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Problems with corn tarnishes biotech dreams

C. Gopinath

FRIENDS of the Earth is one of those NGOs who you would mentally associate with protesting outside WTO, World Bank, and bodies like that. Yet, in September, they launched a protest that has been snowballing in the US market. They complained that taco she lls (a stiff, folded tortilla or chapathi made from corn and used in Mexican dishes) made by Kraft Foods and sold by Taco Bell contained a genetically modified form of corn that had not been approved for human consumption.

This corn, called Starlink, had only been approved for animal feed. This complaint has led to Taco Bell and other manufacturers recalling the product from retail outlets and serious re-thinking on the part of many corporations on whether genetic modifica tion of seeds is a worthwhile path to profits.

Starlink corn is a genetically modified (GM) seed that is a product of the French-German pharmaceutical company Aventis. It is also the only modified corn not approved for human consumption on sale in the US. The corn was bio-engineered to contain a prot ein that is a pesticide and was approved only for animal feed or industrial use since it may cause allergies in humans. Thus, it had to be strictly segregated from corn grown for human consumption.

Aventis maintains it gave appropriate instructions but these were neither followed nor adequately supervised by the distributors and seed companies. This lack of care resulted in the absence of buffers separating fields with and without the modified corn . Thus, the warnings of the anti-bioengineering lobby came true when cross-pollination occurred.

Though it is believed that only small amounts of corn have been contaminated, the mix-up of the two kinds of corn in massive storage areas, called grain elevators, and the difficulty in completely eliminating it from stock has had a massive impact. Starl ink has been planted for the last three years and the harvest this year is about 25 million bushels.

As a byproduct from the Starlink recall, over 300 food products ranging from taco shells to baking ingredients have been withdrawn from shelves. Tests have now shown that the corn stored in many storage areas *around the country* have been tainted and, t hus, are being diverted to animal feed use only. The industry, as a measure of temporary relief, has even appealed to the Environment Protection Agency to allow the sale of the genetically modified corn for human consumption although this is not likely t o be granted.

Another nail in the GM coffin was driven recently when large grain purchasers such as Archer Daniels Midland and Tate & Lyle informed farmers that they would prefer not to buy modified grain in the future. The cost of testing and dealing with bio-enginee red corn has made them wary of the product. Moreover, since different countries have varying rules on the kind of genetic modification they would accept, these companies have decided to deal with products that have a global market. This is going to serio usly affect planting decisions. In the case of corn alone, it is estimated that 25 per cent of the total acreage in the US is planted with GM corn.

GM a mixed blessing

Genetic modification is not new. The Green Revolution in India can give thanks to a form of such process which has not only led the country to self-sufficiency in food but also allowed for nominal exports. There are several reasons why foods are genetica lly modified. For one, altering genes in some kind of crops can increase output and produce high-yielding varieties. Some seeds have been made more resistant to diseases by strengthening their natural resistance or allowing for less harmful pesticides to be used. These are certainly `earth friendly' alterations.

Some fruits are being altered to add a protein that would result in the food protecting against tooth decay. Yet, several detractors fear that the alterations in some cases have resulted in crop failures and that researchers cannot always control where g enes are inserted nor guarantee the resulting outcomes.

Yet, consumer acceptance of GM foods continues to be spotty. Even where manufacturers are sure the genetically altered food is safe for human consumption, they do not want the government to require that foods carry the label that it contains GM ingredien ts. They fear it would imply that there is something wrong with the food and deter consumption. Instead, they are trying to get the government to require foods that do not contain such ingredients to state that it is free of them!

However, these challenges to the progress of science is certainly putting a tarnish on the promise of quick profits for those companies who ventured bravely into the biotech field, integrating agriculture, pharmaceuticals and nutrition, all in one place. This was the notion of `life sciences' that Aventis SA was betting on.

Now, Aventis estimates it will spend from $100 million (Rs 450 crore) to about $1 billion (Rs 4,500 crore) in trying to compensate farmers from whom they are buying back the corn and selling it at a discount to others for animal feed. Meanwhile, as is to be expected, some consumers have sued Aventis on the grounds that they have had allergic reaction from eating corn products containing Starlink.

Recently, Aventis announced its intention to sell its agriculture division. Even before the Starlink debacle, the fear over GM foods in Europe reduced the promise of hi-tech seeds and its agro-chemicals division shrank by about 1.5 percent this year. Oth er companies have had similar second thoughts about the life-sciences idea.

Pharmacia Corp., a pharmaceutical company that bought Monsanto Co. is expected to sell it. Monsanto's corn seed is genetically modified to tolerate a herbicide the company makes, called Roundup. DuPont also placed large bets on the idea of life sciences and purchased a seeds company. However, poor stock price movement has made the company re-think its corporate strategy and the portfolio it chose.

From a conceptual point of view, the idea of several activities gathered under the umbrella of `life-sciences' promised research and production synergies. Companies believed they could leverage resources across different businesses and take advantage of established reputations in the market. It was seen as the next wave of success for mature markets and industries.

However, they ran into a major area of resistance. Consumer acceptance was very slow in coming particularly due to a lack of clear proof that genetic modification is risk-free. This, combined with the increasing concern for the environment, has caused ma ny to wonder if it is worth rushing into this field at least until scientific research can keep pace with the questions being raised.

All this is not to say that the attraction of biotech has been lost in any significant way. The field is wide enough to hold plenty of promise. As a matter of fact, even non-biotech firms are seeing opportunities there. Computer firms are investing in bi gger and faster machines that will help decipher the genetic code and direct research into cures for diseases that have plagued mankind. The field is also attracting investment in new ways to test drugs, testing equipment, and the like.

(The author is a professor of international business and strategic management at Suffolk University, Boston, US. His Internet address is cgopinat@suffolk.edu)