The global GM food bubble may have burst after almost 10 years of exponential growth. Companies are investing less in research than five years ago, profits are static, countries are tightening up labeling and import laws, the promised new generation of crops which could bring health benefits is still years away, and no major new markets are expected to develop for some time.
Paradoxically, Guardian research has also found that the acreage of GM crops is still growing in the US and, at more than 109m acres now across the world, is 25 times what it was five years ago. The industry, moreover, has now convinced almost all governments and world bodies to back the bitterly disputed technology.
But Sergey Vasnetsov, Wall Street's leading chemical industry analyst with Lehman Brothers, says: "The outlook [for the GM food industry] is less certain than it was three years ago. The euphoria has gone. Growth has fallen significantly. The industry has overstated the rate of progress and underestimated the resistance of consumers.
"Acceptability will only come with new products but that seems to be something the industry cannot achieve. The crops that will benefit people [as opposed to farmers] are still three or four years away. The market is not expanding and research budgets are down 5-7% on five years ago. Conceptually, the value [of GM foods] has come down," says Mr Vasnetsov.
Benedict Haerlin, Greenpeace International's GM analyst, agrees: "The wonder times are over. The promises have not materialized. There are still only four major crops being grown. The world market is reducing in terms of delivery.
But the GM food companies are confident they can overcome regulatory hurdles and global opinion. World leader Monsanto, whose seeds were planted on more than 80m acres last year - but which has had to slash costs, cut back on research and fire almost 700 people - is conducting field trials in many developing countries and reported an 11% increase on acreage. The global GM acreage is thought to be 17% higher than in 2000. Most of the new plantings, however, have been in north America.
Mr Vasnetsov is scathing of the claims made by the UN, chemical companies and scientists that GM crops will alleviate hunger in developing countries. "Let's stop pretending we face food shortages. There is hunger, but not food shortages. GM food is for the rich world. The money from GM is in developed countries. The battle is in Europe," he says.
Greenpeace's Benedict Haerlin agrees. "No GM company is going to produce varieties for poor countries unless it sees a market," he says.
US analysts fear that GM crops, after 10 years of plantings, are still a north American phenomenon, with the rest of the world proving increasingly cautious. The US now has 80% of all plantings, followed by Canada, Argentina and China. Ten other countries grow small amounts.
Overcoming Europe's five-year-old moratorium on new commercial plantings is crucial for the development of the crops. EU draft laws announced last month would allow imports with 1% contamination of conventional crops by GM organisms, but while allowing new GM crops to be grown, they could increase to up to three miles the buffer zone between them and conventional ones which could put most farmers off. The companies are expected to lobby to relax the limits.
US growers and government fear that their £30bn food export industry is being undermined as countries try to substitute their exports for those of the US. Despite the objections of the US government and lobbyists, many countries are now trying to turn the screw on US agriculture by increasing regulatory pressure.
Thailand, the world's largest rice exporter, is bringing in strict laws on labeling and traceability; Algeria, a large food importer, may ban completely their import, manufacture or sale; Japan, which takes 20% of all US food exports worth $11bn a year, has imposed tough labeling rules on 24 product categories and new Chinese laws may delay GM maize for several years. In Sri Lanka, the government has come under intense pressure from the World Trade Organization and business not to reimpose a ban on imports and growing of the crops.
The US government and farm organizations admit that GM has severely hit exports. Europe, Japan, Taiwan and South Korea have largely switched to buying non-GM maize and soya from Brazil and China rather than the US. The US department of agriculture recently lowered its maize export forecast by 50m bushels as a result of GM's unacceptability.
Meanwhile, legal uncertainties surrounding the testing of GM crops are leading some European biotech and seed companies to shift their research to north America. "We won't be carrying out any more field trials in Germany for this year," said seed company Norddeutsche Pflanzenzucht (NPZ).
The companies say farmers are happy with the performance and profitability of the crops, but the global wariness has prompted even biotech supporters to question GM. A recent survey of the 14,000 members of the American Corn Growers' Association suggested 78% would abandon GM to recover lost export markets.
While animosity to growing the crops may have peaked in Europe, consumer support is waning in the US. An ABC poll in June found 52% saying GM foods were "not safe to eat," and only 35% expressing total confidence. A year earlier, a Gallup poll found the reverse, with 51% seeing no health hazard.
The hoped-for "ethical" GM crops which have been promoted by governments and scientists are also reported to be years away from markets. Subsistence farmers will not be able to benefit from Syngenta's much-hyped "golden rice", modified to include vitamin A for the benefit of people in developing countries, for at least four years because at present it is only viable in temperate climates.
Monsanto is preparing to introduce GM wheat within two years but US and Canadian farmers, who dominate world exports, are cautious. More than 200 Canadian groups, including the National Farmers' Union and the Canadian Wheat Board, want the test plantings to stop, fearing GM wheat will damage exports.
In the past month, the UN has claimed GM crops could significantly help developing countries, the EU has taken the first steps to ending its moratorium on new plantings, Britain has sanctioned 30 more major trials in readiness for commercial growing, and the New Zealand government has strongly backed the crops.
Testing times - 25,000 trials in 40 countries
The genetic modification of plants involves transferring DNA from a plant, bacterium, or even an animal, into a different plant species
The four main GM crops are corn (maize), cotton, Soya bean and canola
More than 109m acres of GM crops are grown worldwide
The main planting areas are in the US, Canada, Argentina and China
Since 1985, when genetically engineered plants resistant to insects, viruses, and bacteria were first tested, 25,000 trials have been carried out in more than 40 countries
In 1995 the EU approved the importation and use of genetically modified Soya
The UN development program, and all major national scientific bodies, believe GM crops can benefit farmers and consumers
This year more than 30 test sites have been wholly or partly destroyed in Britain
Apart from all major crops, tests have been done on most vegetables, as well as trees and fish.
The four types of GM crops
Bt crops: Protected against insect damage and reduce pesticide use. Plants produce a protein - toxic only to certain insects - found in the common soil bacterium bacillus thuringiensis, or Bt
Herbicide tolerant: Allow farmers to control weeds without harm to the crop
Disease-resistant: Armed against destructive viral plant diseases with a "vaccine"
Nutritionally enhanced: Foods that could offer higher levels of nutrients and vitamins
© Guardian Newspapers Limited 2001