GM gets moving again
July 1, 2011
by Dan Malovany
See the entire report in one PDF
Slightly more than six years ago, the baking industry and Monsanto, St. Louis, MO, one of the world’s largest seed producers, agreed to abandon efforts to develop and plant genetically engineered (GE) wheat for a host of reasons. Some bakers expressed concern about consumer acceptance. Others worried about the millers’ ability to segregate biotech wheat from non-biotech wheat. Simply put, a vocal core of bakers quietly argued behind the scenes that there were too many uncertainties and unknowns to take the risk at that time.
Some of those concerns still exist today. “Wheat is a higher-risk crop than any other in terms of consumer acceptance,” explained Len Heflich, chair of the American Bakers Association’s (ABA) Food Technical Regulatory Affairs Committee (FTRAC). “We are not sure if some percentage of consumers will reject bread made from biotech wheat. Why would bakers take the risk of losing 1, 5, 10% or some other even greater percentage of our consumers? On this point, there is no change.”
During the past few years, bakers, millers, growers and a number of seed developers — including Monsanto and others from across the globe — have re-engaged one another in discussions that could result in a $1 billion investment from public and private sources toward the development of biotech wheat during the next decade.
What prompted the new talks? “We are just being pragmatic in admitting that the pull for biotech wheat from farmers is so strong that it is going to happen,” said Mr. Heflich, one of more than a dozen experts interviewed for this special report. “It is naïve to think that biotech will never happen. It will happen. The only questions are when will it happen, where will it happen and will the industry be ready for it when it happens?”
That pull for biotech wheat is not only coming from farmers but from millers and a growing number of bakers as well. Even among cautious bakers who oppose or voice concerns about growing genetically modified (GM) wheat, the consensus remains that a GM version will become a reality in 10 to 15 years in North America and possibly sooner internationally — especially in Australia and China, where the programs to develop biotech wheat are more developed.
The big wake-up call came during the commodity crisis of 2008 when wheat and corn prices hit historic highs, noted both Glen Weaver, director, product quality and technical services, and Scott Syslo, vice-president of risk management, ConAgra Foods, Inc., Omaha, NE.
Back then, the balance of supply and demand got out of whack, but the situation became worse as market fund managers and speculators jumped into the fray and pumped up commodity prices to earn a quick buck. It became apparent to the industry there was only one solution, according to Don Sullins, PhD, vice-president of technical services and regulatory affairs for ADM Milling, Shawnee Mission, KS. “Three years ago, commodity prices were so stinkin’ high, everyone said, ‘If we only had more wheat, it would drive down these prices,’” he said.
Actually, the 2008 commodity crisis had been developing ever so slowly for a long time, Mr. Syslo said. During the past 20 years, the amount of wheat acreage declined dramatically as farmers shifted production to GM corn and soybeans that have more yield potential and less nitrogen, water and other input costs. “If you look at wheat coverage versus biotech crop coverage, it’s really alarming,” Mr. Syslo observed. “In 1990, we had roughly 78 million acres of wheat growing in the US. This year, we’re down to 58 million. If the wheat market doesn’t evolve and adopt biotech wheat, we’re going to continue that same pattern, and the wheat market will get into that price problem again today.”
Such market dynamics turned the discussion of biotech wheat into a pocketbook issue. “Wheat continues to lose acreage to other crops like soybeans and corn. To understand why, you only need to follow the money,” said Theresa Cogswell, president of BakersCogs, Olathe, KS, and consultant to the industry.
Specifically, according to the US Department of Agriculture’s Economic Research Service, corn returns $474 per acre to the farmer and wheat only $152 per acre, noted Jane DeMarchi, director of government affairs for research and technology, National Association of Wheat Growers. She said the 2008 commodity crisis caused companies that rely on an affordable supply of wheat to look more closely at the long-term availability and price implications of shrinking acreages in US wheat production and other factors.
“In recent years, droughts in Russia and Australia made global supplies uncertain, and this year, US farmers in some states are experiencing drought while other states are experiencing flooding,” she said. “Innovation will be key to our ability to improve production, keep up with a growing global population and adapt to changing climatic conditions around the world.”
SUPPLY AND DEMAND.
Wheat prices once again are expected to be high this year, said Ben Handcock, executive vice-president, Wheat Quality Council. In key growing states such as Texas, Oklahoma, Kansas and Colorado, the amount of quality wheat for baked goods is down significantly because of fewer plantings and Mother Nature, added Mr. Handcock, who toured farms throughout the wheat belt this year. With demand for wheat increasing on a global basis, he said, “there’s just not enough wheat out there.”
Exacerbating the situation, farmers began planting drought-resistant GM corn and soybeans in semiarid areas farther west in the farm belt, displacing acreage that normally supported wheat, Dr. Sullins pointed out. As a result, he said, biotech wheat is simply being supported out of necessity. “Wheat is being displaced, and if we want it at a reasonable price, we need something that will allow it to be planted farther out west,” he said.
In addition to greater yield potential, GE corn also benefits from increasing market demands to convert it into ethanol. Government subsidies of ethanol programs also encourage farmers to plant corn instead of wheat. In all, about 40% of corn production goes toward making ethanol, according to Brian Walker, technical services manager, Horizon Milling, Minnetonka, MN. The literal changes in the landscape for planting corn, soybeans and other crops simply created a fait accompli and sparked the need to develop GM wheat. “With these alternative demands for crops and the increased competitiveness of corn and beans, something needs to be done to boost the competitiveness for wheat,” he said.
Often, Mr. Heflich suggested, farmers plant wheat when they have no other option. To complicate the situation, he said, biotech alfalfa is being introduced this year and will become another competitor to wheat with much less risk. “By going biotech, wheat yield will increase by 40% and reduce the risk of crop loss due to disease or drought,” he said. “This will improve the competitive capabilities of wheat.”
UNCERTAINTY VS. UNKNOWNS.
In many ways, the debate over biotech wheat involves a classic battle of the unknowns, according to Larry Marcucci, president, Alpha Baking Co., Chicago, IL. Specifically, he mentioned the unknown concerns of acceptance by consumers vs. the uncertainty in the futures market that’s prompting volatile commodity prices. Globally, he said, many European nations are putting up protectionist barriers against biotech wheat while Japan, which is the largest recipient of US wheat exports, still has a consumer base that has “a real adversity” to foods made with GE crops. US consumers, he said, seem to have accepted biotech corn, soybeans and other crops, or they don’t seem to care as long as food prices remain low.
On the other hand, Mr. Marcucci observed, it’s difficult to run a baking company profitably and pass on costs when major ingredient costs fluctuate so dramatically. As a result of such bottom line issues, he’s a proponent of biotech wheat. “It’s become a reality that all of the other crops have gotten so far ahead. If we don’t do something now to attack the problem, wheat is going to almost become a second-class crop because the yield is so low and the farmers will not have any reason to plant wheat anymore,” he said.
The industry’s concern about US consumer acceptance of GM wheat and the risk of losing sales may have subsided because of reaction — or a lack of it — with other GM crops. “The fear factor has diminished significantly from 10 years ago because we have seen no major backlash with [GM] corn, beans or canola oil,” Mr. Weaver said.
Still, consumer acceptance of GM products is not a slam dunk. In a 2011 International Food Information Council Foundation survey, 43% of Americans indicated they supported advances in food technology, including biotechnology and other methods. However, another 40% didn’t know enough about the topic to comment while 17% opposed such advances in food technology. Those respondents who supported it listed reasons such as yield or producing more food on less land, as well as preserving natural resources, improved nutrition, less pesticides and improved taste.
Consumer knowledge and even many of the perceptions about biotech wheat and other crops seem to have changed little since the ABA conducted its consumer survey on biotechnology in 2002, noted Lee Sanders, ABA’s senior vice-president, government relations and public affairs. That survey showed that around half of consumers knew little or nothing about biotech and GM issues and more than two-thirds of those surveyed were unaware they had eaten any GM products.
Additionally, consumers indicated that the potential purchase behavior for biotech wheat paralleled that of corn and other biotech crops. Those consumers who supported biotech wheat indicated the need to feed the world’s hungry, and they were more open to biotech if there were nutritional benefits. Those respondents who opposed biotech indicated they didn’t want companies messing with Mother Nature. The biggest opposition tended to come from female consumers, older adults, organic food purchasers or those people who had only a high school degree or less of education.
Likewise, those consumers who were less knowledgeable about genetic science had the most uncertainly about GM crops, according to the survey. An integral point involved how biotech crops were developed, according to the survey. Most survey respondents, even those who said they would switch to non-biotech food did not object to plant-to-plant GM technology. Both consumers who supported biotech crops and those who indicated they might want to switch to non-biotech products were uncomfortable with “inter-life-form,” or animal-to-plant gene transfers. Consumer choice, consumer education, endorsement from trusted sources and differentiation from other less acceptable technologies were keys to acceptance.
While the industry’s fear of negative consumer reaction may have abated over time, even losing a small percentage of sales can put a dent on profits, Ms. Cogswell observed. “If you sell 2 billion loaves of bread and 1% of your customers switch because of biotech wheat, that’s a big number in a mature industry,” she said.
SUSTAINABILITY VS. SAFETY.
With such positive consumer sentiment toward sustainability, wheat farmers are looking for wheat that can be grown with less water, fertilizer and pesticides, Ms. DeMarchi said. “Foods with ingredients made from biotech crops have safely been incorporated into millions of meals around the world for more than 16 years,” she noted. “US farmers will continue providing customers with safe, high-quality and affordable wheat whether they choose to buy biotech wheat or non-biotech wheat.”
The issues of sustainability and safety — and consumers’ reactions thereto — remain at the heart of the debate involving GM wheat. A decade ago, Mr. Weaver recalled, neither the industry nor consumers talked much about water efficiency, nitrogen usage, carbon footprint and other environmental issues. If seed developers can put environmentally friendly traits into new generations of wheat, consumers might have a more positive disposition toward GM flour and finished baked goods made with it. “Most consumers are pro-technology as long as it contributes back to nature and offers sustainability,” he said.
The industry, however, needs to do its due diligence: It must commit to extensive scientific research to ensure the GM crop is benign and consult with consumer focus groups to ensure broad acceptance before committing to a specific form of biotech wheat, Dr. Sullins said.
According to conventional wisdom, being first to market normally determines long-term leadership in terms of market share and sales. But there is one caveat when it comes to GM wheat. “If there is any controversy or questions about this material, I’m not sure being the first to market with biotech wheat will be a positive thing,” he said. “It will be interesting to see what transpires and what questions are being asked by activists and could it create a problem for biotech wheat rollout?” He added it will require consumer, stakeholder involvement and unification of the industry for a seamless transition to biotech wheat.
CALL FOR CHOICE.
The risk of any consumer backlash, either in the US or overseas, is why some bakers such as Hayden Wands, chair of ABA’s Commodity and Agricultural Policy Committee (CAPC), have long supported bakers keeping their options open for the future. “ABA supports consumer choice,” he said. “So long as consumers are able to choose between non-GMO and GM wheat, ABA supports the process moving forward.”
Several bakers are concerned about the cost of segregating GM and non-GM wheat as well as the potential for cross-contamination as GM traits drift from one farm to a non-GM field, creating a third crop of wheat with a small percentage of GM traits in it. “We are concerned about the lack of consensus on a threshold level for biotech wheat cross-contaminating non-biotech wheat,” Mr. Heflich said. “In the absence of a practical threshold, the risk of an unapproved event is high and would be very costly to the industry.”
Another reason for choice might be potentially shifting attitudes by supermarket retailers, both mainstream and those chains that focus on selling natural, locally sourced and non-GE products, said George Poulos, vice-president of manufacturing, Alpha Baking Co., and a proponent of biotech wheat. “A lot of customers today even go so far as to ask us if our products have GE ingredients,” he said. “For instance, why can’t we guarantee that our soybean oil is non-GE. Everyone knows you can’t say that because almost all soybean oil is made from some GE soybeans.”
Although processing essentially removes GE material in soybean oil, the potential reaction among retailers toward biotech products remains an X-factor. “GM is an issue, but it’s not a deal-breaker yet,” Mr. Poulos said. “But you have got to wonder, ‘Why are they asking?’”
CASE FOR QUALITY.
Initially, the seed companies are focusing on yield and drought resistance. It likely won’t be until much later in the GM development process that they turn attention to adding traits that raise the level of protein in wheat, which could improve the baking characteristics and the quality of the final products consumers purchase.
However, Mr. Walker observed, growing biotech wheat would increase yield and use less nitrogen and less pesticides as well as provide other side benefits. Biotech wheat, he added, can only further benefit what bakers are doing already. “We are making more varieties of baked goods with more healthful ingredients, with less chemical additives being used, with longer shelf life and higher throughput than ever before,” he said.
By taking some variables out of the growing of wheat, biotech alternatives might provide some unintended benefits for bakers, especially when they need to adjust their formulas to a new crop, according to Dr. Sullins. “If biotech wheat can take some of the inconsistency out of wheat quality due to Mother Nature’s various events each year — whether it’s a drought or it’s too wet — that would be a boon to bakers,” he said. “Each year, they get a new crop, and it’s different. They have to rewrite the specifications, maybe reformulate or change their processing parameters. We could see some functional or nutritional benefits that provide a real asset in the end. Maybe we can get away from that ‘processed flour syndrome.’”
Let the debate continue as GM wheat gets moving once again.