Grain Bins



Posted on June 12, 2006

Mexico’s tax on beverages containing high fructose corn syrup (HFCS) is a breach of World Trade Organization (WTO) commitments, according to the WTO Appellate Body. “The WTO reaffirmed that Mexico was in violation of its WTO commitments,” said Kenneth Hobbie, USGC president and CEO. “This ruling is a win for U.S. corn producers and other Council members.” According to the Corn Refiners Association (CRA), $944 million in HFCS sales, equivalent to 168 million bushels of corn, has been lost by U.S. farmers and corn processors every year that the tax has been in place. CRA, a member of the Council, estimates that the price per bushel of corn in the United States could rise by $0.10 in key corn states, or $0.06 nationally, when the Mexican market for corn sweeteners is fully restored. The 20 percent tax on soft drinks made with imported sweeteners such as HFCS was imposed by the Mexican legislature in January 2002. The tax has also affected several major U.S.-owned HFCS producers in Mexico who rely on U.S. corn to sustain their operations. The WTO issued a final ruling on the HFCS case in favor of the United States on October 7, 2005, which was later appealed by the Mexican government. The WTO Appellate Body ruling on March 6, 2006, upheld the decisions of the final WTO panel report and sided with the United States on all counts.

The Council’s biotechnology test plots in South Africa played host to a Farmer-to-Farmer delegation recently. The USDA and AfricaBio utilized the test plots as part of their Farmer-to Farmer Workshop on Agricultural Biotechnology which was attended by 25 farmers, seed merchants, agricultural officials and policy makers from eight countries including Uganda, Tanzania, Malawi, Mozambique and Kenya. Participants saw how biotech corn performed in the field and learned first-hand about the use of biotechnology. “The delegates felt it was important that the information and knowledge they had acquired be conveyed to farmers and policy makers in their own countries,” said Kurt Shultz, USGC director for the Mediterranean and Africa. The delay in enacting relevant policy and legislation was noted as one of the main reasons for the slow adoption of biotech crops in south and eastern Africa. Delegates also mentioned the need for greater awareness at all levels of society about the benefits and concerns of cultivating genetically modified crops. The Council is working with grassroots organizations in many African countries and throughout the world to ensure that accurate, fact-based information is the foundation of policies governing biotechnology.

USDA estimates higher corn exports and lower stocks compared to last month, according to the World Agricultural Supply and Demand Estimates (WASDE) released recently. U.S. corn sales to Asia exceeded the USDA’s previous estimates, accounting for the increase by 1.27 million metric tons (49.9 million bushels) to 48.26 million tons (1.8 billion bushels). “The stronger U.S. exports to Asia are a result of continued economic strength in the region and the tapering off of China’s exports, in particular to Korea,” said Erick Erickson, special assistant for planning, evaluation and projects. “This is good news for U.S. corn producers, and evidence of the success of the Council’s long-term commitment to expanding demand and defending U.S. market share in Asia.” Projections for U.S. sorghum and barley supplies and use remained steady.

The Bush administration is moving forward in free trade negotiations with Malaysia and South Korea. U.S. Trade Representative (USTR) Rob Portman recently announced the Administration’s intent to negotiate a Free Trade Agreement (FTA) with Malaysia. Although the country typically imports about 2.5 million metric tons (98.4 million bushels) of corn per year, Malaysia has not purchased any significant volumes from the United States since the 1990s. FTA negotiations with Korea, one of the largest feed grain markets in the world, were announced in February and are scheduled to begin in June. Korea imported 8.6 million metric tons (338.5 million bushels) of corn in 2004/05; of that amount 2.2 million tons (86.6 million bushels) was of U.S. origin. “We are looking forward to providing input to our negotiators as these talks move forward,” said Kevin Natz, USGC director of trade policy. “Already, we have highlighted the importance of using the FTA discussions to ensure that any biotech regulations put in place by South Korea do not become an impediment to U.S. corn exports.” USTR is working under a tight deadline as its Trade Promotion Authority expires in mid-2007. Negotiations with both countries need to be concluded around the end of the year to give Congress time to approve the agreements.

The U.S. Grains Council is planning a value-enhanced grains (VEG) conference for international grain users in June. The VEG conference, being held in conjunction with the National Corn Growers Association’s fifth Corn Utilization and Technology Conference (CUTC), will cover a number of topics such as U.S. production, supply and demand for corn, value-enhanced corn and distiller’s dried grains with solubles (DDGS); U.S. production of specialty grains; how identity preserved grains move through the transportation system; and how biotechnology will affect the U.S. grain industry. Held June 5-7, in Dallas, Tex., CUTC will offer up-to-date information on a variety of industry topics, as well as a trade show featuring new technologies and equipment. Register for CUTC at before March 31 to receive the best rates. The Council also encourages agribusiness members to exhibit at the trade show, more details can be found on CUTC’s website.

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