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 While the U.S. grain industry lobbies the Chinese government to
stop rejecting cargoes of corn containing another unauthorized
genetically modified Syngenta strain, farmers in the Midwest are
weighing whether to take a chance on the Swiss-based company's new
product, engineered to combat pests called rootworms.
Syngenta, the world's largest crop chemicals company, said its
Agrisure Duracade trait will be available for planting for the first
time this year in "limited quantities" after U.S. authorities
cleared it for sale and cultivation last year.
For farmers it may be a risk worth taking: Infestations of rootworms
have developed into a major challenge in top-producing states such
as Iowa and Illinois, because farmers have increasingly been
planting corn on the same fields year after year to take advantage
of high prices. The traditional practice of rotating corn with
soybeans had helped better control pests.
But the planting of Duracade threatens new disruptions — and
millions of dollars in losses — for global grain traders if the
strain gets mixed into the mainstream supply chain and prompts
another round of rejections from China, as some analysts fear.
The commercialization of Duracade could "further contaminate, slow
down, gum up" shipments of U.S. corn to China, Rich Feltes, vice
president of research for commodity brokerage R.J. O'Brien, said in
a recent interview.
The issue has already split the farm sector, as a national growers'
group urged the U.S. Agriculture Department to approve the strain
while grain lobbyists warned in 2012 that the trait could hurt U.S.
trade because it was not accepted by all major importers.
Some U.S. seed companies have declined to license the new Duracade
trait from Syngenta to insert into seeds, out of concern that
growers could be stuck if grain elevators and exporters refuse to
buy corn that contains it.
The United States is expected to export 1.45 billion bushels of corn
in the marketing year that ends August 31, accounting for 10 percent
of the last harvest.
VIPTERA STANDOFF
In November, Chinese authorities began rejecting some U.S. corn
cargoes that contained Syngenta's Agrisure Viptera variety, known as
MIR 162, which has been awaiting Beijing's acceptance for more than
two years.
Why some imports have been allowed while others have been stopped is
not clear, and analysts and traders have offered various
explanations, including possible trade tensions or a desire to
support domestic corn prices.
Whatever the cause, a total of 600,000 ton of U.S. corn and corn
products have been denied entry, weakening U.S. prices and providing
the latest example of GMO use disrupting agricultural trade.
Syngenta is not considering any steps to pull back Duracade from the
market because it believes growers need access to new technologies,
spokesman Paul Minehart said. The number of acres planted with seed
containing the trait will be determined by seed production volumes
and shipping time lines, he said.
In line with industry standards, Minehart said, Syngenta
commercializes corn traits once it has approval from countries with
"functioning regulatory systems."
"The regulatory systems in China and the EU are not considered
functioning according to industry policy, meaning their
decision-making processes are not predictable, are not completed in
a timely manner and can be subject to political influence," he said.
While the European Union approved Viptera for import in 2012, it has
not yet approved Duracade for import.
Syngenta applied for Chinese import approval of Duracade after U.S.
authorities cleared the trait in February 2013. In theory, China's
agriculture ministry has 270 days to make a decision. However,
industry sources say it can take as long as two years after a strain
is approved by the United States.
Syngenta won import approval for the Duracade trait from Mexico and
South Korea in September and from Japan in August. It also has
import approval from Australia, New Zealand and Taiwan.
"United States and China do not have synchronous approval process.
If China does not change the current approval procedure, it remains
an issue in future U.S. exports to China," said Li Qiang, senior
analyst with Shanghai-based JC Intelligence Co Ltd, a private
agriculture-consulting firm.
Until recent years, China's slower system for approving new GMO
products was less of an issue, since it imported almost no U.S.
corn. But shipments have surged in recent years, accounting for
almost 14 percent of U.S. corn exports in 2011/12.
The increase has made it increasingly perilous for the trading
industry to have China excluded from the list of countries whose
approval is required to launch a new trait, some say. China mainly
buys U.S. corn to feed livestock.
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"China may not have a functioning approval system, but they
represent the largest growth potential in U.S. corn exports," Feltes
said. "Let's get real."
"TICKING TIME BOMB"
John Latham, president of Iowa-based Latham Hi-Tech Seeds, has
licensed the Duracade trait from Syngenta for this spring. But
without approval from China, he says, U.S. corn growers have been
wary of booking those seeds and that some elevators may refuse to
accept corn with the trait.
Peterson Farms Seed in North Dakota decided against licensing the
Duracade trait from Syngenta because of concerns about China,
agronomy manager Adam Spelhaug said. The firm sells corn with the
Viptera trait, he said, while making sure that customers who buy
those seeds can sell to markets that accept the trait.
"Unless it has Chinese approval, we're probably not going to bring
something else into our bag right now," he said.
Rootworms are a "ticking time bomb" in U.S. farmers' fields that are
estimated to cost more than $1 billion annually in yield losses and
treatment costs, Syngenta said in an online ad for the trait.
Duracade "delivers unmatched corn rootworm control" that is distinct
from another rootworm-fighting trait previously released by
Syngenta, the company said.
Rival Monsanto Co, the world's largest seed company, introduced corn
rootworm protected products in 2003. However, a group of academic
corn experts in 2012 warned the U.S. Environmental Protection Agency
of growing rootworm resistance to GMO corn.
With Duracade coming to market, "the probability of overall of
resistance goes down because there's another tool that can be used"
to fight rootworm, said Rodney Weinzierl, director of the Illinois
Corn Growers Association.
The National Corn Growers Association in 2012 told the USDA that it
supported Duracade because of rootworm threats. A spokesman did not
respond to requests for an updated comment.
PREVIOUS WARNINGS
Even if corn containing Duracade is planted on a small number of
acres, it could accidentally be shipped to China, exporters said.
Varieties are often mixed with each other because they are grown in
fields near each other and harvested, transported and stored
together.
In 2011, Bunge North America, a unit of agricultural trading house
Bunge Ltd, refused to accept Viptera because it had not been
approved by major export destinations. Archer Daniels Midland Co and
Cargill Inc that year declined to accept at elevators grain that was
not approved for commercial use in the EU, which included Viptera,
without prior written notice.
Syngenta sued Bunge in 2011 for refusing to accept Viptera corn.
Bunge largely prevailed in the case.
Representatives of Bunge, Cargill and ADM declined to comment or did
not respond to requests for comment on Duracade. Two top U.S. grain
groups — the National Grain and Feed Association and North American
Export Grain Association — had discouraged the USDA from clearing
Duracade.
The lack of import approvals for new traits creates "a risk of
significant economic losses to U.S. grain and oilseed producers and
markets," the groups said in a 2012 letter. Chinese quarantine
officials can reject shipments that contain any amount of an
unauthorized strain, they said. The groups declined to provide
updated comments on the matter.
Corn importers in China typically stipulate in their contracts that
the seller bears all costs related to possible GMO risks, industry
sources say.
The USDA in 2012 responded to concerns about missing import
approvals by saying that grain elevators could refuse to buy corn
containing Duracade. Commercialization of the trait could even
enhance trading "through more efficient production of corn supplies
worldwide," the USDA said at the time.
(Additional reporting by Carey Gillam in Kansas City and Niu Shuping
in Beijing; editing by Jonathan Leff and Steve Orlofsky)
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