September 17, 2014 / 10:12 AM / 5 years ago

China, U.S. fail to reach agreement in distiller grains dispute: sources

BEIJING Sep 17 (Reuters) - China, the world’s top buyer of distiller’s dried grains (DDGs), has failed to settle a row with the United States on how to eliminate genetically-altered content from a product worth $1.3 billion in trade so far this year, two industry sources said on Wednesday.

A boy plays in corn kernels piled up at his father's store to sell in Kashgar, Xinjiang Uighur Autonomous Region, September 9, 2012. REUTERS/Stringer

Officials from the U.S. Department of Agriculture (USDA) and China’s quality watchdog, the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), met late last week to discuss testing procedures for DDGs exported to China, but could not agree on methods for shipments already on the way or signed for, the sources said.

“There is no agreement. It will be good if both sides apply same testing methods, which should be economic and efficient,” said one source familiar with the discussion.

The dispute has seen China turn away 1.25 million tonnes of U.S. corn and DDGs this year after discovering the presence of an unapproved genetically-modified (GMO) strain known as MIR 162, developed by Syngenta.

International trader Cargill and another firm are currently taking legal action against the Swiss-based seed maker, claiming that Syngenta’s failure to win Chinese approval for the strain has cost them millions of dollars in losses.

China’s quarantine authority requires U.S. DDGs shipments to be certified MIR 162 free. Those that do not meet the requirement would be rejected.

The rule originally applied to shipments departing after July 24, but the cut-off date has now been postponed to Aug. 18.

The Chinese side prefers polymerase chain reaction (PCR) testing, which is more sensitive to genetic material but is also time-consuming and expensive, said the source. Both sides would continue talks but there is no scheduled timetable, he said.

China’s quarantine authority has stopped issuing import permits to those companies delivering cargoes found to have contained MIR 162.

“Since there is no agreement, we are considering not paying supplier for the cargoes already on the way,” said one Chinese buyer.

China’s imports of U.S. DDGs is expected to rise 57.5 percent on year in 2014 to 6.3 million tonnes, said the China National Grain and Oils Information Centre (CNGOIC). The official think-tank said buyers have booked many cargoes before the deadline of Aug 18.

Imports in the first seven months of the year rose 187 percent to 3.91 million tonnes, according to official Customs data.

Reporting by Niu Shuping and David Stanway; Editing by Michael Perry

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