By Cheryl Anderson
DTN Staff Reporter
DAVENPORT, Neb. (DTN) -- China will require certification that shipments of U.S. dried distillers grains with solubles do not contain the biotech trait MIR 162, the country announced Thursday. U.S. suppliers are unlikely to agree to that demand, according to industry officials.
China's import inspection authority (AQSIQ) announced Thursday it will now require a certificate from the point of origin guaranteeing that each shipment is free of the MIR 162 genetically-engineered trait, an unapproved variety more commonly known as Agrisure Viptera, produced by Syngenta Ag. In the U.S., that point-of-origin certification would have to come from the U.S. Department of Agriculture.
Many in the industry are speculating whether the impetus for China's latest move is politically motivated and was really spurred by a continuing glut of domestic corn and poor results from government auctions trying to sell off excess corn supplies. Therefore, Thursday's announcement may be merely a move to force domestic buyers to buy that grain first. Stories have also surfaced that China is charging exorbitant prices for its domestic corn -- as high as $11 per bushel.
This latest move by China is something the U.S. will never consent to, said Jason Charles, domestic export trader for Land O'Lakes Purina Feed LLC in Minneapolis.
Suppliers in the U.S. will never agree to such certification requirements because of the unreliability in testing, he said.
"You can test one sample of MIR 162 and get a negative, test another sample and get a negative, then test a third time and get a positive," Charles said. "It's hit and miss at best.
"We can send all the certifications we want and send it to a customer in China, and the first thing that will happen is that they probe it and find MIR 162," he said. "Now what? They found it. We didn't. It's just a big, expensive fight."
The MIR 162 issue with China began in mid-December when China began rejecting shipments of U.S. DDGS. Exports of DDGS to China came to a screeching halt, leaving the market in turmoil and sending DDG prices plummeting. Some merchandisers reported DDGS prices falling as much as $70 per ton in one day.
At that time, China announced its intention to test all imports of U.S. DDG for the presence of MIR 162.
Although trade with China recovered somewhat, in June, an announcement by China that it would stop issuing permits for imports of U.S.-produced dried distillers grains wreaked further havoc on the market, sending DDG prices on an unprecedented downward spiral.
Thursday's announcement brought down prices slightly, but did not seem to have a huge immediate impact on the market Friday.
Isaac Crawford, director of merchandising for Poet, said that may be because the low prices have gotten DDGS back into many rations and that robust domestic demand is helping make up for some of the trade lost with China.
"Distillers prices, relative to corn, are a pretty good value right now and a lot of people are keeping it in rations," he said. "Rations have doubled or more for a lot of feed mills."
Crawford pointed out that before, destination markets have been a premium to local markets. However, that has now changed.
"Right now, export destination markets are pressured and there's more uncertainty," he said. "That has lowered the value for now."
In a news release on Thursday, the U.S. Grains Council called for China to approve MIR 162, stating that the mandate would cause serious disruptions with existing DDGS trade and make future DDGS trade hard to achieve.
Tom Slight, USGC president and CEO, said that such a certification would be impossible.
"China is asking for something that cannot be done," Sleight said in the council's release. "This certificate they're asking for does not exist."
The MIR 162 trait has been approved in the U.S. since 2010 and in the European Union and most other importing countries as well.
With U.S. corn crops in excellent shape, Charles said he believes that as weeks progress and DDGS gets even cheaper, China will begin to overlook their demands and being issuing waivers to receive U.S. shipments.
Some believe the key to solving the MIR 162 issue with China is for the U.S. to expedite their approval of the trait, which has become a long-standing process, taking much longer to approve than other GE traits.
The U.S. Grains Council has worked constantly in both its Beijing office and in the U.S. to help facilitate biotech approvals in China. The council has also helped facilitate communication between seed technology providers such as Syngenta, Monsanto and Pioneer with China's ministry of agriculture to help expedite approvals.
In the meantime, the council is working on growing new and existing markets for U.S. DDGS, particularly in Mexico, Taiwan, Canada, Latin America and Korea.
The council expects that the continuing issues with China and new certifications requirements will likely be an important topic discussed at its annual summer meeting in Omaha, Neb., next week.
Cheryl Anderson can be reached at Cheryl.email@example.com
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