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DAVID KRUSE

By Staff | May 16, 2014

The National Grain and Feed Association quantitated the financial losses from the corn exports to China that were rejected as a result of genetics that had not been approved there.

Syngenta claims to have applied for approval of its Agrisure Viptera trait in 2010. It typically has taken China two years to move new genetic traits through their regulatory process, but the approval of Viptera has obviously drug on much longer without explanation.

For whatever reason, China began rejecting corn from the U.S. with the Viptera trait, essentially shutting off U.S. corn exports to China as well as rejecting some DDGs for the same reason, totaling at last count, more 1.124 million metric tons.

The NFGA has estimated that losses to this point, due to rejected cargos of corn and DDGs, total $2.9 billion.

There were commercial losses as shippers diverted rejected cargos having to accept discounts as well as absorb new shipping and handling costs to find new buyers in the region.

The NFGA said the loss specifically to farmers totaled 11 cents a bushel, or $1.144 billion.

You can make it personal. I would calculate that my share of the loss was approximately $15,000 using the NFGA estimate.

Whose fault is it? I think that after a similar episode with Starlink several years ago where farmers won a class action lawsuit for damages, that farmers assumed that seed companies would not introduce new traits that had not been approved by major markets. Syngenta grew impatient waiting on regulatory approval in China so moved ahead commercializing the new seed trait without it.

They are poised to do the same with another new corn technology called Duracade which has yet to have been approved by many more countries than just China.

Syngenta argues of course, that this is everybody else’s fault. They say that China is just using the issue for commercial purposes and if they had not had Viptera they would have found some other excuse.

They also argue that U.S. farmers are depending on this new genetics and should not be denied the new technology because of some foreign regulatory process that wasn’t working.

Syngenta argues that we can’t let these foreigners determine what technology and genetics is adopted or that it will stifle innovation.

Syngenta’s North American director responded to the NFGA, saying, “Your letter, taken literally, would mean that it is the Chinese regulatory system – currently not functioning in a predictable or timely manner – which will decide which tools are going to be available to U.S. corn growers in the future.”

Syngenta passed the talking points down to their troops as they get their message out including, “To be clear, we will continue to move forward with our 2014 Viptera seeds campaign to give growers more access to this important technology.

“We will also continue with an introductory launch of Duracade on limited acres in consultation with the National Corn Growers Association.”

To sum up Syngenta’s position it would appear to me it is, “We are going to go ahead with commercialization of new traits before they are approved for export markets and if it causes problems don’t blame us, blame China or whoever hasn’t approved the corn.”

Don’t bring Syngenta the bill for it either.

I am not contesting their argument that China used Viptera for commercial purposes. If they wanted the corn bad enough they would have taken it, but who put Syngenta in control of the U.S. corn/DDG export viability?

Buyers typically get to choose the rules under which they make purchases and fair or not, Syngenta violated China’s regulatory rules.

I really don’t think that it is going to work that we are going to make the determination of what technology is accepted by other countries because the alternative doesn’t fit Syngenta’s business model or marketing plan when there is a significant commercial risk to farmers and grain merchants.

Syngenta wants us to get on board with them and risk losing all these U.S. corn export customers with slow regulatory approval processes that are halting progress and creating risk for biotech seed firms like Syngenta.

Speaking from the perspective of the farmer, I think Syngenta is looking out for Syngenta.

Syngenta is a Swiss company coming from Europe where they reject seed biotechnology, essentially banning GMOs.

The company has the benefit of coming to the U.S. to take advantage of our system which has been accepting of science and seed technology providing them the economic opportunity to do business here.

It can’t get its own people in Europe to accept GMOs, yet it takes the liberty of introducing new seed that has not cleared the regulatory process of corn export customers, resulting in a costly disruption of the market.

Regardless of fault, that is the reality. I think they need to be more respectful and less arrogant about how they proceed to introduce new traits that impact our export market viability.

I don’t think that is too much to ask of them.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

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