USDA rethinking StarLink Impact

Jim Wiesemeyer / Sparks Companies 30nov00

The story with "legs" keeps growing... but thus far it's a "bad seed"...

Some USDA officials are starting to revise their earlier, more positive thinking regarding the impact of the StarLink corn situation on U.S. export prospects.

For example, Tim Galvin, administrator of USDA's Foreign Ag Service, today said that foreign buyers' concerns about StarLink are having a "significant" impact on U.S. corn exports.

"I'd say a significant [impact] at this point because that is a rather low [weekly corn export sales] number at this point in the year. I think we have to acknowledge it." Galvin was talking about this morning's marketing-year low U.S. corn export sales tally of a paltry 438,800 metric tons. The anemic sales were one-third below the not-so-robust sales of a week earlier and the 4-week average.

Galvin stressed, however, that Japan remained the number-one weekly purchaser of U.S. corn in the latest reporting week, having bought 187,200 metric tons. But he acknowledged Japanese corn purchases "are below where they should be at this time of the [marketing] year."

Japan and South Korea have publicly raised concerns about the ability of U.S. exporters to segregate StarLink and non-StarLink corn.

USDA officials are continuing discussions with the South Korean gov't regarding testing of U.S. food-corn shipments. South Korea has refused to purchase U.S. corn -- or reportedly ship purchases already on the books -- because of an apparent difference of opinion regarding who will pay for the cost of testing the corn.

Of particular concern to USDA officials is news that South Korea has not purchased any U.S. corn for several weeks.

"I don't think we need greater assurances relative to South Korea or Japan," Galvin told me in an interview today. "But unfortunately," he added, "to some degree politics enters the situation just as it does here. International legislators (parliaments, Diets, etc.) raise questions as to what agreement their country has with the U.S. government. For example, Japan puts a lot of value in having government-to-government understandings as opposed to commercial arrangements."

Japanese officials, meanwhile, want a protocol inked with USDA regarding feed-corn shipments. But USDA's Galvin informs that no such feed-corn protocol is currently in the works. He says USDA is in the process of "exchanging information" with Japan regarding the steps taken to date to make clear that USDA's Federal Grain Inspection Service (FGIS) is now in a position to test U.S. corn on a commercial basis.

When asked if he would rule out a feed-corn protocol with Japan, Galvin would not do so but again said he hoped ways can be found to "commercially resolve this problem." He told me that, "a month ago we couldn't have told Japan we had a grain testing service available, but now we can."

Galvin said that Japanese officials have suggested feed-corn protocol language, "but we [USDA] told them in turn that USDA is taking steps in the United States to try to isolate the grain (StarLink corn) so it never enters the export market. Also, a lot has changed over the two weeks or so since the [food-corn] protocol with Japan. What has changed is that FGIS now has in place a system for testing all grain upon request, and we think that ought to provide a commercial basis for anyone to have their concerns addressed, in a commercial way, between buyers and sellers."

Taiwanese officials have also reportedly discussed StarLink corn matters with USDA.

But USDA's Galvin pointed to today's daily U.S. corn sale of 108,000 tons to Taiwan as an indication that corn export sales are continuing to this destination. Galvin said USDA is in discussion with Taiwan to "make sure they understand the steps we have already taken" regarding StarLink corn.