CHICAGO, Feb 24: Exporters hope that new measures put in place after last year's discovery of biotech rice in US cargoes will win back the multimillion-dollar European market.

Total US rice exports are down nearly 20 per cent this season, with European business the hardest-hit.

It's really not likely that we will ship any long-grain rice there (to Europe) until probably this fall, said Jim Guinn, vice president for international promotion with the USA Rice Federation, an industry group.

The US rice industry is hoping that this year's crop will be free of Liberty Link RICE601, a strain of genetically modified rice made by Bayer CropScience, which was found in commercial US storage bins.

That sentiment is reflected in prices at the Chicago Board of Trade, the world's largest grain exchange. The price of rice for post-harvest delivery in November is $1 per hundredweight higher than old-crop March So far, two varieties have tested positive for the gene material. Originally it was found in Cheniere and more recently in Clearfield 131, rice specialists said.

The European Union imported 300,000 ton s of US rice last year, with 85 per cent of it long grain. No GMO rice is authorized for import or sale in the 25-member European Union.

LLRICE601 has only been approved for use in the US.

At least nine countries in Europe -- where consumers are usually more wary of genetically modified products which some have dubbed “Frankenfoods” -- have discovered LLRICE601 in shipments of long-grain rice from the United States.

Europeans tend to not want or like genetically modified crops. But in this particular case it was an event that was never approved there -- so it's more of a technical, legal issue, Guinn said.

One major roadblock in re-establishing US export business with the European Union is agreeing on testing procedures. Rice samples must contain a negative result at 0.01 per cent of the Liberty Link genetic material.

Europeans also require imported cargoes of rice to be tested,at the destination point, even if the rice had tested negative for Liberty Link when the shipment left the United States. That has steered US exporters away from EU markets.

The US rice industry is encouraging states to take steps,to prevent contamination of this year's supply. Top long-grain rice producing state Arkansas is taking the lead in trying to rid supplies of the Liberty Link trait, sources said.

All seeds planted in Arkansas this spring must test negative.for the LL material.

It was in that process that the Clearfield 131 samples were coming back positive for the trait, said Mary Smith, director of the Arkansas State Plant Board's seed division.

When a farmer delivers rice to an Arkansas mill at harvest this summer, he will be required to document that the seeds planted tested negative for the Liberty Link trait and also document the amount of rice acres he planted, she said.

Arkansas is also allowing farmers to move any old-crop supplies into marketing channels before harvest starts. Mills will accept rice testing positive for the LL gene up until July 31, she added.

Louisiana has instituted similar regulations while Mississippi, Missouri and Texas have not, state officials said.

While the Liberty Link trait was found only in long-grain rice it affected exports of US medium grain rice exports.

South Korea and Japan, which typically buy medium-grain rice from the United States, are testing US rice imports to make sure they are clear of the Liberty Link trait.---Reuters