Brazil, which is struggling with a severe corn shortage, is preparing to open the door to genetically modified corn imports from the US.
The Latin American country could “run out of corn by 2017”, warned the US Department of Agriculture’s Brasília bureau in its latest report on Brazilian agriculture. USDA officials said that Brazil’s Ministry of Agriculture, Livestock and Food Supply, was set to request the approval of GM corn imports from the US.
Corn is an important source of export revenue for Brazil, as well as feed for the domestic livestock industry. However, prices have surged after a plunge in the currency this year encouraged active selling overseas and a severe drought wrought damage to the latest harvest.
Conab, the Brazilian crop supply agency, expects the 2015-16 corn crop to fall about 20 per cent to 68.5m tonnes.
The average price of corn in Mato Grosso, which has the greatest supplies of corn, is about R$30.77 a sack or $4.37 a bushel, which is twice the price of last year at this time when it was R$15.00 a sack, or about $1.90 a bushel, according to Soybean and Corn Advisor, a grains consultancy based in Chicago.
In other regions of Brazil where the available corn supplies are even tighter, the price is about R$49.00 a sack or $6.96 a bushel. These prices compare with US corn, which is currently trading on the CBOT at $3.23 a bushel.
Brazilian corn prices “are not expected to decline any time soon, in fact, they may go even higher,” says Michael Cordonnier, president of Soybean and Corn Advisor.
To shore up the country’s pork and poultry sectors, Brazil has already imported about 550,000 tonnes of corn since January, mainly from Argentina and Paraguay. This year the Brazilian government has reduced the tax on corn imports from 8 per cent to zero for six months for shipments from countries outside Mercosur, the South American trade bloc, in an attempt to keep down prices.
According to the report, Blairo Maggi, agricultural minister, is committed to meeting the requests of the livestock industry and wants to ensure the supply of grain in the country, but only for animal feed.
The regulator overseeing GM crops, the National Biosafety Technical Commission, is scheduled to meet at the start of next month. The bulk of corn planted in the US is genetically modified, and if the commission approves US GM corn purchases, it “would leave a window of imports from the US from September to November” the report said.
Brazil is not averse to GM technology and is one of the world’s leading developers of genetically modified crops. It is the second-largest grower in the world after the US with a bulk of the soyabeans, corn and cotton crops consisting of GM varieties.
Tilling technology and a boost in yields has increased productivity, and the country is now the world’s second-largest corn exporter after the US. Exports of the grain have surged from 1m tonnes in 2005 to 29m in 2015, according to official Brazilian data.
Over the past year, encouraged by the sharp fall in the Brazilian real, corn farmers have been exporting heavily, leading to a sharp fall in inventories. Hopes that the “safrinha”, or second corn crop harvest planted in February, would replenish stocks were dashed after extreme heat hit the fields in April and May.
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