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#695 - Biotech In Trouble--Part 1, 03-May-2000

The agricultural biotechnology industry's situation is desperate
and deteriorating. To be sure, genetically engineered (GE) food
is still selling briskly on grocery shelves in the U.S. but
probably only because GE products are not labeled, so consumers
have no idea what they're buying.

At present, an estimated 2/3rds of all products for sale in U.S.
grocery stores contain genetically engineered (GE) crops, none of
which are labeled as such.[1] However, polls show that U.S.
consumers overwhelmingly want GE foods labeled. In a TIME
magazine poll in January, 1999, 81 percent of respondents said
genetically engineered foods should be labeled.[2] A month
earlier, a poll of U.S. consumers by the Swiss drug firm Novartis
had found that more than 90% of the public wants labeling.[3] The
NEW YORK TIMES reported late last year that a "biotech industry
poll" showed that 93% of Americans want genetically engineered
foods labeled.[4] Legislation requiring labels on GE foods was
introduced into Congress last November by a bi-partisan group of
20 legislators.[5]

For five years the GE food industry has been saying GE foods
couldn't be labeled because it would require segregating GE from
non-GE crops -- a practical impossibility, they said. However, in
December, 1999, Monsanto announced that it had developed a new
strain of rapeseed (a crop used to make canola cooking oil) that
might raise the levels of vitamin A in humans.[6] How could
consumers identify (and pay a premium price for) such a product
if it weren't labeled? Obviously labeling will become possible --
indeed, essential -- when it serves the interests of the biotech
corporations.

Many food suppliers seem to have figured out for themselves how
to segregate GE crops from non-GE. According to the NEW YORK
TIMES, Kellogg's, Kraft Foods, McDonald's, Nestle USA, and Quaker
Oats all sell gene-altered foods in the U.S. but not overseas.[7]
Gerber and H.J. Heinz announced some time ago that they have
managed to exclude genetically modified crops from their baby
foods.

For its part, the U.S. government has steadfastly maintained that
labeling of GE foods is not necessary -- and might even be
misleading -- because traditional crops and GE crops are
"substantially equivalent." For example, the government has
maintained that Monsanto's "New Leaf" potato -- which has been
genetically engineered to incorporate a pesticide into every cell
in the potato, to kill potato beetles -- is substantially
equivalent to normal potatoes, even though the New Leaf potato
is, itself, required to be registered as a pesticide with U.S.
Environmental Protection Agency (EPA). (See REHW #622.)

Now the government's position has become untenable. In February
of this year, the government signed the international BioSafety
Protocol, a treaty with 130 other nations, in which all
signatories agree that genetically modified crops are
significantly different from traditional crops. Thus with the
swipe of a pen, the U.S. government has now formally acknowledged
that GE crops are not "substantially equivalent" to traditional
crops.

Meanwhile, a groundswell of consumer protest reached a crescendo
last year in England and Europe, then spread to Japan and the
U.S. where it has severely eroded investor confidence in the
industry. Major U.S. firms that had invested heavily in the
technology are now being forced to pull back. As we reported
earlier (REHW #685), Monsanto, Novartis, and AstraZeneca all
announced in early January that they are turning away from -- or
abandoning entirely -- the concept of "life sciences" -- a
business model that combines pharmaceuticals and agricultural
products. The NEW YORK TIMES reported in January that American
Home Products -- a pharmaceutical giant -- "has been looking for
a way to unload its agricultural operations." At that time the
TIMES also said, "Analysts have speculated that Monsanto will
eventually shed its entire agricultural operation."[8] In late
February, DuPont announced that it was returning to its
traditional industrial chemical business to generate profits. The
WALL STREET JOURNAL said February 23, "But the big plans DuPont
announced for its pharmaceuticals and biotech divisions fizzled
as consolidation changed the landscape, and investor enthusiasm
cooled in the face of controversy over genetically engineered
crops."[9]

Investors are not the only ones turning away from genetically
engineered foods. The WALL STREET JOURNAL announced in late April
that "fast-food chains such as McDonald's Corp. are quietly
telling their french-fry suppliers to stop using" Monsanto's
pesticidal New Leaf potato. "Virtually all the [fast food] chains
have told us they prefer to take nongenetically modified
potatoes," said a spokesperson for the J.M. Simplot Company of
Boise, Idaho, a major potato supplier.[10] The JOURNAL also
reported that Procter and Gamble, maker of Pringles potato chips,
is phasing out Monsanto's pesticidal potato. And Frito-Lay --which
markets Lay's and Ruffles brands of potato chips -- has
reportedly asked its farmers not to plant Monsanto's GE potatoes.
A spokesperson for Burger King told the WALL STREET JOURNAL that
it is already using only traditional potato varieties. A
spokesperson for Hardees, the restaurant chain, told the WALL
STREET JOURNAL that Hardees is presently using Monsanto's
pesticidal potato but is considering whether to abandon it.

Earlier this year, Frito Lay also told its corn farmers to
abandon genetically-modified varieties of corn for use in
Doritos, Tostitos, and Fritos.[7]

According to the NEW YORK TIMES, U.S. farmers have sustained a
serious financial blow because they adopted genetically
engineered crops so rapidly. In 1996, the U.S. sold $3 billion
worth of corn and soybeans to Europe. Last year, those exports
had shrunk to $1 billion -- a $2 billion loss. The seed sellers
like Monsanto and DuPont got their money from the farmers, so it
is the farmers who have taken the hit, not the ag biotech firms.
[11]

The WALL STREET JOURNAL reported April 28 that, "American
farmers, worried by the controversy, are retreating from the
genetically modified seed they raced to embrace in the 1990s...
government and industry surveys show that U.S. farmers plan to
grow millions fewer acres of genetically modified corn, soybeans
and cotton than they did last year."[10]

The ag biotech firms dispute this assessment. They say demand for
genetically modified crops has never been better. Less than a
year ago Robert Shapiro, the chief executive officer of Monsanto,
said bravely, "This is the single most successful introduction of
technology in the history of agriculture, including the
plow."[12] This year a spokesperson for Monsanto says, "We're
seeing a very stable market. There's no major step backward; it's
now a matter of how much we'll grow." [11] But Gary Goldberg,
president of the American Corn Growers Association, told the NEW
YORK TIMES recently that he believes that genetically modified
(GM) corn plantings will be down about 16% this year, compared to
last. He indicated that the ag biotech firms are resorting to
deception to maintain sales: "The [ag biotech] companies are
deceiving farmers into thinking their neighbors are planting
G.M.," he told the NEW YORK TIMES.[11]

In coming days, genetically engineered (GE) food is likely to get
more attention from the public. Last month the National Academy
of Sciences issued a report confirming what critics have been
saying about GE crops: they have the potential to produce
unexpected allergens and toxicants in food, and the potential to
create far-reaching environmental effects, including harm to
beneficial insects, the creation of super-weeds, and possibly
adverse effects on soil organisms. The Academy said there was no
firm evidence that GE foods on the market now have harmful
effects on humans or the environment, but the Academy also
indicated that testing procedures to date have been woefully
deficient.[13] Indeed, the present regulatory system is
voluntary, not mandatory, so it is possible that the government
may not even know about all of the genetically engineered foods
being sold in the U.S. today.

The Academy pointed out that roughly 40 GE food products have, so
far, been approved for sale in the U.S. but approvals have also
been given for an additional 6,700 field trials of genetically
modified plants.[13,pg.35] And a NEW YORK TIMES story May 3 about
super-fast-growing GE salmon noted that "a menagerie of other
genetically modified animals is in the works.... Borrowing genes
from various creatures and implanting them in others, scientists
are creating fast-growing trout and catfish, oysters that can
withstand viruses and an 'enviropig,' whose feces are less
harmful to the environment because they contain less
phosphorus."[14] The TIMES went on to say that, "...[C]ritics and
even some Clinton administration officials say genetically
engineered creatures are threatening to slip through a net of
federal regulations that has surprisingly large holes.... United
States regulators interviewed could not point to any federal laws
specifically governing the use or release of genetically
engineered animals."

The Clinton/Gore administration announced last week that it will
"strengthen" the regulatory system for genetically engineered
foods but said the new regulations will definitely not require GE
products to carry a label, despite overwhelming public demand for
labels. Thus the government's latest regulatory initiative makes
one thing crystal clear: what the Clinton/Gore administration and
the biotech companies fear most is an informed public.

It will take years before anyone knows what the new regulations
entail, or how effective they prove to be. By that time, there
may have been hundreds of genetically modified plants and animals
introduced into the environment with little or no regulatory
oversight. The public is legitimately concerned about this.

In response to these legitimate concerns, the biotech
corporations have begun to spend tens of millions of dollars on a
public relations campaign because "the public has the right to
know more about the benefits of biotechnology." Details next
week.

--Peter Montague (National Writers Union, UAW Local 1981/AFL-CIO)

=====

[1] Carey Goldberg, "1,500 March in Boston to Protest Biotech
Food," NEW YORK TIMES March 27, 2000, pg. A14.

[2] Marian Burros, "Eating Well; Different Genes, Same Old
Label," NEW YORK TIMES September 8, 1999, pg. F5.

[3] Marian Burros, "Eating Well; Chefs Join Effort to Label
Engineered Food," NEW YORK TIMES December 9, 1998, pg. F14.

[4] Marian Burros, "U.S. Plans Long-term Studies on Safety of
Genetically Altered Foods," NEW YORK TIMES July 14, 1999, pg.
A18.

[5] David Barboza, "Biotech Companies Take On Critics of
Gene-Altered Food," NEW YORK TIMES November 12, 1999, pg. A1.

[6] Bloomberg News, "New Crop is Said to Aid Nutrition," NEW
YORK TIMES December 10, 1999, pg. C20.

[7] "Eating Well; What Labels Don't Tell You (Yet)," NEW YORK
TIMES February 9, 2000, pg. F5.

[8] David J. Morrow, "Rise and Fall of 'Life Sciences';
Drugmakers Scramble to Unload Agricultural Units," NEW YORK
TIMES January 20, 2000, pg. C1.

[9] Susan Warren, "DuPont Returns to More-Reliable Chemical
Business -- Plans for Biotech, Drug Divisions Fizzle as Mergers
Change Landscape," WALL STREET JOURNAL February 23, 2000, pg.
B4.

[10] Scott Kilman, "McDonald's, Other Fast-Food Chains Pull
Monsanto's Bio-Engineered Potato," WALL STREET JOURNAL April 28,
2000, pg. B4.

[11] David Barboza, "In the Heartland, Genetic Promises," NEW
YORK TIMES March 17, 2000, pg. C1.

[12] David Barboza, "Monsanto Faces Growing Skepticism On Two
Fronts," NEW YORK TIMES August 5, 1999, pg. C1.

[13] National Research Council, GENETICALLY MODIFIED
PEST-PROTECTED PLANTS: SCIENCE AND REGULATION (Washington, D.C.:
National Academy Press, 2000). ISBN 0309069300. Pre-publication
copy available at http://www.nap.edu/html/gmpp/.

[14] Carol Kaesuk Yoon, "Altered Salmon Leading Way to Dinner
Plates, But Rules Lag," NEW YORK TIMES May 1, 2000, pg. A1.