Australia, forecast to be the third-biggest exporter of the grain, is developing a modified wheat that could be released on the global market in five to 10 years, said German Spangenberg, executive director at Victorian AgriBiosciences Centre. Adoption of GMO wheat, not grown commercially by global producers, is inevitable for food security, he said in an interview in Tokyo.

Prices of wheat, rice and corn climbed to records this year and the World Bank has warned that could push 100 million people deeper into poverty and provoke civil unrest in more than 30 countries. The U.S., Canada and Argentina already use GMO technologies for crops including corn, soybeans and canola.

"To feed the growing population, farmers worldwide will increasingly adopt gene modification technology as crop production is constrained by weather conditions,'' Takaki Shigemoto, an analyst at Tokyo-based commodity broker Okachi & Co., said today by phone. "Non-GMO crops will become a premium product as they will become less available and more expensive.''

GMO wheat under field trials in Australia's Victoria state contains genes from plants such as corn and moss as well as yeast, Spangenberg said on July 2. Test results show the GMO grain generated a 20 percent gain in yield compared with non-GMO crops under drought stress, he said.

`Significant Increase'

"This is a very significant increase,'' Spangenberg said. "GM wheat for drought tolerance will be important to sustain agricultural production into the future.''

Victoria was hit by Australia's worst drought and in the 2006/07 season lost as much as 70 percent of its harvest, equivalent to A$300 million ($288 million), Spangenberg said. "If we had GM wheat for drought tolerance available then, that loss would have been 20 percent less,'' he added.

The U.S. is forecast to be the world's largest wheat exporter in the year that began June 1, followed by Canada and Australia, according to the U.S. Department of Agriculture.

The research center, based in Bundoora, plans to transfer the technology to developing countries to help boost output and is working with the International Center for Maize and Wheat Improvement, a Mexico-based organization that researches wheat varieties for developing countries, Spangenberg added.

Rising Population

The world's population has doubled since 1960 to 6 billion, and is expected to rise to 8 billion by 2030 and 9 billion by 2050, Spangenberg said. In the next two generations, the world will consume twice as much food as in its entire history, he said.

"Rice and wheat are very important staple foods. If you consider the population growth we are going to see in China and India, there will be a significant demand,'' he said.

Over the next decade GMO wheat will probably be adopted in exporting countries, such as the U.S. which already uses GMO technologies, he said.

Western Australia, the country's biggest grain-growing state, bans genetically modified crops and South Australia in February decided to extend a prohibition, citing a lack of conviction on the benefits of allowing them to be grown.

New South Wales and Victoria last year said they would permit commercial growing of GMO canola from this season. Cotton and carnations are the only other GMO field crops already commercially released in Australia.

Herbicide Resistance

GMO crops contain a gene from another organism, giving the plants characteristics such as resistance to herbicides and the ability to produce their own toxins to kill pests. Critics say there may be health and environmental consequences over time.

The Flour Millers Association in Japan, Asia's largest wheat importer, has said it won't buy GMO wheat because of consumer resistance. South Korea only purchases non-GMO food crops for human consumption.

"We are not ready to accept GMO wheat,'' Masaaki Kadota, executive director at the Tokyo-based association, said. "Even if Australia produces GMO wheat, we will seek non-GMO supplies from the country, or may switch to domestically grown wheat.''

DuPont Co., the world's second-biggest producer of seeds, plans to engineer wheat and rice to boost yields as rising demand lifts grain prices to records.

Growers and buyers have asked Wilmington, Delaware-based DuPont to develop higher-yielding wheat varieties to help keep pace with output of crops such as corn, William S. Niebur, vice president of crop-genetics research, said June 5. Syngenta AG is also developing disease-resistant GMO wheat.

Monsanto Co., the world's biggest seed producer, abandoned plans in May 2004 to sell wheat genetically modified to resist weed killer amid opposition from buyers in Europe and Asia.