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Corn farmers say Syngenta's GMOs have cost them the Chinese market

REUTERS/Jim Young
Last fiscal year, China was the No. 3 export market for U.S. corn, at 5 million tons.

I think you can be agnostic — as I am — on whether genetically modified foods are bad for human health and still be concerned about them as drivers of environmental harm, food insecurity, further concentration of economic power in the agribusiness sector, and a shrinking ability of people who want no part of GMOs to have their rights respected.

In which case you might share my interest in Monday's news of coordinated, multi-jurisdiction, federal lawsuits by Midwestern corn farmers against Syngenta Corporation, alleging that its release of new corn varieties since 2009 has antagonized the Chinese government, closed off a huge export market, and cost American growers as much as $1 billion last year.

Now, your typical lawsuit against GMO products and their vendors is a David vs. Goliath battle in which, say, some small-time organic farmers seek to protect themselves from such intrusions as gene drift, superweeds, punitive litigation and the like.

Similarly, the corn farmers claim Syngenta's products and practices have harmed them even though they didn't plant the varieties at issue.

But these potential class actions are different in scope and scale, and they follow by just a few weeks some not quite parallel litigation by Cargill Inc. of Wayzata and Trans Coastal Supply Co. of Decatur, Illinois, who raise similar issues from a different perch in the marketplace and claim vast losses of their own.

Goliath vs. Goliath

So this time, the battle is shaping up to be more like Goliath vs. Goliath.

Syngenta engineered a corn trait known as MIR162, which makes plants resistant to such pests as corn borers, black cutworm and corn rootworm, and it started offering seeds for sale under the name Agrisure Viptera in 2009; a second-generation series, Agrisure Duracade, followed this year.

These varieties have become a huge part of Syngenta's product line. According to a Syngenta news release carried in Ag Professional in mid-September, the company plans to release 52 new corn hybrids for the 2015 growing season, of which 23 are in the Viptera line and 18 in the Duracade line.

And yet, according to the trade press, only about 3 percent of U.S. corn acreage is planted in MIR162 varieties — in part because China, long an important export market for American corn, has not yet approved these varieties for import.

Until recently, the Chinese government has been fairly welcoming to GMO grains and has supported development of GMO corn and rice within China. But its agriculture ministry has insisted on case-by-case import approval of newly engineered varieties, and over the past year there have been signs that Beijing's enthusiasm for GMOs may be fading.

None of which really mattered to U.S. farmers until last November, when China announced that it would reject shipments of U. S. corn that showed traces MIR162. Since then, according to Cargill, more than 1.4 billion tons of U. S. corn shipments have been turned away, costing the company $90 million and counting.

But if the Viptera corn only accounted for 3 percent of U.S. plantings, you might ask, how could so much end up at Chinese docks?

StarLink story, retold

Remember StarLink corn and Taco Bell's taco-shell recall back in 2000? Same story, retold: The way American corn is gathered, stored and transported makes it essentially impossible to segregate grain by source, and even a small quantity of MIR162 grain can quickly disperse throughout the elevators, barges and grain trains.

Last fiscal year, China was the No. 3 export market for U.S. corn, at 5 million tons. Since its inspectors started turning away shipments showing traces of Viptera corn, the country's purchases of U.S. corn have fallen by 85 percent, according to the lawsuit, and helped to drive corn prices to a five-year low.

Not incidentally, the import ban also applies to the dried distillers grain left over from making ethanol, and used as animal feed — which makes one wonder if yet another class of plaintiffs may be on its way to the courthouse.

It is doubtful that many, if any, of Syngenta's challengers in these cases are anti-GMO. Most U.S. farmers grow engineered varieties these days, and Cargill has been at pains to be sure its position on GMOs was not misunderstood. From the Sept.  13 Star Tribune:

“I want to be clear about this,” Dave Baudler, president of Cargill AgHorizons U.S., said in a statement released by the company. “Cargill is a supporter of innovation and the development of new GMO seed products. But we take exception to Syngenta’s actions in launching the sale of new products … before obtaining import approval in key export markets for U.S. crops.”

“Unlike other seed companies, Syngenta has not practiced responsible stewardship by broadly commercializing a new product before receiving approval from a key export market like China,” Mark Stonacek, president of Cargill’s grain and oilseed supply chain in North America, said in a statement announcing the lawsuit. “Syngenta also put the ability of U.S. agriculture to serve global markets at risk, costing both Cargill and the entire U.S. agricultural industry significant damages.”

Syngenta's denial

To which Swiss-based Syngenta has replied that it was fully compliant with all U.S. laws and regulations, and can't fairly be held responsible for the actions of a foreign government. As far as I can tell, it has not yet responded to the farmers' lawsuits — filed late Friday in Illinois, Nebraska, Iowa, Missouri and Kansas — which press the allegation of Syngenta's negligence much further.

From the Illinois complaint, filed in U.S. District Court:

[A]lthough it knew that it lacked approval from Chinese authorities, Syngenta has misinformed farmers, grain elevators, grain exporters, and the general public into believing that regulatory approval of MIR162 corn from China was imminent and that the lack of Chinese approval would not impact the corn market prices. 

Syngenta’s decision to bring Viptera to the market crippled the 2013/14 corn export market to China and caused damage to Plaintiff and other Class members.  Syngenta knew, or should have known, that releasing Viptera would lead to the contamination of U.S. corn shipments and prevent U.S. corn from being sold to export markets such as China, which had not granted regulatory approval to MIR162.  

Following this widespread harm, Syngenta’s decision to release Duracade – its second generation MIR162 corn hybrid – again illustrates that Syngenta has acted in reckless disregard of the consequences of inflicting widespread harm to the U.S. corn market. ...

Incidentally, the lawsuit alleges that MIR162 raises an issue of "genetic drift" via pollen that can be carried significant distances from a field of Syngenta hybrids to other GMO or non-GMO plantings — a longstanding and long-disputed contention of anti-GMO activists as well.

And it would appear the farmers' claimed losses approaching a billion bucks might actually be on the light side. From the Journal-Star of Lincoln, Nebraska, on Monday:

The National Grain and Feed Association in April estimated the situation with China has cost $2.9 billion in economic losses to the U.S. corn, distillers grains and soy sectors. The organization also estimated that U.S. growers, grain handlers and exporters could suffer an economic impact of up to $3.4 billion during the fiscal year that started Sept. 1 given Syngenta’s decision to launch the sale this year of a new product with the MIR162 trait, Viptera Duracade.

Syngenta would seem to be actively disputing such figures, according to a report Monday from Courthouse News Service:

Syngenta's website downplays the importance of selling to China. In its "Plant with Confidence" fact sheet on Agrisure Viptera, checked Monday, Syngenta assures farmers that "the vast majority of corn produced in the U.S. is used domestically," and that in the past five years only 13 percent of U.S.-produced corn has been sold abroad, with China importing little more than 0.5 percent of it.

The U.S. Department of Agriculture, however, on its website claims the United States exports 20 percent of its corn crop... [but acknowledges] that the United States' export relationship with China is "difficult to predict," due to China's fluctuating domestic corn production, which is tied to export subsidies and Chinese tax rebates.

* * *

The farmers' lawsuit filed in Illinois can be read here [PDF].

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Comments (7)

Don't plant those varieties--farmers' problem solved.

The problem then is shifted to Syngenta because they are NOT selling their GMO corn.

Read the article a little more closely

even if they don't plant that variety, if their corn is commingled with someone who has, theirs will be rejected.

Then it is the *other* farmers planting Syngenta

that are the problem--and the storage facilities need to segregate corn by type so they do NOT mix. All farmers in an area need to decide to grow approved OR non-approved corn--but not have a mixture going to the same storage facility unless the types are stored separately. That is the level where the problem occurs, so that is where the solution needs to implemented.

solution

You can't possibly think that is a realistic solution can you? Simply poorly thought out with no way of implementing it.

An interesting legal problem,

one reminiscent of the religious beliefs at issue in Hobby Lobby, in that China's position apparently is not based on science.

The plaintiff's complaint reads like a law school tort exam, alleging every possible theory of liability. Like so many of today's class actions, it appears that this one may be little more than the product of a creative attorney avarice. Four firms are listed as counsel for plaintiff, firms from Chicago, Washington, D.C., Kansas City, and Custer, S.D.

The named plaintiff, Hadden Farms, Inc., is a family-owned farming and agricultural sales business in Illinois. As stated on its website, "Hadden Farms Inc. is active in agriculture. In addition to growing corn, soybeans, alfalfa and wheat, we raise approximately 250 head of cattle. We are also Pioneer Seed, Apache and Palco dealers." It apparently does not oppose the use of genetically modified seed, in view of the fact that Dupont Pioneer is one of the largest GMO seed companies in the world.

1.4 bilion tons

None of which really mattered to U.S. farmers until last November, when China announced that it would reject shipments of U. S. corn that showed traces MIR162. Since then, according to Cargill, more than 1.4 billion tons of U. S. corn shipments have been turned away, costing the company $90 million and counting.

Seems hard to believe when three paragraphs later the article says total exports to China last fiscal year were 5 million tons.

There are always multiple layers...

It's probably a more fundamental problem than GMO, it's market conditions.

(quote)

China’s state-owned corn reserves have reached burdensome levels, especially when faced with the prospect of another good corn harvest this fall, a Chinese official told DTN.

“Corn production in China is expected to be 230 million metric tons (9.1 billion bushels) this year, an increase of 4 mmt from last year,” said Qiangmin Shang, the director of China National Grain and Oil Information Center......

Government auctions have become the main source for cash corn in China, and prices keep rising. Corn sold for $8.84 per bushel in the first sale on May 22. It sold for $9.28 at the end of July.

“Rejecting imported U.S. corn supported the price,” Wang said, adding that “some companies were expecting to import more from the U.S. later last year as the international price was cheaper.” Those companies were forced to increase domestic purchases after the Chinese government started rejecting shipments of U.S. corn that contained traces of MIR 162, also known as Syngenta’s Agrisure Viptera, a biotech trait not yet approved in China.

- See more at: http://agfax.com/2014/08/14/china-corn-reserves-reach-burdensome-levels-...

(end quote)

Corn rejected to support local producer price.

By the way, US corn cost $ 6.68 per bushel at a China port, China-produced corn price is selling at $ 9.28 per bushel