Is the ongoing trade spat between the U.S. and Mexico regarding genetically modified (GM) corn about to end?
Dan Basse, an ag economist and President of AgResource Company, believes that could be the case, thanks to general elections in Mexico. Voters in Mexico elected a new president, who will serve a six-year term for the country. The new President of Mexico is pro trade with the U.S.
“We're encouraged that this GMO dispute that's been ongoing will likely be dropped,” Basse said. "We believe that Mexico will be a strong demand driver for U.S. meats and grains going forward.”
Origins of the Dispute
The immediate past President of Mexico, López Obrador, had signed an executive decree in 2020 banning the use of genetically modified corn. Obrador has said GM corn threatens human health as well as Mexico’s agricultural traditions and cultural identity.
Roughly 90% of all U.S. corn is grown from genetically engineered seeds.
Because of the volume of corn exports, the U.S. initiated dispute settlement proceedings against Mexico, following Obrador’s decision.
The U.S. has maintained there is no science showing that genetically modified foods harm human health, according to the Food and Drug Administration.
Despite the decree, Mexico imported 15.3 million metric tons of corn in 2023, making the country the largest importer of U.S. corn last year.
Modifications to the Decree
Since 2020, “the executive decree has been modified multiple times, pushing back its effective date and narrowing the definition of GM corn in the human food system,” write Dewey J. Robertson, graduate research assistant, and Roman Keeney, associate professor of ag economics at Purdue University, in an online article published May 15.
“At current, the ban is not expected to be applied to corn intended for animal feed and industrial use, provided that heightened protocols for keeping corn out of food processing are maintained,” according to Keeney and Robertson.
“When you look at the drought that's affected Mexico in the last 16 months, there's no way for them to get around U.S. corn, and there's not enough non-GMO in the world that they could source their supply from to really feed their population,” Basse said. “I think Mexico now understands that, you know, U.S. corn is going to be very important to them going forward.”
Expectations for this Year
Mexico is set to import between 14 and 16 million metric tons of yellow corn in 2024, Víctor Villalobos, Minister of Agriculture for Mexico, has said in news reports.
Basse believes U.S. exports of corn to Mexico could be even higher than that, and that other commodities could follow suit in the years ahead. “I think more and more U.S. companies are looking at the Mexican opportunity as they move away from China. When you’ve got someone like Mexico in your backyard, it just seems to me that relationships like that will get worked out."
EDITOR’S TAKE:
The dispute over GM corn has always struck me as contrived and frivolous. That said, it has been a reality and hopefully, as Basse suggests, goes away quickly with the election of the new Mexican President. Therefore, it is a high probability that exports to Mexico will surely increase in the coming year, which will be welcomed news for U.S. farmers/ranchers. We all know that greater exports can push commodity prices higher. More money coming in generally leads to farmers/ranchers looking for ways to update their operations and save tax dollars at the same time. That is reason enough to keep them at the top of your prospect list and share your inventory on AgTruckTrader.com. Also, remember that you can accommodate their unique financing needs with CADFI – designed specifically for the special cash flow of farmers/ranchers!
