The Marketing of Biotechnology

1
The Marketing of Biotechnology Products
Biology 600 Biotechnology Principles and
Products Delivered Live and via
Videoconference June 1-2, 2005
Phil McClean Department of Plant Science North
Dakota State University
2
Major Commercially Grown Biotech Crops In US
1994
2000
1997
1995
3
Monsanto Worked To Be Seen As Producer Friendly

• Regulatory process requires field testing
• Field testing was performed in the US farm belt
• Monsanto invited farm and community leaders to
  field days
• Showed the benefits of GMO crops to local
  producers
• When crops first approved in 1995 producer
  familiar
• with the new genetics
• Early adoption seen as a result of pro-active
  policy of
• showing the benefits of the technology

4
Marketing Approaches for Biotech Crops

• Identical to conventional except for one trait
• Alleviate fear of something new
• Distinct from other products
• Focus on the uniqueness regardless of technology
• Helps to distinguish the product for export
  markets

5
Monsantos Promotion of Roundup Ready Corn

• Delivers unsurpassed weed control of both
  grasses
• and broadleaf weeds.
• Provides proven crop safety and performance with
  patented
• Roundup WeatherMAX containing TranSorb II
  Technology.
• Excellent flexibility due to a wide window of
  application.
• Delivered a 5.5-bushel yield advantage over
  conventional
• corn herbicide programs

Source http//www.monsanto.com/monsanto/us_ag/lay
out/biotech_traits/rr_corn/default.asp (May 31,
2003)
6
Transgenic Crops Increasing In the USa
a Source NASS Planting Reports, 2001, 2002,
2003, 2004
7
Promotional Points For Biotechnology Crops
Economic Benefit to Producer Farm Income Society
Benefit to Hungry Planet Farm Production Environm
ental Benefit to Challenged Ecosystem Pesticide
Usage
8
Benefits of Biotechnology Crops
Plant Biotechnology Current and Potential
Impact For Improving Pest Management In U.S.
Agriculture An Analysis of 40 Case Studies
http//www.ncfap.org/40CaseStudies.
Source http//www.novakbirch.com/cbi/update06-11-
02/
9
Benefits of Biotechnology Crops
Crops Analyzed

• Eight cultivars had a significant impact
• Insect-resistant corn and cotton
• Herbicide-tolerant canola, corn, soybean, and
  cotton
• Virus-resistant squash and papaya

10
Benefits of Biotechnology Crops
Summary for 2001 Grown Crops
Farm Income Impact 1.5 billion increase Food
Production Increase 3.7 billion pounds
increase Production Costs 1.2 billion
decrease Reduced Pesticide 46 million pounds
decrease
11
Benefits of Biotechnology Crops
Projected Effect For Other Crops

• Diverse Crops Considered
• Apples, barley, eggplant, lettuce, and wheat
• New Traits for Other Crops
• Corn and cotton

12
Benefits of Biotechnology Crops
Project Impact for 2001
Farm Income Impact 260 million increase Food
Production Increase 10.7 billion pounds
increase Production Costs 400 million
decrease Reduced Pesticide 127 million pounds
decrease
13
Benefits of Biotechnology Crops
Projected Total Impact for 2001
Farm Income Impact 2.5 billion increase Food
Production Increase 14.5 billion pounds
increase Production Costs 1.6 billion
decrease Reduced Pesticide 163 million pounds
decrease
14
Other Features of The Report

• Every state in the US would benefit
• CA would realize 206 million in net value
• ND would realize gt100 million in net value
• Significant pesticide in major crop-producing
  states
• CA 66 million lb reduction
• New crops would realize benefits
• Raspberry, grape, apple, sunflower, barley and
  wheat

15
Effects of Adoption of Biotech Crops In North
Dakota

• Corn (Insect and Herbicide Tolerant)
• 24.2 million lb reduction in pesticide use
• Barley (Fungal Resistance Scab)
• 1.4 million lb increase in production
• Sugar Beet (Herbicide Tolerant)
• 953,00 lb increase in pesticide use

16
Mandatory Labeling Requirements
Implemented Threshold Level Australia/NZ
1 China None EU
1 Japan 5 Korea
3 Norway 2 Proposed Brazil
4 Saudi Arabia None Taiwan
5 Thailand 3 (corn) 5 (soybeans)
17
Types of Labels

• Australia/NZ
• Genetically modified
• Not from a GM source
• May contain a GM food due to supply variation
• Japan
• GM
• Non-GM
• Norway
• Genetically modified X (corn, soybean)

18
Problems With Labeling

• Multiple markets
• Identity preservation required
• Not completely feasible
• Elevators are not ready
• IP owners not necessarily interested in this
  approach
• Lost markets
• 12 billion (through 2001)

19
Economic Impact of Biotech Crops Non-industry
View of Bt-Corn

• Profitable in 1996, 1997, 2001
• ex. 2001
• Added value 93 million
• Increased value of harvest 231 million
• Added seed cost 138 million
• Net value 1996-2001
• Net loss 92 million
• Increased value of harvest 567 million
• Added seed cost 659 million

From C.M. Benbrook. 2001. When Does It Pay To
Plant Bt Corn http//www.gefoodalert.org
20
Events Important to US/EU Biotechnology Trade
Issues

• 1990 EU approval process implemented
• 1995 US approves first biotech crops
• 1994-1998 EU approves nine biotech crops
• 1996 Mad Cow Disease (BSE) and human
• death linked
• 1997 GMO applications can be submitted to
• a single country, but other countries can
• provide comment labeling becomes an
• option for traits that can be detected

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• 1997-2000 Individual countries override EU
  approvals Austria, France, Germany,
  Greece, Luxembourg EU doesnt react
• 1998 Last biotech crop approved (carnation) 14
  in all approved
• 1999 Moratorium on new approvals implemented
• 2000 Cartagena Protocol on Biosafety adopted by
  130 countries
• 2000 Liability added as a condition for
  approval of new regulations
• 2000 Starlink, a corn animal feed GMO, found in
  taco shells

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• 2001 New approvals halted until new regulations
  are in effect
• 2002 Requirement that all products derived from
  GMO ingredients be labeled is approved
• 2003 US files complaint calling approval
  moratorium illegal under WTO policies
• 2003 New labeling and traceability regulations
  proposed

23
Labeling Regulations

• Labeling required for
• GMO seeds
• Raw products (corn meal) derived from GMO seeds
• Refined products (syrup, oil) derived from GMO
  seeds (new)
• Foods made from raw or refined GMO seeds (new)
• Animal feed derived from GMO seeds (new)
• Allowed contamination (unintended prescence)
  level 0.9
• Label
• This product contains genetically modified
  organisms.
• Or
• The product produced from genetically modified
  (name species).

24
Traceability Regulations

• All businesses along the route must trace the
  product
• Grower, storage units, transporters, processes
• Tracing required from farm to fork
• Businesses must keep track from whom they
  received
• the product and to whom they sold it
• Records must be kept for five years

25
Economic Effects of Industry Policy
McDonalds and Egg Production

• McDonalds is the largest purchaser of eggs
• Most eggs are produced in large chicken farms
• Chickens in caged in very crowded conditions
• Conditions generally considered inhumane
• McDonalds is requiring 72 inches per chicken
• Suppliers had to comply by Jan 2003 or lose
  contract

26
Industry Policy Dictates Product Acceptability
McDonalds and GE Potato

• Largest purchaser of potatoes in the world
• Originally purchased insect resistant GM
  potatoes
• Changed policy over potential consumer
  objections
• Monsanto discontinued production of insect
  resistant
• GM potatoes (NewLeaf Potato)