Canada moves to revive flax exports after GMO flap

Fri Jan 8, 2010 3:15pm EST

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* Much of Canadian crop contaminated with GMO

* Trade strained to EU, Japan, Brazil

* Farmers face higher costs, may grow less-group

By Rod Nickel

WINNIPEG, Manitoba, Jan 8 (Reuters) - Canadian exporters will try to cleanse their flax shipments of genetically modified organisms by requiring farmers to use certified seed, in an effort to reopen trade with top markets.

Shipments to the European Union, which traditionally buys 70 percent of Canada's flax, halted in late summer 2009 after the EU detected GMO material in a Canadian load. GMO flax has not been approved for food use in the EU, where consumers are fearful of the unproven long-term health effects.

GMO detection has weakened cash flax prices and left the crop piling up on farms with markets uncertain.

Farmers grow an estimated three-quarters of Canadian flax from seed they saved from past crops. The plan will see exporters buying crop grown only from seed produced and inspected according to the high standards of certified growers, with additional testing to ensure it's free of GMO material.

"The feeling is that this is probably the best way to get this mess cleaned up once and for all," said Barry Hall, president of the Flax Council. "I think it will be very effective."

The plan will take effect with the crop planted this spring and harvested in autumn, 2010.

Canada is the world's largest producer and exporter of flax, also called linseed. Its seed is popular in baked goods, while its oil has industrial uses like linoleum flooring.

The tough measures will only raise farmers' costs and convince many to plant other crops this year, said Allen Kuhlmann, a flax farmer and chairman of the Saskatchewan Flax Development Commission.

"They look like they're trying to cram this down producers' throats," he said. "I can see there will be a lot of pushback."

A Canadian university researcher developed FP967, the only GMO flax variety ever produced, in the 1990s. The variety, which the researcher ironically called Triffid after a science fiction book about plants that kill people, was authorized for use in Canada and the United States, but the industry successfully lobbied Canada to deregister it in 2001.

Importers in Japan have also discovered GMO materials in Canadian flax shipments and begun additional checks, while Brazil had imposed mandatory testing of Canadian shipments. Japan is Canada's No. 3 flax market, while Brazil is a small importer, Kuhlmann said.

Major flax exporters include Viterra VT.TO, James Richardson International and Cargill [CARG.UL]. A Cargill spokesman referred comments on the plan to the Flax Council, while the others could not be immediately reached.

The industry plan doesn't help find markets for this year's 930,000-tonne crop. Shipping is now more difficult with the key Port of Thunder Bay closed for winter.

The EU has not banned Canadian flax, but exporters have deemed it risky to make shipments that could be rejected. Several shipments from Canada did go to Europe this autumn, Hall said.

Exporters already require farmers to test their crops at labs for GMO contamination. Hall said the industry would like the EU to ease its "extremely tight" 0.01 percent tolerance level. (Editing by Marguerita Choy)

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