December, 1999
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Biotech beer turns off brewing industry

December 28
AP

BISMARCK, N.D. - Charles Ottem would love to see the barley in his fields be immune to disease, but brewing companies worry that beer drinkers might be turned off if genetic engineering made that possible.

``It's something we can't shove down people's throats. We all have to get better at communicating and compromising,'' said Rick Ward, a wheat breeder at Michigan State University. ``The consumer is king, and they will rule no matter what.''

In North Dakota, which leads the nation in barley production, this year's crop was the smallest in more than a decade. A fungal disease called scab has cost farmers in the Northern Plains an estimated $2.6 billion in lost crops from 1991 through 1997 alone.

``Scab, for all practical purposes, has devastated the barley industry in this state,'' said Ottem, a North Dakota farmer and chairman of the state's Barley Council. ``That's the only way we're going to find the solution to all of our disease problems - manipulating genes.''

Barley is used to make beer, but scab-infested barley can affect the taste and cause the beer to gush out of the bottle.

Genetic engineering involves manipulating the genes of a plant. With the growing controversy over biotech food, some overseas brewers already are refusing to buy grain genetically designed to kill pests or withstand herbicides or disease.

In the United States, the brewing industry is still pinning its hopes on a more conventional solution to scab.

``The majority of (research) funds being expended are for traditional breeding programs,'' said Mike Davis, president of the American Malting Barley Association, a trade group for major malting and brewing companies. ``Our general thoughts are that (biotech) research should be pursued as a possible avenue to solve the scab problem.''

At the U.S. Department of Agriculture's Agricultural Research Service facility in Madison, Wis., molecular biologist Ronald Skadsen is trying to create a barley that has antifungal genes in the right place to ward off the scab fungus.

At the ARS facility in Fargo, N.D., geneticist Lynn Dahleen is trying to insert genes into barley that will reduce the toxins caused by scab.

Both say a biotech solution to scab could be as much as a decade away.

``This particular disease has been a bigger challenge than most,'' Dahleen said. ``We don't have a single gene we can breed in that will give resistance.''

Ward, the wheat breeder, said it's too early to tell whether the efforts of Dahleen, Skadsen and others will produce a barley immune to scab.

``We would be remiss to ignore the opportunity to interrogate these complex systems with these very eloquent approaches,'' he said.

Brewers have come to rely more on barley from Canada and the western United States, Davis said. But even if a biotech solution to scab could be found, brewers probably would not rush to embrace it, he said.

``If one was commercially developed, at that time it would have to be thoroughly tested, and a decision made as to whether it could be used,'' he said. ``For any companies selling a food product, they always weigh market considerations.''

Canadian food producers in disarray

December 27
National Post

The battle over genetically modified food has crossed the Atlantic.

Any doubt about that was put to rest last week after Tesco Stores Ltd., Britain's largest supermarket chain, warned suppliers of meat and dairy products, including some Canadian firms, not to use genetically modified grain in their animal feed. While that hardly amounts to a consumer revolt against "frankenfood," it is a shot across the bows for Canadian food producers.

Alarmingly, the industry appears to have been taken by surprise and is in disarray as to how to handle the issue.

Chris Kyte, president of the Food Institute of Canada, an association representing 150 food processing companies, said, "From where I sit, I don't see a big consumer concern over GM foods. I've had five letters, all written by special interest groups, and I am not aware of any company that has gotten more than 10 letters. I think consumers are very comfortable with the [Canadian] food inspection system and food they eat." 

As far as the controversy in Europe, Mr. Kyte said, "Let's face it. It's a great trade barrier for the Europeans."

In any case, he argues, Europe is a small market for Canadian food producers. If it falls off the map, Canada wouldn't notice.

On the opposite side of the spectrum is the Canadian Wheat Board, which is getting set to face what it believes is the inevitable. In a speech last October, Greg Arason, the chief executive of the board, made it clear that it is time for the agricultural sector to start looking at ways to segregate GM crops. "Whether or not the customer has an incorrect or incomplete scientific knowledge, if they think there will be a negative public reaction to a certain product, they simply will not buy it. This is a bottom line that must be recognized."

But Mr. Arason is in the minority.

Many of those contacted for this story refused requests for interviews, referring questions to industry associations (such as Mr. Kyte's) charged with stick handling the issue.

One approach that seems to be gaining momentum is a voluntary labeling system, which, if implemented, would allow manufacturers to identify GM components in their products, in the same way that manufacturers list nutritional components.

The idea, according to Jeanne Cruikshank, regional vice-president of the Canadian Council of Grocery Distributors, is to provide a set of consistent rules so food manufacturers, if they choose, can label their products to identify genetic components.

Coming up with a set of guidelines that makes sense is a difficult problem, she says. First you have to decide what it means to say something has been genetically modified. How much of a GM ingredient do  you need in a product before you have to refer to it on a label? And how far down the food chain do you go? Is it significant if beef used in a hamburger was fed GM grain? And so forth.

But will giving manufacturers the option of identifying GM ingredients in their products put consumers at their ease? Experience in just about every other industrialized country seems to suggest that the food industry is in for a rude awakening.

In Japan, the Kirin and Sapporo breweries have stopped using transgenic maize in their beer and the national tofu manufacturers' association has opted to use only non-genetically modified soy beans in its tofu production.

In Mexico, at least one taco manufacturer, Groupo Maseca, has announced plans to use only non-GM flour.

Closer to home, McCain Foods, one of the world's largest makers of french fries, has been quietly informing potato growers that it will not accept transgenetic varieties.

The coupe de grace came earlier this month as Monsanto Co., one of the world's leading developers of transgenic crops, announced plans to spin off part of its prized crop development business. Analysts  saw the development as a strategic U-turn for Monsanto, which had previously described the business as the foundation upon which it would build its future success.

Now it seems the retreat is turning into a rout. In a remarkable disclosure, Monsanto revealed last week that GM food has been banned from the cafeteria at its head office in Britain.

"We believe in choice," Tony Combes, the company's director of corporate affairs, is reported to have said. He denied it was an embarrassment for the company.

So far, only a handful of crops grown in this country has been genetically modified, mostly varieties of soya, canola and corn. Very soon there will be a lot more. The bottom line is that the cost of establishing dual production systems would be hugely expensive, say observers. The end result would be dramatic increases in food prices.

Soy sauce is not just soy sauce, it seems

December 27
Dow Jones

NARUTO, Japan -- At his family's tiny factory in the heart of Japanese soy-sauce country, Mamoru Otaka has brewed up trouble.

Bottles of his soy sauce are sporting a garish green sticker these days. "NonGMO," it declares -- that is, free of genetically modified organisms. And though Mr. Otaka has labeled only a small part of his output this way, he is roiling the soy-sauce business, stating, "We're throwing a stone into calm water."

Soy sauce is one of the oldest products in Japan, an integral part of its cuisine since the 13th century. Now this ancient industry is grappling with the most modern of controversies: gene-splicing, which has led authorities to order labeling for 29 categories of foods if they have any bioengineered ingredients.

The soy-sauce world thought it would dodge this. The government exempted soy sauce from labeling, because experts concluded it was impossible to tell whether the sauce contained genetically modified ingredients. That is because the fermentation process by which soy sauce is made -- out of soybeans, wheat, salt and water -- breaks up the soybeans' DNA.

But suppose somebody labels his soy sauce anyway, calling it GMO-free? Small soy-sauce producers here have a tough go of it. Thousands have folded in the past 50 years, and a few giants now dominate the $2.1 billion business. In search of a competitive edge, or just a way to survive, a few small producers have decided to play the genetics card. 

This greatly troubles the soy-sauce establishment. Tetsuya Konagai, director of the Japan Soy Sauce Association said, "Consumers' level of trust is very high with soy sauce. We don't want to lose that over something like this." The group is urging brewers to hold off on labeling while it tries to come up with rules.

No one is more establishment than Kikkoman Corp., Japan's biggest soy-sauce brewer. Kikkoman advocates acting as Japanese industries often strive to do at times of disturbing change: in harmony. Even though Kikkoman has a line of organic soy sauce that would qualify as non-GM, it has made a  point of refraining from such labeling. To renegades like Mr. Otaka, "we're telling them that it's better to follow" the group, says Yuzaburo Mogi, the president of Kikkoman, which traces its origins to a business set up by the widow of a samurai around 1630.

Mr. Otaka's firm has some history itself. Otaka Shoyu Co. was founded by his great-great-great-grandfather, Shoemon Otaka, in 1804. Much of the time since then, the company, with less than $6 million in annual sales, has struggled in the shadow of mighty rivals. Its brewery is in the middle of Chiba Prefecture, east of Tokyo, where it is surrounded by major soy-sauce companies, including the original piece of Kikkoman. 

He knows he can't compete with the likes of Kikkoman, which use high-tech machines to control fermentation and, he says, have soy sauce "down to perfection." But when the restaurant clients started calling to ask if Otaka Shoyu's soybeans were genetically modified, Mamoru had a revelation: If he could prove they weren't, there was a market waiting.

In any case, he was annoyed that suppliers had shifted to supplying genetically modified beans without telling him, and that the sauce industry was pressuring everyone to keep mum. "There's a perception out there that you're supposed to keep quiet," he says. "If it serves as advertising, you should be able to advertise it."

Sitting in a cramped conference room with a little altar to the Shinto god of soy sauce, and dressed in a purple warm-up suit, Mamoru explains how he started with his line of organic sauce. He asked the Japanese branch of an Iowa gene-testing company to inspect his organic soybeans to make sure they weren't bioengineered. Then the testing company examined the entire manufacturing process for potential "contamination" with bioengineered beans. It provided a stack of bright-green "Non-GMO" stickers, which Mamoru slapped on bottles of organic soy sauce. He packaged them with other condiments in boxed sets for Japan's winter gift-giving season and sent them off to department stores, where they are selling well.

He also changed soybean suppliers for the soy sauce Otaka Shoyu sells to restaurants, switching to U.S. beans that aren't grown from gene-spliced seed but cost 50 percent more. He plans to leave prices unchanged, figuring no one wants to pay more for soy sauce.

That strategy puts pressure on other small producers. "I wish they wouldn't do such a needless thing," grumbles Hansuke Takahashi, president of Fujihan Shoyu KK. "If someone starts labeling, then we may all have to label, and that raises the price. But soy sauce isn't the kind of thing you could sell at a higher price."

Another tiny rival is unhappy with Mamoru's move for a different reason. Kondo Jozomoto already uses non-GM soybeans, grown locally, and markets high-end sauces. But it fears that a non-GM trend would bid up the cost of its raw materials.

Japan's brewers rely mostly on lowcost, protein-rich soybeans from America, known here as IOM -- for Indiana, Ohio and Michigan.

More and more of those are genetically modified. In 1999, U.S. farmers planted about half of their soybean acreage with seeds altered so the plants could stand being sprayed by a potent weedkiller. That has stirred the ire of environmentalists, some of whom contend one can't be sure the beans are safe to eat.

Thanks to their campaign, Japanese consumer groups are calling for labeling on all soy sauce. One big supermarket chain has recently started labeling for GM ingredients in its store brand. Restaurants are exempt from labeling, but some have begun touting non-GM dishes.

And so, quietly, some small brewers are preparing for a possible soybean war. A brewer called Taihei Co. is producing a non-GM sauce at the request of a Tokyo food cooperative and has displayed its sauce at a trade fair with a discreet non-GM sign. That's as far as it dares go for now. It hasn't pasted on labels, whispers a plant manager, because "there may be pressure" from the soy-sauce association not to.

In Naruto, Mamoru Otaka points to a thick, dark liquid bubbling away in a 30,000-liter steel tank. It's the first batch of soy sauce made from his new non-GM soybeans, he says excitedly. Inquiries are coming in, such as from trading companies proposing to sell his soy sauce in the United Kingdom.

As for playing the genetics card, he has no regrets. "We've been preserving a traditional industry in Japan," he says. "It's the Otaka way to keep making soy sauce the way it always was."

Texas farmers divided over genetically modified crops

Growers consider consumer perception of biotech foods before cutting back

December 25
Dallas Morning News 

Texas farmers are closely watching the widening debate over genetically modified crops. But most aren't cutting back just yet on planting the biotech strains of corn, cotton and soybeans that help reduce their costs of fighting weeds and pests.

Opposition largely has come from the European Union, where activist groups, retailers and consumers want mandatory labeling of foods containing genetically engineered products. Activist organizations operating in Europe have vowed to make it an issue here as well, although the U.S. government has not determined that biotech foods are harmful.

Already, some manufacturers such as baby-food makers Gerber and Heinz have said they would try to keep their products free of genetically modified ingredients. And Archer Daniels Midland Co., an international food-processing conglomerate, has instructed suppliers in the Midwest to segregate biotech grain from that grown conventionally.

That, in turn, has raised anxiety among farmers, mainly in the Midwest, where much of the crops are exported to Europe and elsewhere. Worried that their crops would have nowhere to go, some have decided to cut back on genetically modified seed purchases.

The situation is different in Texas, where most grain is grown for feed rather than for food or export. And no grain elevators have reported that they are segregating grain. Still, some farmers are wary.

"I'll do whatever is necessary to make our product agreeable to the consumer," said Harlan Huffman, who farms with his wife, Hope, and son, Kevin, near McGregor in Central Texas. "In some cases, perception is reality. I'm very concerned about what our customers want and say."

The stakes are high both for farmers and biotech companies. More than half of the corn, soybeans and cotton grown in Texas is genetically altered. And companies such as Monsanto Co. and DuPont Co. have spent hundreds of millions of dollars to develop seeds with traits that protect plants from pests, herbicides and pesticides.

In Texas, the most common biotech crop products are "Roundup Ready" for cotton, corn and soybeans, which guards crops against the powerful herbicide Roundup; and various forms of so-called "Bt" cotton and corn. The latter stands for Bacillus thuringiensis, a bacterium and natural pesticide.

Bt cotton has a built-in resistance to pests such as bollworms and budworms. Bt corn hybrids protect against corn borers. Both reduce the need to spray chemicals to kill the insects, making crop production more environmentally friendly, proponents say.

Kevin Huffman, who's taking over his parents' crop operation, plants Roundup Ready corn and soybeans and has no plans to cut back. He can spray Roundup on top of the crop without hurting it, alleviating the need to spot-spray or hoe weeds.

On soybeans, he saves about $5 an acre in herbicide costs. Spread across the state's 400,000 acres of soybeans, that's a potential annual savings of around $2 million.

"My belief is that it is completely safe," he said. "When I look at genetically modified crops, I'm looking at dollars and cents, and what I'm going to gain from it."

While the biotech crops have not been proved harmful, there are plenty of concerns.

Some observers worry that insects could build up a resistance to bio-engineered crops, and some scientists believe that the genetic process could have the unintended effect of boosting natural toxins or reducing nutrients in some foods. Others fear that some people could be allergic to certain proteins introduced into biotech foods.

Several years ago, soybeans altered with a gene from a Brazil nut caused a reaction in individuals who were allergic to Brazil nuts - and therefore were never marketed.

Earlier this year, researchers at Cornell University determined that pollen from Bt corn can kill monarch butterflies, a cousin of the corn borer. Greenpeace activists seized on the study and demonstrated against Bt corn in Europe - wearing butterfly costumes.

"I think all of our farmers are becoming concerned about the attention the issue is getting, and whether or not they are going to be able to market their crop once it's grown," said Gene Hall, a spokesman for the Texas Farm Bureau, the state's largest farm organization.

Agriculture Secretary Dan Glickman announced a program in July designed to shore up public and farmer confidence in the technology, while also providing for independent scientific review. But he's acknowledged that if American consumers ultimately want their foods labeled, they're entitled to it.

"I think there is concern among producers that the dialog is more fear-based than science-based," said Steve Verett, executive vice president of Plains Cotton Growers Association in Lubbock. "The level of concern is much higher now than it was six months ago."

Most of the cotton grown on the West Texas high plains is modified Roundup Ready, and Mr. Verett doesn't expect any significant reduction in 2000.

However, he thinks the issue is making producers "assess the need for it."

In a Monsanto survey of about 100 Texas cotton producers who have used biotech seed, 97 percent said they intended to replant Roundup Ready, and 94 percent would once again go with Bt cotton, says Doug Dorsey, the company's south region marketing manager.

"We're pleased with what we've sold to date," he said, adding that it's too early to tell what producers actually will do at spring planting.

Another survey, this one of grain elevators across the South, showed that only a handful of elevators bothered to segregate genetically modified corn and soybeans this past harvest, or to even ask farmers if they used the technology, Mr. Dorsey says.

Wayne Martin, president of PYCO Industries, which operates a cottonseed mill in Lubbock that produces cooking oil, says it would be impossible to segregate cottonseed produced from Roundup Ready plants.

The decision by Archer Daniels Midland to ask elevators to separate biotech grain "kind of puts up a red flag" to producers, says Hill County agricultural extension agent Bill Buxkemper. He says some seed dealers in his area are booking fewer Roundup Ready soybean seed sales for the coming year, and says there also may be some reduction in biotech cotton and corn seed sales.

The situation is less clear in the prime corn-growing region of the Texas Panhandle.

"There's a lot of confusion out there right now," said Jim Schrib, in the Amarillo office of seed company Pioneer Hi-Bred International, part of DuPont. "It doesn't appear right now that they [farmers] are coming out of genetically modified crops."

Texas grain elevators would be hard-pressed to keep biotech grain separate. For one thing, there's apparently no reliable test to show whether a crop has been genetically modified. Elevators would have to take the farmer's word for it. And even if a farmer plants nonbiotech crops, they could be dusted by pollen drifting over from a neighbor's farm that genetically modifies crops.

"We're not going to segregate until we find a way to test for it," said Joe Mueck, general manager of Williamson County Grain in Taylor. He says he's been checking the Internet for companies that are developing testing. "Down the line, we might [segregate] if enough people ask for it."

Some experts believe that it may not get to that point in Texas. Much of the grain that isn't grown for feed is exported to non-European countries, such as Mexico, says Dr. Cloyce Coffman, a Texas Agricultural Extension Service agronomist.

But there's this potential wrinkle: Some biotech opponents are beginning to raise objections to cattle being fed with genetically modified corn feed.

"If it turns out that beef is boycotted," Dr. Coffman said, "that could be a different ballgame."

Monsanto's Shapiro seen as laid-back visionary

December 20
Reuters

As head of Monsanto Co., the life sciences firm which agreed on Sunday to merge with drug group Pharmacia & Upjohn Inc., Robert Shapiro has earned the reputation as a laid-back manager who encourages co-workers to call him "Bob."

Shapiro, 61, prefers plaid shirts and khaki pants to a suit and tie. He works in a cubicle rather than a corner office.

Yet underneath the relaxed attitude lies his unwavering support for the life sciences strategy he helped to pioneer.

Once seen as a visionary for his commitment to developing the life sciences model that combines pharmaceuticals with nutritional and agricultural products, analysts now question whether Shapiro may have been too far ahead of his time as fierce opposition to Monsanto's biotechnology spreads.

Shapiro joined Searle, Monsanto's pharmaceutical business, in 1979 and also served as head of Monsanto's NutraSweet artificial sweetener business and its agricultural unit before being named chairman and chief executive in 1995. 

With the Pharmacia merger, Shapiro would serve as chairman but relinquish control of the day-to-day operations. He plans to step down as chairman after 18 months, ending a career with Monsanto that spanned two decades of rapid change in the pharmaceutical and agriculture industries.

He is perhaps best-known for promoting the life sciences model, a strategy that drew praise from analysts but has hurt Monsanto's share price this year as opposition to genetically modified crops mounts in Europe, Asia and to a lesser degree in the United States.

In fact, in a speech to Greenpeace in October, Shapiro acknowledged that Monsanto appeared arrogant as it charged ahead with its genetically modified crops without first assessing public opinion and  explaining the benefits.

Biotech foes contend there has not been enough research to conclude that the crops are safe for the environment and for human consumption. Last week, biotechnology opponents sued Monsanto, alleging it rushed the genetically modified crops to market without first ensuring they were safe.

Earlier this month, rivals Novartis AG and AstraZeneca Plc. announced plans to break off and merge their agribusinesses, a move analysts said may signal the end of the life sciences model.

Just two years ago, Shapiro was busy spending about $8 billion to buy genetically modified seed companies, turning Monsanto into a leading producer of the technology.

The seed company purchases left Monsanto in need of money, and it turned to cash-rich American Home Products Corp. as a merger partner in 1998. The deal fell through later that year -- analysts blamed the demise on differing management styles -- and Monsanto's stock price tumbled from near $60 to the mid-$30s.

After the collapse of the American Home Products deal, Monsanto remained at the forefront in promoting biotechnology, and Shapiro gave several speeches touting the possibilities for improved farming methods. After one such speech in San Francisco last year, Shapiro fell victim to the pie-throwing environmental activists Biotic Baking Brigade, which threw tofu creme and sweet potato pies at his face.

From there, opposition snowballed, and soon biotechnology had made Monsanto a hated household name in Britain. The genetically modified crops that Monsanto designed to improve crop yields and help feed the world drew the fire of environmental activists, who dubbed products made from the crops "Frankenfoods."

In a speech to Greenpeace in October, Shapiro himself acknowledged that Monsanto inadvertently "irritated and antagonized more people than we have persuaded" by pushing its vision of biotechnology too quickly.

"Our confidence in this technology and our enthusiasm for it has, I think, widely been seen -- and understandably so -- as condescension or indeed arrogance," Shapiro said.

"Because we thought it was our job to persuade, too often we forgot to listen," he said.