Industry Decisions May Hold Key in Biotech Future

May 27, 2004

COLUMBUS, Ohio — The recent setbacks in the global introduction of new biotech crops may be setting a precedent for how genetically modified (GM) crops will be produced and marketed in the future. Ohio State University agricultural economists speculate that this latest debate regarding biotech crops may, ultimately, not result in the reduction of biotechnology, but simply put a new production focus on biotechnology. “It seems to me that an issue being raised is whether the development of GM characteristics in plants will shift away from enhancing yield and other production characteristics, toward enhancing characteristics that benefit consumers directly — such as medicinal characteristics,” said Carl Zulauf, an Ohio State agricultural economist with the Department of Agricultural, Environmental, and Development Economics. “Almost daily we read about the medical impact of crop and livestock characteristics on human health. Maybe this latest debate on GM crops will shift its focus away from high yields and weed control to developing characteristics that consumers want.” Monsanto, the United States leader in GM crop production, recently halted its global introduction of a Round-up Ready (herbicide-resistant) wheat plant, in response to international resistance and growing concerns from U.S. producers regarding market share setbacks. Other companies, such as Syngenta and Bayer CropScience, have also backed off in their introduction of GM crops, such as Bt corn and a GM sugar beet to European markets. These events, along with other issues surrounding GM crops such as international regulations, are raising questions about where the future of GM crops is headed. “The crops that are currently being introduced have no tangible benefits for consumers and some are saying why should we bear all the risk for something that has no direct benefit to us whatsoever,” said Ian Sheldon, an Ohio State agricultural economist, who added that the issue with GM wheat is important because it’s a crop directly consumed by humans. “You can make claims about pesticide use reduction or yield gains, but most consumers, in Europe especially, don’t see any benefit to these crops right now.” Both Sheldon and Zulauf agree that the issue of GM foods has mainly to do with consumer sovereignty. That is, consumers decide what they want and don’t want to buy and then producers grow and market products to meet consumer desires. And when consumers, specifically Europeans and Asians, continue to butt heads with companies on GM products, it ultimately impacts markets. “There is a substantive divide between the U.S., which is generally accepting of GM foods, and Europe (Western Europe, especially), which is not accepting of GM products,” said Zulauf. Sheldon, also with the Department of Agricultural, Environmental, and Development Economics, added that most surveys indicate about 70 percent of Europeans don’t want GM crops or are concerned about GM products, whereas in most U.S. surveys the feeling is just the opposite. “Markets are made up of consumers and supplies and, interestingly, this is a case where producers in North America are very concerned about losing market share,” said Sheldon. “There’s an old saying that consumers are always right and I think producers recognize even if the technology would save them time they are not willing to lose that market share.” Additionally, the United States does not dominate the market share in wheat. Though the world’s leading exporter at 26.5 million metric tons, as projected by the U.S. Department of Agriculture for the 2004-2005 crop year, the U.S. only ranks fifth in the world in wheat production. The European Union’s 25 member states (EU 25) are the largest producers of wheat, followed by China, the 12 member countries of the Former Soviet Union (FSU 12) and India. “It’s a matter of staying competitive. Countries have a lot of alternatives for buying wheat,” said Zulauf. “If we are going to be an exporter and a large and increasing share of the world’s population doesn’t want GM crops, it’s going to put the U.S. at a competitive disadvantage if we continue to go in the direction of GM crops. Given the Europeans’ stance and the fact that major Asian importers seem to be aligning themselves with the European point of view, we could essentially shut ourselves out of the market if we try to export GM wheat.” Market shares and consumer sovereignty may seem to clearly explain the issue, but the debate over GM crops is not so black and white. “It’s a food safety issue, an environmental issue, an ethical/cultural issue, religious issue, development issue, issue with trade laws — and they are all tied up in the globalization debate,” said Sheldon. “Research in agricultural biotechnology is slowing down. It’s in limbo until some of these issues are resolved, if they are ever resolved.” One issue is how the World Trade Organization will approach consumer-related GM foods in the future — if the organization will continue to stick to a scientific stance or if consumer ethics will become part of the decision-making process. Additionally, European regulatory issues come to the forefront of any decision regarding GM products. Even now, the debate surrounding GM foods remains in flux with new European labeling laws that were put into effect in April and the European Union’s recent decision to approve the sale of GM sweet corn — lifting a six-year ban that had been challenged by the United States and other large GM exporters. “This is a fascinating interplay of science, technology, politics, consumer sovereignty and farming behavior. All of these major players will determine how we look at ourselves. Right now they are butting heads and colliding with one another and it will be interesting to see how we as a global society work our way through this,” said Zulauf. “Whichever scenario we coalesce around as a global society will have major impacts upon the U.S. food and fiber sector.”

Candace Pollock
Ian Sheldon