NDSU

Extension

The Marketing of BiotechnologyProducts

Phil McCleanDepartment of Plant Science

North Dakota State University

Biology 600Biotechnology: Principles and ProductsDelivered Live and via Videoconference

June 1-2, 2005

NDSU

Extension

Major Commercially GrownBiotech Crops In US

2000

1994

1997

1995

NDSU

Extension

Monsanto Worked To Be SeenAs Producer Friendly

• Regulatory process requires field testing Field testing was performed in the US farm belt

• Monsanto invited farm and community leaders to field days

• Showed the benefits of GMO crops to local producers When crops first approved in 1995 producer familiar with the new genetics Early adoption seen as a result of pro-active policy of showing the benefits of the technology

NDSU

Extension

• Identical to conventional except for one trait Alleviate fear of something new

• Distinct from other products Focus on the uniqueness regardless of technology Helps to distinguish the product for export markets

Marketing Approaches forBiotech Crops

NDSU

Extension

• Delivers unsurpassed weed control of both grasses and broadleaf weeds. • Provides proven crop safety and performance with patented Roundup WeatherMAX containing TranSorb® II Technology. • Excellent flexibility due to a wide window of application. • Delivered a 5.5-bushel yield advantage over conventional corn herbicide programs

Source:http://www.monsanto.com/monsanto/us_ag/layout/biotech_traits/rr_corn/default.asp (May 31, 2003)

Monsanto’s Promotion ofRoundup Ready Corn

NDSU

Extension

Transgenic Crops Increasing In the USa

Crop (% total acreage)Soybeanb Cornc Canolad

Year US ND SD US ND SD US ND SD

2000 54 22 36 25 - 46 - - -

2001 68 49 80 26 - 47 75 75 -

2002 74 61 89 32 - 66 80 80 -

2003 81 74 91 40 - 75 na na na

2004 85 82 95 45 - 79 na na na

a Source: NASS Planting Reports, 2001, 2002, 2003, 2004

NDSU

Extension

Promotional Points ForBiotechnology Crops

Economic Benefit to ProducerFarm Income

Society Benefit to Hungry PlanetFarm Production

Environmental Benefit to Challenged EcosystemPesticide Usage

NDSU

Extension

Source:http://www.novakbirch.com/cbi/update06-11-02/

Benefits ofBiotechnology Crops

Plant Biotechnology: Current and Potential ImpactFor Improving Pest Management In U.S. Agriculture:

An Analysis of 40 Case Studies

http://www.ncfap.org/40CaseStudies.

NDSU

Extension

Benefits ofBiotechnology Crops

Crops Analyzed

• Eight cultivars had a significant impact Insect-resistant corn and cotton Herbicide-tolerant canola, corn, soybean, and cotton Virus-resistant squash and papaya

NDSU

Extension

Benefits ofBiotechnology Crops

Summary for 2001 Grown Crops

Farm Income Impact$1.5 billion increase

Food Production Increase3.7 billion pounds increase

Production Costs$1.2 billion decrease

Reduced Pesticide46 million pounds decrease

NDSU

Extension

Benefits ofBiotechnology Crops

Projected Effect For Other Crops

• Diverse Crops Considered Apples, barley, eggplant, lettuce, and wheat

• New Traits for Other Crops Corn and cotton

NDSU

Extension

Benefits ofBiotechnology Crops

Project Impact for 2001

Farm Income Impact$260 million increase

Food Production Increase10.7 billion pounds increase

Production Costs$400 million decrease

Reduced Pesticide127 million pounds decrease

NDSU

Extension

Benefits ofBiotechnology Crops

Projected Total Impact for 2001

Farm Income Impact$2.5 billion increase

Food Production Increase14.5 billion pounds increase

Production Costs$1.6 billion decrease

Reduced Pesticide163 million pounds decrease

NDSU

Extension

Other Features of The Report

• Every state in the US would benefit CA would realize $206 million in net value ND would realize >$100 million in net value

• Significant pesticide in major crop-producing states CA: 66 million lb reduction

• New crops would realize benefits Raspberry, grape, apple, sunflower, barley and wheat

NDSU

Extension

Effects of Adoption of Biotech CropsIn North Dakota

• Corn (Insect and Herbicide Tolerant) 24.2 million lb reduction in pesticide use

• Barley (Fungal Resistance; Scab) 1.4 million lb increase in production

• Sugar Beet (Herbicide Tolerant) 953,00 lb increase in pesticide use

NDSU

Extension

Mandatory Labeling Requirements

Implemented Threshold LevelAustralia/NZ 1%China NoneEU 1%Japan 5%Korea 3%Norway 2%

ProposedBrazil 4%Saudi Arabia NoneTaiwan 5%Thailand 3% (corn)

5% (soybeans)

NDSU

Extension

Types of Labels

• Australia/NZ “Genetically modified” “Not from a GM source” “May contain a GM food due to supply variation

• Japan “GM” “Non-GM”

• Norway “Genetically modified X (corn, soybean)”

NDSU

Extension

Problems With Labeling

• Multiple markets Identity preservation required Not completely feasible Elevators are not ready IP owners not necessarily interested in this approach

• Lost markets $12 billion (through 2001)

NDSU

Extension

Economic Impact of Biotech CropsNon-industry View of Bt-Corn

• Profitable in 1996, 1997, 2001 ex. 2001

Added value: $93 million Increased value of harvest: $231 million Added seed cost: $138 million

• Net value 1996-2001 Net loss: $92 million Increased value of harvest: $567 million Added seed cost: $659 million

From: C.M. Benbrook. 2001.When Does It Pay To Plant Bt Corn

http://www.gefoodalert.org

NDSU

Extension

Events Important to US/EUBiotechnology Trade Issues

• 1990 EU approval process implemented

• 1995 US approves first biotech crops

• 1994-1998 EU approves nine biotech crops

• 1996 Mad Cow Disease (BSE) and human death linked

• 1997 GMO applications can be submitted toa single country, but other countries can provide comment; labeling becomes an option for traits that can be detected

NDSU

Extension

• 1997-2000 Individual countries override EU approvals; Austria, France, Germany, Greece, Luxembourg; EU doesn’t react

• 1998 Last biotech crop approved (carnation); 14 in all approved

• 1999 Moratorium on new approvals implemented

• 2000 Cartagena Protocol on Biosafety adopted by 130 countries

• 2000 Liability added as a condition for approval of new regulations

• 2000 Starlink, a corn animal feed GMO, found in taco shells

NDSU

Extension

• 2001 New approvals halted until new regulations are in effect

• 2002 Requirement that all products derived from GMO ingredients be labeled is approved

• 2003 US files complaint calling approval moratorium illegal under WTO policies

• 2003 New labeling and traceability regulations proposed

NDSU

Extension

Labeling Regulations

Labeling required for:• GMO seeds• Raw products (corn meal) derived from GMO seeds• Refined products (syrup, oil) derived from GMO seeds (new)• Foods made from raw or refined GMO seeds (new)• Animal feed derived from GMO seeds (new)

Allowed contamination (“unintended prescence”) level: 0.9%

Label• This product contains genetically modified organisms.Or• The product produced from genetically modified (name species).

NDSU

Extension

Traceability Regulations

• All businesses along the route must trace the product•Grower, storage units, transporters, processes

• Tracing required from farm to fork

• Businesses must keep track from whom they received the product and to whom they sold it

• Records must be kept for five years

NDSU

Extension

Economic Effects of Industry Policy

McDonald’s and Egg Production

• McDonald’s is the largest purchaser of eggs• Most eggs are produced in large chicken farms

Chickens in caged in very crowded conditions Conditions generally considered “inhumane”

• McDonald’s is requiring 72 inches per chicken Suppliers had to comply by Jan 2003 or lose contract

NDSU

Extension

• Largest purchaser of potatoes in the world• Originally purchased insect resistant GM potatoes• Changed policy over potential consumer objections• Monsanto discontinued production of insect resistant GM potatoes (NewLeaf Potato)

McDonald’s and GE Potato

Industry Policy Dictates ProductAcceptability