Mold Poses Latest Threat to U.S. Corn Crop
09/14/2012| 01:18pm US/Eastern
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--Farmers, grain handlers face mold problems with corn in some areas
--The mold can emit aflatoxin, a carcinogen
--Unclear if it will affect corn prices
By Ian Berry
CHICAGO--After cultivating corn amid a severe summer drought, U.S. farmers and grain handlers are now harvesting a crop that in many cases is afflicted with mold.
The mold, which thrived in the hot, dry weather that withered corn plants, can lead to the presence of aflatoxin, a carcinogen that is toxic to animals and humans at high levels. Grain elevators and processors are vigorously testing for aflatoxin this summer.
The issue is creating another headache for farmers grappling with the nation's worst drought in decades. In some cases, grain elevators and processors such as Archer Daniels Midland Co. (>> Archer Daniels Midland Company) are rejecting farmers' corn shipments.
The problem, which emerged in early August, is becoming more widespread as the harvest picks up in the heart of the Corn Belt, but the impact it will have on grain supplies is unclear, analysts said.
"Everyone is abuzz about aflatoxin," said Darrel Good, an agricultural economist at the University of Illinois.
About 15% of the U.S. corn crop had been harvested as of last Sunday, according to the U.S. Department of Agriculture.
Aflatoxin is emitted from a dark, green mold that occurs naturally and is more pronounced during drought. The issue is most acute in areas that were the hottest this season, including southern Illinois, Missouri and Kansas, analysts said.
The Food and Drug Administration considers aflatoxin unsafe for humans and animals at high levels. Excessive exposure can cause liver cancer in humans.
U.S. farmers grow much of the nation's corn crop for use in feed for cattle, hogs and chickens, so aflatoxin poses a significant risk if it shows up in high concentrations in feed. The government permits higher levels of aflatoxin in livestock feed than in corn used for food processing.
Over the past two years, companies including Kroger Co. (>> The Kroger Co.) and Procter & Gamble Co. (>> The Procter & Gamble Company) recalled some pet-food products due to concerns about the presence of aflatoxin.
ADM this week started testing every truckload of corn arriving at its flagship Decatur, Ill., facility, said Cory Neal, a broker and branch manager with Heritage Grain Co. in Bethany, Ill., who delivers grain to ADM.
An ADM spokeswoman wouldn't confirm the extent of the Decatur company's testing for the carcinogen but said such testing "is a standing protocol in our grain-purchasing process every year."
Mr. Neal said his elevator, which sends about 10 to 15 truckloads daily to Decatur, has had a load rejected every two or three days. Farmers are well aware of the issue, he said, but sometimes find it hard to gauge the extent of any problem. Testing can be unreliable, and aflatoxin levels can vary widely within a field, he added.
Cargill Inc.'s Eddyville, Iowa, corn-milling plant warned farmers of aflatoxin problems and said it would be testing corn loads, but the issue has slowed down the harvest, as some loads have been turned away, said Ray Jenkins, the plant's head corn buyer.
The state of Iowa last month began requiring milk processors such as Dean Foods Co. (>> Dean Foods Company) to test every incoming truckload for the toxin, which can be passed along in milk.
Dean Foods spokesman Jamaison Schuler said there have been no positive tests for aflatoxin in its milk this summer.
Aflatoxin is a chronic problem on Southern farms but only becomes an issue in the heart of the Corn Belt once every five or 10 years, said Charlie Hurburgh, an Iowa State University professor and grain-quality specialist. Notable aflatoxin outbreaks occurred in the Midwest in 1983, 1988 and 2005, he said.
Analysts said it isn't clear what impact, if any, the mold outbreak could have on corn-futures prices, which jumped to a record last month.
The outbreak is one more headache for farmers in big corn-producing states like Indiana. David Hardin, who grows 2,400 acres of corn and soybeans in Danville, Ind., expects his corn yield--or harvested bushels per acre--to be roughly half of normal. And he knows there is at least some mold in the field.
Mr. Hardin said he is unsure how he will handle an aflatoxin problem if one arises. "We know there's definitely potential for it. We just haven't figured out a way to manage around it," he said.
Write to Ian Berry at ian.berry@dowjones.com
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