Prairie flax farmers are worried they will be forced to undergo costly testing to regain their soured reputation with Europe.

The $300-million-a-year Canadian flax industry is losing money every day, said Terry Boehm, head of the National Farmers Union.

"If we don't straighten this out and become a reliable supplier we could lose that market indefinitely," he said.

"The farmers themselves are uncertain. Many of them have taken out cash advances. They don't know if they are going to be able pay them back based on growing a flax crop because they don't know if they will even be able to sell it."

In September, Europeans detected some genetically modified seeds in a shipment of flax from Canada.

Europe, which buys 70 per cent of Canadian flax exports, has a zero tolerance for genetically modified flax and immediately ceased accepting the cereal grain from Canada.

Genetically modified flax was banned in Canada in 2001 and the source of the rogue flax hasn't been discovered, but it was identified as from a variety approved by the government in the 1990s.

Ian Willdig, who farms near Airdrie in southern Alberta, is preparing for a loss this year. Not only was he hit by hail, flax prices are dropping and the largest trading partner is not interested in his product.

"My biggest fear is how much our reputation has been damaged and when something like this happens it takes a while for people to forget, and that's a tough crawl back," he said.

Farmers may ultimately have to pay for the mistake, he said.

"Before you could market this variety based on your word," he said. "Now it's just one more step that you won't be able to contract your commodity without getting this tested through an independent source and it's going to be time and its going to be money."

Flax, especially organic, is an important and well-paying crop for Canadian farmers, said Boehm. But if the uncertainty continues next spring, farmers might just plant another crop.

"Then we have the scenario where other nations could very well take over our flax markets."