As complex as the world trading system has become, it still relies on something as simple as trust. Basically, it requires that those who enter into mutually agreed contracts will abide by the terms of those contracts. Unfortunately, in the last two months China has chosen to break their contracts.
Several shipments of corn that China contracted for months ago have been rejected. Their reason is that they found that the shipments had traces of Viptera® corn. Viptera corn is genetically modified to withstand insect infestation. It is planted on about 10% of our corn acres.
That corn, along with other corn, is all mixed together at our grain elevators. 90% of our corn is GE corn. The Chinese have been accepting our corn shipments year after year without any complaint. They are accepting corn from Argentina and Brazil with the Viptera trait.
So, what is going on here? China has for years been a very big and reliable market for our corn. They accept all kinds of GE grain and agree that it is safe. However, they say they have not as yet approved the Viptera trait. All of a sudden, they have closed the door.
One obvious reason might be that they think they paid too much for the corn. They booked it last year when corn was at least $2 per bushel higher than it is now. Another reason might be that they must want to punish us a little for siding with the Japanese in an island dispute between Japan and China. We can only speculate. However, this dispute needs to be resolved. Losing the Chinese corn market has helped to drive down our corn prices.
There is one other inconsistency with the Chinese embargo on our corn. They still import our distillers dried grain, and that dried grain has a small percentage of the corn trait that they have rejected.
Secretary of Agriculture Vilsack was recently in China and pushed to open the trade door, but we’re still shut out.