By Tom Polansek
March 24 (Reuters) - The U.S. agriculture industry must devise a system to handle genetically modified crops barred by major importers because unapproved varieties will comprise an increasing portion of production in coming years, top executives at grain merchant Gavilon Group LLC said.
Omaha-based Gavilon, owned by Japanese trading house Marubeni Corp, broke from the world's top grain traders last month by agreeing to accept a new type of GMO corn not approved by China or the European Union. Both countries are major grain buyers.
The corn, a Syngenta AG variety called Agrisure Duracade, is available for planting for the first time in the United States this year. Gavilon agreed to buy the grain from U.S. farmers as part of a deal with Syngenta, while major exporters like Archer Daniels Midland have refused out of concern it will accidentally be sent to China or the EU.
Gavilon will greatly reduce the risk that Duracade corn will be inadvertently mixed with approved varieties by working with farmers and by organizing a network of grain elevators and markets that will accept the grain, said Greg Konsor, the company's general manager of grain operations, in a telephone interview on Friday.
The industry must learn how to efficiently handle unapproved varieties because Duracade will not be the last one to hit the market, he added.
"We've got to figure a solution out to make sure we're not handcuffing the U.S. corn farmer or the seed companies that they can't get their product to market sooner," he said. "At some point in time the industry has to deal with it, and I think now is the time to deal with it."
Concerns about Duracade have captivated the U.S. farm sector this year because China has rejected hundreds of thousands of tonnes of U.S. corn containing another unauthorized GMO Syngenta trait, Agrisure Viptera, since November. Known as MIR 162, the trait has been awaiting Beijing's approval for more than two years.
On March 10, Syngenta halted commercial sales of Duracade corn in Canada because major importers had not approved the product.
Gavilon agreed to accept it because U.S. farmers want to plant the new variety, which is engineered to fight pests, Chief Executive Greg Heckman said. The company, the third-largest U.S. grain handler by storage capacity, is equipped to direct it to appropriate markets, he said.
"Is it always easier if everything is as fungible as water and no one has to think and you don't have to manage any details?" he said. "Absolutely that is easier. But that's not what the customers are asking for."
Cargill Inc, the largest exporter of U.S. grain, has said it will not accept Duracade corn for shipment overseas because it is not approved by major importers. ADM went a step further with plans to reject crops containing Duracade for domestic processing or export.
On Friday, Michigan Agricultural Commodities, Michigan's largest grain handler, became the latest operation to say it will decline the variety in 2014. It can be difficult to segregate different varieties of grain from one another because they are often harvested, transported and stored together.
"We have determined it is in the best interest of U.S. agriculture - farmers, elevators, processors, and exporters - to discourage the production of this variety," Michigan Agricultural Commodities said in a statement.
The National Grain and Feed Association and North American Export Grain Association have unsuccessfully lobbied Syngenta to suspend the commercial use of Duracade and MIR 162 in the United States until China and other export markets have granted regulatory approval.
Duracade already has approval from buyers including Mexico, South Korea and Japan.
Corn containing Duracade will be planted on 250,000 to 300,000 acres this spring and be harvested in the autumn, according to information Syngenta has provided to the U.S. trade associations. Corn was planted on 95.4 million acres in the United States last year.
(Reporting by Tom Polansek; Editing by Richard Chang)