In this article we will discuss about:- 1. Introduction to Agricultural Biotechnology 2. Detailed Study 3. Growth 4. Challenges 5. Impact of Research 6. Trends 7. Development 8. Consumer Acceptance 9. Future Applications.
Contents:
- Introduction to Agricultural Biotechnology
- Detailed Study of Agricultural Biotechnology
- Growth of Agricultural Biotechnology
- Challenges of Agricultural Biotechnology
- Impact of Research on Agricultural Biotechnology
- Trends of Agricultural Biotechnology
- Development in Agricultural Biotechnology
- Consumer Acceptance towards Agricultural Biotechnology
- Future Applications of Agricultural Biotechnology
1. Introduction to Agricultural Biotechnology:
One of the oldest large-scale applications of biotechnologies by industrial societies was the purification of waste water through microbial treatment in the 19th century – modern, Mendelian plant breeding has, since 1973, been increasingly influenced and driven by new molecular biology techniques. This transformation, which is influencing the structure and location of global agricultural activities, has not been studied in any comprehensive way.
This transformation is clearly visible in western Canada, where plant, animal and microbial products and processes are the base of the modern regional economy. In the past, western Canada’s competitive position in agri-food production was based on high-quality land and capital-intensive production processes. That now appears to be changing, with knowledge becoming the defining factor in much of the food industry.
Commercial varieties and an increasing proportion of the production of canola were produced in Saskatoon and the surrounding farming areas in western Canada. Nevertheless, after the first breakthrough, the research into and production of canola began to disperse to other locations.
With the establishment of private intellectual property rights and the development of new biotechnology processes in the 1980s and 1990s, private seed and agrochemical companies began to invest in and to undertake substantial research and development in the canola sector around the world.
Economic theory suggests that innovation-driven industries like this are inherently imperfectly competitive because large up-front research and development costs and low marginal costs yield rapidly increasing returns to scale in production.
When combined with the presence of spillovers that are localized, the theory suggests that over time the research, commercialization and even production activities of an innovative industry will converge on fewer locations, or even a single location. Thus, the ‘myth’ of Saskatoon and Saskatchewan as the centre of the industry may be actually becoming a reality.
This study examines relevant economic theories, reviews the scientific and historical base for the industry uses scholarly citations to investigate the evolution of canola research across both time and geography, analyses the commercialization and adoption of canola in western Canada and the world, and estimates the costs and benefits of innovation in the industry. This work is then used to examine prospective trends and to investigate the role of public policy in supporting and encouraging commercial success in the worldwide canola sector.
2. Detailed Study of Agricultural Biotechnology:
Knowledge-based growth and development theory has been articulated, debated and taught for more than 15 years but has remained for the most part simply a theoretical concept that has been applied in only a limited way.
The few cases where it has been used, such as examining Silicon Valley and other industrial agglomerations, have not included any agri-food examples. This may be partly understood given the prevailing view that agri-food sectors are low tech and not focal points for innovation.
Before beginning this research, the authors undertook a literature search to determine what economic or policy work, if any, had been done on canola. A search of the ISI Social Sciences Citations Index showed that only 53 social science journal articles written by about 35 researchers had been produced between 1980 and 1996 relating to canola. Of those written by economists, many were simply market assessments produced for annual outlook conferences and then republished as part of proceedings.
The other major type of research undertaken focused on market issues, such as the impacts of tariffs and exchange rate variability on trade. On further investigation, a number of papers undertaken in the early period estimated the gains from research into new canola varieties. All of these papers were completed before canola was granted GRAS status in the US and ultimately became the third largest source of edible oil in the world, planted by hundreds of thousands of farmers worldwide.
The fact that these papers were addressing marginal oil that had only limited market access at least partly explains why the research was seldom cited by others. The 53 papers identified in the citations search produced only 18 citations between them; an average group of papers of this type would have been cited 57 times. Since then, there has been little work done on the nature and impact of innovation in the canola sector. In the past few years, interest has risen.
A number of graduate students at the University of Saskatchewan have begun to investigate the research benefits from the introduction of new varieties of canola. More recently, Carew undertook a partial analysis of the impact of intellectual property rights on canola. Elsewhere, a group of sociologists led by Lawrence Busch at Michigan State University has used a sociological approach to examine the research institutions and processes in the public breeding programmes.
Given the major changes that have occurred in the agri-food sector, and more particularly in the canola industry, it is a subject ready and amenable for analysis. Canola exhibits some highly relevant features that made it a logical choice for investigation.
First, the industry has undergone two large innovation periods, first in the 1970s as rapeseed was converted to canola and more recently as biotechnology has enabled more targeted trait introduction.
Secondly, the two transformations were managed by different lead actors. Unlike maize, cotton and soybeans, where private activity has been dominant for decades, canola started out as a publicly managed sector and now is predominantly privately managed. When biotechnology is introduced into the traditionally publicly led breeding programmes for cereals, pulses and small crops, they may face similar circumstances as canola.
Thirdly, although much of the industry has been privatized in the past 15 years, it remains relatively open to investigation. Many of the key scientists and business leaders in the sector began their careers in the public sector and still appreciate the value of exchanging information about what they are doing.
One notable example is the annual industry research committee meetings chaired by Keith Downey of Agriculture Canada, the acknowledged ‘father’ of canola, where firms and public agencies share information about what they are doing in their laboratories and greenhouses.
3. Growth of Agricultural Biotechnology:
Professor Peter Drucker has argued that the basic economic resource – “the means of production”, to use the economist’s term – is no longer capital, or natural resources (the economist’s “land”), nor “labour”. It is and will be knowledge.’ Western Canada has been labelled the ‘breadbasket’ of the world because of the inherent competitive position of its soils and the accumulation of labour and capital in the farm industry. USDA studies have shown that on that basis, Canada has a comparative advantage in producing wheat, canola and some red meats.
The knowledge explosion, however, is challenging western Canada’s comparative advantage for agri-food production. It appears, as Grossman and Helpman argue, that comparative advantage is endogenously generated and evolving over time. As the rate of innovation accelerate, the possibility of firms, sectors or areas losing existing or gaining new comparative advantages increases.
Land, labour and capital were the key assets for growth. In the knowledge economy, the key asset is innovation – the ability to develop new ideas, products and organizational structures by combining existing ideas, products and structures in new ways.
Agricultural policy has traditionally been modelled on the assumption that agricultural markets are perfectly competitive. Research, production and marketing analyses all tend to take as given that the agri-food sector produces ‘commodities’ which are sold in markets characterized by perfectly competitive features. When there is a choice in specifying a model, economists inevitably choose agriculture or food to be the competitive product.
This model, however, does not explain recent agri-food development, which is characterized by increased innovation, more tightly integrated production systems and two-way trade in differentiated products. Douglass North, in his recent Nobel lecture, concludes that ‘neoclassical theory is simply an inappropriate tool to analyse and prescribe policies that induce development. It is concerned with the operation of markets, not with how markets develop’.
The challenge is to find an appropriate theoretical specification for agriculture, which explains what has been happening in the agricultural and food sectors. The purpose of the following exposition is not to theorize for its own sake but to find the threads of economic theory from other investigations and to weave them into an explanatory framework that will help policy makers to understand the dynamics in the sector and examine and compare alternative policy options. While a prototype fax machine is an invention, the millionth fax machine in use marks a transformative innovation.
Innovation most frequently occurs within organizations whose aim is to transform creations into socially valued products, and whose success is marked by the ease in which creations are absorbed into and persist in society. Innovation is characterized by the fact that society always reshapes what it uses; in turn, the ability to renew innovation is dependent on understanding the changing context in which successive innovation occurs. Innovation is thus a creative activity that takes place within an organizational and a social context and has organizational and social consequences.
Three aspects of innovation – a creative activity, an organizational and social context, and organizational and social consequences – tend to concentrate innovations in business, organizations and the economy in clusters in which new knowledge and skills complement imaginative industry leadership, all of which are supported by active partners, including communities and governments. This pattern is frequently seen in the innovation corridors of Silicon Valley, Boston, Austin, Cambridge and Bangalore.
Agri-food systems, in particular, are increasingly driven to innovate to improve cost competitiveness and to differentiate their products and processes. In doing so, they create de facto monopolies. Much of this innovation is ‘knowledge-based’, which creates two self-supporting competitive features. First, knowledge-based innovation involves learning-by-doing, which works to create barriers to imitators as they are only able to use the technological innovation after they have gone through a learning process.
Secondly, because many types of knowledge are hard to protect and exploit, there is significant potential for applied science spillovers to others in the sector. In the first instance, the barrier to competitors helps to secure a better return to innovators while, in the second, the whole economy (regional, national and international) benefits by the externality of the innovation. Both tend to encourage restructuring by innovative enterprises.
The application of information technologies (IT), in concert with biotechnology techniques, creates incentives for industries to ‘industrialize’ by integrating their production chains, linking markets with genetics and coordinating the various production processes. In the past, technology was such that the only way to manage market risk was by direct vertical ownership, a process often constrained by shortages of capital and management ability.
With IT now ubiquitous, the cost of acquiring the information to manage a production value chain has dropped dramatically. In the past, commodity markets typically involved arms-length trades between buyers and sellers, with price as a major deciding factor. Now, branded, differentiated products provide the base for long- term, one-to-one buyer-seller production and marketing chains. In short, the industry needs to be examined in the context of movement of product through the production chain rather than as exchange between uncoordinated firms and sectors.
As a result, trade is no longer exclusively based on traditional factor endowments; comparative advantage has become dynamic. Knowledge-based activity (e.g. research, marketing and logistics) creates significant potential for sectors or countries to develop new competitive and comparative advantages, less dependent on relative endowments of labour and capital. As sectors industrialize and innovate, the product life cycle has shortened to years rather than decades.
Recognizing this, firms with innovative products or processes are driven to expand their markets by exporting and thereby capitalize on their advantage during the period in which they are the only suppliers of that product. The end result is that the flow of trade can be influenced by the actions of sectors and governments. Furthermore, although there are still potential gains from trade, the presence of imperfectly competitive enterprises removes the certainty that both parties in the trade will share the gains.
By re-introducing time, institutions and space into neo-classical economics, economic theorists have begun to model more completely the ‘imperfectly competitive’ markets that we see evolving in the agri-food sector. This modelling approach has been applied in four specific areas of theory – growth, institutions, trade and location. The resulting synthesized theory has significant potential to explain more fully recent developments in the agri-food sector.
One can start with the recently renewed interest in growth theory and innovation in the economy. The traditional growth model developed by Solow posits that national growth is a function of the accumulation of labour and capital, with technological change exogenous to the model. Given that labour supply is largely a function of population growth, the only stochastic variable is capital accumulation, which is a function of the marginal product of capital and the inter-temporal discount rate.
The theory posits that the marginal product of physical capital declines as the ratio of capital to labour rises, so that the incentive to invest declines as an economy grows. Given that trend, at some point capital investment will converge to a constant, with the result that long-term economic growth stabilizes at the rate of growth in the labour force. Both international GDP levels and growth rates should converge due to this process.
The evidence is that something is missing from this specification – growth in per capita incomes has been sustained globally and nationally for long periods above the rate of growth in labour (studies suggest that the Solow model only explains about between 20% and 50% of measured growth) and performance has varied greatly from country to country.
Another deficiency of the Solow model is that it does not explain the role of firms in the growth process. Under perfect competition (a basic assumption in the model), firms are unable to recoup their investments in innovation because their technology is completely transferable and profits will be bid away. Without the possibility of profit, there is no incentive to innovate.
The endogenous growth model starts by re-introducing time to the analysis. Most of the new growth theorists start from Schumpeter’s perspective that otherwise outwardly perfectly competitive firms pursue innovation to achieve monopoly profits during the time required for imitators to catch up. Schumpeter argued that in practice technological change is a strategic response by firms attempting to capture or create markets through product creation and differentiation.
New products or new varieties of products create monopoly positions for the innovator, which allow the innovator to reap monopoly rents. But the existence of those rents creates incentives for other firms to imitate or innovate, either to match or to leapfrog their competitors. Thus monopoly rents from innovation are continuously under threat and likely to be of short-term duration. Schumpeter referred to this dynamic process as ‘creative destruction’.
In this model, the focus is on innovation, which is the firm-based process of investing time and other resources in the search for new technologies and processes. Grossman and Helpman argue that innovation is undertaken for two basic reasons – to reduce costs and to develop a new product that exhibits different quality characteristics (i.e. vertical innovation) or that provides variety (i.e. horizontal innovation). Regardless of the reason, innovators will continue to innovate as long as they expect to earn a return on their efforts.
The new growth theory distinguishes innovations by two characteristics – rivalry and excludability. Rival innovations result in goods or services that can only be used by one person at one time (such as a consumer durable or personal service). Non-rival innovations involve an output (usually knowledge) that for little relative expense, or in some cases no cost, can be disseminated to and used by every producer in a country or the world, and no one’s use is limited by any other’s use.
Excludability (sometimes referred to as separability) measures whether the innovation is protected from widespread use by legal means (e.g. patent) or whether its adoption is limited by industrial organization requirements or climate. If it is excludable, then the innovator can appropriate all the benefits from the innovation. If it is not excludable, then the innovator cannot get paid for his innovation.
The traditional case of rival innovation, with or without excludability, typifies the Solow growth model, with decreasing returns to scale and ultimately a slowing in growth. As Grossman and Helpman observe, there is limited consumer demand, so that as the number of product innovations rises, the average sales per variety will fall. Eventually profit per innovation will stabilize and innovation will converge to a stable path.
Before the introduction of plant breeders’ rights in 1990, almost all of the research on canola varieties was undertaken by the public institutions. Analysis by Nagy and Furtan showed the internal rate of social return to canola research in the 1980s was about 100%, which suggests that there was too little investment at that time.
With the introduction of intellectual property rights for agri-food innovations (e.g. plant breeders’ rights and patents) and the entry of private investment, the number of new varieties has risen sharply. Undoubtedly that should, over time, reduce the internal rate of return on canola research and at some point innovation yielding rival, excludable varieties may reach a saturation point. As more than 190 varieties are now available for planting, this point may be approaching.
Grossman and Helpman conclude that the stable rate of innovation ultimately is positively correlated with the taste for variety (e.g. different soil and climatic zones) and the size of the economy and the efficiency of labour, and will be negatively correlated with the inter-temporal discount rate.
The more interesting case is where the innovation creates a non-rival product – either blueprints or applied science. If the firm that develops and owns the improved process acts like a pure monopolist and does not allow any other firm to use it (e.g. they don’t license it), then that innovation would tend to exhibit decreasing returns to scale, as in the case of the rival innovation.
Ultimately it could stifle innovation and potential growth. Some market participants expressed concern that Calgene’s US patent on Agrobacterium tumefaciens brassica transformation and Plant Genetics Systems’ patent on a hybridization system could lessen competition and lead to this result.
So far, however, no firm has been able to develop a patented process that has been an effective block to other market participants. Although economists have modelled the effect of the general or applied science innovations differently, the results converge on a common view. The new growth theory assumes that at least part of the non-rival knowledge accumulated is non-excludable. With technological change – described by Romer as an ‘improvement in the instructions for mixing together raw materials’ – non-excludable knowledge spills over into the economy as a whole and raises the marginal value of new innovations.
Hence, the positive externality associated with private investment leads to a sectoral or national production function with increasing returns to scale. In essence, the rate of growth in the economy rises with the amount of resources devoted to innovation activity (i.e. R&D, which is in turn a function of the size of the economy), the degree to which new technology is not excludable (i.e. the higher the degree of monopoly the less innovation, or, conversely, the less it is excludable, the greater are the spillovers) and a lower inter-temporal discount rate (i.e. the time horizon for the investors).
Two aspects of this theory suggest that competing firms, and as a result industry, will tend to concentrate in a few locations. First, if firms innovate to earn monopoly profits, it is important to determine the possible scale of monopoly profits and to investigate how they will be used.
If knowledge-based innovation is excludable solely because of legal constraints, namely patents, then the period of monopoly profits will only last as long as the patent. On the other hand, if knowledge-based innovation involves extensive learning-by-doing, there would be extensive fixed costs of entering the industry.
Given that knowledge-based innovations are usually transferable at low or no marginal cost, this creates significant economies of scale, which yields declining average costs and a major barrier to imitators. This tends to extend the period of monopoly profits. Assuming innovators are rational, they will recognize that over time their competitors will either innovate to imitate or to leapfrog the current monopolist, thereby bidding down or eliminating the monopolist’s source of market power and monopoly profits.
So, innovators will be driven, first, to expand production and maximize profits during the period of monopoly and, secondly, to use some of these monopoly profits to continue to innovate to keep ahead of their competitors.
Having monopoly profits allows the innovator to invest a greater amount in R&D and ultimately to widen the gap between it and the nearest competitor. The imperative to innovate has, in practice, tended to keep research and production units linked together in one or at most a few locations, in order to capitalize on the resulting synergies.
Secondly, although knowledge is a non-rival good among all producers worldwide, it might, at least in the short-run, be excludable between jurisdictions for a variety of reasons. In the agri-food industry, for instance, climate, soil characteristics, microbial communities and industrial structure all create natural or man-made barriers to transferring technology between jurisdictions.
4. Challenges of Agricultural Biotechnology:
The first aspect of the paradox is that despite the increasing availability of food, approximately 800 million people out of the global population of 6 billion are food insecure. They dwell among the 4.5 billion inhabitants of Asia (48%), Africa (35%) and Latin America (17%). Of these 800 million people, a quarter is malnourished children.
Children and women are most vulnerable to dietary deficiencies. Dietary micro nutritional deficiencies accompany malnutrition. Vitamin A deficiency is prevalent in the developing countries and it is estimated that over 14 million children under 5 years of age suffer eye damage as a result.
Up to 4% of severely affected children will die within months of going blind and even mild deficiencies can significantly increase mortality rates in children. Iron deficiency affects 1 billion people in the developing world, particularly women and children and its effects are compounded by common tropical diseases.
The second aspect of the paradox is that food insecurity is so prevalent at a time when global food prices are generally in decline. Over the period 1960-1990, world cereal production doubled, per capita food production increased 37%, calories supplied increased 35% and real food prices fell by almost 50%.
The basic cause of the paradox is the intrinsic linkage between poverty and food security. Simply put, people’s access to food depends on income.
Poverty is both a rural and an urban phenomenon. Over 1.3 billion people in developing countries are absolutely poor, with incomes of US$1 per day or less per person, while another 2 billion people live on less than US$2 per day.
Most of them live in the low-potential, rain-fed rural areas of the world. With increasing urbanization, a higher proportion will be living in the cities of the developing countries by the mid-21st century. Ensuring their access to sufficient nutritious food at affordable prices is also an important component of global food-security strategies.
Agricultural research needs to respond to both of these challenges, so as to improve the livelihood of families who live in rural areas and ensure the increased availability of nutritious food at affordable prices for the urban dwellers.
Types of Challenges of Agricultural Biotechnology:
i. Global Challenges:
The most important global challenges are as follows:
a. Reducing poverty, especially in rural areas.
b. Improving food security and reducing malnutrition.
c. Providing sufficient income for the rapidly increasing numbers of urban poor.
d. Mobilizing new technologies for environmentally sustainable development.
The global problems facing agriculture are described by Swaminathan:
Firstly, increasing population leads to increased demand for food and reduced per capita availability of arable land and irrigation water.
Secondly, improved purchasing power and increased urbanization leading to higher per capita food grain requirements due to an increased consumption of animal products.
Thirdly, marine fish production is becoming stagnant.
Fourthly, there is increasing damage to the ecological foundations of agriculture, such as land, water, forests and biodiversity, as well as climate change.
Finally, while dramatic new technological developments are taking place, particularly in biotechnology, their environmental and social implications are yet to be fully understood. World food production challenge.
ii. Challenges of Food Production:
The food production increases over the past 40 years have been achieved largely by increasing productivity of cereals, expanding the area of arable land and massive increases in fertilizer and pesticide use.
To meet the production challenges of the next decades, there is a need to:
a. Increase biological yields of the major food crops.
b. Improve productivity of livestock.
c. Improve nutrient content in the diet, especially of women and children.
d. Intensify agriculture, since land for agriculture is increasingly scarce.
e. Manage natural resources in a sustainable way.
iii. Challenges of Intellectual Property Management:
Many R&D programmes face the challenge and opportunities of managing intellectual property, Partnerships are critical to effective management and investment in intellectual property protection.
a. Learning to manage IPR is a critical issue for many countries and institutions.
b. Intellectual property management includes clarifying the role of institutions, developing an inventory of intellectual property, developing owner ship of intellectual property where appropriate, undertaking technology transfer and marketing the intellectual property.
c. Human resource development is a major need in this area.
d. Benefit sharing with holders of indigenous knowledge and genetic resources is an important issue that must be addressed.
It is most important to build up human resource capacity in IPR for scientists, managers, policy-makers and society as a whole. Societal changes are reflected in changing IPR requirements and further changes are likely to result from continuing international negotiations on IPR and finding ways to reflect the contribution of indigenous knowledge.
5. Impact of Research on Agricultural Biotechnology:
The ultimate question that any study of development must ask is ‘so what?’. In essence the answer is at least partly determined by qui bono (or who benefits). It examines the theoretical approaches to determining winners and undertakes some estimation of the gross benefits from canola research, and the distribution of those benefits between consumers and producers, and more specifically between farmers and others in the supply chain. We can, and do, make a few observations with confidence.
First, the gross returns to canola research have been dropping with each successive year, to the point that the total social returns to canola research cannot justify the level of investment. The estimated internal rate of return is now less than the opportunity cost of this capital. Although some actors are, and will, continue to capture above-average returns on their efforts, many actors receive little or none of the benefit.
Secondly, some of the direct benefit and much of the indirect benefit of the innovations for canola have been captured by consumers. Given the distribution of consumption, that means that part of the benefit has been distributed around the world, wherever the ultimate consumer lives.
Thirdly, the returns to research that remain in the supply chain are not adequate to sustain the current level of private investment.
Fourthly, there are some definite or indisputable losers from the innovations in canola. In particular, producers of other edible and industrial oils, such as palm and coconut producers, have lost both market share and revenues as relatively high-quality industrial rapeseed and canola oil products have pushed them from certain higher-value markets.
Finally, some groups have indeterminate benefits. Farmers, for example, have invested heavily in both research (through check-offs) and in adopting the new technologies, yet the small returns mooted to be there may prove to be only transitory.
Meanwhile governments, which have funded almost all of the public research and a significant share of the private effort through grants, subsidies or tax credits, have been so far unable to extract a return directly for their innovations and have some difficulty taxing the private profits from the innovations, due to the multinational nature of the industry.
Modern biotechnology represents very sophisticated technological innovations at the frontiers of science, embedded with economic and social implications. It involves techniques capable of altering the functions and characteristics of living organisms.
As its application across medical, pharmaceutical, chemical, forestry, fishery, environmental and agricultural uses is rapidly growing the potential economic implications of modern biotechnology for the industrial landscapes are enormous.
Specifically, modern agricultural biotechnology has already been used to alter the function and characteristics of agricultural crops and considerable research is under way that is aimed at applying the techniques to more varieties of agricultural crops. Yet, while applications in other sectors have been readily accepted, agricultural biotechnology has been controversial.
The objective is to define what is meant by genetically modified (GM) agricultural crops, to describe both current and future applications and to assess the factors that have made the consumer acceptance of GM crops controversial.
There are two important caveats. First, this description is not intended as a comprehensive introduction to biotechnology. Secondly, the science is discussed to the extent necessary to provide background to the regulatory policy debates associated with the development and integration of regulations.
6.
Trends of Agricultural Biotechnology:
i. Production Trends:
As a result of the green revolution, yields of maize, wheat and rice in developing countries doubled between 1961 and 1991. In Africa, the annual increase in yield per hectare for maize, wheat and rice (1.3%) is less than a third of that achieved in Asia (4.5%). This presents a significant opportunity to raise cereal production in Africa through yield increases. Food-animal production in developing countries is increased by 15% in the 1980s, whereas the global increase was 24%.
Consumption Patterns:
Demand for food in developing countries is met by both local production and imports. Currently developing countries are net importers of 88 million tons of cereals per year at a cost of US$14.5 billion. In Africa, the current annual production shortfalls of cereals, met by imports, is about 21.5 million tons. It is predicted that these shortfalls will increase tenfold by 2025. Since the 1970s, the developing countries have been increasingly large net importers of milk and meat (except pig meat).
Future Food Demands:
There will be a global demand for 40% more grain in 2020, with most of the demand coming from developing countries. This will include a doubling in demand for feed grains in developing countries. Net cereal imports by developing countries will almost double to meet the gap between production and demand.
ii. Environmental Trends:
a. The intensification of agriculture in the favourable areas has come at the cost of damage to the environment, with increasing salinity problems in irrigated areas and damage to human health and wildlife due to misuse of pesticides.
b. Decreasing water availability for agriculture is one of the most important trends over the last decade. There is a need for more efficient use of water in agriculture, including the development of water-saving and drought-tolerant genotypes and more efficient water-management practices.
c. Pressure on land from urbanization and industrialization increases. There are limited prospects for expanding the land available for agriculture, except by moving into forests or marginal areas.
d. Deforestation and loss of biodiversity are caused by the clearing of land for logging in areas of terrestrial mega-biodiversity. The use of modern plant varieties also threatens the loss of landraces of crops.
e. Natural disasters pose a continuing threat and the long-term effects of climate change are unknown.
iii. Trade and Competitiveness Trends:
a. Increasing trade – one option for obtaining the necessary purchasing power for food is through increased interregional and international trade.
b. Increasing competitiveness – the declining prices for agricultural commodities suggest a need also to increase the productivity of agricultural exports and to develop new value- added products for export.
c. Product quality needs to meet the certification and food safety standards of importing countries.
7. Developments
in Agricultural Biotechnology:
New developments in agricultural biotechnology are being used to increase the productivity of crops, primarily by reducing the costs of production by decreasing the needs for inputs of pesticides and herbicides, mostly in crops grown in temperate zones. The applications of agricultural biotechnology are developing new strains of plants that give higher yields with fewer inputs, can be grown in a wider range of environments, give better rotations to conserve natural resources and provide more nutritious harvested products that keep much longer in storage and transport and continued low-cost food supplies for consumers.
Private industry has dominated research and accounting for approximately 80% of all R & D. Consolidation of the industry has proceeded rapidly since 1996International Developments , with more than 25 major acquisitions and alliances, worth US$15 billion.
During the past decade, the commercial cultivation of transgenic plant varieties became well established, particularly during the latter part of the decade. In 1999, it is estimated that approximately 40 million ha of land were planted with transgenic varieties of over 20 plant species, the most commercially important of which were cotton, maize, soybean and rape-seed. The value of the global market in transgenic crops grew from US$75 million in 1995 to US$1.64 billion in 1998.
The traits these new varieties contain include insect resistance (cotton, maize), herbicide resistance (maize, soybean) and delayed fruit ripening (tomato). The benefits of these new crops are better weed and insect control, higher productivity and more flexible crop management.
These benefits accrue primarily to farmers and agribusinesses, although there are also economic benefits accruing to consumers in terms of maintaining food production at low prices. Health benefits for consumers are also emerging from new varieties of maize and rape-seed with modified oil content and reduced levels of potentially carcinogenic mycotoxins. The broader benefits to the environment and the community through reduced use of pesticides contribute to more sustainable agriculture and improved food security.
Other crop/input trait combinations currently being field-tested include virus-resistant melon, papaya, potato, squash, tomato and sweet pepper; insect-resistant rice, soybean and tomato; disease-resistant potato; and delayed-ripening chilli pepper. There is also work in progress to use plants such as maize, potato and banana as mini-factories for the production of vaccines and biodegradable plastics.
Several large corporations in Europe and the USA have made major investments to adapt the new discoveries in the biological sciences to commercial purposes, especially to produce new plant varieties of agricultural importance for large-scale commercial agriculture. The same technologies also have important potential applications to address problems of poverty reduction, food security, environmental conservation and trade competitiveness in developing countries.
8. Consumer Acceptance towards Agricultural Biotechnology:
The application of modern biotechnology to agricultural crops has been examined as a scientific, technological innovation that promises to have vast implications for agricultural production. Yet, at the most basic conceptual level, all production is for consumption and some consumers have not accepted GM crops, because they remain unconvinced about the consumer benefits or because they have concerns or fears about the technology.
In understanding the rejection, it is useful to remember that consumers are not just economic agents but also social agents who vote and participate as citizens, ultimately shaping the national social and political context within which economic forces operate.
For instance, venture capitalists may not be willing to fund GM crop developers if it would be publicly unpopular. Similarly, producers may be unwilling to plant GM crops either if they cannot market them or if they will be vandalized by eco-warriors.
More importantly, however, consumers have enormous influence over the research, development and commercialization of GM crops through their influence upon regulatory approaches. Therefore, a critical assessment of the social implications of agricultural biotechnology must focus on the issue of consumer acceptance and its role in shaping the domestic regulatory approach and the subsequent regulatory integration strategy.
The objective is to identify the predominant issues associated with the consumer acceptance of GM crops, because these issues are cited by various interest groups active in the regulatory development process.
Asymmetrical Consumer Acceptance:
Further complicating the assessment of consumer acceptance is the existence of discernible differences in consumer acceptance both across biotechnology-based products and between North American and European consumers.
A. Asymmetry of Consumer Acceptance across Biotechnology Products:
The asymmetry of consumer acceptance across biotechnology-based products is associated with two factors. The first is the consumer’s perception of the ‘primary beneficiary’, while the second is the consumer’s perception of control over the application. According to these two factors, modern biotechnology has been more accepted when applied to medical and pharmaceutical industries relative to agriculture. Medical and pharmaceutical applications of biotechnology are perceived by consumers to be focused on human health; therefore the consumer is the primary beneficiary.
When the consumer is the primary beneficiary, it has been argued that there is a greater likelihood of acceptance of the benefits and the risks. On the other hand, GM crops with production-improved traits developed to increase yields and productivity in the intensive agricultural sector are perceived to create supply-side production benefits only. In this case, consumers are being asked to accept something that seemingly provides them with no benefits. Medical and pharmaceutical applications are also perceived to be done in controlled research facilities while the field testing and commercial release of GM crops is perceived to be uncontrolled in the environment.
Some argue, however, that the difference in acceptance of pharmaceutical or medical applications over GM crops is also related to the fact that in the former, there is a long history of stringent premarket approval processes while, in the latter, food is not traditionally preapproved in the same fashion.
This implies that consumer acceptance is also related to regulatory approval. Yet Isaac and Phillips argue that an adverse circularity exists in consumer acceptance, whereby consumers will not accept products that have not been approved, but regulators – fearing a public backlash – will not approve products that are not accepted. This adverse circularity challenges the linear assumption of consumer acceptance.
Even within the broad spectrum of agricultural applications of modern biotechnology, there are asymmetries in acceptance. For instance, agricultural applications to improve human health through nutritive fortification are more readily accepted than applications to improve the commercial attributes of produce. An example of a GM crop with direct consumer benefits is a GM sugar beet developed at the Centre for Plant Breeding and Research, Wageningen, The Netherlands.
Researchers claim that they have developed a sugar with low caloric value because the fructans have been modified to be long-chain fructans, which are not easily digested by humans. Interestingly, this GM sugar beet was not given the label Frankenstein food’ in the UK media, as other GM crops were. In addition, North American survey results indicate that respondents are more likely to accept genetically modified fruits and vegetables than genetic modifications to livestock. This indicates that consumer acceptance is linked to perceptions of the morality or ethics of genetically modifying so-called higher-order organisms, such as animals.
The asymmetrical consumer acceptance across products appears to indicate an important principle – that it is the product application that matters to consumer acceptance, not the technology per se.
B. Asymmetry of Consumer Acceptance across Regions:
The asymmetry of consumer acceptance across regions is a particular challenge to the international trade and market access of agricultural biotechnology products, because regulatory integration efforts must acknowledge regional differences. Essentially there are no universal consumer concerns. Instead, they are shaped by historical, cultural and economic conditions. Additionally, consumer concerns are also influenced by the current information consumers receive.
For instance, in the UK, GM crops have often been inaccurately portrayed as an ‘American’ technology or ‘Monsanto’s’ technology, despite the fact many European firms are very active in the development of GM crops, along with European universities and public research institutes.
Therefore, the complicated mix of consumer concerns and asymmetries of acceptance across products must additionally be understood within a regional context. The focus of the analysis will be on asymmetries in consumer acceptance between North American and European consumers.
Broad support for modern biotechnology is greater in North America than in Europe. Hoban reports that between 66 and 75% of survey respondents in the USA indicated acceptance of biotechnology products, yet in Europe the acceptance among respondents is just over 50%. Although North American acceptance is evidently higher than in Europe, it is important to note that this acceptance was not unconditional.
In fact, concern over the use of recombinant bovine somatotrophin (rbST) in dairy cows in the USA a decade ago is very similar to current European concern and action regarding the use of GM crops in the food supply.
At the forefront of rbST concern was the US-based Foundation for Economic Trends. Due to the public concern, many industrial dairy farms refused to use rbST in their herds. Also several large food processors, along with many food retailers, all boycotted milk and milk products produced from rbST herds. These boycotts remained in place until the scientific uncertainties surrounding the use of rbST had been addressed in a sufficient way to reduce consumer concerns.
To deal with the asymmetry in consumer acceptance of GM crops, both Monsanto and the European biotechnology industry association, Europa-Bio, launched public information campaigns in 1998 in an attempt to increase European consumer information about the benefits of GM crops and hence increase acceptance.
However, market research after these campaigns has revealed that they were very unsuccessful, as consumer acceptance in Europe decreased instead of increasing. The percentage of European consumer ‘un-acceptance’ of biotechnology rose from 38% in October 1997 to 51% in October 1998.
In Germany, the level of consumer ‘un-acceptance’ of biotechnology was reported to be over 80%. As a result, in October 1999 the US-based firm Monsanto embarked on a consultation campaign with UK environmental and consumers’ organizations, such as Greenpeace, the Sod Association, Friends of the Earth and the UK Consumers’ Association.
Research has also indicated that, while education is positively related to consumer acceptance in North America, it is negatively related to consumer acceptance in Europe. Hallman and Metcalfe report that 80% of college-educated respondents and less than 60% of respondents with a high-school diploma or less indicated acceptance of agricultural biotechnology in New Jersey. On the other hand, research in Europe reported that consumer acceptance was negatively related to education, as acceptance was reported as lowest in Denmark, Germany and The Netherlands, which were identified as having the highest education.
Previous research on food-consumption trends in North America and Europe has concluded that European consumption patterns lag behind those in North America by about 10 years. The implication here is that the divergence in consumer acceptance of GM crops is just a short-to medium-term phenomenon, so that trade tensions will just disappear. However, this is not a likely conclusion in respect of GM crops, for several reasons. First, the very perception of agriculture is different in the two regions, resulting in a significant cultural clash.
Secondly, many severe and well-publicized food-safety crises in Europe have created a cultural context of distrust in the food industry and in food regulators. Food safety, in general, has become a sensitive, highly politicized issue throughout Europe, and credence GM crops, developed and commercialized by multinational corporations, appear to be just another trend to fear. In fact, it has been argued that crises and controversy create irreversible effects, implying that consumer acceptance may be on an unalterable trajectory.
Thirdly, the politically significant environmental-protection movement in Europe has made the opposition of GM crops a main theme. Fourthly, and not to be overlooked, the commercialization lead in North America creates pressures to protect domestic biotechnology firms in European member states until they are ready to compete internationally.
9. Future Applications of Agricultural Biotechnology:
The application of modern biotechnology to agricultural crops can generally be categorized into three types – production-trait applications, output-trait applications and applications to create bioengineered products. These three categories will be described below. The first type of application is currently the most widespread, while output-trait applications or bioengineered products are indicative of the future of GM crops.
Production-trait applications of agricultural biotechnology represent a scientific response to long-standing agricultural problems, which had traditionally been addressed through domestic agricultural support programmes. Agricultural production has always been a risky venture, characterized by a significant degree of possible variation in crop quantity (yield) and quality each year.
The risks to the quantity and quality of agricultural production are from the weather (e.g. drought, floods, hail and frost), from soil conditions (e.g. salinity, nitrogen depletion and erosion), from disease (e.g. rot, fungal and rust) and from pests (e.g. bacteria, viruses, nematodes, insects and animals). In both North America and Europe, various financially significant domestic support policies are employed to stabilize the agricultural sector in the face of such risks.
The attractiveness of GM-crop varieties is that they essentially provide scientific solutions to agricultural production risk through attempts to improve the production traits of agricultural crops. For instance, new GM varieties of conventional crops have been created (or are being developed) with a higher degree of stress tolerance to ecological conditions and with a higher degree of resistance to pests and disease.
Two of the most common production-trait modifications are herbicide tolerance and insect resistance, traits that have been developed for use within the intensive agricultural system. In respect of herbicide tolerance, crops have been genetically modified with a gene found in a soil bacterium that is able to metabolize (digest) the non-selective, broad-spectrum herbicide gluphosinate, rather than be destroyed by it. In respect of insect resistance, several agricultural crops, such as maize and cotton, have been genetically modified to express the pesticidal characteristics of Bacillus thuringiensis (Bt), a soil microorganism that produces a protein toxic to certain insects.
Production-trait applications were the most common GM crops up to the 2000 crop season, with over 100 million acres planted to GM varieties. Of these applications, most are single-trait stacking modifications, whereby the genetic material for, say herbicide tolerance, is transferred, creating a GM variety that is herbicide-tolerant. The two most frequent single-trait stacking modifications were for herbicide tolerance and insect resistance.
However, multi-trait stacking modifications represent the future of production-trait GM varieties – that is, transferring the genetic material for, say herbicide tolerance, insect resistance and virus resistance, to one plant organism, creating a GM variety that simultaneously expresses the three desired traits.
At the same time, new agricultural crops will be subject to production-trait applications. Therefore, production-trait applications will both deepen, with multi-trait stacking, and widen, to include new crops without current GM varieties.
There are two important aspects of production-trait applications. The first is that they do not require the adoption of new agronomic practices or farm implements. They can be produced within the traditional intensive agricultural production system, although they may require changes in the chemical regimes.
The second is that, since the end attributes of the GM varieties remain the same or ‘substantially equivalent’ to those of conventional non- GM varieties, they are both for the same end use and sold into the same processing and distribution system, where it is virtually impossible to distinguish between the two.
Similarly to the production-trait applications, output-trait applications do not require the adoption of new agronomic practices or massive investment in new agricultural implements. These varieties may be produced according to traditional agronomic practices.
Unlike production-trait applications, however, they do require changes in the distribution of agricultural commodities. These varieties have end attributes that need to be differentiated from those of the conventional varieties in order to capture the value premium. Output-trait applications create incentives for more active management of the crop distribution system through segregation.
However, this degree of specificity is not yet part of the supply chain. In fact, in North America, improved output traits made up less than 1% of total acreage of GM crops in 1997, 1998 and 1999, in part because the bulk nature of the agricultural commodity distribution system makes it difficult to ensure segregation between the desired varieties and other varieties without some sort of price premium.
The third broad type of agricultural biotechnology application is to create bioengineered products. Brenner suggests that, with bioengineered products, ‘the power of sunlight and plant physiology is harnessed to replace expensive chemical synthesis processes’.
Such applications would have industrial uses far beyond those of traditional agricultural products. Yet Brenner also notes that such applications demand a much more advanced level of biotechnological sophistication than that of current generations of single- and multi-trait stacked GM varieties.
Bioengineered GM varieties would be entirely novel, rather than just improvements to conventional varieties. For instance, in the pharmaceutical sector, such applications, known as ‘pharming’, would allow agricultural crops to be used as bio-factories producing high-value pharmaceuticals or edible vaccines that are currently produced using relatively expensive chemical synthesis processes. Such applications would have the further benefit of a decreased use of synthetic chemicals.
Also, agricultural biotechnology may be employed for high-tech nutritive fortification of foods designed for health care and disease prevention, essentially becoming nutriceuticals. For instance, a current research initiative involves the transgenic modification of potatoes with cholera B toxin. Consumption of the novel GM product creates the production of human cholera-resistance antibodies. Other edible vaccines include GM crops with enhanced cancer-fighting antioxidants, probiotics and prebiotics.
Another example is the nutritionally enhanced vitamin A. GM rice developed to address the serious vitamin A deficiency in Thailand and other South-east Asian countries. Finally, an entirely industrial application of agricultural biotechnology would be the creation of plant-based polymers replacing petroleum- based polymers currently used in synthetic fibres, plastics and even fuels. An example of this is a plant-based credit card developed by Monsanto and initially endorsed by Greenpeace Europe as an alternative to plastic credit cards. The potential benefit is the creation of completely biodegradable polymers.
Unlike production- or output-trait GM varieties, novel bioengineered products would require substantially different agronomic practices. Also, to ensure that GM crops grown for nonfood uses are kept out of the food supply, bioengineered products would require an effective segregation and identity-preservation production system.
Despite the potential of output-trait applications and bioengineered GM products, there are current limits to what agricultural biotechnology can achieve. For instance, it has been argued that ‘no scientists will be able to take a tomato, add 20 genes from a cow and 30 genes from wheat, and come up with a crop that has the nutritional qualities of beef and bread’.
Further, the challenge facing crop developers is not how to prevent GM crops from getting out of control, but, rather, how to develop GM crops that are viable enough to grow within the agricultural system – the very same problem that faced traditional plant breeders.
This brief examination of the current and future applications of agricultural biotechnology has revealed several important features. First, it appears that agricultural biotechnology is, in fact, poised to deepen and broaden its impact upon economic production. Secondly, it has been argued that agricultural biotechnology and recombinant DNA (rDNA) techniques represent another phase in the knowledge intensification of seed development.
Thirdly, it has also been argued that current applications of agricultural biotechnology are not significantly novel applications. Instead, they are more modest applications, incrementally made and very much in keeping with the systematic varietal development process characteristic of traditional plant breeding.
From the point of view of regulatory policy development and integration there are four important distinctions to identify. First, not all genetic modifications are transgenic modifications. From a plant perspective, transgenic modifications, as discussed above, involve the transfer of genetic material between plants or other organisms.
However, some modifications, such as antisense modifications and mutagenesis, only alter the genetic material within a plant’s cell in order to achieve desired results. Therefore, there is no transfer of genetic material.
It appears that the greatest opposition to GM crops is actually directed at transgenically modified (TGM) crops, where genes from sexually incompatible organisms are combined. It is important to disentangle genetic modification techniques from transgenic modification techniques, because not all biotechnology applications are associated with those concerns that are really only relevant for transgenic modifications.
The second important distinction is between a GMO and a living modified organism (LMO). An LMO is a subset of a GMO in that it is a GMO that retains metabolic activity. For an example, consider GM canola/rape-seed. As a seed, it is technically both a GM seed and an LMO, because it remains capable of propagation. Crushed into canola oil, it is no longer capable of propagation and is no longer an LMO, and yet it remains a derivative of a GM crop in the strictest sense.
Thirdly, GM crops are not always ‘novel’ plants. Novel plants, known as plants with novel traits (PNTs) are those for which a naturally occurring counterpart does not exist. PNTs may be created either through the use of biotechnology or through traditional plant-breeding techniques. Hence, novel does not imply the use of biotechnology. GM crops do, however, imply the use of biotechnology, but not every genetic modification creates a PNT.
For instance, if genetic modification is used to develop a new maize variety from two parental varieties, then the resultant GM maize is not novel, in the sense that it does not express traits never before characterized in maize varieties. Instead, it has simply enhanced maize traits that have been combined from the parents using genetic modification techniques.
Fourthly, and arising from the third distinction, GM crops do not always produce GM foods. For example, the oil and lecithin of oilseeds, such as soybean and canola, are used widely in food processing; however, oil and lecithin do not contain DNA or protein. So, although they may be derived from GM varieties, they do not contain GM material and subsequent foods produced with these inputs are not GM foods. This distinction is made clear by an examination of the difficulties of testing a food ingredient or product for GM material.
From a technical testing perspective, a researcher can test either for the GM DNA sequence or for the presence of the introduced protein encoded by the GM DNA. In the former, the test is accurate but sophisticated and time-consuming, as the investigator must know exactly what GM DNA sequence to look for. In the latter, the test is rapid but less sophisticated and less accurate, as it relies upon the binding of an antibody to the introduced protein. The problem is that food processing easily breaks down the protein and can also degrade the DNA to the point where it can no longer be identified as a GM food.
In fact, foods that have been processed (e.g. heated, fermented, acidified, extruded or highly refined) generally have no GM DNA left in them or at least the GM DNA is highly degraded. If the GM DNA is no longer in its unique sequence encoding for the particular protein, then there is no risk that a consumer is ingesting a harmful protein resulting from the genetic modification.
An exception, of course, is crops that are eaten raw or unprocessed – for example, GM maize or GM tomatoes. In these two examples, the GM crops would produce GM foods. The point is that, with the exception of foods eaten raw or unprocessed, the general term ‘GM foods’ is often applied inaccurately and inappropriately.
The four distinctions are important in considering how to regulate GM crops appropriately. For instance, if public concern really lies with the transfer of genes between sexually incompatible organisms-transgenic modifications – then regulations should target TGM crops, not all GM crops.
If it is plant novelty that is the concern then novel-based regulations are more appropriate than technology-based regulations. If the concern lies with the protein structure of GM organisms, than the focus should be only on those products that still contain the GM DNA sequences.
The distinction between GM crops and LMOs is crucial, because the Cartagena Protocol on Biosafety is an international treaty governing the trans-boundary movement of LMOs. Accordingly, unless GM crops are shipped in seed form and capable of propagation, they should not fall under the regulatory principles of this protocol.
Therefore, understanding these important distinctions is vital in establishing regulatory approaches that respond to actual consumer concerns rather than approaches built on vague, ambiguous fears about a misunderstood application of modern agricultural biotechnology techniques.