The Mexican government announced it will be phasing out GMO corn and glyphosate by 2024. Mexico is one of the largest importers of U.S. corn, so that announcement caused concern in the U.S. agricultural sector. David Widmar, an agricultural economist with Agricultural Economic Insights, says there are a lot of questions about how this move by Mexico’s government will work.
“One of them is the impact on domestic production in Mexico. The implications of that ambiguous decree, and also the implications for corn that is used for human consumption. The other side of the coin is livestock feed. And the last piece here is what about corn imports? So, there’s kind of one version of this where absolutely no GM corn is allowed to be produced or consumed or imported into Mexico. And then there’s sort of the other variation where there’s some exception for corn that is fed to livestock or that goes into the feed supply chain, and then also potentially corn that’s imported, so they could still import GM corn to feed their livestock. But maybe they’re not producing it. That’s sort of the high-level take.”
About 25 percent of all U.S. corn exports go to Mexico, but the way they use most of the imports has changed.
“The story in Mexico has been evolving over the last two decades where in 2000, we would have said the Mexican corn situation is mostly driven by domestic production, and it goes into the food sector. Over time, we have seen that shift to a majority of the corn going into feed, and a growing share of their supply comes from imports. About 40 percent today of all the corn that they use comes from imports, so this is important to keep in mind as we think about where all this comes together.”
He says the effect on U.S. corn producers will depend on how far the Mexican government takes their ban.
“There is a scenario here where they’re not going to allow any GMO corn in the country. That seems like the most aggressive, most literal sort of interpretation of how this might play out, and that could limit how much corn goes into the country. Keeping in mind that Mexico gets 90-plus percent of its corn from the U.S, that’s going to have a potential ripple through the entire corn trade situation. Now, if there is an exemption where GM corn can be fed and can be imported, there might be sort of minimal impacts at the sector level, at sort of the entire U.S. farm economy.”
Mexico’s livestock industry may limit the scope of the ban on GM corn import.
“Mexico feeds more corn into livestock than they import, so there is some possibility here where they have a domestic production situation that’s GM free, they have usage for human consumption as GM free, and then they rely on imports of GM to go into their animal feed. So that is a theoretically feasible situation.”
For more information on their thoughts about Mexico and corn, go to www.aei.ag.