Agribusiness giant Cargill launched a legal battle for compensation from Syngenta over losses sustained through Chinese rejections of US corn cargos, in a move which could spark similar claims.

Cargill - one of the ABCD group of major agriculture traders, with Archer Daniels Midland, Bunge and Louis Dreyfus – accused Syngenta of landing "significant damages" on the US agriculture industry by launching a genetically modified corn seed without the approval of Chinese authorities.

The move led to a series of rejections, from late 2013, by Chinese customs officials of cargos of US corn containing MIR 162 – a genetically modified trait cleared by Washington but not by Beijing.

"Unlike other seed companies, Syngenta has not practiced responsible stewardship by broadly commercialising a new product before receiving approval from a key export market like China," said Mark Stonacek, the president of Cargill's North American grain and oilseed supply operations.

Cargill, estimating at more than $90m its own losses from the Chinese cargo rejections, said it had filed for damages from Syngenta after talks "proved unproductive".

However, Syngenta dismissed the lawsuit as "without merit", adding that it had, after gaining US approval for MIR 162 in 2010, "commercialized the trait in full compliance with regulatory and legal requirements".

'Significant damages'

Cargill claimed that Syngenta had by pressing on with MIR 162 "put the ability of US agriculture to serve global markets at risk, costing both Cargill and the entire US agricultural industry significant damages".

The trading house in April, unveiling a 28% drop to $445m in earnings for the December-to-February quarter, blamed the fall largely on reduced profitability of its crop origination and processing division thanks to "costs related to China corn trade".

It restated in August that earnings in the division had decreased "moderately" in the year to the end of May, "reflecting in part the impact of China's rejection of certain US corn shipments".

Cargill is only one of a number of major grain traders affected by China's rejections of US corn, which was among factors seen, for instance, depressing profits at Archer Daniels Midland's German-based Toepfer grain trading operations, and raising the potential for further legal action.

Two US grain industry groups, the National Grain and Feed Association and North American Export Grain Association, whose members include the likes of Bunge Cargill, in January urged Syngenta to mothball MIR 162 until it had been cleared in Syngenta.

 'Inconsistent with industry standards'

Mr Stonacek added that "the risks – as well as the rewards – need to be shared across the marketplace by all of the stakeholders.

"Syngenta has not accepted its share of the risks associated with MIR 162."

Dave Baudler, the head of Cargill's US AgHorizons division, which buys grain from farmers, termed Syngenta's actions "inconsistent with industry standards and the conduct of other biotechnology seed companies".

However, Syngenta said that it had "obtained import approval from major corn importing countries", while being "fully transparent in commercialising the trait over the last four years".

The group added that it "strongly upholds the right of growers to have access to approved new technologies that can increase both their productivity and their profitability".


 

agrimoney