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Economic Implications of Plant-made Pharmaceutical Production in North Carolina

Economic Implications of Plant-made Pharmaceutical Production in North Carolina



Christopher F. Dumas, Troy G. Schmitz, Christopher R. Giese, Michael Sligh. ...

Christopher F. Dumas, Troy G. Schmitz, Christopher R. Giese, Michael Sligh.
Published 2008.
Report features recommendations to help shape a full and meaningful dialogue regarding the future of pharmaceutical crops in North Carolina agriculture. Christopher F. Dumas; Troy G. Schmitz; Christopher R. Giese; Michael Sligh.



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    Economic Implications of Plant-made Pharmaceutical Production in North Carolina Economic Implications of Plant-made Pharmaceutical Production in North Carolina Document Transcript

    • Economic Implications of Plant-madePharmaceutical Production in North CarolinaChristopher F. DumasAssociate Professor, University of North Carolina WilmingtonTroy G. SchmitzAssociate Professor, Arizona State UniversityChristopher R. GieseGraduate Research Assistant, Arizona State UniversityMichael SlighRural Advancement Foundation International – USA
    • The Rural Advancement Foundation International - USA cultivates markets,policies and communities that support thriving, socially just andenvironmentally sound family farms.While focusing on North Carolina and the southeastern United States, we alsowork nationally and internationally. RAFI is creating a movement among farm,environmental and consumer groups to ensure that:• family farmers have the power to earn a fair and dependable income;• everyone who labors in agriculture is respected, protected, and valued bysociety;• air, water and soil are preserved for future generations;• the land yields healthy and abundant food and fiber that is accessible toall members of society;• the full diversity of seeds and breeds, the building blocks of agriculture,are reinvigorated and publicly protected.2008 RAFI-USA. All rights reserved.Rural Advancement Foundation International - USAPO Box 640Pittsboro, NC 27312www.rafiusa.org919-542-1396
    • iPrefaceFor more than 10,000 years, farmers have worked with the environment tocreate new plants, fiber, and food to sustain life all over the earth. As we losefarmers, we lose diversity. As we lose diversity, we lose farmers. The social,economic, and technological changes converging on our rural communities arerapidly changing how food is produced and what comes to our tables.RAFI-USA believes that farmers and consumers must be informed, involvedwith each other, and active in protecting and directing the use of natural andhuman agricultural resources.RAFI-USA approaches all agricultural policy, practice and technology optionswith the same basic questions:o Who will benefit?o Who will be harmed?o Who will pay, if something goes wrong?o Who will decide?These are fundamental questions and deserve our attention. In the best cases,these questions should be answered prior to adoption of new agriculturalinitiatives, and should be addressed in a fully open and transparent process –especially those initiatives which can have profound and/or long-term impacts.RAFI-USA also uses the “triple-bottom-line” assessment when evaluating newagricultural initiatives:o Is it economically viable for the farmers? Will they receive a fairprice and reasonable return on their investment?o Is it environmentally sound? What are the risks to theenvironment, local communities, biodiversity and the ecosystem?o Is it socially just? Do farmers, workers and others participating inthis initiative have full rights and ownership of the technology?Are the contracts fair? Are the farmers in control of themanagement decisions of this initiative?These two sets of tools, benefit assessment and the “triple-bottom line” analysis,guide our evaluations of any potential new agricultural initiatives.It is in this spirit that we have commissioned this report. We hope ourrecommendations can help shape a full and meaningful dialogue regarding thefuture of pharmaceutical crops in North Carolina agriculture, and the realopportunities to achieve the “triple-bottom” line.Michael SlighJanuary 2008
    • iiExecutive SummaryOver the last twenty years, agriculture has seen the introduction andrapid deployment of genetically modified (GM), or “transgenic,” crops for food(i.e., corn and soybeans) and fiber (i.e., cotton). Plant-madepharmaceuticals (PMPs) are a class of GM crop not intended for use as foodor feed. Rather, PMPs are intended for use as therapeutic drugs for humansor livestock, or as materials for research and industry (e.g., cell culturemedia). PMP plants are used as factories to produce the PMP product, theproduct is extracted from the plant, and the plant remains are discarded.Scientists and industry groups typically cite two reasons for pursuing PMPproduction methods. First, lower cost: production of high-qualitypharmaceutical components (proteins and antibodies) is presently doneusing cell cultures inside bioreactors, which is very costly (US$105-175 pergram) and limits the size of the consumer market. Second, growingdemand: by the end of the decade, there could be more than 80 antibody-dependent products with an estimated value of US$20-90 billion, providedadequate production capacity can be developed. Proponents of PMP cropsclaim that PMP production will increase the range of available drugproducts, reduce the time required to bring new drugs to market, lower thecost of drug production, and provide additional markets for farmers.Opponents of GM and PMP crops cite potential food safety risks from cross-contamination of food crops, consumer skepticism of genetically engineeredproducts, potential environmental hazards, and past regulatory mistakes asreasons for their opposition.The regulatory history of PMPs grown outdoors as field crops is notencouraging. Although PMPs have been grown by several companies inexperimental field trials regulated by the U.S. Department of Agriculture(USDA) since the early 1990s, none has been grown in commercialquantities (although one just received a permit to grow at commercial scalein 2007), and no PMP drug products have as yet been approved by the U.S.Food and Drug Administration (FDA). (Some PMPs are being sold in smallquantities for use as research materials.) Escape of PMP plants from USDA-regulated field trials has been followed by regulatory reform at USDA, butPMP plants have continued to escape from field trials following the reformeffort. If PMP plants escape from their designated areas and become mixedwith plants that are intended for use as food, and the mixture enters thefood supply, large disruptions of the food industry can occur.This report will review information on the potential economic benefits,environmental impacts, and externalized costs of GM crops in general, andPMP crops in particular, for North Carolina. Special attention will bedevoted to PMP rice developed by Ventria Bioscience. Ventria’s PMP rice iscurrently undergoing field trials in North Carolina. At present, Ventria’sPMP rice is the only field-grown PMP crop in the state. As of 2007, Ventria’s
    • iiithree PMP rice products, the pharmaceuticals lactoferrin, lysozyme, andserum albumin have not been approved by the FDA for drug, food, or animalfeed uses. The products have been marketed as research and bioprocessingmaterials, but it is not clear that Ventria has received substantial revenuesfrom these uses. Ventria plans to market the products as anti-diarrhealadditives for infant oral rehydration solutions and as nutritionalsupplements in yogurt, granola bars, performance drinks and otherproducts. Ventria has also mentioned adding lysozyme to animal feed as asubstitute for antibiotics. Ventria claims a potential market for theseproducts of more than $2 billion annually. The company’s estimates ofpotential profitability and economic impacts should be considered withcaution. Even if eventually approved by FDA, Ventria’s products may not beprofitable as anti-diarrheal additives for infant formulas marketed indeveloping countries without subsidies, and the profitability of theseproducts in sports drinks, granola bars, etc., is speculative.Although Ventria is conducting field trials in North Carolina, it currentlyplans to grow and process PMP rice at commercial scale in Kansas. Ventriaprojects 30,000 acres of PMP rice production per year in Kansas upon fullscale commercialization. Assuming this speculative acreage forecast iscorrect, with an average farm size of approximately 700 acres in Kansas,perhaps 43 farmers would benefit from PMP rice production. At Ventria’sestimate of $150 to $600 in additional returns per acre relative to corn, PMPrice may bring Kansas farmers an additional $4.5 to $18 million per year.Perhaps 50 more people would be employed in Ventria’s proposed PMP riceprocessing facility in Kansas. Using typical economic multiplier numbers,perhaps 150 additional jobs would be supported in Kansas due to economicmultiplier effects. Including economic multiplier effects, Ventria estimatesthat $45 million annually in economic impact would be generated by PMPrice production activities in Kansas. For comparison, in 2006, Kansasagriculture produced over $11 billion in crop, animal, and relatedagricultural output, with a total economic impact of $28 billion. Ventria’sestimated economic impact of $45 million per year is small relative to thescale of Kansas agriculture.For those farmers considering PMP crop production, several factorsshould be considered in addition to potentially higher revenues per acre.Ventria is implementing the field trials using independent grower contracts.At this early stage, Ventria covers all costs for the North Carolina farmersgrowing PMPs on subcontract. In the future, independent growers will beexpected to provide a seed-to-harvest package deal for the firm’s PMPproduction. This will involve significant investment in PMP-specific trainingand dedicated farm equipment. The USDA requires each PMP grower tohave dedicated land area, dedicated equipment for planting and harvesting,and separate areas for cleaning PMP equipment and processing PMP crops.Employee training is also required as part of compliance with new FDA andUSDA regulatory statues for molecular farming. This raises the possibilitythat molecular farming contracting for field-grown PMP crops will require
    • ivsuch costly investments in infrastructure and compliance that only thelargest, wealthiest growers would be able to participate and profit.Furthermore, use of PMP crops by some farmers may impose “spillover”costs on other farmers who do not grow PMP crops. Farmers who do notgrow PMP crops may have to spend money to certify that their crops are“PMP-free” if grown in the same region as PMP crops. This is an especiallyimportant issue for organic farmers.In addition to the potential costs of PMP production to the farm sector,there may also be environmental costs if field-grown PMP products have adetrimental effect on fish, wildlife, insects (e.g., bees), or wild plants. Whilemuch work has been done on the environmental impacts of GM plants usedfor food, relatively little work has been done on the potential environmentalimpacts of PMP plants. At this point, the most that can be said is that thepotential environmental impacts of PMP field crop production are unknown.For PMP products grown using familiar field crops, the environmentalimpacts may be small, assuming that the PMP product itself within theplant is not harmful, but again, information is very incomplete and no firmconclusions can be drawn. Ongoing work in bioconfinement methods mayreduce the environmental risk of PMP plants.Detrimental human health effects are another potential cost of PMPproduction. While detrimental human health effects of products intendedfor pharmaceutical use are certainly possible, these products would needapproval by FDA for use as drugs or food, and any non-accidental effectswould likely be small, assuming conscientious review by FDA. In contrast,the issue of accidental, detrimental human health effects looms large in thePMP debate. If PMP products not intended for use as food somehow enterthe food supply and become ingested by humans, the effects could besignificant, as these products may not have undergone food safety testing byFDA. Again, the brief history of PMP crop field trials indicates that it is verydifficult to prevent co-mingling of PMP and non-PMP crops, implying thatthe potential for accidental contamination of the food supply is an importantissue.Neither food plants nor farmers’ fields are necessary for the production ofPMPs. PMPs can be grown using non-food plants in contained systemsinstead of agricultural fields. Some alternative PMP containment systemsutilizing non-food plants include duckweed (Lemna spp.), tobacco (Nicotianaspp.), algae (Chlamydomonas reinhardtii) and moss (Physcomitrella patens),and fungi (Aspergillus niger). Yet another option is to produce PMPs usingfood crops grown inside greenhouses, such as potatoes grownhydroponically. Advantages of growing PMPs in containment systemsinclude better uniformity of product, lack of residues from herbicides,pesticides and fungicides, and greatly reduced risk of contaminating thefood supply. Two disadvantages of producing proteins in containmentsystems are that it is thought to cost more, and it is thought to take longerto bring the product to market. However, recent advances in closed-system
    • vtechnology have eliminated some of the cost difference between field grownPMPs and contained systems. In North Carolina, the availability of highly-skilled biotech labor and innovations in the use of contained productionsystems that attain high product purity are catalyzing market expansion ofcontained PMP production. Contained PMP production currently co-existswith profitable organic and local food suppliers in the state.At the present time, PMP production via food crops in the field should notbe considered a cornerstone of future agricultural policy or rural economicdevelopment policy in North Carolina or elsewhere in the United States.Given past difficulties in securing FDA approval for PMP products, thebenefits of PMP production are too speculative. Furthermore, given pastdifficulties in preventing the escape of PMP products in the field, the risksand potential costs of future containment loss events are too great.
    • Contents1 Introduction................................................................................. 12 GM and PMP Regulation............................................................... 22.1 Regulatory Framework and Experience .................................. 22.2 Ventria Bioscience -- Regulatory History .............................. 143 Potential Benefits of PMPs .......................................................... 203.1 Overview .............................................................................. 203.2 The Case of Ventria Bioscience............................................. 224 Potential Costs of PMPs.............................................................. 294.1 Farm Costs and Potential Grower Profitability ...................... 294.2 Government Subsidies to Biotech and PMP .......................... 384.3 PMP Health Risks in Intended Uses...................................... 424.4 Containment Loss and Potential PMP Liability Costs ............ 444.4.1 Consumer Reaction to GM and PMP Products inFood ...........................................................................................................454.4.2 Food Market Reaction to GM/PMP Containment Loss484.4.3 NRC Recommendations to Reduce GM/PMP LiabilityCosts ...........................................................................................................544.5 Externality “Spillover” Costs Affecting Non-GM andOrganic Farmers............................................................................... 564.6 Externality “Spillover” Costs of Environmental Hazards........ 585 Alternatives to Food Crop PMPs.................................................. 666 Conclusions ............................................................................... 677 RAFI Recommendations ............................................................. 748 References.................................................................................. 779 Tables ........................................................................................ 89
    • 11 IntroductionOver the last twenty years, agriculture has seen the introductionand rapid deployment of genetically modified (GM), or “transgenic,”crops. While crop changes produced by traditional breedingtechnologies such as hybrid corn and Green Revolution rice andwheat have had critics, opposition to the production of GM cropshas developed more quickly and publicly. A new type of GM crop,plant-made pharmaceuticals (PMPs), has been undergoing fieldtrials and is on the verge of commercial-scale production. PMPsare therapeutic drugs or medical products produced insidegenetically modified plants. The debate concerning GM and PMPcrops involves three primary issues: the benefits and costs of thetechnology and its products, regulatory measures to preservehuman and environmental safety, and the appropriate legalframework to encourage innovation, promote competition, andpreserve intellectual property (Nelson 2001). The potential benefitsof GM crops include higher crop yields, enhanced nutritionalcharacteristics, and reduced production costs through lowerpesticide or fertilizer requirements. Proponents of PMP crops alsoclaim that PMP production will increase the range of available drugproducts, reduce the time required to bring new drugs to market,lower the cost of drug production, and provide additional marketsfor farmers (BIO 2002a, 2002b, 2006). Critics of GM and PMPcrops cite potential food safety risks from cross-contamination offood crops, consumer skepticism of genetically engineeredproducts, potential environmental hazards, past regulatorymistakes, and increasing corporate control of agriculture asreasons for their opposition (e.g., Freese 2007, 2002).The U.S. Department of Agriculture (USDA) began regulating GMcrops in 1986 (USDA 2005a). Since that time, USDA has approvedover 10,600 applications for field-testing GM crops at more than49,300 sites. Although GM crops have been in use commerciallysince China introduced virus-resistant tobacco and soybeans inthe early 1990s, the first commercial use of GM crops in Westerncountries was the Flavr Savr tomato, a delayed-ripening tomatointroduced by Calgene in the US in 1994 (Nelson 2001). The globalvolume of GM crop production expanded rapidly over the next tenyears. While most GM crops are grown in North America, largequantities are also produced in Argentina, Mexico, and SouthAfrica. GM crops in widespread use include corn, soybeans,cotton, potatoes and canola. From the beginning ofcommercialization in 1994, the global area planted in GM cropsgrew at an annual rate of 13%, reaching 102 million hectares (252
    • 2million acres) by 2006 (ISAAA 2006). Soybeans, corn (maize), andcotton are the leading GM crops in terms of acreage. In 2006, anestimated 10.3 million farmers worldwide grew GM crops in 22countries (Table 1). The United States is the world leader in GMcrop area, with 54.6 million hectares under cultivation, whileSpain is the leading European producer with 60 thousandhectares. The eleven developing countries planting GM cropsaccount for forty percent of GM crop acreage, a percentage thathas been increasing steadily.Considerable controversy surrounds the use and adoption of GMcrops. Some consumer advocacy groups believe that geneticallyengineered foods hold health and environmental dangers. Anti-biotech activists have labeled GM products as “Franken Foods”and have raised long-term health concerns regarding theconsumption of GM products. Several of these groups have beensuccessful in launching anti-GM campaigns that have influencedthe rate of GM adoption. Some examples include: (1) the decisionsof the United States and Canada to forego the adoption of GMwheat varieties; (2) the decision of Aventis to terminate theproduction of Starlink corn (see p. 38 below); and (3) the decisionsof California and Missouri to ban the production of certainpharmaceutical rice varieties. In the United States, the rate ofadoption of GM crop varieties slowed considerably during the early2000s. The United States Food and Drug Administration (FDA)approved on average 9.4 GM-food varieties a year between 1995and 1999. This approval rate fell to 3.0 GM-food varieties a yearbetween 2000 and 2004 (Weise, 2005). Similarly, the United StatesDepartment of Agriculture (USDA) approved on average 8.2 GM-crop varieties per year from 1994 to 1999, but only 2.6 GM-cropvarieties per year from 2000 to 2004.The regulatory situation affecting GM crop production haschanged over time, with some observers complaining thatregulations have become too burdensome, stifling innovation andapplication of new technologies, while others claim that regulatorsare too lenient and allow too much risk. All agree that theregulatory process is complex and varies greatly from country tocountry, complicating trade. The approval procedures and labelingregulations covering GM foods differ among countries. In general,biotech regulations are less stringent in the United States (US)than in the European Union (EU), which in part explains why GMproducts are more widespread in the US. In fact, severalinternational biotech and pharmaceutical companies based in theEU conduct field trials in the United States, because their productshave not been approved for production in the EU (Moss et al.
    • 32006). Finally, the legal framework that protects intellectualproperty embodied in GM crops affects the ownership and controlof new GM projects and the distribution of associated profits.It is within this industry and policy setting that we consider theeconomic and environmental implications of a specific type of GMcrop, plant-made pharmaceuticals, or PMPs, for North Carolinafarmers (Table 2). PMPs are pharmaceutical products producedand extracted from genetically modified plants; the plant is used asa factory to produce the PMP product, the product is extracted,and the plant remains are discarded. PMP plants can be growninside laboratories or greenhouses, or they can be grown outside infields like agricultural crops. The goal of both traditional plantbreeding and new GM technologies like PMPs is to identifydesirable genetic traits and combine them in a crop variety thatcan be grown profitably. Desirable traits are divided into twoclasses—agronomic characteristics that reduce the costs ofcultivation, and product characteristics that increase value toconsumers and the price consumers are willing to pay. PMPs are atype of GM crop that offers a new product characteristic—theability to produce pharmaceutical products. PMPs are referred toas “Generation 3” GM plants. Generation 1 GM plants featuredgenetic modifications that reduced the costs of crop production byreducing the need for pesticides, making the plant more drought-tolerant, etc. RoundUp Ready™ soybeans are an example of aGeneration 1 GM plant. Generation 2 GM plants improved thenutritional qualities of food plants. For example, “Golden Rice” hasenhanced levels of vitamin A. Generation 3 GM plants, PMPplants, differ from Generation 1 and 2 crops in that PMPs are notintended for use as food or animal feed. Instead, thepharmaceutical product is extracted from the PMP plant, and theplant is discarded. However, either food plants (e.g., corn or rice)or non-food plants (e.g., tobacco or algae) can be used to producePMP products. When food plants are used, the plants arediscarded after the PMP product is extracted. However, when foodplants are used, there is a risk that PMP plants may become mixedwith non-PMP plants grown for food or feed during the planting,pollination, harvesting, transportation, storage, or processingphases of production.PMP field trials began in the US (using corn/maize) in 1992,peaked in 1998, and declined beginning in 2001 (Smyth et al.2004). While corn accounts for 47 percent of all PMP field trialpermits, since 2001 there has been increasing interest in PMPsafflower, rice and especially tobacco (Freese and Caplan 2006).Field trials in Canada (using canola) also peaked in 1996-1998 and
    • 4declined following 2000 but are climbing again based on safflower.Other countries report a small number of PMP field trials between1995 and 2002. To date, PMP crops have not been grown in thefield on a commercial scale in the United States, and no PMPproducts have been approved by the U.S. Food and DrugAdministration (Freese 2007). However, firms currently engaged infield trials will presumably wish to grow successful products atcommercial scale in the future.PMP crops and products present new opportunities and risks forNorth Carolina farmers. Because PMP agriculture is in its infancy,relatively little information is available on PMP crops and products.This report will review information on the potential economicbenefits, environmental impacts, and externalized costs of GMcrops in general, and PMP crops in particular, for North Carolina.Special attention will be devoted to PMP rice developed by VentriaBioscience. Ventria’s PMP rice is currently undergoing field trialsin North Carolina. At present, Ventria’s PMP rice is the only field-grown PMP crop in the state. Ventria has PMP rice field trials inMissouri as well and grows PMP rice experimentally ingreenhouses in California (Sacramento Bee 2006). In May 2007,Ventria received approval from the USDA to plant up to 3,200acres of PMP rice in Kansas and has begun work on a PMP riceprocessing facility in Junction City, Kansas (Ventria Bioscience2006). It appears that any PMP rice grown in North Carolina willbe transported to Kansas for processing. Because Ventria’s PMPrice is the first PMP crop to be grown in the field uncontained atcommercial scale in the North Carolina, decisions concerning itsproduction, processing, transportation, marketing and regulationare potentially precedent-setting.
    • 22 GM and PMP Regulation2.1 Regulatory Framework and ExperienceA fundamental lesson of economic theory and practicalexperience is that the “invisible hand” of private markets cannot berelied upon to correct externality “spillover” costs precisely becausethe financial incentives that drive the invisible hand are distorted.In such situations, society often turns to government action tocoordinate and regulate private market actions for the public good.Given the potential externality “spillover” costs associated with GMand PMP crops (see sections 3.5 and 3.6), society has chosen toregulate them. Industries often request government regulation toprevent “bad apple” firms from ruining industry reputations andalienating consumers. For example, the Biotechnology IndustryOrganization, the leading GM and PMP industry trade association,supports “strong regulatory oversight for all products of cropbiotechnology” (BIO 2007).The basic institutional structure for regulating all biotechnologyproducts in the United States is the “Coordinated Framework forRegulation of Biotechnology” established in 1986 (see, e.g., PewInitiative 2004). In general, this framework involves three federalagencies: the USDA’s Animal and Plant Health Inspection Service(APHIS), which regulates the importation, interstate movement,and field testing of GM plants; the FDA, which regulates food andfeed additives, human drugs, and medical devices; and theEnvironmental Protection Agency, which regulates the use of allpesticides, including those expressed in GM plants.Because USDA/APHIS is authorized to regulate potential plantpests under the Federal Plant Protection Act, and since all GMplants have the potential to be plant pests, all GM plants areconsidered “regulated articles” by USDA/APHIS. Use of sucharticles outside a contained facility (e.g., in a field test) requiresauthorization from USDA/APHIS through either a “notification”procedure or a permit procedure. In 1993, the USDA promulgatednew regulations governing field tests of genetically engineeredplants, removing permit requirements for most GM plants butretaining them for PMPs. GM plants that do not require a permitare authorized through the notification process.
    • 3Under the notification process, GM plants (but not PMP plantsor PMIP, plant-made industrial proteins, plants) can be grown infield trials with simple notification of the USDA. For GM plantsintended for use as food or feed, the GM plant developer alsoinitiates a “consultation” with the FDA, during which the planttypically undergoes a voluntary food safety review. For GM plantsmodified to have pesticidal properties, the EPA requires anadditional experimental use permit under the Federal Insecticide,Fungicide and Rodenticide Act (FIFRA). Upon successfulcompletion of the field trials, GM plant developers can apply forderegulated status from USDA/APHIS. If deregulated status isgranted, a GM crop can then be freely commercialized with nofurther oversight by USDA/APHIS, and this is in fact the route thathas been used for all the major commercial GM crops currently onthe market. If the plant has pesticidal properties, it must stillregister with EPA prior to marketing.Since 1993, PMP field trials have been regulated under theUSDA’s permit procedure rather than the notification procedure.In theory, the permit procedure was supposed to be stricter thanthe notification procedure. However, A National Research Councilreport (2002) on the environmental effects of transgenic (GM)plants found that “the only practical trigger used by APHIS [was]the presence of a previously identified plant pest or genes from aplant pest in the transformed plant. Other operational triggers areneeded for transgenic plants that may have associated risks butlack the above characteristics.” The NRC report also found thatAPHIS assessments of potential environmental effects of transgenicplants are largely based on environmental effects considered atsmall spatial scales. Potential effects from “scale-up” associatedwith commercialization are rarely considered. The reportrecommended that post-commercialization validation testing beused to assess the adequacy of pre-commercializationenvironmental testing and that this testing should be conducted atspatial scales appropriate for evaluating environmental changes inboth agricultural and adjacent, unmanaged ecosystems. The NRCreport also found that the APHIS process should be madesignificantly more transparent and rigorous by enhanced scientificpeer review, solicitation of public input, and development ofdetermination documents with more explicit presentation of data,methods, analyses, and interpretations. In the committee’s reviewof public participation in the review process it was apparent thatthe number of comments on Federal Register notices had declinedalmost to zero. Committee discussions with representatives ofpublic interest groups indicated that this decline in responses to
    • 4APHIS Federal Register notices was at least in part due to aperception that APHIS was only superficially responsive tocomments. The committee found that there was a need for APHISto actively involve more groups of interested and affected parties inthe risk analysis process while maintaining a scientific basis fordecisions. Furthermore, the NRC committee found that the extentof “confidential business information” in registrant documents sentto APHIS hampered external review and transparency of thedecision-making process.In addition to the 2002 NRC report, several incidents in 2002involving PMP crop contamination of food products caused USDAto reevaluate its PMP permitting process. In September 2002,ProdiGene, Inc. was ordered by USDA to burn 155 acres of foodcrop corn in Iowa to ensure that it was not pollinated by a nearbyfield of ProdiGene’s PMP corn (New York Times 2002). InNovember 2002, ProdiGene was fined US$250,000 in a secondincident for allowing experimental PMP corn grown in Aurora,Nebraska, in the preceding year to contaminate a soybean cropgrown in the same field in 2002. The contamination wasdiscovered by USDA APHIS inspectors, but only after the soybeanshad been harvested and stored with other soybeans in acommercial grain silo, contaminating 500,000 bushels ofsoybeans. ProdiGene bought the contaminated soybeans and hadthem destroyed at a cost of US$3.5 million. ProdiGene was alsoforced to post a $1 million bond to cover potential damages fromany future contamination episode. The US government made aninterest-free loan to ProdiGene, because the small biotechcompany had insufficient funds to pay (Washington Post 2003).This can create an incentive problem for the bio-pharma industryas a whole, as the small firms typical of the industry would nothave the funds to pay such fines. The problem is that if firmsknow that the government will provide loans or loan guarantees topay fines resulting from regulatory violations, then firms do nothave the financial incentive to maintain containment ofpharmaceutical crops (Smyth et al. 2004).In mid-December 2002, Dow AgroSciences was fined for failingto meet permit conditions to prevent gene transfer from anexperimental transgenic maize variety undergoing field trials atMolokai, Hawaii (Smyth et al. 2004). That same month, PioneerHi-Bred was fined for planting experimental transgenic maize in anunapproved location that was too close to other experimentalmaize plantings in Kauai, Hawaii. In April 2003, Dow was againfined for violating an EPA permit, this time in Kauai. The fineresulted from the detection of 12 transgenic maize plants that
    • 5contained an unapproved gene that is suspected of coming fromthe pollen of another experimental plot located nearby. AlthoughDow officials discovered the plants, Dow failed to notify EPApromptly, and EPA officials expressed disappointment over thedelay.In 2003, on the heels of the regulatory violations occurringbetween 2001 and 2003, including the high-profile 2002 Prodigeneincidents, USDA permit regulation of PMP field trials wasstrengthened (USDA 2006A). Crop-specific measures werestipulated to ensure containment, including isolation distance oftest plots (for maize, for example, the distance is one mile, eighttimes the distance required for the production of foundationseeds), planting of buffer borders of non-GM crops was mandated,and perimeter fallow zones were required. In addition, the use ofdedicated equipment was mandated, there were post-harvestrestrictions on land use, and APHIS was to perform a specifiednumber of inspections during the field test growing season.Also in 2003, the USDA introduced a new category of regulatedproducts, “value added protein for human consumption.” As ofOctober 2006 (UCS 2006b), the only two compounds classified asvalue added proteins are lactoferrin and lysozyme, two of theproducts grown by Ventria Biosciences in North Carolina.Significantly, the USDA allows value added proteins to be regulatedunder the notification process rather than requiring permits.However, Ventria voluntarily submitted requests for permits togrow its PMP crops.USDA oversight of PMP crop field trials under the notification /voluntary permit process depends to a great extent on companyreports filed with the USDA at the end of the field trial, or annuallyfor multi-year permits. Such reports are required to include anyadverse impacts of the experimental crop. Batie and Ervin (2001)point out that because firms receive no financial benefit fromdiscovering adverse impacts, they have little incentive toinvestigate them. Freese et al. (2004) goes further and suggeststhat a clear conflict of interest exists. Because self-reporting ofadverse impacts to the USDA could entail revocation or non-renewal of the permit, and thus loss of profits, the company’s dutyto report such adverse effects is clearly in conflict with its financialinterest. Dalton (2002) reports that Pioneer Hi-Bred and DowAgroEvo denied access to proprietary materials required byindependent scientists to conduct biosafety analysis of Btsunflower after the firms initially cooperated with scientists and
    • 6the scientists’ preliminary findings indicated potential biosafetyrisks.In 2005, the USDA APHIS regulatory program was criticized byits own Inspector General audit for failing to properly regulate andtrack GM and PMP crop field tests, even after the USDAstrengthened regulations in 2003 (USDA 2005a). The audit found:“To evaluate the Animal and Plant Health Inspection Service’s(APHIS) controls over releases and movements of regulatedgenetically engineered plants, we visited 91 field test sites in 22States that were either planted or harvested. We inspected thesites for compliance with APHIS’ requirements for the growing orpost-harvest season. We found that APHIS, the USDA agency thatoversees biotechnology regulatory functions for the Department,needs to strengthen its accountability for field tests of geneticallyengineered crops. In fact, at various stages of the field testprocess—from approval of applications to inspection of fields—weaknesses in APHIS regulations and internal managementcontrols increase the risk that regulated genetically engineeredorganisms will inadvertently persist in the environment before theyare deemed safe to grow without regulation.”In particular, the 2005 USDA audit of APHIS found:(1) The precise locations of all genetically engineered field testsites planted in the United States are not always known. Afterauthorizing field tests, APHIS does not follow up with all permitand notification holders to find out exactly where the fields havebeen planted or if they have been planted at all.(2) Before approving field tests, APHIS does not reviewnotification applicants’ containment protocols, which describehow the applicant plans to contain the genetically engineeredcrop within the field test site and prevent it from persisting inthe environment.(3) At the conclusion of the field test, APHIS does not requirepermit holders to report on the final disposition of geneticallyengineered pharmaceutical and industrial harvests, which aremodified for nonfood purposes and may pose a threat to the foodsupply if unintentionally released. As a result, we found that twolarge harvests of genetically engineered pharmaceutical cropsremained in storage at the field test sites for over a year withoutAPHIS’ knowledge or approval of the storage facility.(4) APHIS does not specify when genetically engineered cropsmust be destroyed, or “devitalized,” following the field test.Approved applicants sometimes allow harvested crops to lie in
    • 7the field test site for months at a time, their seeds exposed toanimals and the elements. Also, because APHIS has notspecifically addressed the need to physically restrict ediblegenetically engineered crops from public access, we found aregulated edible genetically engineered crop, which had not gonethrough the Food and Drug Administration’s regulatory processfor approval for human consumption, growing where they couldeasily be taken and eaten by passersby.(5) Field inspectors “did not inspect all pharmaceutical andindustrial field test sites five times during the 2003 growingseason, as APHIS has announced to the public. APHIS has alsostated publicly that pharmaceutical and industrial field testsites would be inspected twice during the postharvest period, orthe year following the end of the field test, during which the fieldmust be monitored for regrowth of the genetically engineeredcrop. In one case, a violation at a pharmaceutical field test sitein our sample went undetected because PPQ [APHIS PlantProtection and Quarantine] did not perform the requiredinspections at that site during the 2003 postharvest monitoringperiod” (USDA 2005a).Despite USDA’s assurances that it would address the issuesraised in the 2005 audit, new containment breach incidents in2006 raised questions about the ability of even USDA’s new,strengthened regulations to contain GM crops. Twice in 2006,current regulations did not prevent GM rice from contaminatingnon-GM commercial rice supplies, halting exports of US rice tosome countries and causing substantial economic losses for USrice farmers (Washington Post 2006, Bennett 2007). In January2006, GM Liberty Link (LL601) rice (not approved for humanconsumption) was found in rice processed by Riceland Foods inStuttgart, Arkansas (Fortune 2007). Arkansas produces about 45percent of U.S. rice, and Stuttgart is home to America’s two largestrice mills. The rice was then found in commercial rice supplies inTexas, Louisiana, Mississippi and Missouri, as well. The LibertyLink rice may have come from a rice research station in Crowley,LA, operated by Louisiana State University. Although BayerCropScience had dropped plans to produce LL601 in 2001 and didnot pursue USDA approval for commercial production, the rice hadbeen grown in several test locations, including Louisiana StateUniversity’s rice research station near Crowley, LA, from 1999 to2001 (Washington Post 2006). It was later determined that at leastone variety of rice (Cheniere) grown at the research station was
    • 8contaminated with LL601 since at least 2003, even though theclosest Cheniere plot was 160 feet from the LL601 plot (16 timesthe then current USDA standard). It is unknown whether thegrains from the two plots were mixed before or after cultivation, orwhether the LL601 plants fertilized some of the Cheniere plants.However, it was not until July 31, 2006, that Bayer CropSciencenotified USDA and the U.S. Food and Drug Administration that thecompany had detected trace amounts of regulated LL601 incommercial long-grain rice (USDA 2007b). On August 18, 2006,Bayer CropScience applied to USDA for deregulation of LL601, thesame day that USDA announced the LL601 contamination(Washington Post 2006). The Center for Food Safety claimed thatthis was merely an effort by Bayer CropScience to avoid legalliability, as Bayer CropScience had no intention of bringing theLL601 rice to market. In November 2006, APHIS announced that2003 Cheniere variety was the only foundation seed that testedpositive for regulated genetically engineered LL601, and farmerswere advised not to plant it. APHIS also announced that a sampleof the 2003 Cheniere variety indicated the presence of trace levelsof unregulated LL62. LL62, LL06 and LL601 are rice varietiesengineered by Bayer CropScience to be tolerant to herbicidesmarketed under the brand name LibertyLink. APHIS hadderegulated LL62 and LL06 in 1999. On November 24, 2006,USDA-APHIS retroactively deregulated Liberty Link LL601 rice,declaring it safe for human consumption. Later tests foundcontamination by two additional strains of unapproved LibertyLink rice in another type of foundation seed rice, Clearfield 131,which farmers were also advised not to plant. Table 3 provides theUSA Rice Federation’s estimates of the impacts of the LL601 riceincident on U.S. rice export markets. Many importing nationsincreased testing, labeling and certification requirements, andsome stopped U.S. rice imports altogether. It is estimated that 63percent of U.S. rice exports were affected.In 2006, the USDA consolidated its regulations and policies intoa single document: “Draft Guidance for APHIS Permits for FieldTesting or Movement of Organisms with Pharmaceutical orIndustrial Intent” (USDA 2006b). Under the 2006 consolidatedregulations, PMP crops are defined as those genetically engineeredcrops produced with pharmaceutical intent. Under the PMPpermit process, PMP developers must submit detailed explanationsof the genetic engineering process, the purpose and design of theproposed production, and the methods to be used to ensureconfinement. Upon approval, the USDA issues a permit specifyingconditions that must be met before, during and after production.
    • 9The conditions include: separating of PMP crops from cropsintended for food or feed, cleaning production equipment, allowinggovernment inspection of the site, and post-harvest monitoring andland use restrictions. In contrast to GM products intended for useas food or feed, under the permit process PMP crops are notderegulated at the end of field trials; instead, PMP crops remainregulated under permit.The FDA has authority to regulate the manufacture ofpharmaceuticals under the Federal Food, Drug, and Cosmetic Act(FFDCA) but has decided to rely on the USDA to oversee PMP cropproduction (FDA 2002). An exception is the category of “indirectfood additives,” which includes substances that becomecomponents of food indirectly. The PMPs in PMP crops would beconsidered indirect food additives unless classified by FDA as“Generally Regarded as Safe,” or “GRAS.” Substances can beclassified as GRAS if (1) they were in food prior to 1958 and weresafe, or (2) they are generally recognized, among qualified experts,as having been shown to be safe food additives through scientificprocedures. Since most PMPs are not intended for use as food,most do not have scientific evidence for their safety, and hence,would not be considered GRAS, and, therefore, would be regulatedby FDA as indirect food additives. As food additives, thedevelopers would have to submit documentation to the FDAdemonstrating that the products are safe in food. Without FDAapproval, such non-GRAS food additive products would beconsidered “adulterated,” could not legally participate in interstatecommerce, and would typically trigger recall actions. As of October2006, the FDA had not indicated whether it planned to classifyPMPs as indirect food additives (UCS 2006b). However, the FDA(2002) has said that the presence of PMP materials in food couldrender it adulterated under the FFDCA. This effectively establishesa “zero tolerance” level for PMPs and PMIPs in food or feedproducts. Meeting a zero-tolerance level is difficult and essentiallyimpossible to achieve with absolute certainty. This is aconundrum, but one that exists under current regulations in theUnited States as well as abroad. Because it is widely accepted that100% purity is not attainable, a zero-tolerance standard raises thequestion of what should happen in those (inevitable) events when itis violated. Costly recalls of adulterated food may be necessary,firms may be exposed to consumer and public backlash, andliability issues would inevitably arise (Moschini 2006). While somehave called for relaxing the zero-tolerance policy for PMPcontaminants in the food supply and would instead allow somesmall, positive tolerance levels, presumably to minimize the
    • 10financial liability of small loss of containment events, the USDAand FDA have maintained the zero-tolerance standard (Freese andCaplan 2006). The food industry has opposed relaxing the zero-tolerance standard, fearful of consumer and export marketrejection of food if even low levels of PMPs appear in the foodsupply (National Food Products Association 2003). Perhaps it isnot surprising that the Grocery Manufactures of America and theNational Food Processors Association have taken positions againstthe use of food/feed crops for pharmaceuticals (USA Today 2006,Freese and Caplan 2006). In 2003, the former CEO of Kraft Foodssingled out the issue of PMP contamination of foods as a threat toher company and the food industry as a whole (Chicago Sun Times2003).As of late 2006, the USDA-APHIS had never denied a petition fora new GM crop, although about a third of all petitions arewithdrawn when APHIS challenges company claims on petitionsupporting documentation (National Public Radio 2006).On February 28, 2007, the USDA announced yet anotherincident involving loss of containment--rice seed in Arkansas werecontaminated with GM rice variety LL62. In March 2007, the USARice Federation (2007a) expressed doubt that current USDAregulations can prevent GM contamination of the U.S. non-GMcommercial rice supply: “The USA Rice Federation supports theUSDA action in March 2007 to prevent the planting anddistribution of Clearfield 131 (CL131) rice seed that could containtrace levels of genetic material unapproved for commercialization. .. . By the same token, we are increasingly frustrated with theapparent lack of ability on the part of private companies andfederal regulators to control research and maintain accountabilityof the resulting products. The current approach to research,development and management in the biotechnology industry mustbe replaced with more conservative methodologies. . . . The USARice Federation has a long established policy that there must bemarket acceptance and regulatory approval prior to the productionof genetically engineered rice in the United States.”The North American Millers’ Association’s Statement on the Useof Food and Feed Crops for the Production of Plant-madePharmaceuticals and Industrial Products (NAMA 2007) states:“NAMA has significant concern that current confinement systemsfor controlling the seed, pollen and output of plant-madepharmaceuticals and industrial products cannot control 100percent of the genetic material of the newly developed organism orprevent deliberate evasion of the security protocol. . . . NAMA
    • 11believes the risk of adulteration from genetic material not approvedfor food and feed entering the food chain is unacceptable. NAMAbelieves that preventing such adulteration is the responsibility ofthe technology developer and the U.S. government because theprevention of such adulteration is totally within their control.”On May 4, 2007, a federal judge in San Francisco orderedfarmers to stop planting Monsanto’s GM Roundup Ready alfalfaseed because of the risk that it could contaminate nearby non-GM,organic alfalfa fields (Sacramento Bee 2007). This ruling issignificant in that it was the first time that GM crop planting wasstopped due to the potential for, rather than actual, containmentloss. Nationwide, about 200,000 acres of Roundup Ready alfalfahave been planted since the seed was approved for commercial usein June 2005. The judge criticized USDA for failing to adequatelyassess potential problems with cross-pollination before approvingthe alfalfa seed for commercial planting. The judge ruled thatcontamination of an organic alfalfa field with the Roundup Readygene could effectively destroy the organic farmer’s crop.In 2007, the USDA (2007c) conducted an investigation of theLibertyLink rice incidents and released findings in October 2007.On August 1, 2006, USDA’s Animal and Plant Health InspectionService (APHIS) initiated an investigation after Bayer CropSciencereported that regulated genetically modified LLRICE601 (Cocodrievariety rice) had been detected in the long-grain rice varietyCheniere. Investigators determined that genetically modifiedLLRICE601 and Cheniere variety rice were grown at the samelocation and at the same time at the Rice Research Center NorthFarm in Crowley, Louisiana, in 1999, 2000, and 2001 under aBayer CropScience contract. The varieties were separated duringthose three years by distances of 210 feet, 3,000 feet, and 165 feetrespectively. Cheniere was never planted on a location that hadbeen previously occupied by LLRICE601, according to the recordsprovided. Affidavits stated that equipment cleaning had beenaccomplished by the parties involved at the Rice Research CenterNorth Farm in Crowley, Louisiana, for all planting, harvesting, andcleaning operations during this period. Because rice seed for theperiod 1999-2002 was no longer available, the exact mechanismfor incursion of the LLRICE601 gene into the Cheniere variety,such as gene flow or mechanical mixture, was not determined.On February 16, 2007, USDA (2007c) expanded the LibertyLinkrice investigation to include the discovery of regulated geneticmaterial, later identified as LLRICE604, in the long-grain ricevariety Clearfield 131 (CL131). The Arkansas State Plant Board
    • 12reported that up to 30 percent of the samples of CL131—a long-grain variety of rice developed by LSU that was to be sold ascertified rice seed in the spring of 2006—had tested positive for the35SBar gene i n LLRICE604. The variety Cocodrie containingLLRICE604 was developed by Bayer CropScience (formerly DowAgroEvo) and was tested at various locations, including the LSURice Research Station North Farm in Crowley, Louisiana, between1998 and 2000. Because the development of these two varietiesdid not overlap in location and time, the most likely entry point forLLRICE604 into CL131 was through a means other than directcrosspollination. Because LLRICE604 was not detected inrepresentative samples of breeding lines at LSU, the exact timeperiod and means of incursion of the LLRICE604 gene into theCL131 variety was not determined.USDA is currently exploring revisions to its biotechnologyregulations in Title 7, Part 340 of the Code of Federal Regulations(CFR). In July 2007, APHIS published a draft environmentalimpact statement (http://www.aphis.usda.gov/newsroom/content/2007/07/content/printable/complete_eis.pdf) thatevaluates potential options for revising the biotechnologyregulatory program. As a result of this review, APHIS has compileda list of lessons learned (USDA 2007d) and considerations toenhance its regulatory framework. The lessons learned were:1. Records are sometimes not easily obtainable because theyare not retained by the permit and notification holders.USDA is exploring whether to require the creation andretention of additional records to inform potentialinvestigations.2. Efforts to test seed samples during the investigation werehampered by the unavailability of seed samples. USDA isconsidering (a) revisions to the Plant Protection Act thatwould provide the agency with authority to subpoena seedsamples and (b) revising regulations to require sampleretention by permit and notification holders for a specifiedperiod of time.3. In some instances, researchers and developers wereunclear about their responsibilities in the event of anunauthorized release of genetically-modified material.USDA is considering revising regulations to require thatpermit applicants submit contingency plans that addressunauthorized releases., have testing procedures to identifyreleased genes, and retain samples of genetically modifiedmaterials for test purposes.
    • 134. Efforts by USDA offices to work together to collect, test,and track samples were complicated by lack of priorinteroffice links and agreements. The USDA is examiningoptions for interoffice memoranda of understanding andagreements to improve collaboration.5. In some cases, formal, contractual relationships betweenresearchers, developers and other parties did not exist orhad expired. This hampered the investigation. USDA isexploring revisions to regulations that would requirecertain business agreements among technologyresearchers, developers and other parties.6. The sufficiency of isolation distances betweenexperimental crops and nearby field crops to ensureconfinement was unclear due to advances in scientificunderstanding. USDA is exploring revising policy toensure that the latest science is incorporated into isolationdistance recommendations.7. Appropriate quality management systems were notconsistently found throughout the biotechnology industry,increasing the likelihood of compliance problems. TheUSDA is launching a new outreach program to improvequality management systems in the industry.8. Difficulties in retrieving information delayed inspectionsand investigations. USDA plans to use its “ePermits”electronic permit system to improve information accessand retrieval.In terms of the potential effects of international biotechregulations on U.S. farmers, in 2004, the European Union adopteda new Directive on Environmental Liability (2004/36/CE) thatestablished the “polluter pays” principle with respect to adverseeffects of new organisms, such that producers and biotechnologycompanies may be accountable for any uncontrolled release of GMmaterials (Belcher et al. 2005). The European food market is forthe most part closed to trade in North American corn, soybeansand canola (Brassica sp.) at least partly because of the extensiveadoption of GM varieties in the US and Canada, combined with thelack of effective identity preservation mechanisms to deliver qualityassured non-GM produce for the EU market. However, in 2006 theWorld Trade Organization ruled in favor of the United States andGM food producers when it decided that the European Union hadbreached international rules by restricting imports of GM cropsand foods made from them (New York Times 2006a). In fact, theWTO ruling simply claimed that Europe had failed to follow its ownprocedures, resulting in undue delays, rather than faulting the
    • 14European regulatory process for GM crops. If a PMP productproduced by a U.S. farmer somehow contaminated a shipment offood to the EU (perhaps organic food), it is uncertain at this timewhether the farmer or the biotech company would be liable.2.2 Ventria Bioscience -- Regulatory HistoryCurrently, Ventria Bioscience is the only firm with PMP fieldtrials in North Carolina, and no PMP products are grown in thefield uncontained at commercial scale in the state. Ventria hasconducted field trials of rice genetically engineered to producehuman milk proteins in North Carolina since 2005. Table 4provides an overview of Ventria’s regulatory history as described inthis section of the report. Ventria Bioscience was founded in 1993by Dr. Ray Rodrequez, currently a professor of molecular andcellular biology at the University of California, Davis (VentriaBiosciences web site, http://www.ventria.com/, accessed July 20,2007). In 1997, Ventria developed a proprietary productiontechnology, ExpressTec, that uses rice and barley plants toproduce proteins. As of 2007, Ventria had produced threepotential protein products, the pharmaceuticals lactoferrin,lysozyme, and serum albumin. These products have not beenapproved by the FDA for drug, food, or animal feed uses. Theproducts have been marketed as limited research and industrialbioprocessing materials (for cell culture and cell lysis applications)under the brand names Lacromin (lactoferrin, since 2005), Lysobac(lysozyme, since 2006) and Cellastim (serum albumin, since 2006).Ventria plans to market the extracted milk proteins as an anti-diarrheal additive for infant oral rehydration solutions (Bethell2006) and as nutritional supplements in yogurt, granola bars,performance drinks and other products. Ventria has alsomentioned adding rice-based lysozyme to animal feed as asubstitute for the antibiotics added to feed (San FranciscoChronicle 2002).Lactoferrin and lysozyme possess antimicrobial properties andseveral of Ventria’s proposed uses for its recombinant proteins areexplicitly medical in nature. Therefore, the permits initiallyprovided by the USDA for Ventria’s rice production werespecifically for rice engineered to produce pharmaceuticals andindustrial chemicals. Ventria has made several attempts to changethe USDA designation for its rice. In 2003, USDA changed thedesignation of Ventria’s products from “pharmaceutical proteinsproduced” to “value added protein for human consumption.” This
    • 15reclassification of Ventria’s recombinant proteins could potentiallypose a number of potential health risks that have not beenadequately investigated. In addition, Ventria initiated a voluntaryconsultation with the FDA so that its rice could be considered as agenetically engineered crop intended for general food use. Finally,Ventria is seeking Generally Recognized as Safe (GRAS) statusfrom the FDA, which would exempt it from the food additive reviewprocess.The FDA considers PMPs to be indirect food additives unlessclassified as GRAS. Ventria’s products do not have GRAS status.Therefore, Ventria’s products would be regulated by FDA asindirect food additives. As food additives, Ventria must submitdocumentation to the FDA demonstrating that the products aresafe in food. Without FDA approval, food containing non-GRASfood additives would be considered “adulterated,” could not legallyparticipate in interstate commerce, and would typically triggerrecall actions. This effectively establishes a “zero tolerance” levelfor Ventria’s PMPs in food or feed products. The potential forcontamination of food-grade rice with Ventria’s PMPs raises thequestion of unintended exposure. However, the FDA plays virtuallyno role in pharma crop regulation unless a company reaches theclinical trial stage, typically after 5 to 10 years of outdoor fieldtrials. The FDA does not regulate Ventria’s pharma rice at the fieldtrial stage, and will not regulate it at any stage if the intended useof the rice is production of a research chemical, a “medical food”(which is different from the regulatory category “food”), or forexport. Although FDA may ultimately review lactoferrin and/orlysozyme produced from Ventria’s pharma rice if Ventria attemptsto market them as food or feed, it will not consider the potentialhuman health impacts of these pharmaceuticals as accidentalcontaminants in the food supply if Ventria markets the products forresearch use, as “medical foods,” or produces them for export.The EPA has authority to regulate products intended for use aspesticides. The EPA has not reviewed Ventria’s PMP rice despiteevidence that its pharmaceutical proteins possess pesticidalproperties and could harm beneficial organisms, create moreaggressive weeds, or disrupt soil ecology, because the PMP riceproducts are not intended for use as pesticides. Although ascientific advisory panel to the EPA has recommended full lengthamino acid sequencing of plant-produced recombinant proteins,Ventria has only tested a subset of its amino acid sequences.In 2004, the USDA granted Ventria Bioscience field trial releasepermits to grow PMP rice on 120 acres in California (USDA APHIS
    • 16Permit No. 03-365-01r); however, Ventria was blocked fromgrowing its rice in California (Silber 2004) by opposition fromCalifornia rice growers.On June 28, 2005, the USDA announced a “Finding of NoSignificant Impact” (FONSI) and the availability of anEnvironmental Assessment (EA) for the proposed field release ofVentria’s PMP rice in Missouri and North Carolina (Federal Register2005a, 2005b). Based on the EA, USDA/APHIS concluded that theMissouri and North Carolina field releases will not present a risk ofintroducing or disseminating a plant pest and will not have asignificant impact on the quality of the human environment. TheUSDA granted Ventria field trial release permits to grow PMP ricein 2005 on 200 acres in Scott County, Missouri, (USDA APHISPermit No’s. 04-302-01r, 04-309-01r, 05-004-01r) and on 70 acresin Washington County, North Carolina, (USDA APHIS Permit No’s.05-073-01r, 05-117-01r, 05-117-02r) (USDA 2007a).In 2005, Ventria was blocked from growing its rice in Missouri(Bennett 2005) by farmers and food companies concerned aboutcontamination of their food crops with Ventria’s PMP cropscontaining proteins that have not been approved by FDA.In comments filed on June 2, 2005 with the USDA, the FoodProducts Association (2005) expressed its “concerns with theVentria lysozyme and lactoferrin applications, as well as other non-food proteins expressed in food crops, center on the clearpossibility and consequences of adulteration of food/feed suppliesdue to contamination by food crops that have been geneticallyengineered to produce pharmaceuticals or industrial compoundsunapproved for food/feed use.”In June 2005, Ventria planted approximately 60 acres of PMPrice in North Carolina (New York Times 2005c). Planting wentforward in North Carolina in 2005 despite objections fromresearchers at the North Carolina Department of Agriculture andConsumer Services’ Tidewater Research Station(http://www.ncagr.com/Research/trs.htm ), located in Plymouth,NC, where rice varieties from around the world are tested beforeintroduction into U.S. rice breeding programs. Ventria’s field triallocation is about a half-mile from the research station (UCS2006a). According to USDA scientist Dr. David Marshall, who isbased at North Carolina State University: “The potential exists forstray rice pollen to be carried via air currents from the VentriaBiosciences fields to the Nursery and pollinating the introducedgermplasm. If this were to occur, genes from the rice expressinghuman lactoferrin could be introduced into the rice germplasm of
    • 17the National Plant Germplasm System, and thus be disseminatedthroughout the U.S.” (Center for Food Safety 2005). In commentson Ventria’s North Carolina field test proposal, Dr. KarenMoldenhauer, the Chair of the Rice Crop Germplasm Committee(CGC) and Professor at the University of Arkansas, said: “CGC isconcerned about the perception of a grow out this close to thequarantine nursery and hope that they consider moving this growout to a location farther away (at least 15 miles) from the TidewaterResearch Station of NCDA & CS at Plymouth, NC” (Center for FoodSafety 2005). The USDA subsequently moved the station toBeltsville, MD (USA Today 2006).In January 2006, the Union of Concerned Scientists (UCS) fileda Freedom of Information Act request for information on USDA-APHIS inspections and company compliance with federal permitrequirements at the Ventria field test site in North Carolina for the2005 growing season. The USDA provided information detailinghow often the USDA inspected the site, what the USDA found, andhow well Ventria followed permit requirements. The USDA recordsshowed that (1) the USDA failed to inspect the Ventria site duringplanting and harvest, two of the most critical times with respect toensuring containment, (2) Ventria submitted only one of ninerequired notification/planting reports to USDA, (3) the USDAcompleted only three of five required inspections at the Ventriasite, and (4) the USDA did not communicate with Ventria about theeffects of Hurricane Ophelia, which passed close by the site inSeptember 2005 (UCS 2006a). A UCS report concluded that theUSDA was apparently failing to adequately monitor and inspect theVentria test site.Ventria withdrew USDA permits for PMP rice field trials in MO inFebruary 2006 (USDA APHIS Permit No’s. 05-336-01r, 05-336-02r).North Carolina field trials were subsequently approved by USDAin November 2005 and went forward in 2006 (USDA APHIS PermitNo’s. 05-293-01r, 05-332-01r, 05-332-02r). In March 2006,Ventria received approval from USDA to expand its field trials inWashington County, NC, from 70 to 335 acres.North Carolina field trials for 2007 were also approved by USDAin November and December 2006 (USDA APHIS Permit No’s. 06-305-04r, 06-285-01r).On February 28, 2007, the USDA released a draft environmentalimpact statement concluding that Ventria’s PMP rice could begrown in Kansas with no undue risks (Ironically, on the same day
    • 18the USDA announced that rice seed in Arkansas werecontaminated with GM rice LL62.) (Washington Post 2007).Despite the containment breaches involving Liberty Link rice in2006 and 2007, in May 2007 the USDA granted Ventria releasepermits to grow 3,200 acres of commercial PMP rice in GearyCounty, Kansas (USDA APHIS Permit No’s. 06-285-02r, 06-278-01r, 06-278-02r, Fortune 2007), which would be the world’slargest PMP planting to date (Weiss 2007, Freese 2007). On May16, 2007, the USDA announced a “Finding of No SignificantImpact” (FONSI) and the availability of an EnvironmentalAssessment (EA) for the proposed field release of Ventria’s PMP ricein Kansas (Federal Register 2007). Based on the EA, USDA/APHISconcluded that the Kansas field releases will not present a risk ofintroducing or disseminating a plant pest and will not have asignificant impact on the quality of the human environment.APHIS stated in the ruling that “The combination of isolationdistance, production practices, and rice biology make it extremelyunlikely that this rice would impact the U.S. commercial ricesupply.” However, these are the same factors that have failed toprevent containment breaches in the past.The Union of Concerned Scientists (UCS 2007) criticized theUSDA’s decision on Ventria’s Kansas application based on thefollowing grounds:(1) Ventria did not supply enough information on the acres to beplanted (3,200 acres are implied in other USDA documents)(2) the procedures and safeguards to be used by Ventria toensure that none of the PMP rice escapes containment or persistsin the environment after harvest, as described in the permitapplication and the Ventria’s standard operating procedures(SOPs), were not made public in USDA’s environmental assessmentdocuments, the documents on which USDA made its permitapproval decision(3) the analysis made public by USDA does not consider threepotential routes of containment loss: production, shipment andstorage of PMP seed prior to planting, post-harvest transport ofPMP rice to processing facilities, unintentional dissemination ofPMP rice in the field by extreme weather events, such as floods andtornados (the proposed Kansas sites are within 4 miles of theKansas River and one mile of the Smoky Hill River tributary, bothof which flooded in 1993 according to the National Oceanic andAtmospheric Administration; Kansas ranks third among states intornado frequency, with an average of 47 tornados per year), and
    • 19(4) the containment breaches involving GM Liberty Link rice thathave occurred under current USDA regulations.It should be noted that the USA Rice Federation (2007b) filedcomments with USDA on March 29, 2007, strongly recommendingthat APHIS deny Ventria permission to grow [PMP] rice:“The USA Rice Federation today expressed itsdisappointment with USDA APHIS’ approval of the VentriaBioscience request to grow rice containing human proteinsin Geary County, Kansas. . . . The USA Rice Federation isdisappointed with the APHIS decision and hopes Ventria andregulators will carefully ensure that sound and enforcedprotocols will prevent contamination of the commercial ricesupply—an event that would be devastating to the riceindustry. . . . The U.S. rice industry is still reeling from therelease of BayerCropScience’s genetically engineered LibertyLink rice into the U.S. Delta-region rice fields. We are livingwith the effect of unintended events and consequences. Thisdecision will not generate any comfort among U.S.commercial rice growers.”Ventria received permits to produce value-added proteins usingPMP rice field trials in KS in May 2007 (USDA APHIS Permit No’s.06-278-01r, 06-278-02r, 06-285-02r). Ventria received permits toproduce pharmaceutical products using PMP rice in KS inFebruary 2008 (USDA APHIS Permit No. 07-342-102r).Ventria received permits to produce pharmaceutical proteinsusing PMP rice field trials in NC in March 2008 and permits toproduce pharmaceutical products using PMP rice field trials in NCin April 2008 (USDA APHIS Permit No’s. 07-341-103r, 08-093-108r).Again, it should be emphasized that because Ventria’s PMP ricewill be the first PMP crop to be grown in the field uncontained atcommercial scale in the United States, decisions concerning itsregulation are potentially precedent-setting.
    • 203 Potential Benefits of PMPs3.1 OverviewFor millennia, farmers have used selective breeding to producecrops with desirable characteristics. The novel aspect of GMtechnology is the ability to move genes and associatedcharacteristics between organisms that are not sexuallycompatible, creating organisms with previously unavailablebundles of characteristics. GM technology has been used toincrease crop yield, drought tolerance, herbicide tolerance,disease/insect resistance, and product quality. Most recently, GMtechnology has been used to produce PMP substances within cropplants. Many of the PMP products under development areproteins--antibodies, enzymes, vaccines and other therapeuticagents--due to an increasing number of protein-based drugdiscoveries by pharmaceutical companies. In 2005 alone, 38 newprotein-based drugs were approved and more are in the FDApipeline (Williams 2006, 2007). The pharmaceutical industryseeks low-cost production methods for these new drug products.Producing drugs inside green plants, PMPs, is one of severalalternatives.Scientists and industry typically cite two reasons for pursuingplant made pharmaceuticals (PMPs) (Smyth et al. 2004). First,production of high-quality pharmaceutical components (proteinsand antibodies) is presently done using cell cultures insidebioreactors, which is very costly (US$105-175 per gram) and limitsconsumer affordability. Cell culture bioreactors take an average ofthree to seven years to build and cost on average US$450-$600million to complete. Second, there is insufficient bioreactorcapacity to meet current production needs, let alone expectedfuture needs over the next decade (BIO 2002b). Antibodiesproduced in bioreactors using mammalian cell cultures areexpensive, difficult to scale up, and pose safety concerns due topotential contamination with pathogenic organisms or oncogenicDNA sequences (BIO 2002b). As of 2002, production of just fourpharmaceutical products required 75% of global bioreactorcapacity (BIO 2002a). By the end of the decade, there could bemore than 80 antibody-dependent products with an estimatedvalue of US$20 billion, provided adequate production capacity canbe developed (Smyth et al. 2004). The Biotechnology Industry
    • 21Organization, an industry trade group, reports that a January2005 study by Frost & Sullivan, a market research firm, found thatthe PMP market could realize total cumulative revenues ofUS$98.2 billion by 2011 (BIO 2006). The potential size of themarket drives investigation of alternative production methods,including PMP production. Compared with other productionmethods, the costs of producing and storing plant-producedpharmaceuticals are relatively low, plants may be able to producethe product for extended periods of time, product quality isrelatively high, and risk of contamination by pathogens is low(Table 5). The leading PMP plants have been corn/maize,canola/rapeseed, safflower, tobacco and rice.In July 2006, Calgary-based SemBioSys announced that it canproduce over one kilogram of insulin per acre of PMP safflower(BIO 2006). This is enough to supply 2,500 patients for one year oftreatment each. With insulin demand projected to be 16,000kilograms per year by 2012, SemBioSys’ GM safflower provides away to supply insulin to a growing diabetic patient population. Itis claimed that producing insulin in PMP safflower can reducecapital costs by 70 percent and product costs by 40 percent,compared to existing insulin manufacturing. In February 2007,the USDA announced a preliminary decision to allow SemBioSys toplant 1000 acres of PMP safflower in Washington state, althoughthis initial planting would produce a drug to treat diseases infarmed shrimp and promote fish growth rather than insulin. (TheUSDA’s decision to allow SemBioSys to plant PMP safflower on acommercial scale has been criticized (UCS/CU 2007) based on thefact that the USDA review did not assess the potential risks ofescaped PMP safflower in the environment, including the risk ofbecoming an agricultural plant pest, but rather assumed thatSemBioSys’ proposed containment measures would be 100 percenteffective.) Other PMP products under development in 2006included: cystic fibrosis treatment from GM corn (Meristem);treatment for ovarian cancer from GM tobacco (Chlorogen); GMtobacco to address dental caries, as well as the common cold, andhair loss (Planet Biotechnology); monoclonal antibodies from GMduckweed (Biolex), and human milk proteins from rice (VentriaBioscience) (BIO 2006).Although Ventria’s recently proposed PMP rice processing facilityin Kansas may promote economic development in the region(assuming project financing and construction proceed as projected,and Ventria is able to secure necessary approvals to market itsproducts), the history of PMP product development to dateindicates that caution is warranted when projecting the economic
    • 22development benefits of PMP production. Many PMP companieshave either gone bankrupt or have ceased pursuit of PMPproduction, or switched to non-food crop PMP production (Freeseand Caplan 2006). ProdiGene was saved from bankruptcy after itsPMP corn contaminated non-GM soybeans in 2001 and it wasforced to pay for the cleanup by a USDA no-interest loan;ProdiGene was subsequently taken over by Stine Seed. CropTechwent bankrupt in 2003 after pursuing PMP production in tobacco.Meristem Therapeutics stopped PMP corn trials in Colorado in2003 due to farmer-led opposition. Monsanto ceased developmentof PMP corn and soybeans in 2003 even though it had received 44field trial permits from USDA. Epicyte Pharmaceutical, once aleader in PMP corn development, went bankrupt and was takenover by Biolex in April 2004; Biolex now produces PMPs using thenon-food plant duckweed inside controlled bioprocessing facilities.LargeScale Biology went bankrupt in 2005 after pursing PMPproduction in viral-vectored tobacco. Ventria Bioscience droppedfield trial plans in California in 2004 and Missouri in 2005 due tofarmer opposition.3.2 The Case of Ventria BioscienceIn this section, we consider in detail the potential benefitsassociated with Ventria Bioscience’s PMP rice development andproduction, as Ventria’s PMP rice may be the first PMP crop to beproduced in the field uncontained at commercial scale in the U.S.Given that Ventria is a private company developing a new productin the very competitive biotech industry, the firm does not provideestimates of the potential benefits to the firm itself associated withthe eventual production and marketing of its PMP products. Interms of current employment supported by the firm’s activities, theSacramento Bee (2006) reports that Ventria had 18 employees inits Sacramento headquarters in 2006.In 1997, Ventria developed a proprietary production technology,ExpressTec, that uses rice and barley plants to produce proteins.As of fall 2007, Ventria has only three potential products, thepharmaceuticals lactoferrin, lysozyme, and serum albumin thathave not been approved by the FDA for drug, food, or animal feeduses. These products have been marketed as research andbioprocessing materials (for cell culture and cell lysis applications)under the brand names Lacromin (lactoferrin, since 2005), Lysobac(lysozyme, since 2006) and Cellastim (serum albumin, since 2006)by Ventria directly, and by firms InVitria(http://www.invitria.com/index.html) and Sigma-Aldrich
    • 23(http://www.sigmaaldrich.com/catalog/search/TablePage/15552187), but it is not clear that Ventria has received substantialrevenues from these uses. As of fall 2007, Ventria appears to besupported financially primarily by venture capital and with someindirect subsidies from state (Kansas) economic developmentagencies. For example, the Kansas Bioscience Authority gave $1million to Junction City, KS, to support the attraction of VentriaBioscience (http://www.kansasbioauthority.org/projects_funded/).(There appear to be no subsidies to date from North Carolina stategovernment.) Ventria plans to market the extracted milk proteinsas an anti-diarrheal additive for infant oral rehydration solutions(Bethell 2006) and as nutritional supplements in yogurt, granolabars, performance drinks, and other products. Ventria has alsomentioned adding rice-based lysozyme to animal feed as asubstitute for the antibiotics added to feed (San FranciscoChronicle 2002). Ventria claims a potential market for theseproducts of more than $2 billion annually. Ventria claims thefollowing economic and societal benefits associated with its PMPproducts (Ventria Bioscience 2007):• Potentially save hundreds of thousands of lives globallyby reducing childhood diarrhea in developing countries;• Reduce duration of childhood diarrhea by 4 million daysannually in the US and help these children get back toschool sooner; Help parents return to work sooner with aneconomic impact of $1.6 billion over five years in the USalone;• A $50 million positive economic impact over five yearsfrom direct employment in Ventria’s bioprocessingoperations in Junction City, Kansas;• A $228 million positive economic impact over five years tofarmers and rural communities from Ventria’s fieldproduction activities in Kansas;• $37.5 million in savings to the US Government andAmerican taxpayers when compared to governmentsubsidized rice production;• Successful introduction of these first products may leadto additional products being developed using plants as abiological factory. This multiplies the benefits to societyand the US economy.
    • 24In support of the first claim, Ventria sponsored a study in Peruto assess the efficacy of rice-based oral rehydration solutioncontaining recombinant human lactoferrin and lysozyme inPeruvian children with acute diarrhea (Zavaleta 2007, Bethell2006). Ventria’s interpretation of the study results is thatVentria’s products helped to reduce the duration of acute diarrheaby 30%, or a day and a half. (Average duration: 5.21 days forcontrol vs. 3.67 days for Ventria’s products). In addition, Ventriaclaims that the study shows that children receiving Ventria’sproduct more likely to recover from their diarrhea and were lesslikely to relapse into another episode of diarrhea. Freeze (2007)disputes the study findings on several grounds related to allegedproblems with the study methodology.Even if the Zavaleta (2007) study results are scientifically sound,the potential profitability of Ventria’s oral rehydration supplementproducts to the firm itself may be limited by the inability ofconsumers in the target market, low income households indeveloping countries, to pay. Ventria’s CEO Scott Deeter has saidthat financial support from foundations might be necessary tomake oral rehydration solutions containing his company’s proteinswidely available (USDA 2003, Freese 2007).With respect to Ventria’s claim of potential benefits toconsumers in the United States, where consumers have a greaterability to pay for the product, Ventria applies it’s interpretation ofthe results from the Peruvian study to the number of childhooddiarrhea cases in the United States and the number of workingparents and the average daily wage in the U.S (Ventria 2007). Theapplication of the Peruvian study results to the United States mayoverstate potential benefits in the U.S. if children in the U.S. havebetter overall nutrition, sanitary conditions, and hygiene, relativeto Peruvian children, reducing the relative benefit of Ventria’sproducts. A controlled study of Ventria’s products on children inthe U.S. would appear to be necessary to verify this benefit claim.Another potential hurdle to realizing consumer benefits in theUnited States is that, despite the results from the Peru study,Ventria has failed to gain “Generally Recognized as Safe” (GRAS)status from the U.S. Food and Drug Administration for its rice-derived pharmaceutical proteins in four petitions since 2003 (Table4). Ventria has applied to the FDA to approve its PMP proteins asa “medical food” rather than a drug (USA Today 2006). As amedical food, Ventria would not need to conduct long and costlyhuman tests. Instead, Ventria submitted data from scientists insupport of “generally regarded as safe,” or GRAS, status. If Ventria
    • 25wins approval to add its PMP proteins to infant formulas, there isno requirement to label any food products in the U.S. ascontaining genetically engineered ingredients.Part of the reason why Ventria has yet to be granted GRASstatus for its PMP rice may be that a 2004 National Academy ofSciences report (NAS 2004) recommended more stringent testingfor new ingredients in infant formulas. To date, Ventria haschosen not to submit its proteins for review by FDA as new drugs,a more rigorous review process. Concurrently, however, anothercompany (Agennix, based in Houston, TX) has been developingrecombinant human lactoferrin under FDA’s new drug reviewprocess for use as an anti-cancer drug since 1996 (Freese 2007).The material is being produced in genetically modified fungus in acontained manufacturing facility, not in field crops. Thatlactoferrin is being considered as a potent anti-cancer drug raisesconcern about Ventria’s attempt to gain approval for the materialunder the less stringent food additive regulations. Production oflactoferrin in fungus also presents a potential competitor for PMPrice lactoferrin, depending on regulatory approvals and relativeproduction costs.If Ventria’s products are eventually certified as safe, the netbenefits of Ventria’s products to potential consumers, economicallyspeaking, are defined as the incremental benefits beyond thoseprovided by the next-best substitute product. Even if Ventria’sproducts are completely safe and effective, the benefits to theultimate consumers, infants at risk for diarrhea, should bemeasured relative to the benefits provided by the next-bestsubstitute product. Freese (2007) makes the case that improvedsanitation facilities, clean drinking water supplies, improvedhygienic practices, use of disinfectants, and better breastfeedingpractices, in combination with existing oral rehydration therapy,provide a good substitute for rice-derived proteins in terms ofreducing the incidence of diarrhea, perhaps at lower cost, indeveloping countries. In the U.S., the benefits of the next-bestsubstitute treatment for childhood diarrhea would need to becompared with the benefits of Ventria’s products to determine thepotential net benefits of Ventria’s products to U.S. consumers.Potential consumer benefits in the U.S. may be reduced if thepatent holder, Ventria, can exert monopoly power and raiseconsumer prices. Although there are no estimates of Ventria’sability to exert monopoly power in the market for transgenic riceproducts, Kostandini et al. (2006) estimated the potential size anddistribution of economic gains from biopharming transgenic
    • 26tobacco as a source of human serum albumin using an economicsurplus model under imperfect competition. Kostandini et al.determined that the development of transgenic tobacco wouldgenerate annual profit flows of between $25 million and $49million for the patent holder. Because the patent holder can exertmonopoly power in the output market, consumer prices are higher,and consumer benefits lower, than would be the case in acompetitive market. However, should both rice and tobacco provesuccessful as sources of serum albumin, some degree ofcompetition between the two would presumably lower prices,reduce profits, and benefit consumers.In addition to consumers, Ventria’s products may provideeconomic benefits to farmers, crop transportation, processing anddistribution workers, and others who receive benefits due toeconomic multiplier effects. With respect to benefits claimed byVentria for farmers, PMP processing workers, and the local ruralcommunity near Junction City, Kansas, the site of Ventria’splanned PMP processing facility, see Section 4.1 of this reportbelow.With respect to the estimated benefits that may accrue to theJunction City, Kansas, community due to the economic multipliereffects of Ventria-related farmer and processor activity, Ventriaestimates that “with a projected 30,000 acres of production peryear upon full scale commercialization of Ventria’s products, weestimate the resulting economic benefit to be $18 million per yearin direct economic benefit for farmers and the rural community ofJunction City, Kansas.” Ventria’s proposed PMP rice processingfacility in Junction City “is a $6 million capital improvementproject and is expected to employ 10 people within the first year ofoperation. Employment will expand as the demand for Ventria’sproducts grows. It is estimated that an employment of 50 people inJunction City, Kansas will be required for full-scale production.”Ventria assumes an economic multiplier of 2.54 [based on theeconomic multiplier used by Junction City/Geary CountyEconomic Development Commission], to develop an estimate of thetotal economic benefit (direct benefits plus economic multipliereffects) for farmers and rural communities from Ventria’s productsof $45 million per year over the first five years of full-scaleproduction. For comparison, in 2006, Kansas agricultureproduced over $11 billion in crop, animal, and related agriculturaloutput, with over $3 billion in wage, rent, interest, and profitincome (USDA 2007e). Using a 2.54 economic multiplier, the totaleconomic impacts of the $11 billion in direct impact would be onthe order of $28 billion. Ventria’s estimated economic impact of
    • 27$45 million per year is small relative to the$28 billion impact ofKansas agriculture.Ventria’s claim of “$37.5 million in savings to the USGovernment and American taxpayers when compared togovernment subsidized rice production” is not valid, as PMP-rice isnot grown for food and so will not substitute for the rice grown forfood that receives the rice subsidy. However, if Ventria’s PMP-ricereplaces subsidized corn, then Ventria would potentially be able toclaim a reduction in corn subsidies as savings to U.S. taxpayers.Forty-four percent of farms in the Kansas region receivedgovernment payments in 2005, with an average payment of$17,000 per farm (USDA 2007e), or $18,000-$20,000 per farm inGeary county, Kansas (KFMA 2006). In 2007, Ventria estimated “.. . a projected 30,000 acres of production per year upon full scalecommercialization of Ventria’s products” (Ventria Biosciences2007). With an average farm size of approximately 700 acres inKansas (http://www.ers.usda.gov/StateFacts/KS.HTM), perhaps43 farmers would participate in Ventria’s PMP rice production inKansas. If we assume that 43 farms growing Ventria’s rice wouldhave otherwise participated in farm programs in which they wouldhave received $17,000 each in government payments, thensubstituting Ventria rice for corn in Kansas could save taxpayerson the order of $731,000. This number is very small relative to thealmost $286 million in net government payments made to Kansasagriculture in 2006 (USDA 2007e).The economic benefits of Ventria’s PMP rice field test activity inNorth Carolina are difficult to determine, as Ventria will not revealinformation on the numbers of farmers or researchers actively atwork in the state (Sargent 2007). However, given the low acreageinvolved, it is likely that only a very few farmers are participating inthe field tests. It is known that Ventria project researchers,including professors from North Carolina State University, arebased at the Tidewater Research Station in Plymouth, NC(Washington Daily News 2006a). NCSU professor John Van Duyn,is reportedly doing research for the Ventria project in WashingtonCounty.Although Ventria looked for a place to process its rice that wouldbe “within 50 miles” of its PMP rice field test site in Washingtoncounty, NC, and Dr. Scott Deeter of Ventria said that the companywas considering placing a processing facility in WashingtonCounty, Greenville or Wilson, NC, Ventria said in December 2006that it planned to maintain operation of 200 acres of PMP rice inWashington County, NC, but that it would expand rice production
    • 28and establish a rice processing plant in Kansas instead of NorthCarolina (Washington Daily News 2006b).
    • 294 Potential Costs of PMPsThe potential benefits of PMPs must be weighed against thepotential costs, including: (1) the costs to the farmer of specialized,dedicated equipment, training, administration and liability to theGM/PMP-producing farmers, (2) any government subsidies toVentria or farmers, (3) the costs of any harm to human health inintended uses (e.g., allergies), (4) liability costs associated with thepotential loss of containment of PMP products and subsequentcontamination of the food supply, (5) externality “spillover” costsaffecting non-GM producing farmers, including organic farmers,and (6) externality “spillover” costs affecting the environment. Thefirst four cost categories are considered in this section of thereport, while the two types of externality costs are covered infollowing sections.4.1 Farm Costs and Potential Grower ProfitabilitySome GM crop technologies and products are developed bypublic institutions (such as public universities and federalresearch laboratories) financed by tax dollars, while others aredeveloped by private, profit-seeking firms. The intellectual propertydeveloped by public institutions is typically financed by tax dollarsand distributed to users without charge, for example, thoughpublication in publically-available academic journals, whereas theintellectual property developed by private firms is typically ownedby the inventor, who tries to recoup his development costs andmake a profit by, for example, increasing the price of GM cropseed, charging a technology fee, or requiring that the crop be soldback to the firm.Regardless of the source of innovation, farmers must somehowgain from a new technology in order to adopt it. Typically, newtechnology must provide increased financial returns to the farmerby some combination of raising crop yields, lowering input costs,enhancing crop quality (thereby increasing the price consumersare willing to pay), or reducing farm management effort. A roughestimate of gains to farmers from PMP crop production could bemade by estimating increases in net returns (benefits minus costs)per acre and multiplying the per acre gains by the number ofaffected acres. When Ventria was considering locating its PMP rice
    • 30processing facility in northwestern Missouri, the firm reportedlyagreed to pay PMP-growing farmers in the region about twice whatthey would typically earn growing their next-most profitable crop(New York Times 2006b). Ventria (Ventria Biosciences 2007)estimated that farmers located near the site of its planned PMP riceprocessing facility in Junction City, Kansas, will “earnapproximately $150 in additional profit per acre plus additionaleconomic impact from more intensive management required ofVentria’s production, requiring an additional $300 per acre. Forexample, a corn farmer that is currently generating $587 per acrefrom corn production would generate an economic impact of$1,037 per acre, or an increase of $450 per acre if they switch toVentria’s production.” These estimates are based on analysis byDaniel O’Brien, Associate Professor and Extension AgriculturalEconomist, Kansas State University. In addition, Ventria makesthe claim that:“. . . [farmers] are able to receive a more consistent revenuestream versus their alternatives because they do notshoulder losses caused by poor yields, weather damage,disease or insect damage, or other negative impacts typicallyfaced by farmers today. Third, the farmers are trained in newvalue-added farming practices, quality control, andregulatory requirements. Finally, farmers are able to entermulti-year agreements which provide more certainty aboutfuture cash flow, thereby improving their financial outlook.Based on the above, we estimate an economic benefit tofarmers of $600 per acre in positive economic impactcompared to their alternative with corn” (Ventria Biosciences2007).Per acre impacts in North Carolina would likely be different fromthose in Kansas, due to differences in crops grown, theirproduction costs, and market prices. As discussed by Wisner(2005), PMP firms such as Ventria will be the sole suppliers of theirPMP products and may choose to let farmers compete with oneanother for PMP production contracts, inevitably lowering thecontract prices paid to farmers, and reducing farmer benefits fromPMP production.Turning to estimates of the eventual number of acres that maybe devoted to Ventria’s PMP rice production, in a presentation to aUSDA Biotechnology Advisory Committee meeting in 2003 (USDA2003), Dr. Scott Deeter, president and CEO of Ventria Bioscience,described the likely acreage involved as approximately 10,000
    • 31acres and the number of farmers involved as “not very manypeople;” furthermore, it is not clear that all of this acreage wouldbe rice grown in North Carolina:“In 2008, well Im making the prediction that the seconddecade here is where were going to hit the mainstream orgoing to really begin producing products with these -- withthese platforms. Im saying 10,000 acres. Depending onyour efficiency and your yield, that would be an enormousamount of pharmaceutical product. An enormous amount,okay? So this is success for us, okay? Ten thousand acres.I look at that and I put my pharmaceutical hat on, and I say,holy mackerel, is that really that much volume in thepharmaceutical business? Okay? And the answer is yes,because many of the new products that are being developedin the pharmaceutical industry require chronic dosage athigh levels. And we havent been able to go after thoseproducts in the past because we didnt have a system to doit. I look at that from my agricultural hat, and I say, thatsnothing. How many farmers is that? Maybe, you know, [afew] good-sized farmers, thats not very many people. Sothats just two perspectives here that I think are kind ofinteresting as you think about this.”When a member of the Advisory Committee said: “I have to tellyou that my constituents, or who Im representing here today, arewheat producers. And to a larger extent, I would suppose justproduction agriculture. And when you put the numbers on thetable of 10,000 to 100,000 acres, frankly, thats very, very small inthe scope of U. S. agriculture,” Dr. Deeter’s response impliedagreement, and that Ventria’s efforts would not significantly affectthe rural agricultural economy in the U.S.:“But the big benefit here, in my mind, is human health.Thats the problem [Ventria is] working on. Were not --were not working on rural development.”In 2007, Ventria estimated “. . . a projected 30,000 acres ofproduction per year upon full scale commercialization of Ventria’sproducts” (Ventria Biosciences 2007). With an average farm size ofapproximately 700 acres in Kansas(http://www.ers.usda.gov/StateFacts/KS.HTM), perhaps 43farmers would benefit from PMP rice production in Kansas, but thenumber would probably be lower, as a smaller number of larger
    • 32farms would reduce costs, based on economies of scale in the useof specialized farm equipment and farmer education required toproduce PMP crops. Multiplying this acreage estimate by Ventria’sestimates of $150 to $600 per acre in additional returns to farmersresults in a ballpark estimate of $4.5 to $18 million for farmers.The number of farmers supported and the amount of farm incomeearned in Kansas would be lower if Ventria decides to producesome of its rice in a second location, which it reportedly isconsidering. In 2006, Kansas had approximately 64,000 farmsthat produced over $11 billion in crop, animal, and relatedagricultural output, with over $3 billion in wage, rent, interest, andprofit income (USDA 2007e). A direct economic impact of $4.5 to$18 million is very small relative to the size of Kansas agriculture.In any event, Ventria’s Dr. Deeter implied in his statementbefore the USDA Biotechnology Advisory Committee meeting in2003 (USDA 2003) that most of the new opportunities in PMPwould be in the areas of processing and support, rather than inproduction agriculture:“Those new skills are going to bring new opportunities,especially, I think Michael said it well, especially in theancillary areas. All the support, all the facilities where youprocess these. These are biotechnology production facilities.One of the challenges right now in the biopharmaceuticalindustry, even traditional biopharmaceuticals, is talent. Notenough people know how to run these kinds of facilities. So,as we develop that in a state like say Iowa, then theres allthese other services that come around it that really aresignificant.”However, in September 2006 Ventria announced plans to locatea PMP rice processing facility in Junction City, Kansas, instead ofIowa or North Carolina (Ventria Bioscience 2006). Significantly forNorth Carolina economic development, the facility will not belocated in North Carolina. Nonetheless, it is possible that NorthCarolina farmers could benefit by growing PMP rice andtransporting it to Kansas for processing. Ventria reportedly wantsto grow rice at commercial scale in at least two locations in theUnited States in order to have a diverse supply base (it is alsoreportedly searching for a growing area in the SouthernHemisphere to be able to produce year-round) (New York Times2005c). In the Junction City announcement, Kansas AgricultureSecretary Adrian Polansky said that farmers are expected to beamong the project’s major beneficiaries, as those who grow the ricethat supplies the facility can earn a premium compared to their
    • 33next most lucrative crop. “This is as an important development forKansas farmers, who stand to benefit from the additional income,”he said. However, North Carolina farmers were not mentioned,and it is unclear whether Ventria plans to grow PMP rice in NorthCarolina.Given Ventria’s investment in the Junction City, Kansas,processing facility, it is likely that the total acreage of Ventria’sPMP rice farmed in North Carolina will be small. Nonetheless,Ventria secured USDA permits for field trials involving PMP rice inNorth Carolina for 2005 and March 2006. The 2006 planting inNorth Carolina is 335 acres of two plant-made industrial enzymes,lactoferrin and lysozyme, using genetically modified rice (Oryzasativa). (Ventria received field trial permits to produce value-addedprotein using PMP rice in NC in November and December 2006.Ventria withdrew permits to produce selectable markers andincreased protein levels in PMP rice in NC in December 2007. Thefirm received a permit to produce pharmaceutical protein in PMPrice in NC in March 2008. Ventria also received a permit toproduce pharmaceutical product in PMP rice in NC in April 2008.)Ventria is implementing the field trials using independent growercontracts. At this early stage, Ventria pays all costs for the NorthCarolina farmer growing their PMPs on subcontract. In the future,independent growers will be expected to provide a seed-to-harvestpackage deal for the firm’s recombinant protein production(Williams 2006, 2007). As statements made before the USDABiotechnology Advisory Committed quoted above indicate, this willlikely involve significant, specific investment in PMP-relatedtraining and dedicated farm equipment. Since 2003, each PMPgrower is now required to have dedicated land area, dedicatedequipment for planting and harvesting in addition to separateareas for cleaning and processing. Employee training is alsorequired as part of compliance with new FDA and USDA regulatorystatues for molecular farming (Stewart and Knight 2005). Thisraises concerns that molecular farming contracting for field-grownPMP plants will require such costly investments in infrastructureand compliance that only the largest, wealthy growers in NorthCarolina can profit.Despite Ventria’s claims that farmers will profit from growingPMP crops, farm profits may be small, as the PMP patent holder,the biotech firm supplying the seeds, can exert monopsony (a“monopsony” is a buyer’s monopoly) power over farmers. That is,competition among farmers for the limited number of PMPproduction contracts may lower the price that farmers receive forthe PMP product when sold back to the PMP developer/processor.
    • 34For example, Kostandini et al. (2006) estimated the potential sizeand distribution of economic welfare gains from biopharmingtransgenic tobacco as a source of human serum albumin using aneconomic surplus model under imperfect competition. Because thepatent holder can exert monopsony power in the input market(over farmers), it was found that production of transgenic tobaccowas unlikely to significantly benefit tobacco farmers.Ventria is currently planning to produce serum albumin usingPMP rice (Washington Post 2007). If both sources (transgenictobacco and transgenic rice) of serum albumin are approved, anymonopoly power in the product market that PMP rice developersand farmers might have enjoyed would presumably be reduced,which would lower the price of serum albumin, in turn loweringprofits for the biotech patent holders and farmers (but benefitingfinal consumers).For those farmers choosing to grow Ventria’s PMP crops,significant training, dedicated equipment, extra paperwork, andadherence to strict operating procedures to ensure containment(the violation of which could have tremendous financialconsequences) would appear to be required. In a presentation to aUSDA Biotechnology Advisory Committee meeting in 2003 (USDA2003), Dr. Scott Deeter, president and CEO of Ventria Bioscience,addressed these issues:“Right. So our -- our Director of Field Production carriesout our training. The first part of the training is actuallywhat is the -- what is the risk of noncompliance, which ispretty severe. I mean, essentially, its the company. Itsmake or break. And so we want people to be very clear thatthis isnt something thats even thought of as optional.Thats number one. Number two, the training consists ofspecifically of the operating personnel is going to be on apiece of equipment. We might have a standard operatingprocedure for cleaning the combine, okay? And thatcleaning procedure would have probably 30 different steps,you know, estimating. And each of those steps, we would gothrough on the equipment with the -- with the fieldpersonnel. And then when they actually carry out thatactivity, then they would sign the forms that said theyreaware of the cleaning procedure, they carry it out accordingto this procedure, et cetera. So they go through -- theres alot of paperwork in this process. And they would go throughthat for each standard operating procedure. The -- weveactually trained, at a broad level, our entire company. We
    • 35can do that, okay? Were not that big of a company. Butweve trained everyone because we believe its a -- its aculture. Youve got to build a culture of heres theregulation, but then heres our operating procedures.Because, in most cases, our operating procedures aresignificantly advanced, even ahead of the regulation. I meanthats just our approach from a quality standpoint as well asour own goods. Did that answer your question?”Asked about the special operating procedures, combinecleaning, and dedicated equipment necessary to grow PMPs, afarmer (and former president of the Iowa Corn GrowersAssociation) growing corn PMPs in Iowa for the French companyMeristem Therapeutics reported in a USDA Biotechnology AdvisoryCommittee meeting in 2003 (USDA 2003):“So when we started this three years ago, we werentrequired to do so, but it looked to us like the only way thatyou could really guarantee the kinds of identity preservationthat are necessary is to have dedicated equipment for thatplot of production. If any of you have ever tried to clean outa combine, you know how difficult it would be to get everybroken kernel, all the dust, everything out of a conventionalcombine. Someday well have combines that will be self-cleaning, but we dont have them today. So we started withdedicated equipment. Weve argued to APHIS for -- well, weargued for two years that everyone ought to be usingdedicated equipment in the 250 permits that they haveissued around the country. APHIS told us no, no, you cantrequire people to have dedicated equipment because thatwould shut down, basically, all the land-grant institutionsaround the country that are doing work, because they simplycant afford dedicated equipment for each plot. And ourargument was, well, we didnt think that they could affordnot to have dedicated equipment. So we were very pleasedfor the new rules for this year [2003], that there is dedicatedequipment required now.”“. . . Each protein would have its own building, its ownequipment, its own system. I think thats the only safe wayto do it, at least at this point, with the technology we havetoday. Now, I personally dont believe its possible to getevery protein out of a combine. Thats why we use thededicated equipment. And we are starting, in our SOPs now,we havent completed it yet, but were starting to write theSOPs for decommissioning equipment. In other words, some
    • 36day in the future, that combine is going to become obsoletefor whatever reason, and -- and were not going to use it anymore. So we have to decide if there is a procedure, if youcan auto clean that combine, if there is a detergent orenzyme you can use to clean the combine, or should yousimply set it on fire and bury it? Whatever it takes, thatswhat will happen. Now, there was comment made earlierabout the cost of this production system. . . . we puttogether a used set of equipment for this project for about$20,000. And the size of equipment we have for these smallplots, 6, 8, 10, 12 farmers could all use the same equipment.You could put it on a truck, take it from farm to farm, anduse the same equipment. So if you split up the $20,000 costover -- over 8 or 9 farms, you can see its not that significant.Hopefully, if Scott, this is worked right, the margins for uswill be significant enough that we can afford to do that. ButI dont see any problem with the equipment, commissioningit or decommissioning it. Those are all things that are doneroutinely in pharmaceutical production.”“. . . And then we have designed this system where wehave a sort of traditional wagon here that the corn is putinto, but we have installed a drying floor in the bottom of thewagon, and we have installed a drying fan here. And so thiscorn is harvested, transported, dried and stored in this -- inthis wagon. Before it leaves the field, this wagon is weighed.We have portable scales. And we use a mass balancesystem. So we know exactly how much product we takefrom the plot to the storage building you saw in the earlierslide. And so then, as we process, we clean and separateand have the cobs and broken pieces of stalk that areseparated out and cleaned out. Everything is measured atthe end so we know exactly how much mass we have dividedout at the end. It has to match exactly in balance with themass we took out of the field. And there again, its anothersystem that were not required to do, but we do. And this ismy last slide. This is -- this is double-wall containers. Theproduct is being shipped back to France from the farm.”The farmer was asked about the issues involved in transport ofthat equipment not only to and from the plot at his facility, butalso about the potential of sharing equipment among multipleproducers. The farmer replied:“So what our SOPs [standard operating procedures]require is that the planter, for instance, the planting units in
    • 37each box are disassembled. When they leave the building,you can easily see that theres no seed in the planter. Theplanters taken to the plot. The units are reassembled in theplot. Seed is put in the planter. The plot is planted. Thenthe seed is taken out, the units are disassembled again toshow that theres no seed in the units. And the planterstransported back. Now, the combine, of course, you cant dothat. You can only clean as well as -- I mean you can crawlin there, and you can get to a lot of places, but you cant getevery place. And we use a vacuum to vacuum out everythingthat we can possibly reach. The main -- the main concernwhen transporting the combine is something falling out ofthe combine. But if you can get in there and cleaneverything that you can reach, there isnt a chance ofsomething falling out then, because it cant get to an edgeand fall out. Did I answer the question? Okay.”The farmer’s statements above appear to indicate thatadditional, special procedures are necessary when using PMP farmequipment, and that some equipment, such as combines, cannotbe cleaned completely for transportation between farms. If a spilloccurred during transport between farms, resulting in a loss ofcontainment, it is possible that APHIS would disallow sharingequipment across farms. If this occurred, the costs of maintainingspecialized equipment for PMP could not be shared by multiplefarmers, as the farmer quoted above describes.In his presentation to the USDA Biotechnology AdvisoryCommittee meeting in 2003 (USDA 2003), Dr. Scott Deeter,president and CEO of Ventria Bioscience, also described thespecial skills that might be needed to run PMP confinementoperations and cope with the potential liability of confinement loss,skills that most farmers may not currently possess:“. . . this is a new way to do business, and its verydifferent. And maybe even easier to come into this without aperspective of agriculture than to come in with aperspective. Its almost easier to train someone thats notrun a combine before than it is someone who has run acombine. I, my own opinion, it takes a very sophisticatedlevel of understanding to manage this kind of a productionfacility or operation. And Bill, I think, is leading the pack inthis area, so hes the right person to talk to. But I would,guessing, hes going to say its very different than what hedoes traditionally. So its more of a new paradigm and itrequires new skills.”
    • 38The Iowa corn farmer echoed Dr. Deeter’s assessment of theskills needed to write the standard operating procedures (SOPs)necessary for PMP crop production. Even with highly educatedmembers, the farmer’s production team found writing good SOPsdifficult:“One of the fellows in our group is a process engineer froma large company here in the U. S. Another is a registeredpharmacist, who actually -- he actually spent most of histime developing some GMP for animal vaccines. But anyway,we have a group of people like that. We sat down and wroteour standard operating procedures. And we thought itwould be very easy. You know, Ive tried growing crops for29 years now. And I thought, well, this will be easy. I canwrite SOPs for field production. And, of course, as most ofyou know, its very difficult to write SOPs.”4.2 Government Subsidies to GM Crops and PMPIn order to arrive at a measure of the net benefits of PMPs to thecitizens of a state such as North Carolina, the benefits to farmers,the PMP industry and consumers must be sufficient to outweighany subsidies received by the industry. We will provide a fewexamples of financial subsidies offered to PMP firms producingcorn and tobacco before focusing on the incentives offered byMissouri and Kansas to PMP rice-producer Ventria Biosciences.We conclude the section with a more in depth review of thepotential incentives offered to PMP firms in North Carolina.An Iowa state economic development fund gave the ProdigeneCorporation $6 million in subsidies for PMP corn production, awasted investment, given Prodigene’s PMP contamination incidentin 2001-2002 (Des Moines Register 2003).CropTech was a private Virginia corporation developingbiopharm tobacco crops. In its 10-year existence, it received over$12 million in state and federal subsidies (Roanoke Times 2000a,2000b). When it couldn’t stay afloat in Virginia, it soughtfinancing from North and South Carolina, but filed for bankruptcybefore it could accept South Carolina’s incentive package.Ventria Biosciences and Northwest Missouri State University(located in Maryville, MO) signed an agreement in November 2004calling for the university to build and equip a $30 million plant-sciences center in Maryville that would house Ventria and perhapsother biotech companies (St. Louis Post Dispatch 2005). At the
    • 39time, Ventria was considering similar offers from universities inGeorgia, Louisiana and North Carolina (New York Times 2005c).Ventria planned to extract the proteins at a plant underconstruction at Northwest Missouri State University. Ventriaagreed to move its headquarters from Sacramento, CA, toMaryville, MO. The university agreed to spend about $10 millionon the site, and the state government agreed to contribute anadditional $10 million. Ventria agreed to pay the university $500per acre for crops grown on university land. Ventria agreed togrow 70% of its rice in Missouri, and Ventria agreed to pay farmersdouble what they would make on their next-most profitable crop.The university received a 4 percent share in Ventria (New YorkTimes 2006b). University president Dean Hubbard helped raise $5million in venture capital from private sources, money received byVentria by the spring of 2005. (Hubbard later became a Ventriaboard member.) Although the growing season is generallyconsidered too short for growing conventional rice in northernMissouri, Ventria planted four field test plots of several varieties ofits PMP rice in the region in 2005. Twelve of the fourteen PMP ricevarieties planted in field tests were successful, indicating that PMPrice could be grown in the region (New York Times 2006b). Groundwas broken for the plant in the summer of 2005. However, delaysin the approval of funding by the Missouri state legislature ledVentria to terminate its agreement. Ventria stated that it needed“processing facilities in place sooner than possible” for theNorthwest Missouri State University to design and build the site.Legislative concern over the deal delayed a $10 million statecontribution to the $23 million, 60,000 square foot plant (New YorkTimes 2006b). The university also discussed with farmers thepossibility of forming a separate company or co-op to own andoperate the plant.Reportedly, a Topeka, KS, economic development agencyproposed $2.25 million in incentives to encourage Ventria to buildits $10 million rice processing facility in Kansas (Sacramento Bee2006). Private investors and a Kansas state biotechnology agencymay add to the offer, according to the Topeka Chamber ofCommerce.Currently, the state of North Carolina supports many direct andindirect financial incentive programs to attract biotech industries,such as the PMP industry, to the state. While North Carolina iscertainly not alone among states in providing financial incentivesfor economic development, and while there can be sound policyreasons for providing such incentives, it is nevertheless the case
    • 40that a proper accounting of net benefits must subtract the value ofany subsidies from the gross benefits of industry economic activity.Economic development subsidies can be classified as direct andindirect. Direct subsidies include grants and loans made by thestate to a firm as incentive to locate in the state. Direct subsidiesalso include worker training paid for by the state. Indirectsubsidies include state funding for university research, businessincubator facilities, research institutes, and regional business parkdevelopment (such as funding for utility extension to industrialparks).In North Carolina, firms in the Biotech industry, including thosein the PMP industry, have access to economic developmentprograms available to all industries, such as worker trainingprograms offered by the state Community College System, andgrant and loan programs offered through the North CarolinaDepartment of Commerce (NCDC), Commerce Finance Center. Inaddition, biotech firms have access to programs sponsored by thestate-funded North Carolina Biotechnology Center and indirectsupport through biotechnology-related research funded by thestate at two new biotechnology research centers located onuniversity campuses, the Biomanufacturing Training andEducation Center (BTEC) located at North Carolina StateUniversity and the Biomanufacturing Research Institute andTechnology Enterprise (BRITE) located at North Carolina CentralUniversity. The biotech industry also benefits from financialsupport to BTEC and BRITE through the Golden Leaf Foundation,a foundation established to manage North Carolina’s share of thesettlement funds from state lawsuits against the tobacco industry.The Foundation has provided funds for two key biotechnologyeducation and training facilities located at NC State University andNC Central University as part of the North Carolina BiotechnologyCenter (see below). The Foundation also provided start-up moneyfor the NC Community College System’s (NCCCS) BioNetwork(seebelow). The Foundation provided the following list of recentbiotech GM crop and pharma-related grants:Golden Leaf Grants:1) Idealiance - $250,000 assistance with Targacept (Winston-Salem) tofind uses of tobacco proteins in health related applications2) East Carolina University - $250,000 GMP Training for AnalyticalLaboratory Workers in the Biopharma Industry3) Pitt County Community College - $161,000 Associate DegreeProgram in Biotechnology targeting DSM Pharmaceutical expansion
    • 414) Pitt County Development Commission - $311,000 assist withincubator upfit for the location of three Biopharma companies5) Cleveland County Community College - $170,000 Bioinformaticsand Specialized Biotechnology Training targeting job creation inhealthcare and agribio related industries6) Martin County Economic Development Commission - $400,000incubator upfit to lease space for Quintiles (A contract researchcompany providing a widerange of clinical research services forbiotech and pharmaceutical clients.)7) Pitt County Community College - $50,000 IndustrialSystem/Biotechnology Training Clean room Project8) Town of Holly Springs - $2,050,000 public infrastructureimprovements necessary to locate Novartis (350 jobs)In addition, the foundation has invested in NC venturecapital organizations that make equity investments in thebiotech and agri-pharma industries. The foundation was notable to reveal the names of businesses that have benefitedfrom venture capital funding, only that Golden Leaf hasmade a significant investment in early and late stagefinancing to assist with capitalization needs.Golden Leaf Foundation investments in Venture CapitalOrganizations:o Hatteras BioCapital $30 milliono Aurora Ventures V &VI $10 milliono Carousel Capital III $6 millionA few biotech firms have benefited from NCCCS worker trainingprograms (Meyer 2007). Bayer CropScience, which develops GMproducts, has participated in the NEIT program (see Appendix A forNEIT program description). Durham Tech Community Collegehelped train workers in core work skills, including safety,management, supervisory, presentations, and team building atBayer CropScience’s facility in Research Triangle Park, NC.Embrex, Maxton (Scotland Co.), makes an in-egg (in ovo) vaccinefor the poultry industry. Embrex participated in the FIT programat Richmond County Community College, training workers in forklift safety, stainless steel welding (for sterile environment) and afiltration and separation class (class involved actual process formaking vaccine). However, it is not clear that either the BayerCropScience or the Embrex training directly involves PMPdevelopment or production.Ventria Bioscience is the only PMP firm currently operating inNorth Carolina. As far as can be determined from consultations
    • 42with NCDC, BTEC, BRITE and Golden Leaf foundation staff, anddirect inquiries with Ventria BioScience, Ventria has received nodirect subsidies to date. However, Ventria may benefit in thefuture from worker training program subsidies, should it decide toexpand its agricultural production programs in the state, asagricultural workers would likely require substantial training tosuccessfully implement the involved operation procedures requiredfor PMP production. In addition, Ventria may benefit fromsubsidized university research and industrial park infrastructureshould it decide to expand processing operations in the state.Additional, detailed information on North Carolina’s economicdevelopment subsidy programs is provided in Appendix A.4.3 PMP Health Risks in Intended UsesVentria Bioscience is currently conducting field trials of PMPrice in North Carolina, from which altered versions of the humanmilk proteins lactoferrin, lysozyme, and alpha-1-antitrypsin can bereadily extracted. Ventria also produces human serum albumin, ablood protein used in medical therapies and cell culture, usingPMP rice (Washington Post 2007), but it is unclear whether thisproduct is grown in North Carolina. This review will focus on thepotential human health risks of lactoferrin and lysozyme. Thereare potential human health risks associated with these alteredproteins (Freese et al. 2004). These risks include: (1) An adverseresponse of certain bacteria which feed on the iron in humanlactoferrin; (2) The potential for altered versions of lactoferrin andlysozyme to trigger allergic reactions and auto-immune responsesin certain individuals; and (3) The potential for recombinantlysozyme to contain a mutation which causes hereditary systemicamyloidosis - a rare disease marked by slowly progressive renalimpairment that can take decades to reach end-stage. Each ofthese potential risks will be discussed below. To the extent thatthese risks lead to actual injury or sickness with associatedmedical costs, these costs should be considered when assessingthe net benefits of PMP products.Lactoferrin is an important component of infection-fighting whiteblood cells that circulate in the bloodstream. Lactoferrin binds tofree iron at infection sites, inhibiting the ability of microbes to feedon iron, so that they essentially starve to death. The potential usesfor Ventria’s rice-derived lactoferrin include treatments forbacterial-induced diarrhea, topical infections, and antibiotics inpoultry feed. It could also be used as an additive in baby formula
    • 43for treatment of severe diarrhea in children. There are a number ofbacteria that feed on the iron in lactoferrin. This category ofbacteria includes those which cause ulcers and stomach cancers,meningitis, whooping cough, legionnaires’ disease, gonorrhea, andother genital disease. Therapeutic use of human lactoferrin couldstimulate growth of such pathogens, resulting in an adverseresponse. For example, while Weinberg (2001) believes that humanlactoferrin has therapeutic potential, he also believes that it couldstimulate growth of the gut bacterium helicobacter pyloris, whichis implicated in causing ulcers, chronic gastritis, and certain formsof stomach cancer.The recombinant protein lysozyme produced from pharma ricemay contain the mutation which causes systemic amyloidosis.Because the sequencing of Ventria’s recombinant lysozyme isincomplete, this risk is yet to be determined. However, Ventria’sproteins may have the capacity to cause immune systemdysfunction. There is a growing body of evidence demonstratingunexpected immunologic responses to biopharmaceuticalsproduced in genetically engineered cell cultures. In these cellculture production systems, a human gene encoding a medicallyuseful protein such as insulin is spliced into bacteria ormammalian cells, which then produce a recombinant version of theprotein, known as a biopharmaceutical. While the immune systemdoes not normally attack a bodily protein because it is recognizedas “self,” it may respond to the corresponding biopharmaceuticaldue to subtle differences that cause the body to recognize it asforeign. In some cases, the administered biopharmaceutical merelyelicits an immune system response that reduces or eliminates thedrug’s potency.Altered lactoferrin and lysozyme are not exactly identical to thehuman versions of these proteins. The result of these differences isthat they can trigger allergic reactions in certain individuals. Arecent National Academy of Sciences report on the safety of newingredients in infant formula notes that “. . . the commercialproduction of milk proteins using recombinant technologies mayproduce unintended side effects,” such as allergic reactions (NAS2004). They can also lead to auto-immune responses in which theimmune system responds to the body’s own proteins as if they areantigens, thus destroying or damaging normal body tissue.Lonnerdal (2002) states that recombinant rice-expressedlactoferrin and lysozyme are stable to digestion and heat, twoproperties widely regarded as characteristics of food allergens.Digestive stability is of particular concern in infants. Infants andyoung children are 3-4 times more likely to have food allergies than
    • 44adults, and sick infants are even more vulnerable (USEPA 2000).Ventria’s lactoferrin also has a “significant amino acid sequencehomology to a known human allergen, bovine lactoferrin, anallergen found in cow’s milk.” (Lonnerdal 2002). In studies listedon Ventria’s website, only 11 amino acids at the N-terminals of thenative and recombinant versions were sequenced and compared.While 10 of 11 of these amino acids were demonstrated to beidentical, the other 119 amino acids were apparently not tested.In 2002, a Ventria collaborator stated that rice-derivedlactoferrin should be tested on rats and infant rhesus monkeysbefore testing on humans (Lonnerdal 2002). However, Freese(2007) finds that no tests on animals to assess potential effects onhumans have been conducted to date. The methodology used inVentria’s field study in Peru on the efficacy of its PMP proteins intreating diarrhea in infants has been criticized by Freese (2007).Given the potential human health risks and lack of fullinformation (e.g., trials on animals, clinical trials, drug interactiontrials, etc.), it is not surprising that consumers hesitate topurchase, and consumer advocacy groups hesitate to endorse,PMP products.4.4 Containment Loss and Potential PMP LiabilityCostsIn addition to the potential health risks of PMP products in theirintended uses, the spread of GM and PMP crop cultivation createsthe potential for new liabilities in the agricultural and food system(Smyth et al. 2004). PMP products intended for pharmaceutical orindustrial applications may be unintentionally released from“containment” areas and contaminate non-GM crops or food.Containment areas are locations where PMP crops or products areisolated from non-GM crops or food. Loss of containment canoccur during PMP field production, transportation, processing, orstorage. The legal liability inherent in GM / PMP crop productionis emerging as an important consideration in the potentialprofitability and adoption of these crops (Belcher et al. 2005).
    • 454.4.1Consumer Reaction to GM and PMP Products inFoodBecause PMPs have not been commercialized, there has beenlittle research to date on consumers’ willingness to accept PMPproducts and the effects of PMP-origin labeling on consumers’choice of pharmaceutical products, or consumer reaction of PMPcontamination of food products. In contrast, there has been aplethora of economic research on consumers’ reaction to GM foodproducts and the effects of GM labeling on consumers’ choice offood. Since a major concern regarding PMP products is loss ofcontainment, subsequent contamination of food crops or the foodsupply, and consumer rejection of contaminated food, the studiesof consumer attitudes toward GM food shed some light on potentialconsumer reaction to PMP contamination of the food supply. SincePMPs are not intended as food and do not undergo the same pre-market food safety scrutiny as GM products intended as food,consumers may be more wary of PMP contamination than they areof GM food products; this an area for future research. Here wereview the available research on consumer reaction to GM food.Consumer attitudes tend to vary greatly from country tocountry, and even from region to region as well. In general, GMOfood labeling has a large effect on whether or not consumerschoose to buy GM foods. Foods that are labeled as “geneticallymodified,” are less desirable by consumers, in spite of potentialbenefits these foods may confer to their consumers. In the US, thelabeling of GM foods is voluntary; no foods have been labeled asGM foods in the market, even though many food products doindeed contain GM ingredients. In other countries, such as thosein the European Union (EU) and Japan, the labeling of GM foodsfor many products is mandatory. Under this regulatoryenvironment, most if not all food manufacturers and retailerswould not market any GM foods for fear of consumer resistance.Because GM foods labeled as such cannot be found in themarketplace, the extent of consumer acceptance of GM foodscannot be easily assessed. Thus, other methods, such as consumersurveys, are used.Chern et al. (2002) conducted student surveys in Norway,Japan, Taiwan, and the US and they also conducted two pilotnational telephone surveys in Norway and the US. These surveyresults reveal that American and Taiwanese students are morefavorable to GM foods than Norwegian and Japanese students.Furthermore, the majority of students in all four countriessupported a mandatory labeling of GM foods. The estimated
    • 46percentages of the willingness-to-pay for a premium of non-GMvegetable oil are 55-69% for Norwegian students, 50-62% forAmerican students, 33-40% for Japanese students, and 17-21%for Taiwanese students. These results imply substantial premiumsthat consumers in all of these countries are willing to pay in orderto avoid GM foods.The pilot telephone surveys conducted in Norway and the USnot only reinforce the findings obtained from the student surveys,but also provide more consistent data for a cross-countrycomparison. The surveys show that the Norwegian consumers weremore concerned about GM foods than the American consumers.However, consumers in both countries showed strong support formandatory labeling of GM foods and, in the case of salmon, werewilling to pay for substantial premiums to avoid both GM-fed andGM salmon. However, the additional amount that students werewilling to pay for non-GM salmon were considerably higher inNorway than in the US.Fulton and Giannakas (2004) show that consumer aversion toGM products has important economic implications for GM cropintroduction. This willingness of consumers to pay more for non-GM food affects food markets in the United States in a number ofways. Individual consumers in the United States, as well as foodprocessing corporations such as Frito Lay and Taco Bell, arewilling to pay a premium for non-GM products. Therefore,producers of non-GM products must pay part of the segregationcosts, which cut into their producer surplus. Because the marketfor GM imports in Europe is virtually non-existent, U.S. exportersof non-GM crops must take great care to ensure that theirproducts are not contaminated.Onyango et al. (2005) showed that the use of choice modelingexperiments provides a way of valuing non monetary attributesassociated with consumption of GM food products and a way ofidentifying consumer preferences. The results indicate how productattributes of price, product benefits, and technology influenceconsumer demand for genetically modified food products. Theresults show how a consumer makes tradeoffs between the productattributes. The results suggest that health, environmental andproduction-related benefits have a positive effect on choice. Also,the results generally show that genetic modification is viewednegatively.An indirect measure of consumer acceptance of GM products isthe reaction of food importers to GM contamination events in thefood supply. Presumably, food importers would stop purchasing
    • 47GM-contaminated food if they believed that their customers wouldnot purchase it. By this indirect measure, foreign consumeracceptance of GM products is low. In 2004, Japanese customerssaid that they would not buy California rice if Ventria were allowedto produce PMP rice in the state (USA Today 2006). As a recentexample, when it was announced in August 2006 that the U.S. ricesupply was contaminated with GM rice, Japan banned U.S. riceimports, stores in Germany, Switzerland and France pulledAmerican rice off the shelves and a ship transporting U.S. rice wasquarantined in Rotterdam, Netherlands (Washington Post 2006).In addition to direct studies of consumers and the indirectactions of importers, consumer advocacy groups also provide agauge of potential consumer reaction to PMP products. Whilemany advocacy groups do not oppose properly regulated andapproved PMP products, many do oppose production of PMPsoutdoors in food crop plants, including the American ConsumersUnion , the Public Interest Research Group, and the Center forFood Safety in the U.S., and GeneWatch in the U.K. (Daily Mail2007).The actions of some food processors and food industry groupsare also an indication of potential consumer reaction to theincorporation of GM products in processed foods. For example, inMarch 2004, the North American Millers’ Association sent a letterto the USDA urging more stringent oversight of PMP crops,warning that “the risk of adulteration from genetic material”modified for pharmaceutical or industrial uses entering the foodchain was, in its view, “unacceptable” (Los Angeles Times 2004).In 2005, Anheuser-Busch, the largest beer producer in the U.S.and the number 1 buyer of rice, threatened to stop buying ricegrown in Missouri if some farmers were allowed to grow geneticallymodified rice there in field tests. The company reached acompromise after the state pushed the farmers to grow the GM rice120 miles from other rice fields in the state (New York Times2005b). More than half of Missouri’s rice is exported to Europeanand Caribbean countries, where consumers are concerned aboutGM food. The vice president of Riceland Foods, one of the largestrice mills in the U.S. that markets more than half of Missouri’srice, said “We are still having to make statements to our customersthat the rice we export is not genetically modified. . . . We areconcerned longer term that if Ventria and others get involved thatwill get harder to say” (New York Times 2005c). In comments filedon June 2, 2005 with the USDA, the Food Products Association(2005) expressed its strong opposition to the use of food crops toproduce PMPs in the “absence of controls and procedures that
    • 48ensure essentially 100% protection of the food supply. . . .The useof food crops to produce materials not intended to be in the foodsupply must only proceed under systems proven to prevent anycontamination or adulteration of the food supply . . . We cannotoveremphasize the importance of the agency and developmentcompanies making an aggressive proactive effort to developing ‘failsafe’ systems that anticipate, rather than just react to mistakes. Todate, effective control programs have not been demonstrated to oursatisfaction.” The Grocery Manufacturers Association of Americaalso opposes bio-pharming (USA Today 2006).Some farm industry groups also oppose PMP production in foodcrop plants based on negative consumer reaction to potential lossof containment and mixing of GM and non-GM food crops.. Withrespect to Ventria’s PMP rice, Bob Papanos of the U.S. RiceProducers Association said in the spring of 2006 during the LibertyLink rice contamination incidents, “We just want [Ventria] to goaway. This little company could cause major problems” (USAToday 2006). According to the USA Rice Federation (2007a), theannouncement by USDA in August 2006 that trace amounts ofBayer CropScience Liberty Link rice entered the U.S. commercialrice supply resulted in “the closure of the European Union as adestination for U.S. rice.” In a spring 2007 a public comment tothe U.S. Department of Agriculture regarding the agency’sconsideration of Ventria’s application for approval to grow PMP ricein Kansas, the U.S.A. Rice Federation wrote: “If Ventria’spharmaceutical rice were to escape into the commercial ricesupply, the financial devastation to the U.S. rice industry wouldlikely be absolute. There is no tolerance, either regulatory or inpublic perception, for a human gene-based pharmaceutical to endup in the world’s food supply” (New York Times 2007).4.4.2Food Market Reaction to GM/PMP ContainmentLossIn the United States, persons who believe that their crop orproperty suffered damage from an activity involving a GM crop (bypollen flow, for example) could bring a tort liability suit undervarious legal presumptions, including trespass, negligence, orprivate nuisance (Kershen 2004). Tort claims based on strictliability (i.e., liability without fault) may also be possible, perhapsmore so for PMPs and PMIPs than for first-generation GMproducts. A recent lawsuit in the Canadian province ofSaskatchewan (Monsanto v. Schmeiser) involved a farmer who
    • 49grew and marketed a patented crop without paying the TechnologyUse Agreement (TUA) fee to a biotechnology firm (Belcher et al.2005). The farmer claimed that GM canola arrived in his fieldthrough random cross-pollination and/or seed translocation, andthus he should not be liable for the TUA fee. In the end, the casewas decided in favor of the biotechnology firm (SCC 2004). Theselegal developments show that farmers who produce GM cropscould face a risk of litigation from neighboring farmers andbiotechnology companies, as well as public institutions. Williams(2006, 2007) reports that in North Carolina, contract growers havenot fully addressed the question of liability for food or feed mixups.Liability risk will likely be highest in the case of GM food plantsused for PMPs which are grown adjacent to the same food plantswithout PMPs, which likely explains Ventria’s decision to avoidfield trials in California, despite the California Rice Commission’sapproval of Ventria’s plan for commercial-scale planting of PMPrice in the state (Los Angeles Times 2004). (Greenpeace alsopicketed a Ventria rice field in Sutter County, California, in thesummer of 2001, San Francisco Chronicle 2002).The financial liability to the farmer associated with losingcontainment and losing the investment in PMP-specific farmequipment is significant. When asked about the importance ofmaintaining containment to the liability of farmers producing PMPsin the United State, a farmer (and former president of the IowaCorn Growers Association) growing corn PMPs in Iowa for theFrench company Meristem Therapeutics reported in a USDABiotechnology Advisory Committee meeting in 2003 (USDA 2003):“So its absolutely critical that we have perfectcontainment. We have no -- no tolerance for mistakes in oursystem. Thats why almost all the requirements that wehave from the regulatory folks, we double or triple, becauseour family farm, my family, our business, is in jeopardy hereif we screw up. And its not like if I work at a biotechcompany, whereas if theres a mistake, I can just go to thenext company and get a job. If I have a mistake, Im done.”“. . . the group that we work with is a hand-picked groupof producers. Its 72 members in Iowa, and right now, mybrother and I are the only ones producing [pharma crops],but the other 71 would certainly like to at some point in thefuture. But you need to know exactly who youre working
    • 50with, and you have to trust them. Because all it takes is onemistake by one individual and youve collapsed the wholesystem.”Although rice is not grown for food in North Carolina, futurePMP products grown in food crops such as corn, soybeans ortobacco could create these kinds of liabilities if the PMP cropplanted by a North Carolina farmer was proven to cause anadverse effect on his neighbor’s crop. If this were to occur, thePMP producer could be personally liable for damages. If PMP riceis grown in North Carolina for Ventria Biosciences, and the rice istransported to Ventria’s proposed facility in Junction City, Kansas(Ventria Biosciences 2006), then there is the additional risk of lossof containment during transportation along hundreds of miles ofhighway or rail line. Which party--farmer, transportationcompany, biotech company, etc.—would be responsible for thefinancial liability arising from loss of containment could be acomplex and expensive legal issue, involving complex contractsand significant legal fees. Liability insurance could be a significantbarrier to entry for farmers seeking to grow PMP crops, yet thisremains an unanswered question for independent growers.Financial liability and risk is exacerbated by international tradein GM and potentially PMP crops. Export market access may berestricted when a GM trait is found in the U.S. supply (even ifpresent in trace levels). In such a case, individuals could bringliability suits based on the concept of public nuisance. Episodes ofaccidental GM contamination support this conclusion, includingthe high-profile StarLink and Prodigene cases. In the StarLink casefarmers claimed economic damages arising because theintroduction of GM crops affected export market access andmarket price for their non-transgenic crop (Moschini 2006). In thelate 1990s, Aventis CropScience, a multinational French-basedcorporation, introduced StarLink corn into the United States eventhough the EPA had not approved StarLink corn for humanconsumption. On September 18, 2000, the Cry9C Starlink genewas found in sample of Taco Bell taco shells. Kraft Foods, Inc, theproducer of Taco Bell taco shells, recalled the product after furthertesting by the FDA. Many other food products were also recalledbecause of the presence of StarLink corn, including other corn-based taco shells, tostada shells, tortillas, tortilla chips, and chiliseasonings kit. Due to the recalls, Japan and South Korea
    • 51temporarily halted US corn imports until testing procedures werefirmly established (Schmitz et al. 2004).StarLink corn is toxic to European corn borers and certain otherinsect pests. By 2000, StarLink corn was grown on approximately362,000 acres, roughly 40% of which were in Iowa. StarLink cornbecame commingled with non-StarLink corn in the US grain-handling system. According to Lin et al. (2003), commingling ofStarLink corn with other corn varieties was exacerbated by threefactors: (1) some of the corn grown on the buffer zone was probablycross-pollinated with StarLink corn; (2) a portion of the StarLinkcorn, including that grown on the buffer zone, had entered themarketplace prior to the effort to contain StarLink-commingledcorn; and (3) some elevators did not know they were receivingStarLink-commingled corn. In order for US corn to be sold for foodpurposes both in the United States and in major importingcountries, it now had to be segregated and tested.Once implemented, StarLink testing became highly stringent—the tolerance level ranged from one kernel in a sample of 400 inthe US to as much as one kernel in three samples of 800 in Japan.Several class-action lawsuits ensued, Fingers et al. v. Kraft FoodsNorth America, Inc., et al. was one such case. The plaintiffsclaimed they had allergic reactions to food containing Cry9C. TheCenters for Disease Control tested the 17 people who claimedStarLink had made them sick and found that none of them hadantibodies consistent with allergic reactions to StarLink. Despitethese results, a federal judge approved a $9 million settlement inMarch 2002. Mulholland et al. v. Aventis Crop Science USAHolding, Inc. was another such case. The plaintiffs, who were non-StarLink corn growers in seven Midwestern states, claimedproperty damage and corn loss claims. Property damage claimantswere compensated for lost market value, transportation, andstorage costs resulting from actual contamination of their crops,fields, equipment, and property. Corn loss claimants werecompensated for the alleged reduction in the general price of corndue to the presence of StarLink corn in the US corn supply. Asettlement for $110 million was reached in February 2003.The latter case is important since it is applicable to ongoingdebates over the acceptance and impacts of genetically engineeredcrops both within the United States and abroad. The StarLinkincident illustrates the complexity of isolating crop varieties withinthe existing grain marketing system and preventing unwantedcommingling. Schmitz et al. (2005) performed an analysis of theimpact of StarLink corn on US producers and found that US
    • 52producers lost between $26 million and $288 million in the firstyear following the StarLink incident. However, if it were not for UScorn subsidies, the full economic damages would have been in therange of between $298 million and $964 million (Schmitz et al.2005).In 2002, Monsanto applied for environmental safety approval ofits Roundup Ready wheat for use in Canada. However, theCanadian Wheat Board threatened to sue Monsanto if itsgenetically engineered wheat passed the crop varietal registrationprocess in Canada. As a result, Monsanto withdrew from its GMwheat program in North America in May 2004. Two economicstudies were conducted to analyze the effect that decision had onproducers and consumers in various countries. Berwald et al.(2006) concluded that if the United States and Canada would haveallowed Monsanto’s wheat to be grown, consumers in bothcountries would have benefited. On the other hand, Furtan et al.(2005) concluded that, under the same circumstances, wheatproducers would actually lose money, while both consumers andthe biotech company would benefit. In July 2004, the USDAdetermined that Monsanto’s GM wheat was safe for human andlivestock consumption. However, this approval came afterMonsanto decided to put an end to its GM wheat researchprogram.Ventria’s Vice President Delia Bethell noted in a 2003 petition tothe FDA that Ventria’s PMP rice could inadvertently enter thecommercial food rice supply (Ventria 2003). GM pest-resistant ricegrown experimentally in China allegedly made its way illegally intoChinese seed markets, sold by a Chinese agricultural universityspecializing in GM rice research (New York Times 2005a, 2005b).It could be argued that the U.S. regulatory system is significantlydifferent from China’s, but the StarLink corn and Liberty Link riceexperiences (see Section 4 of this report) would appear to indicatethat the U.S. system also has difficulty keeping GM products out ofthe food supply.In 2004, the National Research Council released a report on thebiological confinement of genetically engineered organisms (NRC2004a). The NRC found that an organism that is typically grown toproduce a common and widespread food product, such as Ventria’srice, probably would be a poor choice as a precursor for anindustrial compound unless that organism were to be grown understringent conditions of confinement. This is an important issue forany novel compound or GM organism for which zero tolerance ofbioconfinement failure is needed. Engineering organisms that are
    • 53not otherwise used for food or feed could be an effective way toprevent a transgenic compound from entering the human foodchain. The NRC report recommended that “Alternative nonfoodhost organisms should be sought for genes that code for transgenicproducts that need to be kept out of the food supply.”In a presentation to a USDA Biotechnology Advisory Committeemeeting in 2003 (USDA 2003), Dr. Scott Deeter, president andCEO of Ventria Bioscience, described why Ventria is using rice,instead of a non-food crop, to produce PMPs:“One of the questions, why do we work with food crops? Well,theres a lot of reasons, actually. Its not something that wedecided up front and said, well lets use food crops. In fact it wasbecause of the biology of food crops and the science and theplatform there. So grains can store -- have a natural proteinstorage mechanism. They also are free of infectious contaminantssuch as prions. So theyre not animal source. I dont know if youremember last year, last summer, where we dealt with the WestNile virus and the blood supply. Well, thats because the virus wasessentially transmitted to new -- new individuals through theblood. Through the blood supply. Because that blood comes froman animal origin, from a human origin, in fact. Grains dont carrythe viral vectors that humans do. So that provides a benefit interms of manufacturing. These crops are generally regarded assafe. What does that mean? Well, a lot of the production systemsthat are in use today by the biopharmaceutical industry, if, forinstance, one is E. coli, and we dont hear a lot about that, andtheres probably good reason for why we dont hear about it.Nobody really wants to think of their drugs being produced in E.coli. However, grains -- so if we produce in E. coli weve got to doenormous amounts of processing and purification to get the activeingredient out. If we produce in grains, we have a host that isbasically safe. And if the only difference here is the activeingredient, and we show that the active ingredient is processed in away that provides safety and efficacy through the clinical process,we can envision a time where we dont need to go through thepurification processing to the extent that we have to today in thebiotechnology world. And that is a big chunk of the total cost ofpharmaceuticals. So theres another benefit there, especially fororally or topically delivered products.”Ventria’s potential liability costs for losing containment of itsPMP products could be very large. Consider the example of AventisCrop Science and Bayer CropScience. In the spring of 2001,Aventis Crop Science destroyed GM “Liberty Link” rice that was
    • 54being grown experimentally in Texas after its GM StarLink corncontaminated the human food supply, resulting in Aventis payinga multi-million dollar settlement to affected parties (Fortune 2007).When Aventis’ crop science unit was later sold to BayerCropScience, Bayer CropScience dropped plans to bring LibertyLink rice to market. These firms presumably dropped plans toproduce Liberty Link rice due to the potential risk of loss ofcontainment and the possibility it could enter the human foodsupply. Nonetheless, in 2006 Liberty Link rice somehow made itsway into the U.S. commercial food rice supply, perhaps from aresearch test plot at Louisiana State University. According toJeffrey Barach, a vice president of the Food Products Association,“Once [GM rice] is in the pipeline, it’s very hard to get it out”(Washington Post 2006). Four hundred rice growers have filed afederal lawsuit against Bayer CropScience. Ten rice seed dealersfrom Arkansas, Missouri and Louisiana have also sued BayerCropScience, alleging that the company’s carelessness ruined theirseed. Tilda, a British rice importer, has sued Bayer CropScience,Riceland Foods and Producer’s Rice Mill, saying it had to destroyor send back Arkansas rice. The North American Millers’Association has called for “Mandatory liability insurance coverageto indemnify all downstream traders, handlers, processors andfood manufacturers for the full cost of recall, destruction andbrand degradation as a result of gene flow or other release ofgenetic material into the food or feed industries” (NAMA 2007).4.4.3NRC Recommendations to Reduce GM/PMP LiabilityCostsThe National Research Council recently evaluated the safety ofgenetically engineered foods (NRC 2004). The NRC report notedthat because most crops can produce allergens, toxins, or anti-nutritional substances, both conventional breeding methods aswell as genetic engineering have the potential to produceunexpected and unintended changes in a food crop. Hence, theissue of food safety with respect to GM and PMP crops is a matterof degree rather than kind. Furthermore, the NRC found that noadverse health effects in the human population attributed togenetic engineering had been documented. However, the NRCfound that potential food safety risks exist, and the recent adventof genetic engineering science and GM and PMP crops likely meanthat consumers are less familiar with these risks. The NRC reportconsidered ways to reduce safety risks before product
    • 55commercialization (pre-market) and after commercialization (post-market).Current safety assessments in the pre-market period focus oncomparing the GE food with its conventional counterpart toidentify uniquely different components. The NRC found thatdespite technological advances in analytical chemistry, our abilityto interpret the consequences to human health of changes in foodcomposition is limited due to the complexity of food composition.Although current analytical methods can provide a detailedassessment of food composition, limitations exist in interpretingtheir biological significance. That is, we have limited abilities tointerpret the analytical results and predict health effects. The NRCreport concludes that “The knowledge and understanding neededto relate such compositional information to potential unintendedhealth effects is far from complete . . . Furthermore, currentlyavailable bioinformatics and predictive tools are inadequate forcorrelating compositional analyses with biological effects.” TheNRC recommended that “genetic modification in food, includinggenetic engineering, undergo an appropriate safety assessment. . .. prior to commercialization.” The NRC report also concludes“Although the array of analytical and epidemiological techniquesavailable has increased, there remain sizeable gaps in our ability toidentify compositional changes that result from geneticmodification of organisms intended for food; to determine thebiological relevance of such changes to human health; and todevise appropriate scientific methods to predict and assessunintended adverse effects on human health.”Post-commercialization or post-market evaluation tools,including tracking and epidemiological studies, are importantcomponents of the overall assessment of food safety. Post-marketsurveillance is a common procedure, for example, with newpharmaceuticals and has been beneficial in the identification ofharmful and unexpected side-effects. The NRC recommended that“When warranted by changes such as altered levels of naturallyoccurring components above those found in the product’sunmodified counterpart . . . [post-market surveillance] Improve[s]the ability to identify populations that are susceptible to foodallergens and develop databases relevant to tracking theprevalence of food allergies and intolerances in the generalpopulation, and in susceptible population subgroups.” This [is]especially pertinent to GE foods because of the unique ability of GEprocesses to introduce gene sequences that generate novelproducts that are incorporated into organisms intended for use asfood and especially in situations where the novel products are
    • 56introduced at levels that have the potential to alter dietary intakepatterns (e.g., elevated levels of key nutrients). The NRCrecommended that we “Develop a database of unique geneticsequences (DNA, polymerase chain reaction sequences) from GEfoods entering the marketplace to enable their identification inpost-market surveillance activities.” Although post-marketsurveillance has not been used to evaluate any of the GE cropsthat are currently on the market and there are challenges to itsuse, this approach holds promise in monitoring the potentialeffects, both anticipated and unanticipated, of GE foods.4.5 Externality “Spillover” Costs Affecting Non-GMand Organic FarmersAs with any new product, the introduction of plant-madepharmaceuticals has the potential for unintended, negativeconsequences. Any such negative side effects are generally termed‘externality,” or “spillover,” costs by economists, because the costsaffect someone other than the producer and consumer of theproduct in question—the costs “spillover” onto someone “external”to the transaction between the product’s producer and consumer(Nelson and De Pinto 2001). With respect to PMPs, potentialexternality costs fall into two broad categories, costs imposed byPMP production on non-PMP and organic farmers, andenvironmental damage costs.PMP production imposes externality costs on non-GM farmers,such as organic farmers. These “spillover” costs include theincreased costs of product identification and certification necessaryto gain entry into markets banning some or all GM products.Exporters of non-GM crops need to assure the importing countrythat their product meets importing country regulations. Testingeach unit of product as it crosses international borders or at thepoint of sale to the final consumer is either prohibitively expensiveor not technically feasible. Recently, firms have begun to developnew quality-assured supply chains using various segregation,identity-preserving production and marketing (IPPM), andtraceability systems to bridge the gap between heterogeneouscountry regulations and the traditional agricultural foodproduction systems that produce and deliver pooled, homogeneouscommodities (Smyth et al. 2004). For example, maize and soybeanproducers have tried to develop and deliver quality assured GM-free grains to Europe and Japan (Lin 2002), beef producers are
    • 57developing quality assurance and trace-back systems (Spriggs andIsaac 2001), and canola producers and processors in Canada havedeveloped IPPM systems to manage more than 39 new varieties(Smyth and Phillips 2003). However, even if these systems achievetheir goals, they will be costly, and it is the existence of the GMand PMP products that creates the need for these systems. If afarmer chooses to grow GM-free products and sell them to GM-freemarkets, he must bear part of the costs of certifying that hisproducts are GM-free. These costs can include the extra costs ofsegregating and tracking the crop during storage, transportationand handling, additional testing and marketing costs, andopportunity costs of missing the best times to sell the product dueto processing and transportation delays and bottlenecks (Table 6).These costs are necessitated by the developers and growers of GMproducts, including PMP products. Hence, the “spillover” coststhat GM-free farmers must incur to certify that their products areGM-free should be counted as a cost of GM crop production (Moss,Schmitz and Schmitz 2007, 2004). Most existing studies of IPPMcosts are based on niche markets with low volume, whereestimated costs are C$30-40/tonne, or 15% to 20% above the costof conventional supply systems (Smyth et al. 2004) (Table 7).Some believe that costs would fall with larger production volumes,while others believe that there are too many constraints (e.g.,storage, trucking) in the system for IPPM to be feasible at largerscales. Lin and Johnson (2004) estimate the cost of segregatingnon-GM maize and soybeans at 12% of the average farm price.The prospect of PMP products raises a number of issuesgermane to the debate on the coexistence of GM and non-GMagriculture, including organic agriculture. Because many of theseproducts are being pursued with host plants that are also used infood and feed production (such as maize and rice), the possibilityof adventitious presence of PMP and PMIP traits in the food andfeed system becomes a real possibility. The two major avenues bywhich this could happen are pollen and seed dispersal. Pollen isdispersed mainly by wind and insects. Seeds are dispersed bywind, animals and human activities associated with seedproduction, harvest, transportation, storage, and processing.Preliminary research in plant biology has indicated that it willlikely take longer than a year for a non-GM or organic grower to beable to meet the existing standards for non-GM markets on a fieldcontaminated by a GM version of the crop (Gilligan et al. 2003,Norris et al. 1999). The length of time necessary for crops to meetmore rigorous standards, such as organic certification, after a fieldhas been contaminated, will likely be even longer. Hence, the costs
    • 58to non-GM farmers of GM contamination of their fields could be atleast a year’s worth of production, if not more. Indeed, seeds fromGM crops have produced volunteer populations for up to 3 years(Norris et al., 1999). The potential loss of containment imposesidentity preservation costs on other farmers not growing PMPcrops. For example, certified organic farmers in North Carolinapay for a quality-control process in which the food is routinelytested for the presence of genetically modified DNA (Williams 2006,2007).As discussed in Section 2.1 above, on May 4, 2007, a federaljudge in San Francisco ordered farmers to stop plantingMonsanto’s GM Roundup Ready alfalfa seed because of the riskthat it will contaminate nearby non-GM, organic alfalfa fields(Sacramento Bee 2007). This ruling is significant in that it was thefirst time that GM crop planting was stopped due to the potentialfor, rather than actual, containment loss. The judge criticizedUSDA for failing to adequately assess potential problems withcross-pollination before approving the alfalfa seed for commercialplanting. The judge ruled that contamination of an organic alfalfafield with the Roundup Ready gene could effectively destroy theorganic farmer’s crop.4.6 Externality “Spillover” Costs of EnvironmentalHazardsSince GM organisms were introduced into the environmentnearly 20 years ago, questions have been raised about theconsequences of the escape of those organisms and theirengineered genetic material––transgenes––into natural andmanaged ecosystems. A National Research Council report (2002)on the environmental effects of transgenic plants found thatalthough the transgenic process presents no new categories of riskcompared to conventional methods of crop improvement, specifictraits introduced by both approaches can pose unique risks. Thereport found that both transgenic and conventional approaches(for example, hybridization, mutagenesis) for adding geneticvariation to crops can cause changes in the plant genome thatresult in unintended effects. Genetic improvement of crops by bothapproaches typically involves the addition of genetic variation toexisting varieties, followed by screening for individuals that haveonly desirable traits. The screening component will remove many
    • 59but not all of the unanticipated physical and ecological traits thatcould adversely affect the environment.More specifically, the NRC report found that (1) small and largegenetic changes have had substantial environmentalconsequences; (2) the consequences of biological novelty dependstrongly on the specific environment, including the genomic,physical, and biological environments into which they areintroduced; (3) the significance of the consequences of biologicalnovelty depend on societal values; and (4) introduction of biologicalnovelty can have unintended and unpredicted effects on therecipient community and ecosystem.A growing body of research has considered the environmentalimpacts of introducing GM crops into an agricultural landscape(Batie and Ervin 2001, Barton and Dracup 2000). The NRC (2002)report on the environmental effects of transgenic plants identifiedfour primary categories of potential hazards from the release oftransgenic crop plants: (1) hazards associated with the movementof the transgene itself with subsequent expression in a differentorganism or species, (2) hazards associated directly or indirectlywith the transgenic plant as a whole, (3) non-target hazardsassociated with the transgene product outside the plant, and (4)resistance evolution in the targeted pest populations. Thepotential indirect effects of transgenic crop plants on humanhealth as mediated by the environment constitute a fifth categoryof hazard discussed in the NRC report. In addition to thesecategories, the EU recognizes altered genetic diversity as a separatecategory of environmental hazard in its modified directive 90/220(European Commission 2001). The NRC does not recognize alteredgenetic diversity per se as an environmental hazard because theNRC considers the effects of altered genetic diversity, such asincreased extinction rate, a compromised genetic resource,inbreeding depression, or increased vulnerability to environmentalstresses, to be the actual environmental hazard. In the NRCclassification scheme, the effects of altered genetic diversity areaddressed under transgene movement effects. The EU recognizesaltered genetic diversity as a distinct category of potential effect asa precautionary measure, because the effects of transgenemovement are uncertain and are presently incompletelycharacterized. By recognizing the more easily measured,intermediate effects on genetic diversity as a potential hazard, theEU believes its risk analysis will address and manage all of theeffects the committee lists under movement of transgenes withouthaving to assess them specifically.
    • 60Environmental hazards can be divided into two categories—short and long-run (Nelson and De Pinto 2001). Short-runhazards, such as effects on non-target organisms (such as themonarch butterfly, see Losey et al. 1999), can usually be stoppedor reversed by ending use of the GM crop. In contrast, long-runcosts, such as the development of pest resistance or enhancedsurvivability of the crop, making it a weed, usually develop slowlyand are not reversible.Short-run environmental costs typically consist of negativeimpacts on non-target organisms. For example, although thetarget species of Bt corn are a few types of lepidopteran insects,other related, non-target species are killed as well, such as themonarch butterfly (Losey et al. 1999). In addition, other speciesthat rely on target or non-target affected species as a food sourcemay be negatively impacted as well.Long-run environmental costs include the development ofresistance in insect and weed pest species, increased weedcharacteristics of the crop itself due to enhanced survivability, andnegative impacts on non-target species due to gene flow (sexualtransmission of genetic material from one species to another) fromthe GM crop to other species (Nelson and De Pinto 2001). Forexample, increased resistance to Bt pest control toxin is a potentialproblem in insect pests of GM crop Bt corn such as the Europeancorn borer (Huang et al. 1999). Farmers have attempted to slowthe development of insect resistance by planting refugia (crop areaswithout GM crops), but farmer participation in refugia programshas been low due to the added management burden (Nelson andDe Pinto 2001). In addition to insect resistance to pesticides, someweeds have developed resistance to herbicides as a result ofplanting herbicide-resistant GM plants such as glyphosate-resistant soybeans in combination with high herbicide dosage(Nelson and De Pinto 2001).Increased weediness of the crop itself appears to be problem sofar only for canola (Nelson and De Pinto 2001) and creepingbentgrass (National Public Radio 2006). GM crop Roundup ReadyCreeping Bentgrass escaped from test plots in central Oregon andwas discovered growing in the wild 21 kilometers from its Oregontest plot in 2004. This was the first know occurrence of a GM-plant escaping and surviving in the wild. The wind-pollinated,perennial crop has weedy relatives and was found to have alreadyhybridized with wild plants. Grass seed farmers in the WillametteValley region of eastern Oregon are worried that contamination oftheir fields could jeopardize their $374 million business.
    • 61Concerns related to gene flow include movement of herbicideand virus-resistance genes from GM crops to wild relatives andflow of antibiotic resistance marker genes to microorganisms in thestomachs of animals that eat GM crops. If a herbicide- or virus-resistant GM crop passes resistance to wild relatives, weedproblems can be exacerbated. Canola, for example, is grown inregions where weeds with some degree of sexual compatibility exist(Nelson and De Pinto 2001). Other crops with some potential forgene flow include sugar beets, cucumbers and squashes.Antibiotic resistance marker genes are used to indicate thesuccessful insertion of novel genetic material into GM plants. Themarker gene is linked to another gene that produces the desiredGM trait, and both genes are inserted into the potential GM plant.If GM plant cells grown in the laboratory are not killed by certainantibiotics, it is an indication that the gene insertion wassuccessful. Two potential problems related to the used ofantibiotic resistance marker genes are the inadvertent interferencewith therapeutic antibiotics and genetic flow to microorganisms(Nelson and De Pinto 2001). Antibiotic resistance genes are in thefood supply now. For example, in 1993, Calgene asked the Foodand Drug Administration (FDA) to evaluate the product of thekanamycin resistance gene in the FlavrSavr tomato as a foodadditive. The FDA decided that the gene product was safe as anadditive in both food and feed because the frequency of genetransfer was very low, and the natural incidence of resistancegenes in the environment is much higher.A major concern regarding the co-existence of GM and non-GMcrops in agricultural landscapes is gene transfer through cross-pollination of non-GM crops by nearby GM crops (Belcher et al.2005, Haslberger 2001) and the biocontamination of non-GM cropsthrough seed translocation. There already exists some researchinto the potential for gene transfer to occur (Rieger et al. 2002,Gilligan et al. 2003, Hucl and Matus-Cadiz 2001). This researchindicates that gene transfer can occur in most crops, and thattransfer is influenced by factors such as pollination mode, geneticstability, fitness and fertility of hybrids, and proximity and size ofcrop populations (Barton and Dracup 2000).The USDA (2005b) discussed the potential for rice cross-pollination in the Environmental Assessment of Ventria’s proposedPMP rice plantings in Missouri and North Carolina:“Rice is not sexually compatible with plant species outside ofthe Oryza genus. There are no sexually compatible species ofOryza other than Oryza sativa growing in the United States.
    • 62Rice is primarily self-pollinating and out-crossing ratesusually occur at a very low rate (generally less than 1%). Thefloral structure of O. sativa and the short viability of itspollen present biological barriers to cross-pollination (Gealyet al. 2003). A rice floret opens only once for a short period oftime, usually for a little over an hour or less, during whichfertilization can occur. Pollen viability is for no longer thanfive to ten minutes, but the stigma can remain viable for twoto four days and can be fertilized by foreign pollen if for somereason it is not fertilized by its own pollen (Gealy et al. 2003).Due to the high self-pollinating characteristic of rice, theAssociation of Official Seed Certifying Agencies (AOSCA)certified seed regulations for foundation seed require aminimum isolation distance from other rice varieties of atleast ten feet when ground drilled and 50 feet if groundbroadcast (AOSCA 2003). With proper isolation distancesmaintained between Ventria’s rice and other cultivars of rice,gene escape via crosspollination would be highly unlikely.Temporal isolation can further reduce the likelihood ofeffective pollination and fertilization. In addition, anothermechanism for gene escape would be out-crossing withweedy/red rice. The establishment of a weedy rice populationnext to the field site could offer a means of escape of thegene from the production area. Since red rice seeds oftenhave dormancy and shatter easily, the gene could beharbored in a weedy population for a number of years.”Hence, although the likelihood of cross-pollination / outcrossingis low, nearby populations of weedy (uncultivated, volunteer)populations of red rice could become contaminated and serve as aharbor for an escaped gene for a number of years.Unintended gene flow occurred in some varieties of Mexicanmaize in the fall of 2001 (Quist and Chapela 2001). In the summerof 2002, Snow et al. (2003) reported evidence suggesting that atrait from transgene insertions may be able to move to otherplants, creating the conditions for potential “superweeds.”However, gene flow is much less likely in rice, due to its self-pollinating characteristics.In a presentation to a USDA Biotechnology Advisory Committeemeeting in 2003 (USDA 2003), Dr. Scott Deeter, president andCEO of Ventria Bioscience, described the methods Ventria woulduse to limit gene flow:“Now, there are several technologies that are beingdeveloped from male sterility of the pollen to switches to
    • 63other technologies that are being employed to manage whatIll generally call as gene flow, okay? And this could be geneflow either direction. It could be unwanted gene flow intoyour pharmaceutical production crop, or gene flow outside ofyour pharmaceutical production crop. The food industry isconcerned about the latter. The pharmaceutical industry isconcerned about both. So there, in Ventrias perspective,this is a critical question for this industry. And this is whyweve chosen two self-pollinating crops. So self- pollinatingcrops mean that the male and female reproductive systemsare contained within the plant. They arent designed forpollination in the wind or through insects. A plant isdesigned that way. So weve -- weve developed our systemaround plants that have self- pollinating features. Like rice,barley and wheat are three that do. We use rice and barley.The reason for this is -- has to do with the -- theres severalstudies that go back. We know a lot about the biology ofrice. We know a lot about biology of barley. These studies,the rice bio-safety study, the U. C. Davis study, the bottomline of those studies is beyond 30 feet, they seem to let noout-crossing. The out-crossing rate of beyond six feet i s, inmost studies, as close to zero as you can get. So we use a100-foot setback, which isnt more than 3 times what we seein any of these studies.“. . . So we grow our pharmaceutical crops under a permitissued by USDA. We directly manage using standardoperating procedures. Our field personnel are trained, or wemaintain ownership of the seed and grain, as I said. We usea hazard analysis, critical control point philosophy, so wemanage each step of the way for quality of our own product,but also for environmental stewardship purposes. And weprocess these products before we then go on to sell the activeingredient. We do 100 percent internal audit of our standardoperating procedures to make sure that our field personnelfollow the procedures. We do that through interviews as wellas through random audit. The -- we have a dedicated fieldproduction. We have dedicated field production equipment.Anything that comes into contact with plant material isdedicated for pharmaceutical production. Its not used forany other type of production. We have -- that includesharvesting, storage and processing. Initial processing up tothe stage where it gets converted into a flour form. We usedouble-contained transportation, which is a requirement by
    • 64USDA. And we have -- we have third parties. In addition toUSDA, we use the California Crop Improvement Associationto audit our -- that our field production practices achieve theresult that were after, which is no out-crossing. Thats what-- this is what we do. And I know that many of thecompanies that are involved in our industry follow verysimilar approach.”It is unclear whether Ventria uses third parties to audit its fieldproduction practices in North Carolina. The National ResearchCouncil report (2002) on the environmental effects of transgenicplants recommends “that two different types of general ecologicalmonitoring be used to assess unanticipated or long-term,incremental environmental impacts of transgenic crops. One typeof monitoring involves use of a network of trained observers todetect unusual changes in the biotic and abiotic components ofagricultural and nonagricultural ecosystems. The second involvesestablishment of a long-term monitoring program that examinesthe planting patterns of transgenic plants, and uses a subset ofspecies and abiotic parameters as indicators of long-term shifts inan ecosystem.” It is not clear whether Ventria has establishedsuch monitoring programs for its North Carolina PMP rice.An additional route for containment loss is the possibility ofspills or other mishaps during long distance transportation of PMPrice from fields to processing facilities. The PMP rice currentlygrown in North Carolina must be taken to Iowa or Missouri forprotein extraction (Washington Daily News 2006a). With theannouncement (Ventria Biosciences 2006)in 2006 that Ventriaplans to locate its PMP rice processing facility in Junction City,Kansas, any PMP rice grown in North Carolina for VentriaBiosciences would presumably be shipped to Kansas forprocessing, presenting an additional risk of loss of containmentduring transportation along hundreds of miles of highway or railline.A recent National Research Council report NRC (2004a)discussed the possible use of bioconfinement methods to confinecertain GM organisms and their transgenes to specificallydesignated release settings. All bioconfinement methods can beconceptually divided into three general categories: those thatreduce the spread or persistence of GM organisms; those thatreduce unintended gene flow from GM organisms into otherorganisms; and those that limit expression of transgenes. Most ofthe bioconfinement methods discussed in the NRC report are
    • 65equivalent to natural mechanisms of reproductive isolation that actto maintain species barriers. However, the NRC noted that, inplants, the leakiness of those species boundaries is well known.Within species, distinctive breeding systems such as dioecy (maleor female plants) and self-incompatibility also are known to beleaky. Moreover, experience suggests that sterility is rarelyabsolute. Thus, the NRC found that “in most circumstances,single-method efforts at bioconfinement are likely to be less than100% effective in preventing the escape of transgenes, especially iflarge numbers of plants are involved.” Although the efficacy ofsome of the approaches is known, most are untested. Failures inthe bioconfinement of GM organisms have not been documented todate, in part because so few methods have been implemented.However, the NRC found that “given the imperfections of methodsunder development and those of methods that have been applied tononengineered species, it is likely that failure will occur.” The NRCfound that “Current methods for detecting and culling individualGM organisms after a bioconfinement failure are very limited, andthey depend on the organism and scale of the original release ofthe GM organism.” Currently, monitoring is difficult because itinvolves searching for what often will be a rare event over apotentially large area. Ideally, monitoring methods would bedeveloped that could identify escapes with remote sensing.With respect to any potential impacts of U.S.-grown PMP cropson the environment outside U.S. territory, the National ResearchCouncil report (2002) on the environmental effects of transgenicplants found that “APHIS’ jurisdiction and the focus of itsEnvironmental Assessments are confined to the United States, butsome APHIS assessments discuss potential environmental effectsof specific transgenic plants outside the United States.” In effect,any potential environmental hazards outside the U.S. due to U.S.PMP production are not considered by U.S. regulators.
    • 665 Alternatives to Food Crop PMPsNeither food plants nor farmers’ fields are necessary for theproduction of PMPs (Williams 2006, 2007). PMPs can be grown insterile containment systems instead of agricultural fields. At thistime, pharmaceutical firms place a premium on uniformity andpurity of recombinant protein to such an extent that containmentsystems are preferred. A major drawback of field crop PMPs is thatprotein content is variable from crop to crop. Recombinantproteins produced in containment systems are more uniform. Inaddition, proteins produced in containment systems are free ofresidues from herbicides, pesticides and fungicides.Contamination risks to food supplies are greatly reduced. Proteinsexuded via roots of genetically modified plants and harvested fromthe container’s aqueous media offer some processing advantages.Two disadvantages of producing proteins in containment systemsare that it is thought to cost more, and it is thought to take longerto bring the product to market. However, Agres (2006) reports thatrecent advances in closed-system technology have eliminated someof the cost difference between PMPs and contained cell culturesystems.The range of molecular farming systems using contained, non-field systems continues to expand. Some commercial systems forcontainment include non-food plants such as duckweed (Lemnaspp.) (Cox et al. 2006), tobacco (Nicotiana spp.) (Somerville andBonetta 2001, Poirier et al. 1992), algae (Chlamydomonasreinhardtii) (Franklin and Mayfield 2004) and moss (Physcomitrellapatens) provide good choices for containment systems (Streatfield2005, Fischer et al. 2004, Gasdaska et al. 2003). Agennix isproducing lactoferrin in a closed, fermentation system usingAspergillus niger (a filamentous fungi) for treatment of lung cancerand diabetic food ulcers (http://www.agennix.com). See alsoFreese (2002, Appendix 5) for additional information onalternatives to PMP food crop production. Another option is toproduce PMPs using food crops inside greenhouses, such as thepotatoes grown hydroponically in greenhouses by AltaGenBioscience (San Francisco Chronicle 2002).At present, biotechnology firms based in North Carolina producePMPs using containment systems based on non-food plants ratherthan food crop plants in un-contained farm fields. High productpurity and access to highly-skilled labor are catalyzing marketexpansion of PMP production in contained systems in the state.
    • 67Contained PMP production currently co-exists with profitableorganic and local food farmers. North Carolina may be able toexploit containment system technology to gain the benefits of PMPproduction while avoiding the risks of production methods that usefood crops in farm fields.6 ConclusionsOver the last twenty years, agriculture has seen the introductionand rapid deployment of genetically modified (GM) crops for food(i.e., corn and soybeans) and fiber (i.e., cotton). Plant-madepharmaceuticals (PMPs) are a class of GM crop not intended foruse as food or feed. Rather, PMPs are intended for use astherapeutic drugs for humans or livestock, or as materials forresearch and industry (e.g., cell culture media). PMP plants areused as factories to produce the PMP product, the product isextracted from the plant, and the plant remains are discarded.PMP plants can be grown inside laboratories or greenhouses, orthey can be grown outside in fields as agricultural crops. Whengrown as crops, they can be food plants (e.g., corn, safflower, orrice) or non-food plants (e.g., tobacco).Many of the PMP products under development are proteins--antibodies, enzymes, vaccines and other therapeutic agents--dueto an increasing number of protein-based drug discoveries bypharmaceutical companies. In 2005 alone, 38 new protein-baseddrugs were approved and more are in the FDA pipeline. Thepharmaceutical industry seeks low-cost production methods forthese new drug products. Producing drugs inside green plants,PMPs, is one of several available production methods. Scientistsand industry groups typically cite two reasons for pursuing thePMP production method. First, production of high-qualitypharmaceutical components (proteins and antibodies) is presentlydone using cell cultures inside bioreactors, which is very costly(US$105-175 per gram) and limits the size of the consumermarket. Cell culture bioreactors take an average of three to sevenyears to build and cost on average US$450-$600 million tocomplete. Second, there is insufficient bioreactor capacity to meetcurrent production needs, let alone expected future needs over thenext decade. As of 2002, production of just four pharmaceuticalproducts required 75% of global bioreactor capacity.By the end of the decade, there could be more than 80 antibody-dependent products with an estimated value of US$20-90 billion,provided adequate production capacity can be developed. The
    • 68potential size of the market drives investigation of alternativeproduction methods, including PMP production. Proponents ofPMP crops claim also that PMP production will increase the rangeof available drug products, reduce the time required to bring newdrugs to market, lower the cost of drug production, and provideadditional markets for farmers. Opponents of GM and PMP cropscite potential food safety risks from cross-contamination of foodcrops, consumer skepticism of genetically engineered products,potential environmental hazards, past regulatory mistakes, andincreasing corporate control of agriculture as reasons for theiropposition.The regulatory history of PMPs grown outdoors as field crops isnot encouraging. Although PMPs have been grown by severalcompanies in experimental field trials regulated by the U.S.Department of Agriculture since the early 1990s, none has beengrown in commercial quantities (although one just received apermit to grow at commercial scale in 2007), and no PMP drugproducts have as yet been approved by the U.S. Food and DrugAdministration. (Some PMPs are being sold in small quantities foruse as research materials.) Escape of PMP plants from USDA-regulated field trials has been followed by regulatory reform byUSDA, but PMP plants have continued to escape from field trialsfollowing the reform effort. Because many PMPs are grown in foodplants (even though the PMP plants are not intended for use asfood), if the PMP plants escape from their designated areas andbecome mixed with plants that are intended for use as food, andthe mixture enters the food supply, large disruptions of the foodindustry can occur, as the mixture cannot be used for food,because the PMPs have not been approved by the FDA for use asdrugs (much less for use as food).The lack of commercial scale data limits the ability to assess the(potential) benefits and costs of PMP products. However, apreliminary assessment can be made based on data available forother (non-PMP) GM crops and on current plans for PMP cropproduction and processing facilities. As of 2007, the one PMPproduct with planned commercial scale production as a field cropis PMP rice to be grown and processed by Ventria Bioscience inKansas. At present, Ventria appears to be supported financially byventure capital and government subsidies, as it has only threepotential products, the pharmaceuticals lactoferrin, lysozyme, andserum albumin that have not been approved by the FDA for drug,food, or animal feed uses. The products have been marketed asresearch and bioprocessing materials (for cell culture and cell lysisapplications) by InVitria, Sigma-Aldrich, and Ventria itself, but it is
    • 69not clear that Ventria has received substantial revenues from theseuses. Ventria plans to market the extracted milk proteins as ananti-diarrheal additive for infant oral rehydration solutions and asnutritional supplements in yogurt, granola bars, performancedrinks and other products. Ventria has also mentioned addingrice-based lysozyme to animal feed as a substitute for theantibiotics added to feed. Ventria claims a potential market forthese products of more than $2 billion annually. Ventria estimatesthat an additional $45 million annually in economic impact will begenerated by PMP rice production activities on farms and economicmultiplier effects. For comparison, in 2006, Kansas agricultureproduced over $11 billion in crop, animal, and related agriculturaloutput, with over $3 billion in wage, rent, interest, and profitincome (USDA 2007e). Using a 2.54 economic multiplier, the totaleconomic impacts of the $11 billion in direct impact would be onthe order of $28 billion. Ventria’s estimated economic impact of$45 million per year is small relative to the$28 billion impact ofKansas agriculture. In addition, some small (less than $1 million)savings to taxpayers may also result if farmers forego growinggovernment subsidized crops to grow unsubsidized PMP rice.How much of these estimated economic impacts will likelybenefit farmers? Ventria estimates “. . . a projected 30,000 acres ofproduction per year upon full scale commercialization of Ventria’sproducts.” With an average farm size of approximately 700 acresin Kansas, perhaps 43 farmers would benefit from PMP riceproduction in Kansas, but the number would probably be lower, asa smaller number of larger farms would reduce costs, based oneconomies of scale in the use of specialized farm equipment andfarmer education required to produce PMP crops. Multiplying thisacreage estimate by Ventria’s estimate of $150 to $600 per acre inadditional returns to farmers results in a ballpark estimate of $4.5to $18 million for farmers. Again, a relatively small numbercompared to the size of the Kansas agriculture industry. Whilesome of these farmers will undoubtedly be located in Kansas,Ventria is reportedly looking for a second field production site. AsVentria has PMP rice field test sites in North Carolina, the state iscertainly a contender. In addition to the direct employment offarmers, perhaps 50 people would be employed in Ventria’sproposed PMP rice processing facility in Kansas, and Ventria had18 employees in its Sacramento headquarters as of 2006. Usingtypical economic multiplier numbers, perhaps 150 additional jobswould be supported in Kansas due to the economic multipliereffects of PMP rice production and processing in the state.
    • 70Ventria’s estimates of potential profitability and economicimpacts should be considered with caution. Ventria has notobtained FDA approval for its pharmaceutical rice products despitefour petitions to FDA since 2003, and the firm recently withdrewits petition to FDA for GRAS status for its product lactoferrin.Even if eventually approved by FDA, Ventria’s products may not beprofitable as anti-diarrheal additives for infant formulas marketedin developing countries without subsidies from philanthropicfoundations (according to Ventria’s own statements), and theprofitability of these products in other uses (in sports drinks,granola bars, etc.) is speculative. Even if infant formula additiveswere profitable for Ventria after philanthropic subsidies,philanthropies themselves may not choose to subsidize theseproducts if other means of reducing infant mortality (e.g., improvedsanitation, hygiene, and breastfeeding practices) are more cost-effective for the philanthropies.For those farmers considering PMP crop production, severalfactors should be considered in addition to potentially higherrevenues per acre. Ventria is implementing the field trials usingindependent grower contracts. At this early stage, Ventria coversall costs for North Carolina farmers growing PMPs on subcontract.In the future, independent growers will be expected to provide aseed-to-harvest package deal for the firm’s PMP production. Thiswill involve significant investment in PMP-specific training anddedicated farm equipment. Since 2003, each PMP grower is nowrequired to have dedicated land area, dedicated equipment forplanting and harvesting, and separate areas for cleaning PMPequipment and processing PMP crops. Employee training is alsorequired as part of compliance with new FDA and USDA regulatorystatues for molecular farming. This raises the possibility thatmolecular farming contracting for field-grown PMP crops willrequire such costly investments in infrastructure and compliancethat only the largest, wealthy growers would be able to participateand profit. That only some farmers may profit from growing a newcrop is not unusual, but what is different about PMP crops is thattheir use by some farmers is likely to impose “spillover” costs onother farmers who do not grow PMP crops. Farmers who do notgrow PMP crops may have to spend money to certify that theircrops are “PMP-free” if grown in the same region as PMP crops.This is an especially important issue for organic farmers. Inaddition, even if a farmer is not located in a PMP-growing region, ifthe food supply is contaminated by PMP crops grown in otherregion, all growers of that crop may be hurt by industry-wideconsumer boycotts and export restrictions on the product. Given
    • 71the short history and limited extent of PMP crop field testing, lossof containment and food supply contamination incidents have beenrelatively frequent, so the potential costs of temporary market lossto non-PMP farmers should not be discounted.In addition to the potential costs of PMP production to the farmsector, there may also be environmental costs if field grown PMPproducts have a detrimental effect on fish, wildlife, insects (e.g.,bees), or wild plants. While much work has been done on theenvironmental impacts of GM plants used for food, relatively littlework has been done on the potential environmental impacts ofPMP plants. At this point all that can reasonably be said is thatthe potential environmental impacts of PMP field crop productionare unknown. For PMP products grown using familiar field crops,the environmental impacts may be small, assuming that the PMPproduct itself within the plant is not harmful, but again,information is very incomplete and no firm conclusions can bedrawn. Ongoing work in bioconfinement methods may reduce theenvironmental risk of PMP plants.Detrimental human health effects are another potential cost ofPMP production. While detrimental human health effects ofproducts intended for pharmaceutical use are certainly possible,these products would need approval by FDA for use as drugs orfood, and any non-accidental effects would likely be small,assuming conscientious review by FDA. One exception might bethe creation of new product categories by USDA for regulatoryexpediency that might allow PMP products to enter medicines orfoods as nutritional supplements without FDA review. Such“redefining products to avoid regulation” should be prevented toavoid altogether the potential problem of non-accidentaldetrimental human health effects.In contrast, the issue of accidental, detrimental human healtheffects looms large in the PMP debate. If PMP products notintended for use as food somehow enter the food supply andbecome ingested by humans, the effects could be significant, asthese products may not have undergone food safety testing byFDA, because they were not intended to be used as food. If any ofthe genetically modified proteins from Ventria’s rice wereeventually discovered anywhere in the human food system, it couldhave disastrous financial consequences for farmers. Ventria wouldlikely shut-down production, which would involve significanttransitional costs to farmers as they would have to clean out all oftheir seeding, harvesting, transportation, and storage equipment.Farmers would also have to ensure that any residual rice plants,
    • 72seed, etc. were completely wiped out. Finally, farmers would incursignificant costs in transforming their equipment for use in someother endeavor. Farmers in the rest of the country would sueVentria for economic damages resulting from the reduction in pricecaused by the increased segregation and testing costs imposed onthe U.S. crop storage system. Moreover, several countries thatimport rice from the United States would temporarily banshipments, which would decrease demand for US rice, furtherdepressing crop prices. Again, the brief history of PMP crop fieldtrials indicates that it is very difficult to prevent co-mingling ofPMP and non-PMP crops, implying that the potential for accidentalcontamination of the food supply is an important issue. Even ifPMP-farmers (and non-PMP farmers) could insure themselvesagainst liability for food supply contamination, they might stillsuffer financial costs if consumers continued to fear acontamination incident and avoided or boycotted the crop,depressing demand and crop prices. Furthermore, even if PMPcrops could be contained with 100 percent reliability, sales of non-PMP crops might still suffer if consumers did not believe thecontainment reliability estimates, which might be a reasonablebelief to hold, given the history of containment breaches duringfield trials. The National Research Council (2004) has proposed anumber of recommendations related to pre-market and post-market safety assessments that could reduce both accidental andnon-accidental human health risks associated with PMPproduction.Neither food plants nor farmers’ fields are necessary for theproduction of PMPs. PMPs can be grown in sterile containmentsystems instead of agricultural fields. Advantages of growing PMPsin containment systems include better uniformity of product, lackof residues from herbicides, pesticides and fungicides, and greatlyreduced risk of contaminating the food supply. Two disadvantagesof producing proteins in containment systems are that it is thoughtto cost more, and it is thought to take longer to bring the productto market. However, recent advances in closed-system technologyhave eliminated some of the cost difference between PMPs andcontained cell culture systems.North Carolina has a competitive advantage in PMP productionnationally without using food crops in farm fields, as its residentbiotechnology firms use containment systems based on non-foodplants. Contained production systems that attain high productpurity and access to highly-skilled biotech labor are catalyzingmarket expansion for PMPs grown in contained systems in thestate. Contained PMP production currently co-exists with
    • 73profitable organic and local food suppliers in the state. Choiceamong contained PMP production systems continues to expand.For example, some alternative PMP containment systems utilizingnon-food plants include duckweed (Lemna spp.), tobacco (Nicotianaspp.), algae (Chlamydomonas reinhardtii) and moss (Physcomitrellapatens), and fungi (Aspergillus niger). Yet another option is toproduce PMPs using food crops grown inside greenhouses, such aspotatoes grown hydroponically.At the present time, PMP production via food crops in the fieldshould not be considered a cornerstone of future agriculturalpolicy or rural economic development policy in North Carolina orelsewhere in the United States. Given past difficulties in securingFDA approval for PMP products, the benefits of PMP production aretoo speculative. Furthermore, given past difficulties in containingPMP products in the field, the risks and potential costs of futureescape events are too great.
    • 747 RAFI RecommendationsWe are grateful for the considerable expertise and the careful,fair and balanced approach that Dr. Dumas and his colleagueshave taken in assessing this novel and controversial subject.Our goals are to provide information and analysis for familyfarmers and policy leaders for making better-informed choicesabout our shared agricultural future. We support a much moretransparent process, and consideration of a broader range ofsound options, prior to committing our farmers and states to anypotential rural economic initiatives. This is especially important incases like this, which can place farmers or states into additionalrisk or jeopardy and can impact existing successful agriculturaland pharmaceutical enterprises.The scope of this report is focused on North Carolina policy andopinion leaders, farmers and civic organizations; however, itslessons and implications can be applied to other states as well.The outdoor development of novel genetically engineeredpharmaceuticals utilizing food crops otherwise consumed as foods,such as rice, and the novel and very early stage of thisdevelopment leads RAFI-USA to the following recommendations:We agree with the USA Rice Federation, GroceryManufacturers Association of America, the editors of thejournal Nature Biotechnology, and others who have calledfor an end to the use of food crops for plant-madepharmaceuticals development, and especially not in theopen field settings. This very novel technology posesconsiderable potential legal, environmental and healthrisks – ones to which the farmers involved will potentiallybe the most liable. States and farmers should avoid suchunintended problems and contaminations by avoiding theoutdoor planting of such crops.We also remain quite concerned by the lack of meaningfuland comprehensive regulatory oversight of these plant-made pharmaceuticals. The problems arising from thislack of regulatory rigor has been well documented in thisreport. RAFI-USA strongly urges immediate steps be takento independently evaluate these failures and deficienciesand for the appropriate regulatory agencies to resolvethese problems by committing more resources into
    • 75comprehensive assessments prior to approvals and intomore on-going post- introduction tracking and oversight.The overall farmer economic benefit of PMP riceproduction at this time seems very meager and does notconstitute a meaningful rural economic engine for NorthCarolina or other state’s farmers.This state and other states confronting this issue shouldtake a case-by-case approach to accessing these novelpharmaceutical crop initiatives. We also urgeconsideration of the history of the PMP sector, which isdominated by small biotech start-ups, many of which havegone bankrupt, and none of which has yet produced asingle FDA-approved drug despite field-testing that datesback to 1991. State incentives seem unjustified andpremature for rice-based pharmaceutical development forseveral reasons: for one, the FDA’s continuing refusal togrant “generally recognized as safe” status to Ventria’spharma-rice derived proteins; as well as the potentiallyhigh risks and the very low number of farmers that wouldbe required to meet any potential market niche that maydevelop. Also, the low economic returns to such farmersas compared to other, lower-risk agricultural enterprisesseems to warrant a more cautious approach.The state of North Carolina and other states should alsomore carefully assess their own liability, risks and thepotential impacts of their support for open field PMPs; aswell as the impacts on other non-open field biotechindustries in their states.A much broader range of farmer and rural communityoptions should be comprehensively compared andevaluated prior to considering support for PMPdevelopment.It is our assessment that using rice, a major worldwidefood crop, in open field development of geneticallyengineered pharmaceuticals does not meet our criteria ofthe “triple-bottom-line” wins of economic, environmentaland social benefits for North Carolina farmers andcitizens.We strongly urge much greater public transparency,accountability, scrutiny and debate as well as a strong callof support for a much fuller dialogue about meaningfulways to revitalize rural economies that are desperately
    • 76needed to help farmers meet growing consumer demandfor safe, local and nutritious foods, while preserving theenvironment and providing fair returns back to our farmfamilies and communities.
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    • 899 TablesTable 1. Countries Growing 50,000+ Hectares of GeneticallyModified (GM) Crops in 2006. (Source: ISAAA 2006)Rank Country Land Area in GMCrops(million hectares)GM Crops Grown1 UnitedStates54.6 Soybean, maize, cotton, canola,squash, papaya, alfalfa2 Argentina 18.0 Soybean, maize, cotton3 Brazil 11.5 Soybean, cotton4 Canada 6.1 Canola, maize, soybean5 India 3.8 Cotton6 China 3.5 Cotton7 Paraguay 2.0 Soybean8 SouthAfrica1.4 Soybean, maize, cotton9 Uruguay 0.4 Soybean, maize10 Philippines 0.2 Maize11 Australia 0.2 Cotton12 Romania 0.1 Soybean13 Mexico 0.1 Cotton, soybeaen14 Spain 0.1 Maize15 Colombia <0.1 Cotton16 France <0.1 Maize17 Iran <0.1 Rice18 Honduras <0.1 Maize19 CzechRepublic<0.1 Maize20 Portugal <0.1 Maize21 Germany <0.1 Maize22 Slovakia <0.1 Maize
    • 90Table 2. Technological “Generations” of Genetically Modified (GM)Plants and Plant-Made Pharmaceuticals (PMPs)TechnologicalGenerationGoal of GeneticModificationPlantUseExampleCropGeneration 1Reduce productioncosts of food plantsFoodRoundUp-Ready™soybeansresistpesticidesGeneration 2Increase value of foodplants by improvingnutritional contentFood“Golden Rice”withenhancedvitamin AGeneration 3Producepharmaceutical orindustrial productsusing food or non-foodplantsFactoryPharma-riceproduceshuman milkenzymes
    • Table 3. U.S. Rice Export Markets Impacted by the Presence of LL601 Rice.(Source: USA Rice Federation web site, June 2007.)2006Ranking Country2006Exports($millions)Importer Reaction to Presence of LL601in U.S. Rice Supply TradeImpacted1 Mexico $205 GM certification now required; trade disrupted X2 Japan $169 Testing now required X3 Iraq $145 Testing now required at 1% sensitivity X4 Haiti $112 Trade continues5 Canada $107 Testing now required at 0.5% sensitivity X6 EU $69 Trade in long grain rice stopped X7 SaudiArabia$42 Trade continues; labeling required for presence >1%8 Nicaragua $40 Trade continues9 Cuba $40 Trade disrupted; situation uncertain X10 Honduras $39 Trade continues...12 Korea $32 Testing now required X...16 Philippines $20 Trade stopped X...18 Taiwan $20 Testing now required XTotal U.S. Exports: $1,289Share of Total U.S. Exports Impacted: 63%In addition, Russia has banned all U.S. rice imports, and the UAE importers are seeking a “GE free” certificateon U.S. rice.
    • Table 4. Ventria Bioscience – Regulatory History OverviewDate Event1993Ventria Bioscience founded by Dr. Ray Rodrequez, professor ofmolecular and cellular biology at University of California, Davis.1997Ventria develops ExperssTec, a proprietary technology that uses rice andbarley plants to produce proteins2003USDA changes Ventria’s product designation from “pharmaceuticalproteins” to “value added protein for human consumption”2003Ventria applies to FDA for “Generally Recognized as Safe” (GRAS) statusfor PMP lactoferrin rice as a possible contaminant in food rice. Ventriasought approval of Lf rice as contaminant while publicly claiming Lf ricewould not contaminate food. If approved, PMP rice would be exemptfrom the food additive review process.2004USDA grants Ventria field trial release permits to grow PMP rice on 120acres in California2004Opposition from California rice farmers blocks field production of PMPrice in California2004Ventria applies to FDA for “Generally Recognized as Safe” (GRAS) statusfor PMP lactoferrin rice as ingredient in foods, beverages, and medicalfoods.2005 Ventria markets Lacromin (lactoferrin) for laboratory cell culture use2005USDA announces “Finding of No Significant Impact” (FONSI) and theavailability of an Environmental Assessment for the proposed field trialsof Ventria’s PMP rice in Missouri and North Carolina2005USDA grants Ventria field trial release permits to grow 200 acres of PMPrice in Missouri and 70 acres of PMP rice in North Carolina in 20052005Ventria applies to FDA for “Generally Recognized as Safe” (GRAS) statusfor PMP lysozyme rice as an antimicrobial agent and ingredient invarious foods.2005 Ventria begins PMP rice field trials in NC2005Field production of Ventria’s PMP rice in Missouri blocked by farmersand food processors2005Researchers at Tidewater Research Station, NC, a half-mile from theVentria field trial site, complain that rice germplasm at the station, partof the National Plant Germplasm System, could be contaminated by theVentria field trial plantings2005For unknown reasons, Ventria withdraws petition to FDA for “GenerallyRecognized as Safe” (GRAS) status for PMP lysozyme rice as anantimicrobial agent and ingredient in various foods.2006Ventria applies to FDA for “Generally Recognized as Safe” (GRAS) statusfor PMP lysozyme rice for use in infant formulas & pediatric oralrehydration solutions.2006Union of Concerned Scientists files Freedom of Information Act requestfor USDA-APHIS inspection and company compliance reports for Ventriafield test site in NC; UCS concludes that USDA was not adequately
    • monitoring and inspecting the Ventria test site.2006 Ventria markets Lysobac (lysozyme) for laboratory cell lysis use2006USDA expands Ventria field trial permits to grow up to 335 acres of PMPrice in NC in 20062006Ventria withdraws petition to FDA for “Generally Recognized as Safe”(GRAS) status for PMP lactoferrin rice as ingredient in foods, beverages,and medical foods because FDA indicated it would not approvelactoferrin as safe.2006 Ventria markets Cellastim (serum albumin)2006USDA moves the National Plan Germplasm System operations from theTidewater Research Station, NC, to a station in Beltsville, MD.2006Ventria withdraws petition to FDA for “Generally Recognized as Safe”(GRAS) status for PMP lactoferrin rice as ingredient in foods, beverages,and medical foods because FDA indicated it would not approvelactoferrin as safe.2007USDA approves Ventria field trial permits to grow PMP rice in NC in20072007USDA releases draft environmental impact statement concluding thatVentria’s PMP rice could be grown in Kansas with no undue risks2007USDA announces that food rice seed in Arkansas has beencontaminated with genetically modified rice variety LL622007USDA announces “Finding of No Significant Impact” (FONSI) and theavailability of an Environmental Assessment for the proposed fieldproduction of Ventria’s PMP rice Kansas2007USDA grants Ventria field trial release permits to grow 3,200 acres ofPMP rice in Kansas2007Union of Concerned Scientists criticizes USDA’s decision to allow fieldproduction of PMP rice in Kansas2007USA Rice Federation files comments with USDA opposing fieldproduction of PMP rice in Kansas
    • Table 5. Comparison of Production Systems for Recombinant Human Pharmaceutical Proteins. (Source:Source: Ma et al., 2003)Production SystemsProductionSystemFeatureBacteria YeastMammalian cellcultureTransgenicanimalsPlant cellculturesTransgenicplantsOverall costProductiontimescaleScale-up capacityProduct qualityGlycosylationContaminationrisksStorage costLowShortHighLowNoneEndotoxinsModerateMediumMediumHighMediumIncorrectLow riskModerateHighLongVery lowVery highCorrectViruses, prions,andoncogenic DNAExpensiveHighVery longLowVery highCorrectViruses, prions,andoncogenic DNAExpensiveMediumMediumMediumHighMinordifferencesLow riskModerateVery lowLongVery highHighMinordifferencesLow riskInexpensive
    • Table 6. Example of Identity Preserving Production and Marketing (IPPM)System Costs—Canadian HT canola in 1996 (1996 Canadian dollars) (Source: Smyth et al.2004)Cost CategoryAgrEvo & ManitobaPool Elevators ($/t)Saskatchewan WheatPool ($/t)On-farm costsFreight InefficiencyDead FreightProcessorAdministrationOpportunity costCollective subsidyTotal IPP Cost$1$5-6$1.50-2$3-4$4$20-----$34-37$1$7-10$2-3$3-5$5$10$5-7$33-41t = metric tonne
    • Table 7. Summary of Identity Preserving Production and Marketing (IPPM)System Cost Studies. (Source: Smyth et al. 2004)Commodity (terms)YearIPPM Costper Tonneof CommodityNon-GM Canola (FOB Vancouver vessel; minimum)Non-GM Soybeans (FOB export position; minimum)Non-GM Maize (primary elevator to export elevator)Non-GM Soybeans (primary elevator to exportelevator)Food Maize (FOB inland elevator)High Oil Maize (FOB inland elevator)Food Soybeans (FOB inland elevator)STS Soybeans (FOB inland elevator)GM canola (crushed domestically)Soybeans (container, in store Japan, no producercosts or testing)2004Est.2004Est.2004Est.2004Est.199819981998199819962000C$25.90-$30.65US$35.53-$40.92US$12.47US$28.54US$43.22US$14.01US$91.58US$17.99C$33-$41US$27.72C$ is Canadian dollar.