Jan. 25--China took advantage of falling grain prices last month to lay in a huge supply. The Middle Kingdom imported 820,968 metric tons of corn and corn-based animal feed. Most of it came from the American Midwest.
But somewhere between Decatur and Shanghai, trouble arose. In recent weeks, Chinese inspectors have sent back roughly 600,000 tons of U.S. grain, saying it flunked their quality-control standards. By rejecting such a vast amount of corn, China has roiled the marketplace and shattered trade relations.
China says the problem is genetically modified crops.
The shipments at issue contain a type of GM corn that is approved for use in the U.S. and Europe, but not in China. The Swiss-based firm Syngenta AG, which markets the corn, applied for Chinese import approval. Under international trade rules, a decision should have been made already. So far, no action.
Genetically modified crops remain controversial, and some opponents of them might take heart in China's stance. But something more is going on here. Although some Chinese consumers are wary of biotech products, the Chinese government has mostly embraced them. China has approved 15 varieties of genetically modified corn for import.
The rejection of the most recent U.S. shipments goes beyond supposed concern about the technology. China's foot-dragging on regulatory approval is likely an excuse to block imports.
Why? Nationalism could play a role. Although China pours significant funding into developing genetically modified crops, its scientists lag behind their peers in research hotbeds like St. Louis and North Carolina'sResearch Triangle Park. Most GM crop technology is controlled by Western companies, which some Chinese leaders find hard to swallow.
Dysfunction in China's regulatory system could be a factor. China's decision-making in the past has been unpredictable and untimely. In this case, some shipments of the GM corn have been allowed to enter the country and some have not. Some ports are said to be more stringent, some are allegedly amenable to bribes.
China might be gagging on its dependence on the U.S. for food. For some time, more than 90 percent of China's corn imports have come from the U.S. In 2012, practically every kernel that China imported hailed from Illinois and other American grain states. China has sought to diversify by purchasing more corn from Ukraine, as well as from upstart Asian producers such as Laos.
China also has to manage its domestic market. Its growers recently harvested a huge corn crop. The Chinese government subsidizes its farm sector by paying an artificially high price per bushel. Government officials might have decided that private traders were poised to swamp the market by bringing in too much low-priced U.S. corn, then used GM "contamination" as an excuse to send some of the stuff back.
There are lots of potential reasons for this buy-and-switch. All of them, though, point to an erratic and unreliable trading partner. That has huge implications.
Over time, China is going to need a lot more corn. As Chinese get wealthier, they continue to add meat to their diets. Their livestock herds will expand, and those animals must eat. China has been growing more. In the future, China probably will be importing more too.
For Midwest farmers, China's behavior poses a dilemma: Syngenta's seed is popular because it helps farmers to control an outbreak of rootworm, a serious pest. Farmers want to plant the latest varieties of biotech corn, but they don't want to risk having it banned for export to one of the world's top markets.
Some U.S. agricultural trade groups have pushed Syngenta to stop selling its seed until China approves it for import.
Syngenta shouldn't have to shelve a hot new product because one import market -- albeit a huge one -- is playing games. That would strike a blow against the innovation that is needed to feed a hungry world.
China has to be fair and transparent, to follow trade rules and approve new agricultural products on a timely basis.
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