Mexico issued a proposed ban on GMO corn in 2022, putting the U.S. in a position to lose out on 17 million metric tons of corn exports to Mexico, effectively violating the U.S.-Mexico-Canada Agreement (USMCA). So, where could the corn dispute end up?
Export numbers aside, [Ohio State University’s] researchers anticipate two “substantial” indirect impacts on U.S. producers.
1. Market aftershocks
“There would likely be a ‘ripple effect’ as additional supplies are diverted to the domestic market, driving down corn prices,” the OSU researchers said. “As a result, U.S. corn farmers would likely see increased risk of a squeeze on their margins.”
2. Regulatory uncertainty
“If this dispute is not resolved in favor the U.S., it would introduce considerable regulatory uncertainty, with the potential of undermining the stable operation of commodity markets,” the researchers said.
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According to their research, the two impacts could increase the cost of risk management tools like hedging and options, and compound “financial strain” on U.S. grain producers as a whole.
The good news is OSU’s researchers don’t foresee producers experiencing these two problems, as they expect a dispute panel would rule in favor of the U.S.
