Dr. Ken Rietz
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The US leads the world in producing genetically modified (GM) crops, and China similarly leads the world in imports of GM crops, mainly from the US. Both of those titles might be in line to change as China is beginning to, slowly for now, grow more and more of its own GM crops. The reasons and consequences of that move, in China, the US, and the world, are potentially large, and I will explore some of them in this commentary. First, here is a graph of the total amount of corn exported from the US, by year. |
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Figure 1: The amount of corn annually exported from the US, in 1000 MT It is important to set the background that has led China to this decision. China’s land is not well suited for agriculture while its population is immense. Importing food is the natural solution, but that does not sit well with China, which does not want to be dependent on any foreign country for something as essential as food. Food security is a major factor in its thinking. Besides, it is somewhat politically sensitive for Chinese crops to yield so much less than crops in the US, Canada, and South America (Brazil and Argentina). For example, the five-year average yield for corn in the US is 173 bushels per acre, while for the same interval, China produced 101 bushels of corn per acre. Increasing yield would both be a feather in their cap and reduce the amount of corn imports. But China is also aware that the seed is not the only factor affecting yield, so it hardly expects their yields to match the West. In 2023, China produced 288 million tonnes of corn, and imported 23 million tonnes. The average increase in crop yield when switching to GM is 8.6%, so switching to GM corn could reasonably expect to increase this by 24.8 million tonnes, eliminating the need to import corn. However, China imports roughly five times more soybeans than it produces, so GM soybeans are unlikely to eliminate the need to import soybeans. To date, China has been raising GM cotton for years, but only starting near the end of last year did they begin to accept GM grains. In December, China approved licenses for 26 companies to begin producing GM seeds, and in January, they approved more. This looks like China is dramatically increasing their GM crops, but that is not the case. Even though they have licenses to produce enormous numbers of GM seeds, the plans are for testing them first, only planting 1% of the area with the GM seeds this year. The results this year will directly influence Beijing’s plans for the future, which will stretch over several years before returning to some sort of equilibrium. How will this affect global exports and economies? This year, there is likely to be no noticeable effect, since the trial is so small. China is well-known for moving massively once they decide to move. In this case, the adjustments will need to be made in the global market as China’s imports change significantly. But with increasing harvests and decreasing export demand to China, other countries will have to modify their ratio of grain and seed planting. The most reasonable result is larger total harvests, causing those prices to drop. |