Biotech in the USA Under Attack from All Sides
--Los Angeles Times
Tuesday, Home Edition
SECTION: Part A; Page 1; Financial Desk



A storm of protest against genetically engineered foods by foreign
governments and consumers has reached U.S. shores, leading some experts to
predict that agricultural biotechnology could go the way of nuclear
energy--falling out of favor because of public fears and unfavorable

Critics say the industry erred by rushing products with unknown health or
environmental side effects to market before the public was ready and
harnessing the technology to help farmers and food distributors rather
than creating obvious benefits for consumers.

Even industry leaders acknowledge that a protest movement launched in
Europe and Asia is having a telling effect in the U.S., bringing threats
of a global trade war and stalling the introduction of a new wave of
genetically altered crops with improved nutritional benefits.

Agricultural biotech has been a victim of its own success. Five years
after the first genetically engineered crop won federal approval,
transformed foods are everywhere--more than half the soybeans planted in
the U.S. this year and 30% of the corn are from biotech seeds. Oils and
sweeteners derived from these crops are ingredients in a host of processed
foods such as soft drinks, tortilla chips and French fries.

But the protests may even lead to a rollback of what's already been done:
The American Corn Growers Assn. has urged its members to consider using
non-genetically modified seeds next year. "Agriculture has been sold a
bill of goods about how great genetically modified seeds would be," said
the association's chief executive, Gary Goldberg. "We're sure as hell not
going to grow a product the customer doesn't want."

The backlash has been noticed on Wall Street too, where doubts are being
raised about the viability of ag biotech.

For months, analysts Timothy Ramey and Frank J. Mitsch at Deutsche Banc
Alex. Brown have been arguing that "GMOs genetically modified organisms
are dead."

In May, Ramey correctly identified the emergence of a two-tier market for
grain in which improved grains would sell for less than traditional
hybrids. Two months later, he asked, "Are GMOs safe, good for the
environment and necessary to support the inevitable growth in the world's
population? Yes, but the same arguments can be made for advancing nuclear
power. Despite the support of the scientific community, it is unlikely
that we will add any new nuclear power plants any time soon."

Lack of Public Education Criticized

Other analysts also see problems ahead. "We like biotech genetic
engineering long-term because it is a very useful tool and eventually
science will win out," said Paine-Webber's Andrew Cash. "But in the
immediate future, the only thing investors care about is perception. . . .
There is a big, dark cloud over those stocks right now."

The heart of the argument against genetically altered crops is that too
little is known about them.

"There need to be long-term studies of the environmental and health
effects, which there haven't been," said Charles Margulis, who heads
Greenpeace's U.S. efforts to ban genetically modified crops.

Activists from around the country, after a meeting in Bolinas in Northern
California in July, have now drafted a list of demands: the labeling of
all products derived from genetically engineered crops or animals, an
improved system for assessing health hazards, an end to the patenting of
plants and animals, and strict corporate liability for damages caused by
these products.

The activists aren't alone in their criticism of the industry. Among the
most prominent critics of the big companies is Gordon Conway, president of
the Rockefeller Foundation, the nonprofit organization that helped bring
about the so-called Green Revolution by promoting high-yield hybrid seeds
and improved growing methods to feed the developing world.

Conway fears a growing mistrust of biotechnology, and he faults the
corporations that introduced the first altered crops for failing to
respond. "As a result of the reaction against what they are doing and the
way they are doing it, we may lose the benefits of the technology," Conway

This summer, he took his complaints to the board of directors of Monsanto,
a major supplier of genetically engineered crops. "The rush to get
products to market," he told board members, who had invited him to speak,
"has led to mistakes, misunderstanding and a backlash against plant

European Protests Spread to U.S.

"We think these foods are perfectly safe, but European consumers don't get
it yet and we are going to lose sales," conceded Carl Feldbaum, president
of the Biotechnology Industry Organization, which is beefing up its public
relations and lobbying efforts to defend its ag biotech members. The
backlash "is not going to kill the industry," he said. "It is going to
slow it down."

Even though no ill effects from modified foods have been reported,
protests overseas are having an impact in the U.S.:

* Exporters are asking farmers to separate their genetically modified
grains when they reach the silo to satisfy overseas customers who reject
biotech crops.

* Like their counterparts in Europe, environmental extremists have been
mowing down and uprooting test crops. In recent weeks these self-styled
green vigilantes have struck fields at UC campuses in Berkeley and Davis.

* U.S. trade officials are bracing for a fight with Europe over biotech
crops in what could become a replay of an earlier battle over a European
ban on American beef from hormone-treated cattle.

The Clinton administration has been fighting to remove what it regards as
arbitrary trade barriers that block access to overseas markets, including
attempts to banish genetically modified crops. When World Trade
Organization negotiations open in Seattle next month, the U.S. will back
rules "that allow for the use of these technologies," said U.S. trade
ambassador Peter L. Scher.

The U.S. does not oppose labeling of genetically modified products, said
Secretary of Agriculture Dan Glickman, as long as "whatever labeling is
scientifically based and would not arbitrarily close doors to our

American consumers, unaware of how quickly genetically modified
commodities have slipped into the food supply, may well wonder why the

Company officials and federal regulators admit that there are potential
hazards in manipulating plant genes, but nothing like the claims of
"Frankenstein foods" that make daily headlines in Britain.

"There's a real lack of understanding of the extent of analysis we do to
establish safety," said Roy Fuchs, Monsanto's director of regulatory
science for plant biotechnology. Before introducing a product, the
company subjects the altered crop to a battery of tests to ensure that the
new traits are not toxic and are unlikely to cause allergic reactions, he

But environmentalists point out that the system essentially leaves safety
in the hands of a few major seed companies, subsidiaries of multinational
corporations such as Monsanto, Novartis and DuPont.

After researchers at Cornell this spring reported that the pollen from
genetically engineered corn could kill Monarch butterfly larvae, the
Monarch became the symbol for the movement to outlaw all biotech crops.

The industry has launched a counteroffensive, citing scientists who
believe the Cornell experiments were conducted under conditions never seen
in the field. They argue that the insect-killing proteins in the corn,
taken from a bacterium called Bacillus thuringiensis, or "Bt," are less
harmful than the chemical pesticides they have replaced.

As proof that the food safety system works, seed producers everywhere
point to the same example--an experimental soybean, developed at Pioneer
Hi-Bred International--that boosted the value of soybeans as livestock
feed by borrowing a gene from the Brazil nut.

Because a small percentage of the public is allergic to Brazil nuts,
Pioneer checked out samples of the genetically engineered soybeans, using
a standard skin-prick test in allergic volunteers. The transformed
soybeans triggered allergic reactions, and Pioneer abandoned the soybeans,
concerned that they could accidentally enter human food supplies.

The incident, said Pioneer spokesman Doyle Karr, illustrates the company's
"careful, thoughtful approach to things."

But those opposed to genetically modified foods point to the incident as
proof of the perils of transferring genes from one species to another.
"This can be a life-and-death matter," said Rebecca Goldburg, a scientist
with the Environmental Defense Fund.

Worries Over Health Risks

Brazil nuts were known to cause allergies, and patients with allergies
were available for testing, she said. But there is no easy way to
determine which proteins are likely to produce allergic reactions in all

This summer, Greenpeace and Consumers Union, publisher of Consumer
Reports, separately announced that they had detected the presence of
genetically modified ingredients in baby foods, infant formula,
nutritional supplements for the elderly and other products.

In response, both Gerber and H.J. Heinz announced they would shun
genetically modified ingredients in their baby foods, while denying any
danger. Some pet food manufacturers are doing the same.

The revolt against these products began in Europe, where confidence in
government regulators had been rattled by an outbreak of mad cow disease
in British cattle and other instances of food contamination.

As the movement picked up momentum, European supermarket chains promised
to yank genetically modified products off their shelves. In Britain and
Japan, the governments called for labeling.

Humans began experimenting with crops at least 7,000 years ago with the
discovery of bread wheat. Scientific plant breeding was born in the 19th
century, when farmers began crossing plants systematically in the search
for improved characteristics.

Using these conventional breeding techniques--including radiation and
chemical treatment to increase mutations--the seed companies each year
offer growers new hybrids promising higher yields or pest resistance or
improved flavor.

The process is largely unregulated.

Still, one new variety of potato was withdrawn from the market several
decades ago because of high levels of solanine, a natural chemical that
can cause intestinal distress. A new celery variety was pulled when food
handlers developed allergic rashes.

Long-Term Results Not Yet Known

In fact, many common foods naturally contain low levels of toxic
chemicals, with no known impact on health.

"Two of the best carcinogens are present in edible mushrooms that many
people enjoy with their steaks and gravies," said Norman Borlaug, who won
the Nobel Peace Prize for developing high-yield wheat varieties that
became staples of the Green Revolution.

In the mid-1970s, scientists discovered ways to snip useful genes from one
species and splice them into another. The revolution in genetic
engineering promised a new era in which crops with improved nutritional
value would feed the world.

But the first genetically engineered crops directly benefited growers and
seed companies, not consumers, by adding characteristics such as
resistance to weedkillers.

In 1992, the Food and Drug Administration decided--over the objections of
environmental and consumer groups--to treat genetically engineered crops
just like other foods. As long as the transferred genes produced proteins
already in the food supply, the agency would not require pre-market
approval or special labeling.

The first test under the FDA's voluntary review system came in 1994, when
the agency approved the Flavr Savr tomato, a fruit genetically altered to
stay firm during shipping. It proved a flop in the marketplace.

At the same time, Monsanto developed a genetically modified soybean that
could resist the company's best selling weedkiller--Roundup. The herbicide
destroyed weeds but spared the genetically altered crop--reducing the need
for hoeing while boosting Roundup sales.

And Ciba-Geigy, now part of Novartis, produced a corn with an insecticide
from Bt bacteria built into every leaf and kernel to kill the European
corn borer.

One concern about such products was that antibiotic resistance genes, now
standard in genetically engineered plants, could be taken up by bacteria,
creating antibiotic resistant microbes. Highly unlikely, concluded the

Other researchers believe that the widespread use of Bt crops might create
superbugs--pests no longer susceptible to Bt insecticides.

Federal law places the burden on the seed companies and food manufacturers
to make sure that their products are safe, said George H. Pauli, the FDA's
director of product policy. But he notes: "For every commercially
developed product for sale in the U.S. the producer has come in to consult
with us." And the agency retains the power to recall unwholesome products.

The FDA shares responsibility with the Environmental Protection Agency,
which looks at the potential dangers of the genetically engineered
pesticides, and the U.S. Department of Agriculture, which reviews impacts
on agriculture.

Activists charge that the result is a fragmented system of review that
ignores potential hazards.

The Alliance for Bio-Integrity filed suit last year, charging that the FDA
ignored the objections of its own scientists in deciding not to require a
special review of genetically engineered crops.

A second suit, filed last year by Greenpeace and others, charges that the
EPA ignored the possibility that Bt plants might harm beneficial insects
and engender resistance in target pests.

"This is not like an oil slick, which you can contain or mitigate," said
Joseph Mendelson, an attorney for the plaintiffs in both of the suits.
"These plants reproduce and cross-pollinate. They put their traits into
the environment, and there is no way you can recall them."