The following article was originally published by Food Tank.
United States commodity organizations have cheered on the U.S. government as it tries to get Mexico’s restrictions on genetically modified (GM) corn declared in violation of our trade agreement with Mexico and Canada, arguing that it cuts farmers’ export markets and sales revenues. But what if Mexico’s modest restrictions could instead turn out to benefit U.S. farmers who shift to premium non-genetically modified (GM) corn markets as international corn prices fall?
It sounds counter-intuitive, but it might just be true. The math is pretty simple. Despite all the bluster about Mexico’s February 2023 restrictions on GM corn, they affect a very small share of U.S. exports. After negotiations with the U.S. government over a more restrictive 2020 decree, Mexico dramatically limited its revised order, exempting GM feed corn from any mandated reductions. The restrictions apply only to the use of GM corn in tortillas and other products minimally processed for direct human consumption.
The restrictions were intended mainly as precautionary measures for a population that consumes more such corn products than anyone else on the planet. The corn for tortillas, and the minimally processed flour for tamales, enchiladas, and other Mexican staples, are overwhelmingly non-GM white and native varieties from Mexican producers.
Before the decree, Mexico was importing only about 600,000 tons of white corn from the U.S. each year, a tiny share of the 16.5 million tons of U.S. corn it imported last year. That means that barely 3 percent of U.S. corn exports are potentially affected by Mexico’s restrictions. But the share is actually closer to 1 percent, because only an estimated half of U.S. white corn are GM varieties, and barely half of U.S. white corn exports are destined for Mexico’s tortilla industry, according to USDA reports.
So just 1 percent of U.S. corn exports are potentially affected by Mexico’s policies. From the beginning, the Mexican government has asserted that its revised and less restrictive decree has little impact on U.S. producers. They are right, and the U.S. in the formal presentation of its complaint did not even attempt to quantify how many U.S. farmers are affected.
And here’s the thing: Those who are affected can always switch to non-GMO white food-grade corn and export to Mexico’s tortilla industry.
U.S. farmers who do that could earn premium prices, ranging from $0.25 to $0.50 per bushel for non-GMO white corn, according to industry sources. Such premiums could be particularly attractive right now to farmers who saw corn prices fall more than 30 percent last year.
U.S. trade officials have preferred not to discuss non-GM opportunities for U.S. farmers, but some farmers and grain suppliers would welcome them.
“I think the U.S. farmer would be delighted to have a market where they would get paid more by providing an identity-preserved, (non-GMO) crop,” says Lynn Clarkson, CEO of Clarkson Grain, a leading U.S. supplier of non-GM corn.
Graham Christensen, a fifth-generation farmer in Lyons, Nebraska, is one example. “Absolutely, if there’s a demand there, let’s find ways to partner with Mexico,” he says. “They’re that much closer, and they’re a trade partner. We should make it happen.”
Nate Belcher, co-owner of Hybrid85, a Nebraska-based non-GM corn seed company, says his state—the leading producer of white corn in the U.S.—could meet Mexico’s demand for non-GMO corn.
“There’s a US$450 million market in corn going from Nebraska to Mexico. We could fill the non-GMO demand from Nebraska and a good portion of the Midwest as well,” he says.
According to Farm Action, a farm advocacy group, “if the U.S. shifted 180,000 acres (0.2 percent of its corn acreage) of GM corn to non-GMO, it would generate US$7.75 million in additional premiums for U.S. farmers and successfully meet Mexico’s needs.”
The U.S. trade officials and farm commodity groups are ignoring basic business common sense: Give the customers what they want. Mexico wants non-GM corn, and U.S. farmers can supply it, creating a mutually beneficial relationship instead of the current animosity of the current trade dispute.
U.S. farmers would be better served if our government supported a smooth transition for farmers affected by Mexico’s corn policies to non-GM production to meet that country’s changing demand.
