GM concern could mar US wheat sales to Egypt


SHARM EL-SHEIKH, Egypt, Feb 9 (Reuters) - U.S. wheat sales to Egypt
could face pressure from concerns over
genetically- modified (GM) wheat and the high price of the dollar,
industry experts said at a conference to promote U.S.
wheat on Saturday.

"It's definitely become an issue in the Middle East. People just don't
want it (GM wheat)," said David Payne, director of
Louis Dreyfus Negoce.

He said U.S. wheat officials had heard similar fears from end-users
during recent promotion drives in the Far East.

"Growers in Colorado and Oklahoma are telling farmers to stay away from
it," he told Reuters.

The United States is one of the world's largest wheat exporters, though
U.S. wheat officials say two thirds of it is
consumed in the United States, where concerns about genetically-
modified food are not as high as in Europe and other
parts of the world.

Egypt has been one of the world's largest importers of U.S. wheat in
recent years, importing 3.5 million in marketing
year 2000-2001.

U.S. wheat competes with French, Australian and Canadian wheat for
Egyptian government tenders, but private sector
millers - who account for around one million tonnes of imports a year -
are increasingly turning to cheap alternatives
with lower freight costs, traders say.

Eldon Lawless, board member of the U.S. Wheat Associates group which is
organising the two-day regional
conference, said GM wheat would come into the market by 2004 at the
earliest.

Egyptian millers sought assurances that GM wheat would not find its way
into Middle East cargoes.

"If you have one grain in a thousand which is genetically modified, the
consumer is going to refuse it," one said in a
panel discussion.

"There's not enough information to put my mind at ease. I hoped I'd hear
something today to make me feel comfortable,
but I didn't," another told the seminar.

Industry figures said the weakness of the Egyptian pound could also
damage U.S. wheat sales.

The pound is currently trading in an official three percent band above
and below a rate of 4.51 pounds to the dollar set by
the central bank, compared to a core rate of 4.15 pounds set in August.

But black market rates are well above five pounds to the dollar.

"The exchange rate difference is going to do a lot of damage to the
industry in Egypt if something isn't done about it. I
hope the Egyptian government will not allow this big anomaly in rates to
continue," agricultural counsellor at the U.S.
embassy in Cairo Thomas Pomeroy told the conference.

"The dollar is so high right now. That's our problem, it kills us," a
Colorado farmer told Reuters.

"U.S. wheat is expensive now and the exchange rate makes it even more
expensive to get dollars, so millers are turning
to less expensive wheat," one Cairo-based international trader said.

He said his trading house is currently offering U.S. soft wheat to local
millers at 800 Egyptian pounds per tonne,
compared to 650-700 pounds per tonne for equivalent Hungarian and
Ukrainian wheat. "Millers don't want U.S. wheat at
the moment, over the last two months or so."

Egypt's main buyer, the state-owned General Authority for Supply
Commodities (GASC), has been able to maintain
high buying levels of U.S. wheat through credit facilities offered
through U.S. aid programmes to Egypt.

((Andrew Hammond, Cairo newsroom, tel: 00-20-2-578-3290/1,
cairo.newsroom@reuters.com))