Why Didn't We Learn Our Lesson?

"NGFA recently released a pair of economic analyses that estimate up to $2.9 billion in economic losses have been sustained by the U.S. corn, distillers grains and soy sectors in the aftermath of the enforcement of a zero-tolerance policy on Syngenta’s Agrisure Viptera™ MIR 162 corn technology in U.S. export shipments to China, where the trait has not been approved yet for import as food or feed.

But according to a second NGFA analysis, U.S. growers, grain handlers and exporters could sustain an even greater economic impact – up to $3.4 billion – during the 2014/15 marketing year that starts Sept. 1 given Syngenta North America Inc.’s decision to launch seed sales of its new Viptera Duracade™ 5307 biotech-enhanced corn well before the earliest regulatory-approval timelines in key U.S. corn export markets (including China). Syngenta has said seed sales of Duracade 5307 are expected to result in the planting of between 250,000 and 300,000 acres in portions of as many as 19 U.S. Corn Belt states.

The NGFA stressed that it strongly supports agricultural biotechnology and other scientific and technological innovations that contribute to efficient production and availability of a safe, abundant, affordable and high-quality food and feed supply for U.S. and world consumers. In addition, the NGFA said it is working in tandem with the North American Export Grain Association; corn, soybean and other grower organizations; biotechnology providers; and the seed industry in trying to improve the timeliness and synchronization of U.S. and foreign governmental approvals of biotech-enhanced traits.

However, the NGFA said its economic analyses of the impacts of the trade disruptions resulting from the detection of unapproved Agrisure Viptera MIR 162 provides a “case study” on the ramifications of commercializing crop biotechnology before securing import approvals from major U.S. export markets – particularly foreign countries with a zero-tolerance policy for the presence of unapproved biotech-enhanced traits.

“Regaining and maintaining access to the Chinese import market, as well as preserving access to other U.S. export markets, is critically important to the short- and long-term prospects of U.S. agriculture,” said NGFA President Randy Gordon. “These export markets are key drivers of producer profitability, current and future economic growth for U.S. agriculture, and achieving global food security.”

The NGFA noted that the U.S. Department of Agriculture (USDA) currently forecasts China’s corn imports will increase from 2.7 million metric tons in 2012 to 22 million metric tons by 2023, accounting for nearly half the projected growth in world corn trade over that time span. For the current 2013/14 marketing year, USDA had projected before the trade disruption that the United States would be the principal corn exporter to China – at an estimated 7 million metric tons. However, U.S. corn export shipments to China reported on an aggregated basis to the NGFA by U.S. exporters have amounted to only 1.23 million metric tons thus far.

The NGFA’s study found that in the aftermath of the disruption in U.S. corn shipments to China that began in November 2013 following the detection of MIR 162, financial losses to the U.S. corn, distillers dried grains with solubles (DDGS) and soybean sectors are estimated to range from $1 billion to $2.9 billion. U.S. corn trade with China has come to a standstill since then, and trade with China in DDGS and other U.S. commodities is being conducted in a riskier market environment. For instance, U.S. exporters have reported that China has detained and tested several shipments of U.S. soybeans following the detection of MIR 162, and that some U.S. soybean sales to China have been reduced or canceled as a result. China has responded by significantly increasing imports of U.S. grain sorghum, originating corn from Ukraine and utilizing its domestic stocks. Most recently, Brazil and Argentina were granted approval to begin exporting corn to China.

Meanwhile, the NGFA analysis estimates that U.S. corn prices would have been 11-cents-per-bushel greater if the MIR 162-related trade disruption with China had not occurred. The study found that applying this price-depressing impact across U.S. corn production amounts to a $1.144 billion loss for U.S. corn farmers over the last nine months of the current 2013/14 marketing year. At the time NGFA conducted the analysis, it was uncertain if and when China would approve MIR 162 corn for import during the current marketing year that ends Aug. 31."

Farmers are really going to need that $2.9 billion after this years losses.

Maybe we will learn our lesson, it's a global marketplace.

Ed Winkle