Battle Lines.

Brazil's courts bar transgenic crops. They might be too late.

HOW LONG CAN BRAZIL--A HUGE SUPPLIER OF corn and soy for international markets, especially Europe--hold out against farming genetically modified foods? The answer could be blowin' in the wind.

Transgenic soy and, to a lesser extent, corn seeds smuggled from Argentina already have caused a small percentage of soy and corn product in Brazil to test positive for modification. Genetically modified (GM) seeds reportedly accounted for 8% of Brazil 1999 soy crop.

If GM fields are planted legally, which court cases under way now might eventually allow, pollen would spread from field to field and seed could get mixed in Transport--something which has already happened to corn in the United States, reaching consumers in the form of tainted taco shells. Farmers, food processors and environmental groups alike say accidental crossbreeding in Brazil is virtually inevitable.

Meanwhile, if transgenics continue to be blocked, experts warn, black market demand could bring in seeds just the same, contaminating Brazilian fields. If demand for GM foods grows, and public pressure for GM labeling laws doesn't slow domestic consumption, so to will grow demand for contraband seeds, says Gabriela Flora, program associate for agricultural biotechnology at the Institute for Agricultural and Trade Policy in Minneapolis, Minnesota. "The continued smuggling of GM soy seeds from Argentina will increase the percentage of transgenically modified soy in Brazil," she says.

Swiss-based Societe Generale de Surveillance, which runs product-testing labs worldwide, is betting fear will be big business. In April it opened Brazil's first GM testing lab in Santos, home to Brazil's biggest port. The lab will certify whether Brazilian corn and soy products are GM-free. Europe now requires gene-modified soy and corn to be labeled and restricts most other transgenic crops.

Currently, Brazil-based multinational soy and corn processors like Cargill, Archer Daniels Midland and Bunge must pay a 10% premium over normal shipping costs to send samples of their soy and corn cargos to the U.S. and European labs that certify them. The process takes a week; if done in Brazil, it would take two days.

When lab results show cargos aren't GM-free, processors have to find new buyers for their products. That often means shifting from Europe to southern Africa or China, as well as renegotiating cargo prices and even rerouting vessels at sea. Societe Generale de Surveillance estimates that within a year or two, as its own start-up costs decrease, it can reduce certification costs by 30%.

"This lab should encourage more smaller Brazilian soy and corn processors to ship their non-GM product to Europe because it will reduce certification costs," says Patricia Hellmeister, business development manager for SGS in Brazil. "The lab should help boost the volume of non-GM soy and corn-based exports, mainly going to Europe."

Money changes everything. Smuggling and winds notwithstanding, farmer Almir Rebello believes economics will drive change faster. He says its only a matter of time before the world's No. 2 soybean exporter will join the GM club, just like neighboring Argentina, the world's No. 3 soybean exporter. (The United States is No. 1).

Eventually, traditional soy and corn will cost consumers more, says Rebello, who owns 370 acres of soybean and corn fields in Rio Grande do Sul state. That's because non-GM soy and corn require a variety of pesticides. GM soy and corn, some of which are engineered to resist pests, produce greater yields with fewer chemicals.

"The higher price of non-GM corn and soy will, within three to five years, cause the Europeans to increasingly switch to cheaper GM soy and corn imports," predicts Rebello, president of a Rio Grande do Sul state chapter of the Amigos da Terra, a state farmers association. "Once this happens, Brazil will lose its main market for non-GM soy and corn and will be forced to plant their GM varieties."

Environmentalists counter that European demand for unmodified foods will be enough to keep Brazil relatively GM-free, although some concede smuggling of transgenic seeds from Argentina can only increase. "Europeans, with a far longer history of environmental abuse-linked health problems than most peoples, are far more health conscious than most peoples, and consume more organically-grown foods than most peoples, a consumption level that's going up, not down," says Roberto Kishinami, the executive director of Greenpeace in Brazil.

Some green groups are taking no chances. Andrea Salazar, the coordinator of the anti-transgenic campaign at the Sao Paulo-based consumer advocacy group institute for Consumer Defense, believes the Brazilian legal blockade will be hard to dismantle--and that public opinion will turn on any efforts toward widescale introduction of modified products. Salazar's group sought and won a 1998 injunction to stop Monsanto from planting Roundup Ready soy seeds, which are genetically modified to resist pests.

The government has done virtually no testing on GM crops, Salazar argues, adding that if it tries to allow them into Brazil, court rulings and public pressure against GM crops "will create a brick wall to block it."

The Brazilian government, which favors transgenic farming, is fighting along with Monsanto in court to allow Brazilian farmers to commercially grow GM soy and corn, a move that will ensure doubt about the purity of Brazil's crop and drive demand for crop certification.

Of course, GM seeds are already growing in Brazil's vast soy and corn fields. An extended legal battle could well turn out to be academic, a quixotic verbal struggle to figure out who left the door open to transgenic crops in Brazil.