The Marketing of Biotechnology Products

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. Monsanto’s 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/layout/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 Environmental 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 >$100 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 ImplementedThreshold 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

21. 1997-2000 Individual countries override EU approvals; Austria, France, Germany, Greece, Luxembourg; EU doesn’t 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

22. 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 McDonald’s and Egg Production • McDonald’s 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” • McDonald’s is requiring 72 inches per chicken • Suppliers had to comply by Jan 2003 or lose contract

26. Industry Policy Dictates Product Acceptability McDonald’s 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)