So, Why Did China Really Reject Our GMO Corn?

Back in the beginning of December, China blocked 5 shipments of corn from entering the country. The General Administration of Quality Supervision, Inspection and Quarantine claimed that the shipments were blocked because they may contain certain varieties of GMO corn produced by Sygenta which have yet to be approved for commercial sale in China. 

It was no coincidence that China’s rejection of our corn came at the same time that Vice-President Joe Biden was visiting the country. Gao Yanbin, the director of research at Jinshi Futures Co. in Shanghai, stated: “We can’t ignore that there may be a political message given the timing.”

So, what was the message? 

You can bet it wasn’t about a rejection of biotech corn, despite claims by the country. China has allowed many genetically modified varieties of crops to be deregulated and used commercially. A problem arises, however, because China generally waits for the United States or Brazil, both major producers of corn, to deregulate a new biotech crop before beginning the process in their own country. It also takes longer for the Chinese to approve new GMO crops.

For example, a crop in the US may present to the USDA for deregulation in year 1 and by year 10 it can gains deregulated status and can be commercial sold. It would only be at that point that China may start the process of reviewing the crop; only allowing deregulated status around year 25. 

This creates a lag in the regulatory scheme. (One that USDA Secretary Vilsack has tried to correct.) It also gives China a nice out when they don’t want to accept US corn. In December, the Chinese used the excuse that the crops were rejected because they may contain this Sygenta variety that had not gained deregulated status in their country, despite the fact that deregulation for that exact variety was expected shortly. 

In other words, they said, “your shipments might contain GMO varieties that we haven’t approved yet, so we’re rejecting the whole thing.”

But China’s real aim here has nothing to do with protecting their markets from a as-of-yet regulated biotech product. China has been a net importer of corn since 2010 and purchased a record 5 million metric tons on the global markets through the year September 2012. The USDA also estimates that China may buy 7 million tons through the year September 2014. That would make China the fourth biggest buyer of corn in the world.

That gives China not only incentive to lower the price of corn, but also the ability to play with the price of corn. 

Corn is a commodity that is contracted out ahead of time. A buyer, such as China, will contract in advanced to purchase certain quantities in December, certain quantities in January, certain quantities in February, and so on throughout the year. By rejecting the shipments of US corn, China can create a wave through the marketplace. Because corn prices have hit record highs the past few years, a contractor such as China that has bought the corn in advance is paying higher prices. Now that the price of corn has dropped, China no longer wants to pay those high prices. 

So what do they do? They reject shipments of US corn and break the contract. They can then turn around and purchase the corn again at a much lower price, which reflects the current value on the market.

And that’s the game. It has nothing to do with biotechnology. GMOs are just an easy scapegoat. China doesn’t care about what type of product they’re feeding their people — you can just look at the human rights violations in that country. The outrage at biotech is completely faked.

But even if you accept the idea that this is about biotech, it makes absolutely no difference. It has been suggested that the US should not allow varieties of GMOs to be commercially grown until all of our major export markets have accepted them. Otherwise, we run the risk the shipments getting rejected and countries, like China, playing the prices. 

The idea, however, is ridiculous. It makes no sense that we should prevent the implementation of new technologies because we haven’t received permission from China yet.