The Guardian

The decision, announced yesterday, is a major fillip for the anti-GM lobby and follows pressure from US and Canadian farmers who feared the introduction of GM wheat would lead to the collapse of their billion-dollar markets in Europe and Japan.

Monsanto, the world's biggest seller of GM seeds, had looked to the development and introduction of GM wheat to fulfil a dream of dominating the world's bread market.

The company had proved that GM wheat increased yields by 5% to 15% but consumer resistance to the idea of eating GM bread - particularly in Europe - meant the biggest part of the US export market would disappear overnight.

In yesterday's statement, Monsanto acknowledged that there was not a sufficient market to make the introduction of its GM wheat worthwhile and said it was concentrating on corn (maize or sweetcorn), cotton and oilseeds such as rape, where it already has a large seed market.

Carl Casale, the executive vice-president of Monsanto, said: "As a result of our portfolio review and dialogue with wheat industry leaders, we recognise the business opportunities with wheat are less attractive relative to Monsanto's other commercial priorities."

Sue Mayer from Genewatch, a GM pressure group, said: "This is amazing, extraordinary; the company has been bullish about this great new flagship product and insisting it would be marketed across the world. This is a huge step down. They must have feared a terrible backlash from farmers who would have boycotted their other products."

Although wheat is only one of the world's staple food crops, it is the most valuable for a seed seller because it is grown in the richest regions of the world, Europe and America, where profit margins are the greatest.

But after the boycott of GM maize and soya in Europe, wheat farmers have feared that they would also lose markets.

For the past 10 years the EU and Japan have bought about 45% of the wheat that the US exports. About half of the 5.5m tonnes of US wheat exports in 1999-2000 went to these two markets, according to the US department of agriculture.

Most of the wheat for bread in Europe comes from North America, because most European grain is not of high enough quality to make bread.

There has been resistance from US growers for some time to the introduction of GM wheat because of fears that cross-pollination or mixing in stores would render it unsaleable.

North Dakota failed in an attempt to introduce legislation to prevent its introduction in 2001. But the attempt exposed the level of concern among European importers about GM wheat.

One letter came from Julian Watson of Rank Hovis, one of the largest EU millers. It said: "So that you are completely clear on Rank Hovis's policy toward GM wheat: we do not want any level of such grain in our supplies from you.

"To date, we have been able to say to our customers that GM wheat has not yet been brought to the market. This now needs to be backed up with preventative actions.

"You should treat this issue with the utmost gravity and priority, given that the alarm generated by even the perception that spring wheat may contain GM traits could be enough to jeopardise the entire export programme to the EU."

Fearing a massive disruption in supplies and a consumer boycott of bread if the US did introduce GM wheat, millers have been seeking alternative wheat supplies from Australia and eastern Europe.

Pete Riley, the GM campaigner for Friends of the Earth, said: "This is a worldwide victory for consumers and farmers."

But Monsanto made it clear it had not abandoned its dream of GM wheat forever.