By Ryan Hanrahan
Reuters’ Karen Braun reported last week that “the United States has been losing corn export business to Brazil as the South American country continues expanding its output, though top customer Mexico has secured a record volume of U.S. corn for shipment this year.”
“That is despite an active dispute between the United States and Mexico over Mexico’s proposal to curb genetically modified (GM) corn imports, which if enforced to the most radical extent could severely dent U.S. corn exports,” Braun reported.
The Dispute
The corn dispute between the United States and Mexico began in February 2023, when “Mexico published a presidential decree that includes an immediate prohibition on the use of biotech corn in Mexico’s dough and tortilla production,” the USDA Foreign Ag Service reported. That is problematic for the United States, which exported to Mexico “corn totaling $4.792 billion in 2022 (USDA/FAS, 2021), with about 17 million metric tons of yellow corn crossing the border annually,” according to farmdoc daily‘s Ian Sheldon, Seungki Lee, and Chris Zoller.
The decree does, however, “allow its use in animal feed and the making of consumer products like cosmetics, textiles and paper,” according to Reuters reporting from Adriana Barrera.
Then “on June 2, 2023, the United States requested dispute settlement consultations with Mexico under the USMCA (the North American trade pact),” the USDA Foreign Ag Service reported. “On August 17, 2023, the United States Trade Representative announced the establishment of a dispute settlement panel under USMCA regarding certain Mexican measures concerning biotech corn.”
At that time, the United States said that “Mexico’s decree banning imports of GM corn used for tortillas is not based on science and violates its commitments under the USMCA, which has been in place since 2020,” Barrera reported. “Mexico’s policy, however, is based on science and what the U.S. says has ‘no foundation,’ (Mexican economy minister, Raquel) Buenrostro said.”
Current Exports
While the dispute could affect future corn exports to Mexico, trade remains strong in 2023-24 and U.S. farmers have not seen much of an impact from the situation, Braun reported.
“As of Jan. 18, a record 15.3 million metric tons of U.S. corn were on the books for shipment to Mexico in 2023-24, some 20% more than the date’s previous high set two years ago,” Braun reported.
“Mexico accounts for 47%” of the current total sales of the U.S. Department of Agriculture’s full-year export forecast of 53.3 million tons for 2023-24,” Braun wrote, with the country “easily the top buyer with Japan a distant second at 14%.”
“Mexico’s 47% share of U.S. corn sales is well above recent averages for the date, though the record is 48% at this time a year ago, meaning that Mexico’s heavy booking pace is within historical bounds,” Braun reported. “Mexico is seen importing a record amount of corn in 2023-24 as consumption expands, and the U.S. is overwhelmingly the top supplier.”
Potential Outcome
While the dispute panel at USMCA is still ongoing, commodity leaders, including Neal Caskey with the National Corn Growers Association, believe that it will wrap up sometime later this year, according to reporting from Brownfield Ag News’ Larry Lee.
“‘They expect to have that put to bed sometime maybe this fall, and we expect to prevail,’ Caskey said. ‘We have the treaty on our side, we have the law on our side, and we have science on our side.'”
In addition, Braun reported, “the lack of alternative options for Mexico has kept market participants’ concerns at bay.”
Mexican Economy Minister Raquel Buenrostro said in September 2023, however, that a resolution could be reached as early as March 2024 in the dispute, according to Reuters.
Whatever the timeline for the dispute resolution, “Boydston and Caskey both say they expect the dispute panel to side with the United States sometime this fall,” Lee reported.
Source : illinois.edu