China’s rejection of cargos of U.S. corn containing a biotech trait not yet approved for import has reopened a continuing problem. At issue is Syngenta AG’s Agrisure Viptera for insect resistance, also known as MIR 162. In August 2011 Bunge North America, a major international corn merchandiser, refused to buy corn with the biotech trait because of the potential for rejection of imports by the Chinese; other major grain companies took similar action. Harmonization of Chinese regulations with the rest of the world is the obvious solution.
The Agrisure Viptera trait is approved for production and all uses in the U.S. and is approved for import by the EU, Japan, Mexico and other major importers. When USDA deregulated it in April 2010, Syngenta began preparing for commercial production by corn farmers across the U.S. in 2011. The trait was cleared for export to key global markets as identified by a 2007 agreement of the Biotech Industry Organization and the National Corn Growers Association. China was not on the list of export markets in 2007 because it was not importing corn or distillers dried grains with solubles (DDGS), a feed co-product of dry mill corn ethanol plants.
The principal problem is that China does not start its regulatory approval process for a new trait until the trait is approved by an exporting country. China also has a zero tolerance for low level presence for unapproved varieties. A process for approval that normally takes a couple years (their target is 270 days) leaves China at risk of unexpected importation and puts a burden on exporters to keep it out of the bulk-handling supply chain. If Syngenta waited for the approval of Agrisure Viptera by China, the company would have lost at least three years of intellectual property rights protection and seed sales. Chinese approval was expected for the 2012 crop, but still has not been granted.
The Chinese government has granted import approval in recent months for other biotech products. In early June the Chinese Minister of Agriculture announced approval of three soybean events now in use in Brazil: a BASF biotech trait for sulfonylurea tolerance; Monsanto’s insect resistance and combination with the newer Roundup Ready trait; and Bayer’s version of Liberty Link resistance to glufosinate. Brazil is a major supplier of soybeans and the announcement was made in a meeting with the visiting Brazilian Minister of Agriculture. The USDA World Agricultural Outlook Board estimates that in 2013/14 China will import 69 million metric tons (MMT) of soybeans, two-thirds of the soybeans traded globally. Chinese soybean buyers do not have the luxury of refusing to buy certain traits.
China has increased the number of suppliers of corn as its volume of imports has increased. It has granted access to corn from the U.S., Argentina, Brazil and Ukraine. USDA expects China to import 7.0 MMT from all sources in the 2013/14 corn marketing year, up from 2.7 MMT in 2012/13 and 5.2 MMT in 2011/12 year. Chinese production for the 2013 crop is now projected at 211 MMT after growing 205.6 MMT in 2012 and 192.8 MMT in 2011. China’s large crop this year may reduce the pressure to increase corn imports, but clearly China is ready to import more corn in future years to maintain meat production in a short corn crop year.
China was a net exporter of corn from 1996/97 through 2008/09. The lack of approval of biotech corn for imports helped it avoid imports under the tariff rate quota for corn in its ascension agreement to the WTO. China was only a small net corn importer in 2009/10 and 2010/11. The situation changed markedly with imports of 5.2 MMT in 2011/12 and the use of the Agrisure Viptera trait which was ‘new’ technology not in the previously approved corn varieties for import.
The new suppliers of corn to China are growing corn with biotech traits. According to the U.S. Agricultural Attaché in Argentina, 100 percent of the soybeans are biotech as is 95 percent of the corn. The new soybean traits approved by China in June are also approved in Argentina. The Agrisure Viptera corn trait at issue in China is also approved for production and use in Argentina. According to Reuters, a corn shipment from Argentina was imported to China earlier this year even though it contained traces of the Agrisure Viptera trait.
According to the U.S. Agricultural Attaché in Brazil, 88 percent of the soybean acres were planted with biotech traits, as were 88 percent of the winter corn acres and 65 percent of the summer corn acres. The Agrisure Viptera trait is approved in Brazil.
The U.S. Agricultural Attaché in Ukraine reported that the country does not export crops with biotech traits because none have been officially registered for production, use and commercial sale. He said that rumors in the industry in Ukraine are that the majority of the soybeans have biotech traits and a third of corn has biotech traits. Conservative estimates by the U.S. industry are that 20-30 percent of the crops in Ukraine are biotech and all shipments to export facilities are tested for biotech traits to segregate grain sent to the EU. The latest Agrisure Viptera trait is not likely present. The Ukraine government has agreed to supply China with 4-5 MMT of corn per year for the next three years.
The Ministry of Agricultural Policy and Food in Ukraine is reportedly ready to begin animal feeding trials to measure the impact of biotech crops, even though that question has been thoroughly answered by others. Pioneer has built new seed facilities in Ukraine and Monsanto has announced plans to build.
China does not lack trained professionals to do whatever technical work needs to be done on Agrisure Viptera MIR 162 approval. According to the U.S. Agricultural Attaché in China, the Chinese government has heavily invested in biotech research and seed development, primarily through publicly funded research institutes and universities, including a July 2008 State Council approval of a $3.5 billion special research program over 12 years to develop new biotech varieties.
The Chinese government has its own political problems on corn imports in general and biotech corn in particular, similar to issues in the rest of the world. A few opinion leaders want to cling to the self-sufficiency policies of the past, including soybeans and corn. Others just want to make sure corn imports do not become as large as soybean imports. The anti-biotech groups don’t worry about imports as long as they are not biotech. A deliberate move to regulatory harmonization for corn with the rest of the world would be the best outcome for China. A much more difficult shift in regulations would be one triggered by a short crop at home and a need to import 10-20 MMT of corn in one marketing year.