Brazil Welcomes GM Imports From US

GMO Maksud/Adobe Stock

Spend Matters welcomes this guest post from Michael Liberty, market analyst at Mintec.

For the first time in its history, Brazil opened its doors in August 2016 to genetically modified (GM) corn imports from the U.S. In this post, we’ll look to answer why Brazil turned to the U.S., and what the possible implications could be.

GM crops are always a hot topic. A GM crop is created when the genetics of a crop are altered in a bid to introduce a new trait, including resistance to certain pests, disease or environmental conditions. While GM crops are prevalent across the U.S. and Brazil, many other countries share conflicting views over the cultivation and trade of these products. This is mainly due to concerns that GM products could lead to new health risks, and that the effects of these crops on human health are not yet understood.

The U.S. and Brazil are the world’s largest producers of GM products, with an estimated 175 million acres and 110 million acres of GM crops, respectively. To add some perspective, Texas, the second largest state in the U.S., is too small to accommodate all of America’s GM fields. The U.S. grows a whopping 43 different types of GM corn, while Brazil grows an equally impressive 29 types — all with different specifications and regulations. Corn accounts for 30% of global GM crop produce.

Brazil’s decision to import GM corn from the U.S. was prompted by the tight supply situation in Brazil. Corn production in Brazil fell to the lowest level in five years in 2015/16, down 21% year-over-year at 67 million tonnes, due to severe droughts. This was compounded by an increase in demand for feed grains in Brazil, due to rising production in the beef, pork and poultry sectors.

Under pressure from tight supplies and rising domestic prices in August, Brazil’s biosafety commission (CTNBio) approved two varieties of GM corn for import from the U.S. for animal feed use. Brazil imported 1 million tonnes of U.S. GM corn between August and October. In October, CNTBio approved three more varieties for imports, which are expected to bring an additional 1.5 million tonnes. Overall corn imports into Brazil for 2016/17 are forecast to rise a staggering 595% y-o-y to 2.3 million tonnes.

Although prices for corn in Brazil remain high compared with previous years, prices fell in October as the increase in imports eased supply concerns. Meanwhile, prices in the US have risen since October, due to an increase in demand from Brazil.

More interestingly, Brazil’s decision to import GM crops from the US could have global implications. The first to come to mind is whether or not this new deal will encourage other countries to turn to GM crops. Would this then prompt producers to raise GM production? It is definitely something worth considering while we wait to see how the new deal plays out in the global market.

Share on Procurious

Discuss this:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.