KANSAS CITY, Mo., May 23 (Reuters) - Germany's Bayer AG BAYG.DE is battling to keep thousands of U.S. rice farmers from becoming part of a massive class-action lawsuit over the contamination of commercial rice supplies by a Bayer biotech rice not approved for human consumption.

In hearings this week in federal court in St. Louis, Missouri, lawyers representing rice farmers said about 7,000 long-grain producers in Missouri, Arkansas, Louisiana, Mississippi and Texas should be allowed to seek unspecified damages against Bayer for contamination that was uncovered in August 2006.

Farmers suffered extensive losses, both from a plunge in rice prices, and in a drop in export business as Japan and the European Union moved to restrict U.S. rice from crossing their borders.

Many farmers also were not able to plant a crop the following year because of seed shortages tied to the contamination, and had to undertake costly clean-up efforts, according to plaintiffs’ attorneys.

Bayer is fighting the class-action move, and both sides are now awaiting a ruling from U.S. District Judge Catherine D. Perry .

“We believe that the individual actions brought by plaintiffs are not appropriate for consolidation under the rules governing class-action proceedings,” Bayer attorney Bruce Mackintosh said in a statement.

Plaintiffs’ attorney Don Downing said class-action status was the best way to help farmers who lost money, markets, and in some cases, an entire season’s crop.

“This is their livelihood,” Downing said.

About 700 rice farmers have filed lawsuits against Bayer following the August 2006 disclosure that the company’s genetically altered experimental rice had somehow contaminated food supplies.

While the United States is a small rice grower, it has been one of the world’s largest exporters, sending half of its crop to foreign buyers.

The genetically engineered long-grain rice in question has a protein known as Liberty Link, which allows the crop to withstand applications of a herbicide used to kill weeds.

The U.S. Department of Agriculture and Food and Drug Administration said there was no public health or environmental risks associated with the genetically engineered rice and the two agencies elected not to punish Bayer for the contamination. (Editing by Walter Bagley)