Corn is harvested on farm land leased to Tucker Farms in Kentucky, US in September 2013. Photo: CFP

Amid a trade conflict that has gained increasing attention, Chinese industry analysts have urged US seed companies and exporters to act more responsibly when selling genetically modified (GM) products to China.

Their warning came after recent reports that China has rejected large quantities of US corn since November, causing huge losses for the US agriculture industry. 

According to a report released by the US National Grain and Feed Association (NGFA) on April 16, China rejected 1.45 million metric tons of US corn after tests in November found it contained a strain of GM corn not approved for import.

The unapproved strain is called Viptera, also known as MIR 162, which was developed by Swiss agribusiness Syngenta AG.

According to the General Administration of Quality Supervision and Quarantine in March, China has rejected more than 900,000 tons of US corn since MIR 162 was found in shipments of US corn in Shenzhen, South China's Guangdong Province in October.   

The NGFA report estimated that China's rejection has caused a loss of as much as $2.9 billion for the US agricultural industry.    

The potential losses could amount to $3.4 billion for the next marketing year which begins on September 1 2014 due to the introduction into the supply chain of another Syngenta biotech strain called Agrisure Duracade, the report said.

The rejected shipments have had a heavy impact on top US corn exporters such as Cargill Inc and Archer Daniels Midland Co (ADM), the report also noted.

In a statement e-mailed to the Global Times Sunday, ADM said the rejection resulted in a complete halt of corn exports to China, without giving further details.

Cargill did not respond to requests for comment by the Global Times. 

Who's to blame?

The US agricultural industry has been divided as to who should take the responsibility for the rejected corn shipments.

The NGFA and North America Export Grain Association have asked Syngenta to stop selling corn seeds containing MIR 162 and also asked Syngenta to pay compensation.

Syngenta did not respond to an e-mail request for comment by the Global Times.

According to media reports, Syngenta filed an application in 2010 for approval of MIR 162 with China's Ministry of Agriculture (MOA), the country's regulator for GM food imports. Syngenta sent additional materials to the MOA in March this year.

"ADM and most of the major US grain exporters believe that seed companies like Syngenta should market their products responsibly. Commercializing seed products that are not approved in all of the major export markets is not responsible," ADM said in its statement on Sunday.

According to ADM, Syngenta knew or should have known that its aggressive marketing of MIR 162 to farmers in the US before it was approved in all major export markets would result in rejection of export shipments. 

"ADM and other corn exporters have requested compensation from Syngenta for the losses caused by its actions, but they have refused," it said.

Some US industry observers have voiced suspicions that China's rejection was based on competitive motives and US companies also complained that China's opaque regulatory process causes uncertainties, according to a report by the Wall Street Journal on April 11.

The MOA did not respond to a faxed request by the Global Times for comment. But a member of staff at the ministry who wished to remain anonymous told the Global Times on Thursday that any rejection of US corn would be based on safety concerns.

GM crops are plants whose DNA has been altered through genetic engineering techonology.

GM crops require fewer pesticides than conventional ones, but the safety of GM food has been hotly debated in China.

"China has strict rules for the import of GM corn. It evaluates each GM variety case by case and will not issue a license unless the variety proves safe," Li Guoxiang, a research fellow at the Rural Development Institute under the Chinese Academy of Social Sciences (CASS), told the Global Times on Sunday.

"MIR 162 is a special strain yet to be approved by the MOA. The rejection is purely based on technical evaluation and does not involve any political or commercial motives," Li said.     

Cheaper imports 

"The irresponsible US seed and trading companies market and export unapproved GM corn at very low prices to attract Chinese companies to take the bait," Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant, told the Global Times on Thursday,  

"Supply and demand for corn is currently balanced in China, which does not need to import corn. But with its commitment to the WTO, China allows sufficient freedom for corn imports, offering chances for both importers and exporters to take advantage of the domestic and US price gap," Ma said.

China's corn output was expected to top 215 million tons in 2013, up 7 million tons year-on-year, the most recent available data from the State Administration of Grain showed.

Apart from serving for food, corn is used for animal feed and industrial processing to produce ethanol fuel. 

Under its commitment to the WTO, China offers low-tariff import quotas for key grains including wheat and corn. The country has capped the corn import quota for 2014 at 7.2 million tons.

Some Chinese importers take advantage of the wide price gap between overseas and domestic markets. The average price of corn imports is 2,050 yuan ($329.16) per ton, while the average price of domestic corn is between 2,300 and 2,400 yuan per ton, according to data from cngrain.com, a website owned by the China Grain Reserve Corporation.   

China's demand for corn has been weak since September because pork prices have been falling, resulting in weak demand from the animal feed industry. But China's rejection of US corn imports raised speculation that it was using this as an excuse to protect domestic corn producers.

"Chinese authorities cannot forbid importers from importing cheap corn but it has the power to stop unapproved imports. This is a matter of food safety," Ma said.

Corn imports are likely to rise in the future as the country's economy continues to grow and urbanization proceeds, creating greater demand for meat, dairy and ethanol fuel, Guo Qingbao, vice director of the information department at cngrain.com, told the Global Times on Monday.

"If the US companies do not correct their action but instead put pressure on China to accept their exports, they are bound to lose a promising market to other exporters such as Brazil and Argentina," Guo said.