With reports that China was closer to commercialising genetically modified (GM) maize and soybeans, South Africa is set to face increased competition, according to the Agricultural Business Chamber (Agbiz )chief economist Wandile Sihlobo.
Farmers and agribusinesses should also closely monitor the developments in the Asian nation, he said.
South Africa is a net exporter of maize so China’s increased production of these crops could bring increased competition and downward pressure on prices in the medium term.
Sihlobo said some of South Africa's key maize export markets were South Korea, Japan, Taiwan and Vietnam -- all have proximity to China.
"If China progressively increases production and becomes a consistent net exporter of maize, South Africa would have to explore markets elsewhere, which would be a challenge.
“China has increasingly become a noticeable market in South Africa's maize exports and hopes that the country could be a long-term export market.
“Thus, improvements in its domestic maize and soybean production would have a consequential impact on South Africa's export drive.
“Admittedly, it is still too early for any haste decisions. For now, all we can do is watch closely the full commercialisation date and review possible options at such a stage," Sihlobo said.
China was reported to have approved 37 genetically modified maize seed varieties and 14 genetically modified soybean varieties, taking it close to commercial planting of genetically modified maize and soybeans.
Sihlobo said this was not the first time China had made headlines about its path towards the potential commercialisation of genetically modified maize and soybeans for domestic cultivation.
In June 2013, the Chinese National Crop Variety Approval Committee released two standards that cleared the path for cultivating genetically modified crops in the country.
"This was the missing piece in the regulations for the commercial production of genetically modified maize and soybeans in China, as the government has two steps in these regulations, namely, a ‘safety certificate’ and a ‘variety approval’ before crops can be commercially cultivated," Sihlobo said.
Various GM maize and soybean varieties have received the safety certificate since 2019 and the missing piece was the "variety approval", which was approved in June last year.
"Thus, at the time, we already believed that the full approval and commercialisation of genetically modified crops in China was a real possibility.
“The news this past week that the Chinese Ministry of Agriculture and Rural Affairs approved further varieties of genetically modified maize and soybean seeds further underscores China's determination to plant these varieties. However, commercial cultivation is not yet approved.
“The timing for wide-scale commercial release is still unclear, although some speculate it could be closer as China aims to boost its crop yields as part of the food security drive. The area plantings for the recently approved varieties are still reasonably small, estimated at 267 000 hectares," he said.
Agbiz said in its current production methods, China's maize yields were comparable with South Africa, the US, Argentina and Brazil, which had long adopted GM seeds.
“Thus, we suspect adopting genetically modified seeds will further lift the yields. Furthermore, in countries like the United States, Brazil and Argentina, among others, genetically modified seeds have had additional benefits such as lowering insecticide use, more environmentally friendly tillage practices and crop yield improvement," he said.
Sihlobo said if South Africa's future crop yield improvement assumption held, then China's maize and soybean import dependence could lessen.
"China is one of the world's largest maize and soybean importers. The country accounted for 11% of global maize imports and 62% of the world's soybean imports in the 2022/23 marketing year.
“The forecast volumes for the 2023/24 marketing year remain roughly unchanged. Therefore, given China's significance in imports, an improvement in domestic production of maize and soybeans in future would have notable implications for global grains trade and prices."
Agbiz said they thought a reduced volume of China's soybeans and maize imports in the global market would mean downward pressure on global prices.
"However, we do not foresee this happening within the next few seasons as planting these newly approved varieties of genetically modified maize and soybean seeds is still constrained in a small area as it is a trial," Sihlobo said.
BUSINESS REPORT