LINDA WERTHEIMER, host:

Last year was an unsettling one for America's rice farmers. Shipments of U.S. rice were turned away from European ports because they contained traces of genetically engineered rice that regulators had never approved. And as Dan Charles reports, no one is sure how it got there.

DAN CHARLES: This mystery story began quietly, almost a year ago in France. Routine tests of a boatload of rice from the United States came up positive for genetically engineered grain. This was strange, because as far as anyone knew, U.S. farmers weren't growing any genetically-engineered rice. It took months to figure out exactly what the test had detected. On a Friday afternoon in August, the U.S. Department of Agriculture announced there were, in fact, traces of genetically engineered in the U.S. harvest.

Mr. JACKIE LOEWER (Rice Farmer): August 18th - that's our 9/11. The market just crashed.

CHARLES: Jackie Loewer farms rice in southwestern Louisiana.

Mr. LOEWER: A lot of local mills had rice on the dock waiting to be loaded, and a hold was put on it. And so they just sat there. I mean, the market was frozen for a month.

CHARLES: The amount of genetically-engineered rice was tiny, the equivalent of just 6 kernels out of about 10,000. But once people started looking, they found it all over, in storage bins in Arkansas, on shipping docks along the Mississippi, and in ship loads of rice arriving in Europe, where governments refused to take it. Bobby Hanks, CEO of the company Louisiana Rice Mill, says exporters lost millions of dollars.

Mr. BOBBY HANKS (CEO, Louisiana Rice Mill): There were a lot of shipments that got turned around. There were a lot of shipments that were rejected and had to go somewhere else. And there were a lot of shipments that were sitting on the water here in the U.S. that had to be unloaded and found - you know, a home found for it here in the U.S.

CHARLES: Things did settle down. Many countries did eventually accept the rice, and the USDA and the FDA announced, belatedly, that it was safe to eat and to grow. The new genes in it have previously been approved in corn, soybeans and canola. But the USDA is still trying to answer a troubling question. How did this happen?

(Soundbite of music)

CHARLES: Investigators think the answer may lie in the Cajun country of southern Louisiana, in the town of Crowley. Crowley calls itself the rice capital of America. Here you find rice fields, rice mills and every fall, after harvest, the town's big annual party, the International Rice Festival. Crowley also is home to a famous Rice Research Station operated by Louisiana State University. And for a few years, until 2001, this research station grew some experimental plots of the genetically-engineered rice that turned up in France. Steve Linscombe is director of the research station.

Dr. STEVE LINSCOMBE (Director, Rice Research Station): We were very interested, and still are very interested in this technology.

CHARLES: That technology was a tool to fight off rice's evil twin, a weed called red rice. When red rice infests a field, it can cut a farmer's harvest in half. And farmer Fred Zaunbrecher says his usual weapons, chemical herbicides, are useless against it.

Mr. FRED ZAUNBRECHER (Rice Farmer): And the plants are so much alike that anything that would kill the red rice would actually kill the good rice, too.

CHARLES: But the genetically-engineered rice developed by a company called Bayer CropSciences had the benefit of some new genes imported from bacteria. They allowed the plant to survive a herbicide called Liberty that kills most vegetation, including red rice. Research station director Steve Linscombe.

Mr. LINSCOMBE: From a weed control standpoint, this is, this would be extremely valuable to the industry.

CHARLES: In Linscombe's experiments, the rice worked well. But Bayer CropSciences never brought it to market. It worried that consumers wouldn't want to eat it. Now the Crowley research station also has another job. It breeds new, conventional rice varieties and maintains the original stocks of seeds for each variety it releases. These so-called foundation seeds are the ancestors of the seeds that farmers plant. Linscombe says they guard these seed stocks like crown jewels. There's a wide boundary around fields where foundation seeds grow to prevent cross pollination with other plants. And workers make sure farm equipment doesn't accidentally carry in stray kernels that don't belong there.

Mr. LINSCOMBE: Everything we do here is to minimize any potential for seed mixtures or anything.

CHARLES: So what do you do when the combines come in?

Mr. LINSCOMBE: We tear them completely down. We tear them completely apart. We blow them with air and any number of things.

CHARLES: But in August, after the USDA's surprise announcement, Steve Linscombe tested his foundation seed and found traces of that herbicide-tolerant rice.

Mr. LINSCOMBE: We then were able to determine that the problem was isolated in one foundation seed production. It was in the 2003 seed production that we had of the shaneer(ph) variety.

CHARLES: And it's probable that in 2001, some of the earliest plants of the shaneer variety were growing within a few hundred yards or so of Bayer Crop Science's genetically-engineered rice at the LSU Rice Research Station. This may be where a grain or two somehow got mixed in with conventional seed, then multiplied and spread. The USDA is investigating the case. It's expected to issue a report within a few months. Rice exporters, meanwhile, just want some assurance that this will never happen again.

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CHARLES: A conveyor belt at this rice mill in Mermentau, Louisiana carries one bag after another to a waiting truck. The bags carry American flags and a big picture of the Statue of Liberty.

Mr. DANNY NUJER(ph) (General Manager): And this rice is going to Ghana.

CHARLES: Danny Nujer is the general manager here. Ghana will take American rice, even if a bit of it is genetically engineered. But the rice industry says within a year, this entire problem will disappear. The shaneer variety is off the market for now. And there will be a program of testing to make sure that the seed farmers plant this spring has no genetically-engineered rice in it. But he episode has left some rice exporters with a lingering headache and doubts about anyone's ability to control genetically-engineered crops. What if it had been something that wasn't healthy? said one. We'd have been in a much worse situation. For NPR News, I'm Dan Charles.

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