March 31, 2005

China's corn subsidies a threat to the US

Despite a World Trade Organization pledge to end export subsidies, China appears to continue to offer export subsidies to its corn growers.

The 13 percent value added tax (VAT) and good freight rates that China offers to local exporters makes it impossible for US exporters to compete with the country's corn prices, the USDA disclosed.

China is also reportedly pricing exported corn below domestic prices, allowing producers to move large amounts of corn out of the country.

Even railway construction fees for exporters are waived, so that delivery costs are lowered by 30 percent.