Syngenta corn release poses issues for grain groups

by Josh Sosland
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WASHINGTON — Widespread concern in the grain industry over the premature commercialization of individual crops with bioengineered traits has been brought into focus by a legal dispute between Syngenta A.G. and Bunge North America, said the National Grain and Feed Association and the North American Export Grain Association.

The N.G.F.A. and NAEGA issued a joint statement Aug. 26 in connection with a lawsuit filed by Syngenta Seeds, Inc. against Bunge. In a complaint filed Aug. 19, Syngenta said Bunge unjustifiably was refusing to accept Syngenta Agrisure Viptera corn.

In their statement, the industry groups expressed strong support for the right of grain companies to choose what crops they will not accept, a right explicitly challenged in the Syngenta lawsuit.

In its complaint, Syngenta has asked that Bunge be “preliminarily and permanently enjoined from refusing to accept Agrisure Viptera-produced corn, Syngenta will suffer immediate and irreparable injury for which there is no adequate remedy at law, in the form of lost goodwill, lost market share, lost confidence from its customers and distribution network, and other injuries. Syngenta is also entitled to damages in an amount to be proven at trial, in excess of $75,000 exclusive of interest and costs.”

With corn harvest approaching, questions have arisen over where grain producers who planted Viptera will be able to deliver their grain. In April, Syngenta told Seed Today it was “rapidly approaching a sold-out position for its Agrisure Viptera 3111 corn seed in its first full year on the market.” Commenting three months later on the strong demand for the new seed, Syngenta in releasing financial results said its North American sales were “driven by our new multi-stack offer including Viptera and by increased licensing revenues.”

Elaborating on the financial results, Syngenta’s c.e.o. Mike Mack said in a conference call that the new Viptera trait “was present in 20% of the portfolio and met a highly positive grower response.”

Industry sources indicated well over 250 million bus of Viptera corn will be harvested in the next few months.
To the U.S. grain industry, the commercialization of Viptera in 2011 was premature.

“The grain handling and export industry have communicated consistently, clearly and in good faith with biotechnology providers and seed companies about the importance of biotech-enhanced events in commodity crops receiving regulatory approvals or authorizations — prior to commercialization — in key export markets where foreign governments have functioning regulatory systems that approve biotech-enhanced traits,” NAEGA and the N.G.F.A. said in their statement. “These communications regarding key export markets, identified through market and trade assessments, have been conveyed through industry trade associations and in direct communications by individual companies.”

Syngenta said it has fulfilled the industry’s requirements, noting it has received regulatory approvals from “countries recommended by the Biotechnology Industry Organization and the National Corn Growers Association before commercialization, that is, Canada and Japan.”

Syngenta continued, “Additionally, the technology has been approved for cultivation in Canada, Argentina and Brazil, and for import in Australia, Brazil, Mexico, New Zealand, the Philippines, Korea, and Taiwan.”

At issue, though, is China, which Syngenta said is not a major export customer for corn, and which has not approved the seed. Syngenta noted that China accounted for only 3% of U.S. corn exports in 2010-11.

Bunge has disputed this characterization as did the NAEGA and the N.G.F.A. statement.

“U.S. farmers, as well as the commercial grain handling and export industry, depend heavily upon biotechnology providers voluntarily exercising corporate responsibility in the timing of product launch as part of their product stewardship obligation,” the NAEGA and the N.G.F.A. said. “Technology providers must provide for two critical elements: First, maintaining access to key export markets like China, or for that matter any market like China that has a functional, predictable biotech-approval process in place; and second, proactive transparency to all stakeholders when there is a potential for restricted marketability of their products based upon approval status in major markets. The negative consequences of overly aggressive commercialization of biotech-enhanced events by technology providers are numerous and include exposing exporting companies to financial losses because of cargo rejection, reducing access to some export markets, and diminishing the United States’ reputation as a reliable, often-preferred supplier of grains, oilseeds and grain products. Premature commercialization can reduce significantly U.S. agriculture’s contribution to global food security and economic growth.

“Putting the Chinese and other markets at risk with such aggressive commercialization of biotech-enhanced events is not in the best interest of U.S. agriculture or the U.S. economy.”

The groups said their concerns about the premature commercialization of Viptera corn should not be construed as opposition to agricultural biotechnology.

“The N.G.F.A. and NAEGA both strongly support agricultural biotechnology and other scientific and technological innovations that contribute to the production efficiency and availability of a safe, abundant and high-quality food and feed supply for U.S. and world consumers,” the groups said.

Of great concern to the grain industry is language in the Syngenta complaint challenging the right of grain companies to decide what grains they will and will not accept.

“Common law imposes a requirement that public warehouses, as public utilities, may not refuse to receive goods which it is authorized to receive and store,” the Syngenta filing said. “Iowa has codified this common law principle in Iowa Code § 203c.27, which states: /[e]very warehouse operator conducting a warehouse licensed under this chapter shall receive for storage therein, so far as its authorized storage capacity permits, any product of the kind the operator is permitted by the operator’s license to store, and which may be tendered to the operator in a suitable condition for warehousing, in the usual manner and in the ordinary and usual course of business, without making any discrimination between persons desiring to avail themselves of warehouse facilities.’”

Bunge’s approach to Viptera is not universal within the grain industry. Cargill is accepting the corn, conditionally, said Mark Klein, a company spokesperson.

“Cargill is posting signs at our elevators asking farmers to let us know in writing prior to delivering Viptera corn,” Mr. Klein said. “This is to give us the time and flexibility to try to find the appropriate markets for the product. So we are accepting it. We just don’t want growers to show up with a load and be told we’re not sure we have a place for it right then and there.”

Still, according to NAEGA and the N.G.F.A., the ability to choose which crops they will and will not accept is a cornerstone of the grain business.

“Within the U.S. grain and oilseed handling and marketing system, each company makes its own determination as to whether to accept various commodity crops — including those containing biotech-enhanced events — driven by customer preferences, regulatory regimes, contractual commitments and the respective markets they serve,” NAEGA and the N.G.F.A. said. “Given the nature of the U.S. grain marketing system, these business decisions extend to the first point of sale from the producer. The N.G.F.A. in the late 1990s developed sample contract clauses that companies could consider using based upon their specific market needs and situations with respect to biotech-enhanced traits. These sample contract clauses were updated most recently in May 2007.

NAEGA and N.G.F.A. member companies continue to make commercial decisions on appropriate responses to the commercial introduction of new biotech-enhanced events based upon the individual company’s facilities, economic considerations and market opportunities.

“Providing all participants in the value chain, from producer to consumer, with the ability to choose is a key driver in enabling coexistence of diverse interests in agriculture in the United States.”

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