October 27, 2022

A new study finds Mexico’s ban on GM corn could have costly repercussions

A new study finds Mexico’s ban on GM corn could have costly repercussions

By: Sydney Sheffield 

A new report from World Perspectives Inc. details the possible impact of the potential Mexican restriction on genetically-modified (GM) corn. Consumer Price Impacts of Mexican Restrictions on GM Corn: An Economic Analysis, comes as Mexico’s government issued a decree, expressing a policy goal to gradually phase out glyphosate and GM corn use in the country by 2024.

According to the report, the announced policy would aggravate current food insecurity by drastically raising prices for corn, basic foods, and other critical products derived from corn in the Mexican economy. The average cost of corn would increase by 19% and tortilla prices would increase by 16%. About 10% of the Mexican population lacks access to adequate food and under the policy ban, this level is expected to double or triple in the nine poorest Mexican states, mostly in the south. Additionally, price increases in corn protein, fiber, oil, and thousands of processed foods distributed by tens of thousands of Mexican food retailers would all suffer price increases.

“We have seen the impact Russia’s invasion of Ukraine has had on global food prices. Unfortunately, Mexico’s barriers to biotechnology innovation will only exacerbate food price inflation for its most vulnerable citizens by disrupting supply chains and impeding producers’ access to new technologies to bolster yields,” said Dr. Michelle McMurry-Heath, President, and CEO of BIO. “To ensure producers have access to the technologies necessary to strengthen food security, improve sustainability, and tackle climate change, we urge Mexico to return to timely and science-based risk assessments of biotech traits for agricultural products, consistent with its international trade obligations.”

From 2018 through 2020, Mexico was the largest export market for United States corn and accounted for nearly 30% of US corn exports. The United States GM corn farming sector could see significant changes in the first year of a ban, specifically an increase in the ending stocks-to-use ratio that could push prices to $0.32/bushel, 5% lower than would have otherwise occurred.

Additionally, the findings indicate that Mexican livestock production would contract, declining by an average of 1.2% annually. Poultry production in Mexico would fall by 17% in total while hog production would contract by 13%. The beef and dairy sectors would see their industries’ outputs fall by 9% and 8%, respectively. For Mexico’s poorest populations, prices could rise to the point that eggs become a luxury item which could cause the first drop in egg demand since 2017.

Over time, Mexico’s GDP would fall by $11.72 billion over 10 years, and economic output would be reduced by $19.39 billion. There would be an annual loss of 56,958 jobs, which would reduce labor income by $2.99 billion. 

“The US- Mexico trading partnership has contributed greatly to the food security and economic vitality of both countries,” said the National Corn Growers Association President Chris Edgington. “That’s why we should do everything possible to ensure that the relationship continues in a fair and mutually beneficial way.”

Read the full report here