a month—to China. It stopped shipments after several of its cargoes were refused.

“It’s too big a gamble,” said owner Nick Huntsman.

The lost Chinese business forced him to lay off five employees, and the company now is using just 50 per cent of its production capacity due in part to reduced exports.

The hay controversy arose this summer, when China’s General Administration of Quality Supervision, Inspection and Quarantine said it found unapproved genetically modified strains in U.S. alfalfa shipments from three companies.

Agency officials declined to comment.

China long has had a zero-tolerance policy against biotech alfalfa, and U.S. exporters shipping there say they purchase alfalfa from farmers who grow non-biotech crops. But the U.S. industry has two problems: its definition of what qualifies as non-biotech may not be strict enough to meet tougher Chinese standards, and there is evidence biotech genes have spread to non-biotech crops.

Possible explanations for the presence of genetically modified material in alfalfa shipments thought to be non-GMO include cross-pollination of one crop by the other or crops becoming mixed during harvesting, baling or storage of the hay. Another is the seed itself. Roughly 30 per cent of U.S. alfalfa seed sold in the U.S. is genetically modified, according to Monsanto. The Monsanto variety is engineered to withstand sprays of Roundup, a widely used Monsanto-made weedkiller. The USDA in 2011 authorized farmers to plant Roundup Ready alfalfa without restrictions. Critics had fought in court to block the alfalfa, charging that it could transfer by pollen to non-biotech crops including organic alfalfa—a scenario some suggest is happening now.

A Monsanto spokeswoman declined to comment on concerns over contamination. “Monsanto is working with the growers and the industry to build consensus toward appropriate, accurate and consistent testing protocols that give farmers the certainty they need to market their crops,” she said.

Voluntary standards used by the U.S. seed industry permit some wiggle room when it comes to purity. For alfalfa, industry standards allow 2 per cent of “off-types,” or another variety of alfalfa, to be present in a seed field, meaning that a bag of non-GMO alfalfa seed, for instance, could contain a small amount of genetically modified seeds, potentially resulting in traces of “non-GMO” hay shipped to China with biotech traits.

Until recently, U.S. hay exporters had been using a basic “strip” test, which resembles an over-the-counter pregnancy test, and can detect when hay contains more than 5 per cent biotech material, according to U.S. industry officials. Positive readings used to be uncommon. But when China began testing U.S. imports over the summer, it used a more-sensitive chemical DNA test, capable of detecting when hay contains as little as 0.1 per cent biotech material.

U.S. exporters are now using similar tests to help them comply with the new Chinese policy, and industry leaders say they are working with China to ensure future shipments will meet the country’s requirements. But some exporters said they are worried because tests of U.S. inventories have yielded many positive readings for biotech material—a sign Monsanto’s biotech alfalfa is often present in crops considered non-biotech. With biotech seeds approved for use in the U.S., industry leaders say, a true “zero” reading will be difficult to meet.

Exporters including Anderson Hay & Grain Co. in Washington state and California-based Al Dahra ACX Global Inc. have lost millions of dollars from forfeited sales and higher costs from rerouting rejected shipments to other countries, according to industry executives.

Anderson Hay, one of the largest U.S. hay exporters, said its sales declined markedly after China rejected some of its shipments.

“It’s had a huge impact on our business,” said Mark Anderson, chief executive of the closely held Ellensburg, Wash., company.

“The consequences for exporters who ship a lot of product to China are huge,” said John Szczepanski, director of the U.S. Forage Export Council, a hay-industry group.

Hay is the second major U.S. crop roiled recently by China’s more-stringent position on biotech crops. U.S. corn exports to China have plunged 87 per cent by weight this year following Beijing’s move last autumn to reject shipments containing a genetic modification developed by Syngenta AG . U.S. farmers and grain traders including Archer Daniels Midland Co. have sued Syngenta, claiming it acted irresponsibly by selling the biotech seeds in the U.S. before Chinese authorities approved the corn. Syngenta has said the suits have no merit and it has been transparent about the approval process for the biotech corn. Last week, the company said it expects China soon will grant approval of the corn.

China’s moves are posing tough questions for agricultural companies about how to balance the growing use in the U.S. of genetically modified seeds -- which are altered to make them resistant to pests or able to withstand herbicides -- against tighter restrictions elsewhere. China has approved some types of genetically modified seeds, but its approval process often takes longer than in other big countries, according to U.S. industry executives.