The unnecessary ban on biotech corn would take effect next year, cost 32,000 U.S. jobs annually, and worsen food insecurity in Mexico.
A major disruption to the market for U.S. corn is set to take effect in one year, as a decree by Mexico’s President would ban the import of GMO corn effective January 31, 2024.
Historically, Mexico is the number one market for U.S. corn, and so it should surprise no one that the NCGA has been active in pushing back, with strong support from the Biden administration in Washington.
NCGA is urging the administration to hold the line and file a dispute settlement under the USMCA to hold Mexico accountable to their obligations under that trade agreement.
In order to build awareness of the issue in Congress, on January 31 NCGA held a well-attended briefing for Congressional staffers with an all-star panel of experts:
- Congressman Adrian Smith from Nebraska, chair of the Ways and Means Subcommittee on Trade
- Acting Deputy Undersecretary for Trade and Foreign Agricultural Affairs Jason Hafemeister
- NCGA President Tom Haag
- Nebraska grower Andy Jobman
And the discussion was moderated by NCGA Vice President of Communications Neil Caskey.
Overall, the impact of this decree really would set a precedent that we do not want to be set, and that's this stigmatism against GMO crops. GMO technology is extremely, extremely important to agriculture in the US and the rest of the world too.
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A major disruption to the market for US corn is set to take effect in one year as a decree by Mexico's president would ban the import of GMO corn effective January 31st, 2024. Historically, Mexico was the number one market for US corn, and so it should surprise no one that the NCGA has been active in pushing back, with strong support from the Biden Administration in Washington. The NCGA is urging the administration to hold the line and file a settlement dispute under the USMCA to hold Mexico accountable to their obligations under that trade agreement.
And so, in order to build awareness of the issue in Congress, on January 31st, we held a well-attended briefing for congressional staffers with an all-star panel of experts. Joining us were Congressman Adrian Smith from Nebraska, the Chair of the Ways and Means Subcommittee on Trade, Acting Deputy Under Secretary for Trade in Foreign Agricultural Affairs, Jason Hafemeister. NCGA President Tom Haag was there to offer leadership's perspective, and Nebraska grower Andy Jobman gave us the view from the farm field. The discussion was moderated by NCGA Vice President of Communications, Neil Caskey.
Let's go ahead and get started. Tom, from a grower point of view, help us understand what Mexico means to US farmers.
What it means for us is that they're neighbors, therefore, importing our corn to theirs is less distance than we have to worry about going to China or whatever. But there are also our largest importer of our yellow corn and white corn, which is $10.3 billion a year. And if we would happen to lose some of that over this issue, it would be huge for the American farmer because 90% of the corn that we grow is GMO corn. That would be the first major thing right there, Neil, that would be a big impact to the US corn farmer. At NCGA, we represent 26 affiliated states and a little bit less than 40,000 members, but we have 300,000 corn farmers that pay checkoff dues to their estate, so it would be a big impact.
Andy, anything you want to add to that from your perspective?
Yeah, so on our particular farm, we raise a lot of food grade white and yellow corn. Actually, all of it is food grade, white and yellow. Most of it stays domestic for a major domestic corn ship processor, but we do have extra white corn that we do sell to a vendor that ships that corn to Mexico and to Central America. This last year, about 50% of that extra corn that I grew on my farm went to Mexico. So when we hear rumors and threats of that market shutting down, it definitely hits really home for me and a lot of producers in Nebraska. Nebraska's the number one white corn producing state in the nation, so that's a little bit unique for Nebraska.
But overall, the impact of this decree really would set a precedent that we do not want to be set, and that's this stigmatism against GMO crops. We've been producing GMO crops on our farms for over 20 years, and the science is solid behind it in terms of the safety, in terms of what we can do for conservation and stewardship, and I think we'll talk a little bit about that later. You think about the American corn farmer's role in protecting our environment, leaving a very small environmental impact and very small carbon footprint, we can't do that without GMO crops. I think GMO technology is extremely, extremely important to agriculture in the US and the rest of the world too.
So shifting gears just a bit, I want to talk a little bit about the US-Mexico-Canada agreement. So Congressman Smith, obviously you were on the committee that helped with that trade agreement. And so, tell us what that agreement did for agriculture in general and in corn I guess in particular that helped put us in a better spot.
Congressman Adrian Smith:
It strengthened our position. Certainly, when you look at the broader context of what NAFTA had done for agriculture, more specifically though, agriculture had done so well under NAFTA that when there was a renegotiation, it did make a lot of agriculture a little bit nervous, but it showed that we can get this done. And so, it updated NAFTA, added biotechnology, for example. Imagine that given the events of the day or of these few months of how Mexico is treating us. And so, yes, there is a dispute settlement, but that was updated as well. I hope that we won't need a dispute settlement ultimately, but I'm just hoping that this tension between Mexico and the US specifically on white corn can be resolved.
As Andy mentioned, we do not want dangerous precedents to be set that give other countries other ideas when it's politically motivated, it's not scientifically based. It's politically motivated, and it's very damaging I think ultimately to trade generically. We don't need more challenges with trade especially when we face, I think, an unlevel playing field around the world. I think it's just so helpful. I think getting USMCA done was a result of really leaning in on trade issues to get that done. The world was watching. A lot of folks said it could never be done, and yet USMCA was done, it was done for the right reasons. I think it was the most bipartisan trade agreement in modern history. There were more Democrats who voted for it than Republicans. Of course, the Democrats had majority at the time, but that's not always the case. And so I just think we should use this as leverage now moving forward, but obviously to make sure we enforce what we have.
Deputy Undersecretary Hafemeister, this question is for you. So 10 months, I guess, after that agreement was ratified, then we got a curve ball out of Mexico with this decree. Can you help us understand what happened and what they're trying to do with this ban on GM corn?
Yep, for sure. In January of 2021, Mexico instituted a decree related to corn in particular, but more broadly about biotechnology. The objective of this decree was to set up a phase-out of the use of biotech in food products and particularly for corn. This phase-out would be implemented by January of 2024, so a little over a year from now. And in the interim, Mexico, their government was charging the country to find an alternative to the use particularly of herbicide-resistant traits, but also to biotech products in general. And so, while trade has continued in the interim, so Mexico continues to be a big market for us, we've had problems that they have not been approving new traits. New seeds that are being developed by companies that have new positive traits that our farmers want to have access to, they're not being legalized for sale in Mexico. The Mexican government under this decree is preparing to eventually ban the import of any biotech corn products.
So, this is a big problem for us for several reasons. One, Mexico's an important commercial market for us, not just for corn, but for a lot of products. We want to make sure that commerce is not unfairly burdened. So we have a commercial interest in making sure that the market stays open as was promised to us under NAFTA and then USMCA. Second, there's a particular need we have to really show that we're serious about trade. There's a lot of concern in the public in the US that trade agreements are unfair, they're not delivering for America, that other countries are taking advantage of us. This is really creating a lot of resistance to trade, which is a problem for us in agriculture since trade is so critical to our livelihood. We want to make sure that we make the point that we are enforcing trade agreements, that these agreements that are benefiting our farmers we're going to keep them in place and be respected.
Third, there's a real technology issue here. We're really banking on these genetic modifications, old school and new school, to help improve farm income. These can help increase yields and reduce costs for our farmers. This can help increase the food availability globally. We think that's critical for global food security. And third, we really think these technologies are going to be pivotable to addressing the climate challenge. And so, if these technologies are stifled because a key market is making it illegal to market that crop, that's going to have a lot of negative repercussions. Even if we can keep the market open for old-style seeds, that's not going to address all these promises that we see in the new technology going forward.
Finally, we're worried about Mexico. They are big importers of corn. Their livestock industry depends on corn. This helps feed Mexicans. This helps spread the dollar in a Mexican pocket. We're not interested in seeing the cost of living go up in Mexico. So for all those reasons, we've really jumped on this one.
So Andy, when I think about the farm gate implications, I think about the impacts on your particular farm. And so, could you talk a little bit about why that is and maybe even go beyond just the effects of your farm and just talk about the broader US corn industry as well, the effects of this proposed ban?
Yeah, so I'll walk everyone through a short timeline of what it takes to put in a crop. The crop that we're going to plant here in a few months in April for the 2023 crop, a lot of those seed decisions, what hybrid to plant, how much of it, et cetera, et cetera, I've made all those decisions already. A lot of times that's coming in the fall before. A lot of that is just driven by various market forces and opportunities to purchase at a discount. But a lot of times I'm set by the time January one rolls around with pretty much what I'm going to plant. Walking that back even further, that seed that I'm purchasing from a retailer, a seed company or a local cooperative or whatever, that was grown in the season prior to that. The season prior to that is when the seed companies or our retailers were making decisions on, "Okay, what kind of seed will our farmer want to plant two seasons from now?"
And so, I hope that illustrates the complexity of the whole grain channel. From developing seeds clear to delivering a final product from the farm gate to an end user, it's three to four years in one turn, in one cycle. And so, to simply flip a switch on and off between wanting non-GMO or wanting GMO from our trade partners is just simply logistically impossible because it takes so long to develop these lines of corn, it takes obviously a whole growing season to raise it, and then it's going to stay in the grain channel, in the supply channel for another at least a year. So this is a very complex industry. And then you throw on top of all of that the requirements that you would need to isolate non-GMO grain from GMO grain from the farm gate clear to the end user, wherever that end user may be, that's a whole nother complicated situation too.
That's why you see farmers and associations really, really step back and say, "Hey, whoa, whoa, whoa, we can't just do this on a whim." In a lot of cases, it undermines the technology and the advancements that we've seen already in our crop production when it comes to improving soil health, using less energy, being more environmentally friendly, and also raising a much higher quality product. I mean, we can't do that without GMO technology today. I've drawn the similarity of we're moving backwards if we would do that. It would be getting rid of electricity and going back to candles, basically, if we get rid of GMO technology.
Yeah, thanks, Andy. We've been grateful to have wonderful support on Capitol Hill, and Congressman Smith, that's a big credit to your leadership and all the things that you've done. Could you just help us understand all the activity, all the bipartisan support that we have on Capitol Hill for this particular issue and maybe where that might be going into the future?
Congressman Adrian Smith:
Yeah, I appreciate the support of many of my Democratic colleagues who are sharing the same concerns about what we're talking about. This issue is not just about us, this is about feeding the world. Andy just talked about taking a step back from electricity back to candles. Imagine if we didn't have GMOs, I mean, we'd need more water, more chemical. So it's actually good for the environment to head in a direction utilizing a biotechnology for the future and that we can all benefit from that. What is lost all too often in terms of trade discussions is the impact on consumers. I've heard from Mexico actually some folks concerned about the president's policies there in Mexico, that this is not friendly to consumers in their own country. I would hope that we would all be sensitive to that because trade policy, whether it's us, whether it's consumers in another country, it impacts all of us.
It does indeed. I know that we're grateful for the support of the administration as well. This next question is for you, Deputy Undersecretary Hafemeister. I know that this has been going on for some time, but the talks, the negotiations have certainly heated up in recent weeks. I don't know if you could just shed some light on where we've been and where things are on that end.
Yeah, I'll put in some context. So in 2021, Secretary Vilsack made his first international trip down to Mexico, met with the Mexican government, including the president, and heard back from them some of their priorities. Some of it was heritage related. Mexico says, "We are the cradle of corn. We don't want to have these new strange varieties coming in and contaminate the pure Mexican corn. So that's why we don't want it." Some of it is health, that there's some belief in some places, Mexico and US, that biotech or some of the herbicides used around it are not healthy. And so, that's part of the reason. Part of it is a generalized fear of biotech. These were some of the things that are in the air down there. Secretary Vilsack was able to make the case both in 2021 and he went back in 2022 to talk about the safety of these products, the legality under the trade agreement where we're obligated to have access, the economics for American corn farmers as well as Mexican consumers, and the importance to the relationship that Mexico really needs to take a hard look at this decree.
And so, we've been in conversation with Mexico since then. There's really, I guess, three things to keep an eye on. One is the overarching decree. This is a regulation, something that comes out of the office of the president down there that sets out this vision of transitioning away from biotech. So that decree on its face is problematic. Second is the approvals of new varieties have been stopped. And so, that's stopping the commercialization of corn and some other grains that could be sold down there and stopping our farmers from planting them. And then the third is any related trade regulations that might go in place to try and otherwise restrict or channel these products. So those are the three tools, the three instruments that we're paying attention to.
We've been clear with the Mexicans that this really needs to be solved. It's not the kind of thing that is easily compromised because it's about science, it's about law, it's about economics. And so, we're asking them to look at those instruments and to reform them. We're in conversation in December, the Mexican government sent up four of their ministers, agriculture and trade and foreign ministry and health ministry, they came to Washington. Secretary Vilsack again encouraged them to dig deep and make the reforms. And so, those conversations are ongoing. Last week, our new undersecretary for trade, Alexis Taylor, went down there with our new trade ambassador from US Chair, Doug McCaleb, and really reaffirmed that some of these halfway measures that Mexico had been floating really don't do it, we really need to see reform. So that's where we're in our talks with Mexico.
Oh, very good. So just one final question relates to President Obrador. We know that his term will be ending in 2024, and I guess this is for anyone that might want to field it, any speculation on what that might mean on this particular decree?
Congressman Adrian Smith:
I'm not a political scientist internationally, but just watching this issue with the various countries around the world, and let's face it, Europe, UK more specifically I should say, the UK, they say they left the EU because of too many regulations, but then they want to keep them on agriculture. This seems to be perhaps a poultry issue more than others, but they keep coming and wanting to visit with me saying they want a trade agreement, but they expect to exclude agriculture. I'm like, "I don't know how you pass a trade agreement in the US in the Congress here without agriculture." The number one trade constituency, I think, here in these parts of America anyway. So it's a political football. I do worry that not enough is being done to actually get some movement from the president of Mexico because it seems to center around his personal preferences there.
I haven't even studied all of the political dynamics associated with it, but imagine... A long time ago, I don't know if you guys saw that Jimmy Kimmel did Man on the Street, interviewing 10 people, you probably watched this, asking them what GMO stood for. I think one out of the 10 kind of got it right. So that's what we're up against. We've seen the politics of different aspects of food production and livestock agriculture as well, animal agriculture. It can get out of hand really quickly, and who suffers the most? Consumers. You would think there'd be a little more understanding these days just with the cost of eggs. Now that's different reason perhaps, but there's just so much that goes on that I hope that we can have a discussion with stakeholders that can elevate the back and forth.
Now, to Undersecretary's point earlier about the negative connotations of trade, it's interesting because I agree that over the years there have been developing negative connotations in discussions about trade. And then circa 2017, here comes some tariffs. The coffee shops across America blew up about tariffs. "What do tariffs do? What do they not do? What could be the results? What's the leverage attempt here?" And so there was all of this concern about tariffs. I get it, I'm not a big fan of tariffs either. But I do believe that it elevated the discussions in coffee shops across America about trade, and that helped us get some things done in the previous administration as it relates to trade. And so, I hope that we can push forward by leaning in on these trade issues, whether it's with Kenya or whether it is holding UK's feet to the fire on how badly do they want a trade agreement and other opportunities.
We hear a lot about labor and environment and how these other countries unfairly engage with labor and environment. Well, imagine if we had no trade agreements whatsoever. What would be the state of labor and environment around the world in other countries? So trade agreements actually give us more leverage to set the standard, I think a positive standard with how employees should be treated and what is good for the environment. That becomes a win-win when we can level the playing field and being able to sell more of our products around the world when we know we're really good at feeding the world. We don't want to see unnecessary, unreasonable regulations stand in the way.
We'll bring it home with some final thoughts. We'll start down on that side of the table, Deputy Under Secretary with you. Anything that we didn't cover that you would want to bring up?
Nope. Just to say appreciate the chance to talk about this, a big priority for us. We know it's real important to our stakeholders and just important for the relationship with Mexico, the technology. A lot's at stake here. We're we're very much doubling down on it. This is going to be a big year. Farmers are getting ready to plant in the spring for a crop they'll harvest in the fall and sell into the winter. And if Mexico doesn't change this regulation, they won't be able to sell these in January in Mexico. So now really is the time for Mexico to make the change. We're definitely using all the tools we can to try and convince them of that and just appreciate the help we've gotten from stakeholders from the Hill and from everybody.
Well, I would, as a corn farmer, just want to voice appreciation for administration and the USDA and USTR for getting engaged on this. It is a huge issue, like you said, Under Secretary. The science and the truth are definitely on our side. We would really encourage administration to really hold the line on this issue. Secretary Vilsack I think recently said that there is no compromise that is acceptable from our standpoint. I think that's a really, really strong statement that we're 100% behind. The corn chips that are in my pantry are the same corn chips that everyone else in the nation buys. I feed GMOs to my family, as do all farmers across the nation. It's safe, it's reliable. You talk about food security, environmental, social benefits, there's just a win-win-win there. There's great synergism between science and the social benefits as well as the environmental, so yeah, a huge issue that we're going to continue to work on and strive for that positive outcome of keeping that trade relationship with Mexico.
I've got a few comments here just as we've been going on. Well, the American corn farmer has been working hard the last seven to eight years on sustainability, and we're gaining more every year. The farmer's doing a better job of taking care of the land every year. 35 years ago when I started farming, 40 years ago when I started farming, complete different practices back then compared to what we do now. At one time back, we had to say it wasn't black and where I lived, you can't plant it. Well, now we can use vertical tillage just because of the technology and all that, and we're proving it can work. The Mexican government would like to say, "Corn farmers from the US, this is what we want you to do." We don't want another country telling us that we should have to farm that way. We know what we're growing. We know we're growing a safe product. Like Andy said, it's been 20-plus years since we've been growing this.
The thing that also comes up, and representative Smith mentioned it, it's going to cost us more to grow that non-GMO corn, so that means the price goes up. We've got $7 corn right now, we might need $11 corn in order to break even so. But then we export it to them, it's going to be that much more expensive for that Mexican consumer to buy the product compared to what they're buying it for right now. So we can see more of the pluses going our way, and that's why GMO has been proven itself to be a very, very good product for us.
One last thing I would like to chew too is what Andy just mentioned. Back in December, our CEO got a call from Secretary Vilsack saying, "I just had a meeting with the Mexican entourage with my group." And he says, "We're staying strong." He says, "Let's not give in." Well, then last week when USTR and USDA were down there, when they came back home and said, "No, no deals, we're staying to our rules." Let the trade agreement work, that's what we're here for. And with the administration saying the same thing, that is what our NCGA wants to hear, that they're behind us and that they believe in the American corn farmer and what we're doing. Thank you.
Well, thank you all for a great conversation. Mexico's a great neighbor. They're also a great customer of our corn. I heard it from Congressman Smith and Andy, the win-win term. This proposed ban is a lose-lose for our two countries. We're grateful for the bipartisan support that we have for the administration and Congressman Smith, all you're doing on Capitol Hill. Because of that, we're optimistic that we're going to have a positive resolution soon. We need that sooner rather than later given that the clock is ticking. January 31st, 2024, that is the date that we're working for. And so, with that, I want to say thank you on behalf of National Corn Farmers Association. Thank you for coming here. Thank you for our panelists and our leadership here in Washington. Thanks.
Once again, a big thank you to all our guests in this Capitol Hill Congressional Briefing, Congressman Adrian Smith from Nebraska, Acting Deputy Under Secretary for Trade and Foreign Agricultural Affairs, Jason Hafemeister, NCGA president, Tom Haag, Nebraska grower, Andy Jobman. The discussion was led by NCGA Vice President of Communications, Neil Caskey. I'm Dusty Weis, and we hope you'll join us again next month for another episode of the Cobcast: Inside the Grind with the National Corn Growers Association. To keep up with this and other issues, you can follow @NationalCorn on Twitter for more news and updates from the NCGA. Visit ncga.com to sign up for the association's email newsletter. And make sure you're following this show in your favorite podcast app. The Cobcast is brought to you by the National Corn Growers Association with editing by Larry Kilgore III, and it's produced by Podcamp Media, branded podcast production for businesses, podcampmedia.com. For the National Corn Growers Association, thanks for listening. I'm Dusty Weis.