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By Chris Prentice
NEW YORK, Oct 29 (Reuters) - America's sugar beet growersare under siege as U.S. food companies increasingly shungenetically modified (GMO) crops.
In the past seven years, the farmers - many in Minnesota,North Dakota, Michigan and Idaho - have all switched to GMOseeds created by Monsanto Co and sold by others as theyseek to increase yields and cut costs. Genetically ModifiedOrganisms include plants that have had been created through genesplicing - the introduction of DNA from a different species tomake a new one.
Now, as public sentiment moves against GMO crops and importsof cane sugar rise, sugar beet growers have seen their share ofthe U.S. sugar market slip to the smallest on record. Criticsbelieve GMO crops contribute to the industrialization of farmingand question promises of safety.
Beets' share of all U.S. sugar deliveries - which representtotal demand to major users and customers - fell to less than 41percent of the U.S. total of 11.8 million tons (10.7 milliontonnes) in the last fiscal year, a record low, down from 47percent of 10.4 million tons in the 2008 crop year, the year thebiotech seeds were introduced on a commercial scale, accordingto U.S. government data dating from 1992.
Beets will account for almost 60 percent of this year's 8.8million tons of sugar production in the United States. Anydifference between what's been produced and what's been sold isgenerally inventoried and/or sold the following year. Thoughit's not clear that the erosion in demand comes from reactionagainst GMO food, industry sources said the trend is beginningto pressure the beet industry.
CONSUMER BACKLASH
Food manufacturers are taking seriously the backlash fromconsumers, including Millennials, the generation of people nowin their 20s and 30s, who are perceived to care more about theingredients on their plates.
Companies including Hershey Co, Chipotle MexicanGrill Inc, Unilever Plc subsidiary Ben &Jerry's Homemade Inc and General Mills Inc have pledgedto ditch GMO ingredients in some products, bowing to customerpressure.
"Millennials care about the ingredients that are in ourproducts," said Eric Boyle, director of responsible sourcing atHershey. "Simple ingredients are a long-term trend. This iswhere things are going."
Hershey will stop using beet sugar in its Kisses and MilkChocolate bars, two of its best-known products, by the end ofthe year.
Vermont has passed a law, due to come into effect next year,which requires food with GMO ingredients to be so labeled. It'sthe first such law in the nation and a move that some industryexperts think could drive consumers toward organic and othernon-GMO foods.
MARKET PROTECTION
The U.S. protects the domestic sugar market through anetwork of import quota and marketing allotments, and guaranteesU.S. growers a premium that's now about 4 cents a pound aboveglobal prices, which have been depressed due to oversupply.
Refined cane sugar typically trades at a slight premium overrefined beet sugar. Raw sugar costs about 25 cents a pound inthe United States.
It's easy to see why beet farmers made the switch tobiotech. Within two years of the seed's launch in 2008, theywere used in almost every U.S. beet farm, boosting yields torecord highs and slashing herbicide costs. For most beetfarmers, returning to conventional seeds is inconceivable.
"If we had to go back to conventional seeds, our cooperativecouldn't survive," said Rebecca Larson, an agronomist withWestern Sugar Cooperative in Denver.
Sugar from beets and sugar from cane look and taste thesame. Proponents of GMO sugar say that the product is safe andidentical to its non-GMO competition. Even so, consumers areturning to organic and less processed foods, said Billy Roberts,a senior food and drink analyst at Mintel.
"People are interested in avoiding Frankenfood and foodsthey don't understand," Roberts said.
LOBBYING EFFORTS
For beet farmers, the situation has gotten so bad that theyare boosting their lobbying efforts in Washington and launchingtheir first major offensive to combat growing public oppositionthrough a social media campaign.
Western Sugar, one of eight sugarbeet co-operatives in theUnited States, is already seeing a dent in sales as consumersturn away from GMO.
"We are seeing an impact," said Larson. "A lot of ourcustomers are decreasing their orders because they want non-GMOsugar. It feels like it's more and more by the day." Shedeclined to give specific details on volumes of sales lost or oncustomers that have moved away from their sugar.
As the debate over GMO foods drives customers away from beetsugar, it's also exposed a schism with the farmers who growsugar cane in Florida, Louisiana, Hawaii, and Texas.
Cane growers have become the main beneficiaries of the shiftaway from beet sugar and many are embracing the trend. There areno genetically-modified cane seeds.
ASR Group, the world's largest vertically-integrated canesugar refiner, owned by the politically connected Fanjul familyof Florida, labels products such as household brand Domino Sugaras GMO-free through the Non-GMO Project, an organization thatcertifies and audits food.
AmCane Sugar Refining LLC and Cumberland Packing Corp, whosepackets of "Sugar In The Raw" are used in thousands of StarbucksCorp's stores across America, have also signed up forthe non-GMO seal.
Cane and beet farm groups declined to discuss the polarizingeffect the GMO issue has on their industry, one of the nation'smost powerful farm lobby groups in Washington.
Luther Markwart, head of the American Sugarbeet GrowersAssociation that represents country's 10,000 beet farmers,acknowledged that on this issue, unlike most, sugar beet farmersare going it alone.
"This is simply a beet issue," he said.
The split is a contrast from the industry's usual cohesivestance on issues that affect farmers from policy to consumertastes - two years ago, it fought off efforts to dismantle thecountry's generous farm subsidies and the industry has waged asuccessful decades-long campaign against a long-time foe,high-fructose corn syrup.
GRASSROOTS CAMPAIGN
Markwart said the beet industry ignored the push againstgenetically-engineered foods for too long.
"It was never something that seemed like you needed to spenda lot of time on," he said.
That's no longer the case. He has enlisted 18 women, largelyfarmers and wives of farmers and including Larson, to defendsugar on Twitter and Facebook and persuade mothers that GMOseeds are safe. He said that because the message is beingdelivered by women, that consumers will trust it.
Last month, the group flew to Monsanto's St. Louisheadquarters to learn about the seed technology and sharpentheir social media skills, Markwart said.
The industry is throwing more cash at the issue too. Thisyear, the U.S. Beet Sugar Association, a sister organizationwhich represents sugar-beet processors, has started lobbying onbiotechnology for the first time.
It spent almost $1 million in the first half of the year onissues including GMO labeling, according to U.S. Senate recordsreviewed by Reuters.
GMO critics "are trying to drive a wedge between the farmersand the consumers," said Laura Rutherford, a North Dakota-basedfarmer and the first recruit to the social media campaign. "Weneed to start pushing back."
(Reporting by Chris Prentice. Editing by Josephine Mason andJohn Pickering)
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