GM imports may reduce corn prices

Grain market in China sees major shift in supply-demand balance

The government's move to ease import restrictions on genetically modified corn may drive down domestic prices for the crop, which is already uncompetitive on the international markets, raising concerns among local farmers struggling with rising planting costs and low profits.

Argentina's Ministry of Agriculture, Fishery and Food on Tuesday said that China had approved imports of one of the country's GM varieties of corn, Syngenta AG's Agrisure Viptera, also known as MIR 162.

As the world's fourth-biggest exporter of corn, Argentina has been negotiating for access to the Chinese market for that strain of corn for several years.

Hu Zengmin, an analyst at the China National Grain and Oils Information Center in Harbin, said that imported corn is mainly used in animal feed. The country's corn-consuming regions are located along the coast in provinces like Shandong, Jiangsu and Fujian.

The policy shift "will definitely encourage more GM corn from the United States and Argentina to be shipped to China sooner or later", said Hu. The customs-cleared prices of US corn range from 1,800 yuan ($288) to 1,900 yuan per metric ton in China, about 400 yuan lower than the domestic price.

Many Chinese feed producers, even those in corn-growing regions, favor US or Argentine corn because of the lower prices. But many of these companies began to stockpile domestic crops after the country tightened controls on imported corn.

Last December, Chinese authorities rejected shipments of the crop from the US that contained an unapproved genetically modified strain. Argentina's announcement came after Syngenta AG, a global agribusiness based in Switzerland that markets seeds and agrochemicals, said it had received import approval for MIR 162 from the Chinese regulatory authorities.

MIR 162 has been approved for cultivation in the US since 2010 and has also been approved for cultivation in Argentina, Brazil, Canada, Colombia, Paraguay and Uruguay.

The approval covers corn grain and processing byproducts, such as dried distillers' grains, for human and animal consumption.

"The supply-demand relationship for corn, rapeseed meal and soybean meal will be changed by this shift," said Hu. "Feed enterprises will only choose corn with lower price tags and the selling prices of Chinese corn are very likely to drop in 2015."

China last week also approved imports of biotech soybeans developed by DuPont Pioneer, the largest US producer of hybrid seeds for agriculture, as well as another type of GM soybean produced by Germany-based Bayer CropScience AG. The approval enables Bayer to start full commercial launch plans in the US.

The nation imported 1.99 million metric tons of corn between January and November. The China National Grain and Oils Information Center estimates that corn imports will total 2.4 million metric tons this year.

For decades, China's agricultural sector has embraced non-GM technologies to ensure grain output and security. The government has encouraged this situation, because it is concerned that GM crops might affect biodiversity and lead to adverse social and economic consequences.

Tian Zhihong, a professor of international trade of agricultural products at the China Agricultural University in Beijing, said that because of safety concerns, imported GM corn and soybeans will not go directly to the dinner table. They will only be used in scientific tests, animal feed, oil pressing and the biochemical industry, as per government regulations.

"As this is a new technology for Chinese consumers, it is sensible that the public has different views and doubts," said Tian. "The government should ensure the use of biotechnology is safe and should not allow foreign firms to control the market for GM products."