The Union of European Community Rice Millers' Associations, in a document obtained by Reuters, has demanded that Thai suppliers must "maintain the integrity of their non-genetically modified rice, through rigorous identity preservation methods throughout the supply chain".

"Supplies of rice from the origins, where the GM rice becomes commercialised risk rejection in the EU," the Brussels-based Union said in the note to the Thai Rice Exporters' Association.

"Consumers in Europe are unconvinced about the benefit of genetically modified food either to themselves or to the environment," it said.

A spokesman for the Thai rice exporters' association said the warning would not have an immediate impact on Thai rice exports, but had clearly reaffirmed the EU's stance on the GMO issue.

"Though we are quite sure our rice is non-GMO, we would have to be very careful as GMO hides in various forms of materials used in farming," he said.

The association has informed its members of the EU's position on GMO in order to avert any ban of Thai rice exports.

"Once the EU detects any link to GMO in our Thai rice, it will have an excuse to cease buying and that could seriously tarnish our reputation," the spokesman said.

The EU currently buys Thailand's high-grade rice, especially jasmine rice. It accounted for 85,600 tonnes, or three per cent, of Thai rice exports in the first-half of 1999.

The EU is a potential market for value-added rice products and hence much valued. It is also a major market for Thai farm products, such as tapioca, chicken, canned tuna and shrimps.

New techniques are controversial

Controversial new biotechnology techniques enable genes of farm products to be manipulated sometimes by introducing external genes. Producers and exporters such as the United States, China, Argentina use them to boost output and lower production costs.

Biotechnological manipulation of farm products has become a controversial issue in Thailand, which faces a dilemma over ways to speedily upgrade farm efficiency and competitiveness.

At the same time Thailand is striving to sell its farm products to markets highly sensitive to GMO technology, industry sources said.

EU countries have slowed chicken imports from Thailand over GMO concerns and pending regulations on labelling because the country imports millions of tonnes of animal feed ingredients annually from countries that use GMO technology.

"If we do not welcome this technology, our cost might be higher than those of other sellers and we could lose our competitiveness," president of the Thai Feedmills Association Somchai Kungsamutr said.

"But if we use it, we might have to be faced with safety issues and concerns from buyers as well," he said.

The Thai government hopes to solve the problem by requiring importers of agricultural raw material to clearly specify the origins of their imports.

"We may ask importers of several sensitive products to require from their foreign suppliers a GMO-free certificate," said deputy director general of the Foreign Trade Department Pissanu Reanmahasarn.