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Iowa farmers warn of losses over Mexican GMO corn ban
Proposal would cut off one of Iowa’s largest export markets
Caleb McCullough, Gazette-Lee Des Moines Bureau
Nov. 27, 2022 6:00 am, Updated: Nov. 27, 2022 10:26 am
DES MOINES — A proposed ban on genetically modified corn imports to Mexico would have substantial impacts on Iowa farmers if carried out, farm groups say.
There’s still uncertainty about the details of the proposed policy, but U.S. officials said a total ban on genetically modified corn — which makes up more than 90 percent of corn grown in the United States — would cause a drop in the price of corn and in farmers’ profitability in the coming years.
Mexican President Andrés Manuel López Obrador initiated the ban by presidential decree in 2020, with a scheduled start date of Jan. 1, 2024. The decree stemmed from concerns about the health and safety of genetically modified products.
Some Mexican officials have signaled the ban would affect corn going into food with exceptions made for corn designated for livestock feed, which makes up the vast majority of U.S. exports to the country. Obrador, who had previously said the ban would affect all corn imports, said last week in a news conference he’s looking at making an exception for livestock feed, according to Bloomberg.
If the ban covers all corn, agriculture experts said Iowa’s farmers would take a hit and would likely see their balance sheets in the red.
“It’s going to be extremely devastating if that was to happen,” said Lance Lillibridge, chair of the Iowa Corn Growers Association and a corn farmer in Benton County. “And it needs to be taken extremely seriously by everyone.”
According to an estimate from World Perspectives, the U.S. corn farming sector would experience a net $3.56 billion loss in the first year under the ban, and $13.61 billion in losses over 10 years. Overall, the forecast found the United States would lose $73.89 billion in economic output, and GDP would drop by $30.55 billion over 10 years.
“It would be very, very disruptive,” Lillibridge said. “It would put us all in the red for sure.”
Brent Johnson, president of the Iowa Farm Bureau Federation, said it’s not clear what the Mexican government will ultimately decide.
“That moving target is a huge concern right now, and we really don’t have a good feel as to where President Obrador is going to land on that issue,” he said. If the ban does allow for corn used for livestock feed, the impacts would not be as dramatic, he said.
Mexico was the second-largest recipient of U.S. corn in 2021, importing $4.7 billion worth of the crop. Iowa accounted for $3.3 billion in corn exports in 2021, and Mexico was a leading recipient of Iowa corn, according to figures from the Iowa Economic Development Authority.
Senators call for trade dispute
Iowa’s U.S. Sens. Chuck Grassley and Joni Ernst, both Republicans, said the decree violates the U.S.-Mexico-Canada Agreement, the trade agreement between the North American countries.
The senators said the decree violates provisions in the USMCA that dictate that “sanitary and phytosanitary” measures taken by a country need to be based on relevant scientific principles and evidence. They called for U.S. Trade Representative Katherine Tai to request a dispute settlement under the agreement.
“Despite overtures to the Mexican government for nearly two years, there is little indication from the country’s leadership that it will adhere to its commitments under USMCA,” they wrote in a letter to her. “The time has come for the Office of the United States Trade Representative (USTR) to intervene on this issue.”
If Mexico goes through with a total ban on genetically modified corn imports, producers in the United States and other countries would not be able to meet the demand right away, said Chad Hart, a professor of economics at Iowa State University.
Farmers currently are buying the seed they will plant next spring, which would grow the corn available for Mexico to purchase by the beginning of 2024. There isn’t enough non-GMO seed to meet the potential demand, Hart said.
“It requires significant planning and also the right pricing and cost incentives to be put in place for that type of policy to work,” he said.
Hart said Mexico could incentivize the growth of non-GMO corn by paying a high premium and investing in U.S. production and shipping sectors for non-GMO corn, but there hasn’t been much movement from Mexico to set up that production. Mexican officials have said they are looking into agreements with farmers in top corn-producing countries to source non-GMO corn, according to Reuters.
Shifting to growing a significant portion of corn non-GMO would take years, Johnson said, based on the technology used to produce seeds. Storage and transport infrastructure for specifically non-GMO corn would also need to be expanded.
“So there’s a really long line that is all interconnected, and it’s not a matter of farmers (saying), ‘Well, next year, I’m going to make a different decision,’” he said. “It is truly an impossibility.”