Lying on the western bank of the Mississippi River, the New Orleans suburb of Westwego (pop. ~9,000) would seem to have little in common with Shenzhen, the thriving southern Chinese metropolis of 15 million people located some 8,500 miles away. In September 2014, their distant connection became front page news when the family-owned American agribusiness giant Cargill Inc. (~US$136 billion in revenue in 2013) filed a lawsuit in Louisiana court against a business unit of the Swiss biotech company Syngenta (US$14.6 billion in revenue in 2013). The basis of the lawsuit arose after China rejected a series of US corn shipments. Cargill has claimed over US$90 million in lost revenue, while the National Grain and Feed Association estimated a US$2.9 billion loss for the US grain industry as a whole.

Westwego, a transit port for Cargill corn, exported Syngenta-designed genetically modified (GM) corn seed that was rejected at the port of Shenzhen. The initial refusal (60,000 MTs) in November 2013 by Shenzhen customs officials was attributed to “insufficient application material” for Agrisure Viptera (aka ‘MIR 162’), a GM corn hybrid with insect resistance. In March 2014, another US corn shipment (21,800 MTs) was turned back due to MIR 162 “contamination”, this time by the northern port city of Tianjin. By June 2014, approximately 1.25 million MTs of US corn had been rejected. It became readily apparent to Cargill and other corn suppliers that the MIR 162 problem would not be resolved quickly. Cargill held talks with Syngenta to discuss financial compensation over the losses, noting that it was Syngenta’s responsibility to obtain Chinese market approval for MIR 162. Syngenta rebuffed talks of compensation stating that the lawsuit had no merit.

The idea that Cargill and Syngenta, two multinationals that mutually reinforce each other’s position in the global food supply chain, would be at loggerheads over China’s corn market seemed unthinkable only five years ago. In 2009, China’s corn imports (incl. Hong Kong & Macau) totaled just US$27.4 million, 69th largest worldwide just after Mozambique. During that same year, Brazil became the first country to approve MIR 162 for commercial production. This gave Syngenta the go-ahead to pursue approval of their corn seed in the Chinese market, as China requires regulatory approval in a second country before a company can start its application process. At the same time, China issued GM organism safety certifications for domestically developed GM corn and rice seed. It appeared to outside observers that China was beginning to warm to GM grain. In 2010, with little perceived risk, Syngenta not only sought export approval for MIR 162, but also approval to cultivate it on Chinese soil, a condition that would lengthen the overall application process.

Over the next three years, a combination of rising food prices spurred on by the 2008 financial crisis, crop losses from heavy winter snowfall, and increasing domestic demand for animal feed led China to drastically ramp up corn imports. This was a boon for US corn suppliers like Cargill. From 2009 to 2012, Chinese (incl. Hong Kong & Macau) imports of US corn increased from just over 32,700 MTs to 5.1 million MTs. Equally as impressive was that the US’s share of China’s import market jumped from 29% in 2009 to 98% in 2012 – a near monopoly on China’s corn purchases. Prospects to increase shipments were high, with talk that China might need 7 million MTs of corn by 2013. However, the following year saw Chinese demand cool as government-supported corn stockpiles started to overflow, with inventories hitting an estimated 63.3 million MTs, a ten year high. China also wanted to diversify its supply base, in order to move away from its reliance on the US, granting export approval to Brazil, Argentina and Ukraine. As a result, Chinese imports dropped to 3.2 million MTs, while US import market share shrank slightly to 91% (2.9 million MTs).

China's Corn Imports

Even with the drop in imports and the shift towards other suppliers, concerns over the lack of MIR 162 approval prior to November 2013 were barely on the radar. After all, China was aware that GM corn comprised 90% of the corn that was planted in the US in 2013. In addition, MIR 162, approved for cultivation by the US in 2010, comprised just 3% of US corn plantings in the two harvest seasons leading up to Chinese rejection. Unfortunately for the US grain industry, that 3% was often mixed in with other approved GM corn at grain elevators and storage facilities across the country. By the time the corn hit Chinese ports, it’s likely all shipments contained at least trace amounts of MIR 162, giving China carte blanche to reject corn shipments.

While the denial of US corn shipments came as a surprise to many, in reality anti-GMO sentiment in China had been building prior to MIR 162’s rejection. In March 2013, Beijing residents lobbied to remove GM soybean oil from local school and university cafeterias, citing health concerns. In August 2013 (the same month that China imported its first shipment of Argentine GM corn), a PRC Army Major-General published an article in a state-run newspaper denouncing American GM crops, stating that they caused infertility and cancer, and even equating Monsanto (a US biotech firm) produced GM crops with Agent Orange, an herbicide used by the American military during the Vietnam War. China’s Minister of Agriculture waited until March 2014 to reply to the accusations, when he stated that GM crops were beneficial and harmless, and that he regularly consumes GM food products.

This modest endorsement may have been too little, too late as Monsanto shelved plans to grow GM corn in China, despite having a hybrid corn seed joint venture with a state-owned Beijing-based seed company.  DuPont Pioneer, a rival of Monsanto’s, still sees opportunity and is moving forward with plans to seek commercial approval to produce GM corn in China. The safe middle ground appears to be in seeking import approval and not cultivation. What is clear is that the port Shenzhen, China’s top port of call for corn in 2011 (17% of all imports) and 2012 (21% of all imports), has faded amid the MIR 162 controversy. In 2013 and (Jan-Sept.) 2014, Shenzhen comprised only 6% and 3% of China’s corn imports, respectively.

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