A top U.S. Federal Reserve official on Monday suggested that farmers consider a path toward internationally accepted standards for genetically modified crops, following rejections of U.S. corn shipments by China.
Dallas Federal Reserve Bank President Richard Fisher told a gathering of farmers in Chicago that it was important that the "revolution of genetic modification be responsibly carried forward" to avoid threatening trade.
"I am thinking particularly of the current situation of the millions of tons of corn currently sitting off China's shores, held out of the Chinese market ostensibly because of its GMO (genetically modified organism) characteristics, despite its acceptance in other major markets, including our own," Fisher said in prepared remarks.
As of last week, nearly two million tonnes of U.S. corn heading to China faced stringent testing for an unapproved genetically modified variety after several cargoes were denied entry by state quarantine authorities.
Since mid-November, China, the third biggest customer of U.S. corn, has turned away several cargoes and containers of corn that tested positive for Syngenta AG's Agrisure Viptera as it has not been approved for import by China.
U.S. exporters had hoped Chinese officials would look the other way as the corn variety, also known as MIR 162, has been in the U.S. supply chain since 2011 and no cargoes had been rejected for containing the trait until this year, trade sources said.
MIR 162 has not been segregated from other corn varieties because approval by China appeared imminent and all other major buyers have approved its import, including Japan, South Korea, Russia and even the European Union, which is notoriously slow in approving GMO crop varieties. Approval by China has been pending for more than two years.
"I have no desire to enter into any argument with greens and environmentalists," Fisher said. "I simply wish to suggest that you might consider ways to reach internationally agreed-upon standards for GMO enhancement."
Strong demand for U.S. crops from China and other buyers in recent years has kept supplies tight and prices high. Grain prices have pulled back recently as a record-large U.S. corn harvest has replenished inventories after a historic drought last year.
"We are seeing a significant and sustained correction in the price of wheat and corn," Fisher said. "I expect soybeans to follow, as well as the sources of animal protein created from these basic plant-food stocks."
Farmers "respond to demand-pull inflation in crop prices with greater plantings and harvests, often to the point of overshooting," Fisher said.