The Future of Food Biotechnology Markets and Policies in an International Setting Edited by Philip G. Pardey THE INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE'S (IFPRI's) mission is to identify and analyze policies that meet the food needs of the developing world in a sustainable way. Research at IFPRI concentrates on economic growth and poverty alleviation in low-income countries, improvement in the well-being of poor people, and sound management of the natural resource base that supports agriculture. IFPRI is one of 16 Future Harvest centers and receives its principal funding from 58 governments, private foundations, and international and regional organizations known as the Consultative Group on International Agricultural Research. Cover photo credits The images on the left show reporter gene expression patterns in rice lines developed by the Center for the Application of Molecular Biology to International Agriculture's (GAMBIA'S) TransGenomics Project. Seed expression images were generated by Sujin Patarapuwadol. and floral expression patterns were generated by Sri Koerniati and Fu Xiqin. The bottom right image represents a Diversity Array Technology (DArT) image, a form of "DNA on a chip" technology developed by GAMBIA for low-cost genome analysis, here being used on rice. The image was generated by Damian Jaccoud. All individuals noted here are Ph.D. students working under the supervision of GAMBIA'S chief scientist, Andrzej Kilian. T h e F u t u r e of Food T h e F u t u r e of Food Biotechnology Markets and Policies in an International Setting Edited by Philip G. Pardey Published by the International Food Policy Research Institute Washington, D.C. Distributed by The Johns Hopkins University Press Copyright © 2001 International Food Policy Research Institute All rights reserved. Sections of this book may be reproduced without the express permission of, but with acknowledgment to, the International Food Policy Research Institute. Library of Congress Cataloging-in-Publication Data available. International Food Policy Research Institute 2033 K Street, N.W., Washington, D.C. 20006-1002, U.S.A. Telephone: +1-202-862-5600; Fax: +1-202-467-4439 www.ifpri.org To John Louis Dillon, 1931-2001, who cared about people generally and the poor in particular, and never shied away from controversy, sometimes helping to create it. Contents Tables ix Figures x Foreword xi Acknowledgments xiii Part 1 Introduction Chapter 1 Biotechnology Markets and Policies—Overview 3 Philip G. Pardey Chapter 2 Agricultural Biotechnology—An Australian Perspective on a Global Science 11 Michael J. Taylor Part 2 Looking Forward on a Global Scale Chapter 3 Rich and Poor Country Perspectives on Biotechnology 17 Per Pinstrup-Andersen and Marc J. Cohen Chapter 4 Estimating the Global Economic Effects of GMOs 49 Kym Anderson, Chantal Pohl Nielsen, Sherman Robinson, and Karen Thierfelder Chapter 5 Transcending Transgenics: Are there "Babies in the Bathwater" or is That a Dorsal Fin? 75 Richard A. Jefferson Comment 93 Brian Fisher Part 3 Intellectual Property Policies and Practice Chapter 6 Addressing Freedom-to-Operate Questions for International Agricultural R&D 99 Carol Nottenburg, Philip G. Pardey, and Brian D. Wright Chapter 7 Public Good and Private Greed: Realizing Public Benefits from Privatized Global Agrifood Research 129 Peter W. B. Phillips and Dan Dierker Comment 149 Ron Duncan Comment 151 Bob Lindner viii CONTENTS Part 4 Biotechnology Impacts: The Economic Evidence Chapter 8 Agricultural Biotechnology: A Critical Review of the Impact Evidence to Date 155 Michele C. Marra Chapter 9 The Economics of Herbicide-Tolerant Wheat and Bifurcation of World Markets 185 Richard Gray Chapter 10 Potential Impacts of Biotechnology-Assisted Selection on Plant Breeding Programs in Developing Countries 197 Michael L. Morris, Jean-Marcel Ribaut, Mireille Khairallah, and Kate A. Dreher Part 5 Regional Perspectives on Biotechnology Policies Chapter 11 Agricultural Biotechnology and Rural Development in Latin America and the Caribbean 221 Eduardo J. Trigo, GregTraxler, Carl Pray, and Ruben Echeverrfa Chapter 12 Biotechnology Policies for Asia: Current Activities and Future Options 251 John Skerritt Chapter 13 The U.S. Biotech Story: As Told by Economists at USDA 273 Nicole Ballenger Part 6 Concluding Comments Rural R&D Technology Policy 293 Jock R. Anderson Biotechnology Policy Issues 298 Walter J. Armbruster Public Policy Responses to Biotechnology 303 Bob Richardson Acronyms and Glossary 307 Contributors 311 CONTENTS ix Tables 3.1 Illustrative impact of a 33 percent reduction of food commodity prices on poor and rich consumers 18 4.1 Scenario 1: Effects of selected regions adopting G M maize and soybeans 53 4.2 Scenario 2: Effects of selected regions adopting G M maize and soybeans plus western Europe bans imports of those products from GM-adopting regions 56 4.3 Scenario 3: Effects of selected regions adopting G M maize and soybeans plus partial shift of western European preferences away from imports of G M products 59 7.1 Patenting activity in key crops 131 8.1 Major transgenic crops by trait, country, and approval type 157 8.2 Transgenic acreage 160 8.3 Transgenic crops by state and U.S. total, percentage of planted crop acres, 2001 161 8.4 Potential bias in measured economic impact by field trial type and transgene trait 165 8.5 Comparing means of different groups of respondent farmers and farms: The case of Bt cotton impacts in the southeast, 1996 168 8.6 Summary of farm-level impact evidence for Bt cotton 171 8.7 Summary of farm-level impact evidence for other technologies and crops 172 8A.1 Ranges of benefits by crop, geographic area, and study 176 10.1 Plant breeding applications for which marker-assisted selection (MAS) is likely to be cost-effective compared with conventional selection 206 11.1 Financial and human resources for biotechnology R & D , 1999 224 11.2 Biotechnology techniques and research focus in selected Latin America and Caribbean countries, circa 2000 226 11.3 Government programs supporting biotechnology in selected Latin American and Caribbean countries, 1980-2000 228 11.4 Area under commercial production of G M crops, 1999 231 11.5 G M field trials in the LAC region, by year and by trait, 1987-2000 232 11.6 Summary of biosafety regulations in Latin America and the Caribbean 236 11.7 Agricultural biotechnology property protection in Latin America and the Caribbean, circa 2000 238 11.8 Public-sector roles and policy options for biotechnology development 242 11 A.1 Biotechnology R & D capacity at CIMMYT, CIAT, and CIP 246 12.1 Non-GM biotechnologies and their current applications 252 12.2 Regional and international programs in Asia 256 12.3 Work underway or recendy completed on G M crops, supported ACIAR 259 12.4 Priorities of ACIARs Asian partners for Australian collaboration in Biotechnology 260 12.5 Potential biotechnology applications in Asian developing countries 266 13.1 Washington / t o articles on agricultural biotechnology, 1999-2000 274 13.2 Econometric results on the impact of adopting herbicide-tolerant and insect-resistant field crops 278 x CONTENTS Figures 3.1 Selected countries of 25 surveyed on the use of biotechnology to grow pest-resistant crops that require fewer farm chemicals 23 3.2 Public opinion on the use of modern biotechnology in selected countries 24 3.3 Percentage of adults who "agree" that benefits of using biotechnology in food crops are greater than the risks 25 3.4 European support for the application of biotechnology in the production of foods and in the development of crops with increased resistance to pests, 1996 and 1999 26 3.5 Percentage of sample population that perceives a serious health risk associated with con- sumption of G M foods, 1995 27 3.6 Ordinary tomatoes do not contain genes, while genetically modified ones do: True or false? 28 3.7 By eating a genetically modified fruit, a person's genes can be changed: True or false? 29 3.8 Distribution of economic surplus generated by the use of Roundup Ready® soybean seed in the United States, 1997 38 4.1 Changes in exports from South America by destination: G M oilseeds 64 4.2 Changes in exports from Sub-Saharan Africa by destination: G M oilseeds 65 4.3 Changes in exports from South America by destination: Non-GM oilseeds 66 4.4 Changes in exports from Sub-Saharan Africa by destination: Non-GM oilseeds 67 4.5 Ratio of non-GM to G M prices of oilseeds 68 4.6 Ratio of non-GM to G M prices of cereal grains 69 4.7 Changes in total absorption for different degrees of substitutability between G M and non-GM crops in high-income Asia and western Europe 70 7.1 A simple model for research with and without IPR 137 7.2 A simple model for research with IPR and freedom-to-operate provisions 139 9.1 Scientific view of genetic modification 187 9.2 Economic surplus gains with costless segregation and no externalities 189 9.3 Consumer surplus effects with costly segregation 192 9.4 Producer surplus effects with cosdy segregation 192 9.5 The market for non-GM wheat, depending on country 194 10.1 Biotechnology research production metafunction 201 10.2 Stylized economic model of a plant breeding program 207 10.3 Net benefits flow, conventional versus marker-assisted line conversion scheme 208 11.1 Discovery and development process of a transgenic crop variety 233 13.1 United States agricultural research and development 276 F o r e w o r d What is the future of food? Looking forward, a thinking person could adopt either a pessimistic or an optimistic outlook. On the bleak side many hun- dreds of millions of poor people are still malnourished, and there will be an additional 1.5 million mouths to feed by 2020. Little new land remains to bring into agriculture, and the water and other natural resources needed for agriculture are being degraded and siphoned off for use in other sectors. Being upbeat, one can marvel at the productivity gains seen over the past several decades and be reassured the same will hold true for the decades to come. The sense that a new technologi- cal era in agriculture is upon us bolsters the optimists but the latest crop of biotech- nologies, and the context in which they are being developed and used, are attracting much controversy and criticism. In the minds of many, agriculture is a natural endeavor and should remain so: yet in many ways it is the antithesis of "natural." Farmers managed and manipulated the genetic makeup of crops for the first 10,000 years of agriculture, giving rise to slow, but by contemporary standards only modest, gains in crop function and yield. The science of genetics took off in the early twentieth century and so did crop per- formance, with unprecedented increases in yields over much of the world in the sec- ond half of the last century. Yet these efforts came with their fair share of controversy. Some saw the hybrid corn technologies that spread rapidly beginning in the 1930s in the United States as a thoroughly unwelcome change. The technology was deemed "unnatural" and deprived farmers of the chance to save seed for next year's crop. It also heralded the privatization of large parts of the seed sectors in many devel- oped counties. The new semi-dwarf (short statured) rice and wheat varieties that became available to farmers in the 1960s were tarred with the same brush. Unfa- miliarity bred contempt, and similar sounding arguments swirl around the trans- genic crops and other biotechnologies science is just beginning to provide. There is no question of the need for substantial yield gains over the decades to come, nor that genetic manipulation in tandem with other technologies is necessary to achieve these boosts in productivity. What is in question is the part biotechnol- xii FOREWORD ogy will play in achieving food security for all and especially for the world's poor who are yet to gain access to the food many of us simply take for granted. The ramifications of the market and policy choices taken now regarding agri- cultural biotechnologies will reverberate for decades to come. The consequences will be global, and the choices controversial. The chapters in this book confront this controversy with new analyses and insights from economists and technologists. The topics covered include an assessment of differences in perceptions among rich and poor countries; a quantitative investigation of the effects of rich-country restric- tions on international trade in G M O crops on the welfare of poorer parts of the world; an analysis of alternative technology trajectories; an exploration of the effects of intellectual property rights on the bioscience done by public agencies the world over; and several economic appraisals of the economic impacts of the technolo- gies—past, present, and future. Once in a while, those making policies confront choices with profound long- term consequences; today's policy choices about biotechnology are such. They will affect the future of food for many years to come. I recommend that those who are concerned about these policies read this book. It will inform and affect your views; it did mine. Per Pinstrup-Andersen Director General, IFPRI A c k n o w l e d g m e n t s O n January 22, 2001, a workshop on "Agricultural Biotechnology: Markets and Policies in an International Setting" was held in Adelaide, Australia. The event was convened jointly by the Australian Agricultural and Resource Economic Society (AARES) and the International Food Policy Research Institute (IFPRI) of Washington, D.C., in conjunction with the annual AARES meetings. This book includes revised versions of the papers presented at that workshop. Agriculture, Fisheries and Forestry—Australia, the Grains Research and Devel- opment Corporation, and the U.S. Farm Foundation generously provided financial support for the workshop and the production of this book. In addition to this spe- cific support, significant general support was provided to IFPRI's research on agri- cultural biotechnology and genetic resource policy by the Swedish International Development Agency (Sida), the Canadian International Development Agency (CIDA), the European Commission (EC), and the U.S. Agency for International Development (USAID); results of that research are represented in some of the chap- ters that follow. The workshop could not have been organized from half way around the world without the dedication of the chair of the AARES local organizing committee, Doug Young, assisted by members of that committee, especially Kym Jervois, Andrew Man- son, and Randy Stringer, all of whom went above and beyond their duty in provid- ing logistical and practical help. Julian Alston, 2001 president of the AARES, sowed the seed of the idea for the workshop and also helped to make it happen. The editor gratefully acknowledges the help of several IFPRI staff in preparing this manuscript, in particular Patricia Zambrano for her excellent research assistance, Heidi Fritschel, Uday Mohan, and Joanna Berkman for their very effective editorial assistance, and Evelyn Banda for the layout and cover design. Above all, thanks go to Mary-Jane Banks, who oversaw the logistics for the workshop and helped organize and edit the material for this manuscript, ably seeing it through several rounds of revi- sion. Final thanks are offered to the chapter authors for their contributions and con- sideration in meeting the tight deadlines required to produce this book. P a r t 1 I n t r o d u c t i o n C h a p t e r 1 B i o t e c h n o l o g y M a r k e t s a n d P o l i c i e s — O v e r v i e w Philip G. Pardey C o n t e x t Sorting the wheat from the chaff is something farmers have done for eons. Sorting the truth from the tales—and ultimately the payoffs from the pitfalls—of the new agricultural biotechnologies is a much tougher task. The latest, most exhilarating, and most controversial chapter in agricultural science is the biotechnology revolu- tion. Science has now moved beyond understanding the structure of D N A to ana- lyzing the complete sequence of genes in humans, plants, animals, and other organisms. The mapping of this genetic landscape, known as genomics, includes the recently completed gene sequences for Arabidopsis thaliana, a weed in the mustard family of Brassicaceae, and for rice. Both plants provide genomic blueprints for a host of basic plant functions, dramatically accelerating crop improvement efforts. By coupling the biosciences with new computing and informatics technologies, researchers are developing databanks of D N A sequences for individual plants and animals and are linking them to various functions and traits. To the new science of functional genomics, genes are recipes for proteins, and proteins are the workhorses of living cells. The even newer science of proteomics catalogues proteins within liv- ing things and probes deeper to understand the molecular structure of these pro- teins and the complex biology linking specific genes to specific proteins. Like the more conventional breeding efforts preceding them, the modern biosciences open up more options for improving plants' resistance to certain pests and diseases; their tolerance to drought, waterlogging, frosts, and saline or acid soils; and the overall 4 PHILIP G. PARDEY quality of grain. These plant traits can reduce crop losses and the costs of produc- tion, raise crop yields and the returns to growers (and others in the food marketing chain), and expand choices available to consumers. The biosciences are also expand- ing options for improving the agricultural performance of animals and providing avenues for agriculture to grow new pharmacological and nutraceutical products. All these discoveries have spurred a rapid restructuring of the institutions and industries engaged in the science that affects agriculture, at least in the United States and other rich countries. Incentives for research are changing, as are public and private research roles, ultimately shifting the balance between locally provided and internationally traded goods—part and parcel of the globalization of agricul- tural research. The disquiet over these new biotechnologies both reflects and affects these many changes. Some critics are concerned over environmental and human health consequences. In Europe, consumer resistance to transgenic plants and animals has engendered trade bans and restrictive labeling. The majority of consumers in other markets, including Argentina, China, and the United States, seem less concerned and more accepting. Other critics of biotechnology focus on its relationship to the consolidation and concentration of the agriculture industry, most noticeably the many mergers and acquisitions in the seed and agricultural chemical companies dur- ing the 1990s. The concern is that oligopoly will stifle competition, shift profits away from farmers, and drive research toward private profitability, but not neces- sarily society's food security interests. An additional criticism is that the prolifera- tion of patents and other forms of intellectual property protection demanded by large biotechnology companies will slow progress in the agricultural sciences and make new innovations inaccessible to farmers and scientists in developing countries. Joined to this is the worry that many of the less-developed countries (LDCs) lack the capacity to regulate and monitor the use of modern biotechnologies in ways that will satisfy consumers in rich export markets, further impeding their development. Each of these criticisms merits attention in the context of science and food security. Perhaps because the preponderance of agricultural biotechnologies have been developed and most extensively commercialized in the United States and other rich countries, the debate has had a distincdy rich-country bias. The concerns of and opportunities for producers and consumers in poor countries have been less promi- nent, yet the issues involved are global. Countries are inextricably linked through international markets—either through trade in agricultural technologies or the food products these technologies bring about—and through a host of institutional arrangements and international policy and legal agreements. The chapters in this book highlight these international aspects, reporting recent work done mainly (but not exclusively) by economists. Economists think in terms BIOTECHNOLOGY MARKETS AND POLICIES-OVERVIEW 5 of tradeoffs: in this case balancing the risks and rewards posed by using these new technologies. Part of the policy problem is that many of these biotechnologies and the collective experience with them are nascent, providing only a partial picture of the possibilities and their consequences. This makes it difficult to identify the nature and magnitude of the costs, benefits, and tradeoffs involved—doubly difficult because the essence of science is its unpredictability. Notwithstanding these uncertainties, marshaling the available evidence and subjecting it to economic scrutiny with an eye to problems of common interest or those with international ramifications should prove useful for policymaking—at least that was the premise in putting together this volume. Key questions and con- cerns beg inherently economic answers: How much should be invested in the new biosciences? Who should perform the research and pay for it? Who are the likely users—as well as the likely winners and losers? C h a p t e r O v e r v i e w In the second chapter of this introduction, Michael Taylor provides an Australian perspective, recognizing Australian agriculture's reliance on global markets, both for exporting its primary and processed food products and for importing biotech- nologies or the technological tools required to further the country's own research. In Chapter 3, Per Pinstrup-Andersen and Marc Cohen compare and contrast rich versus poor country perspectives on agricultural biotechnology. They delve into how and why these perspectives differ, highlighting the consequences of the dif- ferences. Many poor people live on the edge of subsistence, spending much of their meager incomes on food. For genetically modified (GM) foods their risk-benefit cal- culus is entirely different than it is for rich people. The market power of agricultural interests also differs between rich and poor countries and advocacy groups are active too. Pinstrup-Andersen and Cohen build a strong case for making choices about G M food and agriculture based on sound scientific testing and evidence-based approaches, and above all stress leaving the choices to those who are ultimately affected by them. The confluence of rich and poor country concerns is most pronounced in the area of trade. Some see the push for stricter labeling regimes and import controls (and the product segregation strategies they entail) as a prudent precaution to per- ceived health concerns; others see it as a back door to protecting domestic agricul- tural interests from products produced elsewhere. Whatever the reasons, markets are moving toward more regulations concerning the sale and international movement of G M foods. In Chapter 4, Kym Anderson and colleagues provide a range of results using various global models to explore the economywide consequences of 6 PHILIP G. PARDEY stricter controls on the trade in G M varieties. There is an inherent tension between the gains flowing from the productivity consequences of G M crops and the increased costs that come from restricting the production or sale of these crops; these changes have ripple effects throughout economies worldwide. Anderson et al. inves- tigate the wotldwide production, consumption, trade, and price effects of restrict- ing the local production of genetically modified organisms (GMOs), for example G M maize and soybeans in western Europe, or sale of G M crops, including a ban on imports—the most extreme application of the precautionary principle within the scope of the Biosafety Protocol. The authors find the potential global economic gains from growing G M coarse grain and oilseed crops to be sizable and the eco- nomic costs to Europe from banning the imports of G M crops significant (to be weighed against the perceived benefits from implementing the precautionary prin- ciple in this fashion). A less costly alternative would be to allow consumers access to both G M and non-GM foods, using market mechanisms instead of import bans to express their preferences. An important finding is that developing countries can respond to the G M preferences of rich countries, and redirect their trade flows accordingly. Whether developing (and other) countries ultimately gain or lose, and by how much, depends on (a) the degree of substitutability between G M and non- G M varieties and the price differentials between the two types of crops (aspects that were explicitly modeled), and (b) the costs of labeling and segregation, and impli- cations for research and development (R&D) and seed markets globally (aspects that were not dealt with explicitly in the models). We have barely begun to tap the potential of these new technologies. In Chap- ter 5, Richard Jefferson goes beyond the current crop of transgenic technologies, providing intriguing insights into some strategic technological options facing the biosciences, both in the near and longer term. Developing a clearer and structured sense of these options, their implications, and the links to other areas of the agri- cultural sciences puts the current, single transgene technologies (like Bacillus thuringiensis [Bt] cotton and corn or Roundup Ready® soybeans) into proper per- spective, making for more informed policy choices. The elaborate web of patent protection in western countries, and its extension to international trade law, has provoked anxiety that the "genetic commons" may be enclosed by biotechnology companies seeking to protect their profits, locking developing countries out and blocking their access to new developments by public and nonprofit researchers. The chapters in Part 3 deal with the policy and practical consequences of changing intellectual property regimes on agricultutal R & D . In Chapter 6, my colleagues Carol Nottenburg and Brian Wright and I confront the "lockout" apprehension by assessing the geographical extent of the intellectual prop- erty and the pattern of trade flows for crops grown in poor countries and con- BIOTECHNOLOGY MARKETS AND POLICIES-OVERVIEW 7 sumed in rich ones. We conclude that as things stand now the concerns that patents and other forms of intellectual property are stifling research done for or in devel- oping countries are largely misplaced, diverting attention from more crucial issues like lack of funding and scientific and regulatory wherewithal to access and tap the promise that modern biotechnologies offer. As the extent of patent protection expands, access to proprietary science is bound to become a bigger problem. We broach some of the options by which public agencies may take advantage of pro- prietary technologies, emphasizing the international and developing-country aspects. In Chapter 7, Peter Phillips and Dan Dierker go beyond issues of access to intellectual property, expanding on the theme of the problems posed for public research from an increasingly private approach to agricultural innovation. They suggest parts of the public research agenda are beginning to mimic the private port- folio, shifting to shorter-term research done increasingly on a commercial or fee-for- service basis and seeking patent protection on the results. Moreover, this is happening at the expense of the more basic research that underpins tomorrow's applied R&D. According to Phillips and Dierker, putting publicly performed R & D increasingly in the pockets of private interests undermines the independence of public research, hinders the provision of technology assessments by disinterested parties, and confounds efforts of regulatory agencies to credibly oversee the intro- duction and use of these technologies. They conclude their chapter with a num- ber of suggestions to revitalize the public good parts of publicly performed R & D . More than two thirds of U.S. cotton and soybean acres were planted to trans- genic varieties within six years of initial introduction. Farmers in other countries like Argentina and China have also been quick to take up these technologies, given the chance. The adoption rates, themselves, are strong evidence that these crops are prof- itable for farmers. In Chapter 8, Michele Marra systematically scrutinizes all the empirical evidence available in the public domain of the impacts of the first gener- ation of transgenic crops in the United States and elsewhere. The types of potential benefits are described and discussed as well as the systematic biases introduced into some of the estimates because input quantities are not set at the relevant technology- specific optimum. Overall, the evidence indicates these technologies are profitable for farmers although the impacts vary by year and location. Transgenic cotton (con- taining D N A from soil bacteria that produce proteins to control the types of cater- pillars that attack cotton plants) shows reduced pesticide use in most years in most U.S. states; pest-resistant corn shows small but significant yield increases in most years across the U.S. Com Belt (and fot some places in some years the increase is substantial); and, despite evidence of small yield losses in Roundup Ready® soybean varieties in many U.S. states, other cost savings seem to more than offset the lost 8 PHILIP G. PARDEY revenue from the yield discrepancy. Evidence of the effects of transgenic crops in other countries is provided as well. There are different ways to introduce the same trait into a crop. In Chapter 9, Richard Gray describes an economic model for assessing the effects of two types of herbicide-tolerant wheat that may both be ready for commercial release in 2002. One is a non-GM variant produced by mutagenesis (a chemical or radioactive process to induce mutation used by breeders for decades); the other is a G M vari- ant developed by the Monsanto Corporation that is tolerant of the glyphosate her- bicide marketed as Roundup®. Gray investigates the likely economic consequences of these two technologies, taking explicit account of possible economic externality and costly segregation effects. The externality effects include the additional costs G M producers may impose on non-GM producers (from increased weed control costs or price discounts for non-GM crops grown in unsegregated markets), and possible (but, based on current evidence, seemingly improbable) increases in health care costs for consumers of G M products. The issue of segregation costs arises because there are many sources for mixing different wheat varieties, and it is cosdy to maintain and test for the purity of the product. Indeed, Gray speculates that it is unlikely segregation systems will develop at a low enough cost to maintain par- allel G M and non-GM product streams, possibly causing countries to bifurcate into G M and non-GM producers. The modern biosciences affect not only the costs of growing and marketing new varieties, but also the costs of research to breed new crop varieties. In Chapter 10, Michael Morris and colleagues assess the economics of biotechnology-assisted plant breeding programs, particularly those in developing countries. They focus on marker-assisted selection methods, whereby short pieces of D N A within or close to gene sequences with traits of interest are identified and used to track the movement of these traits from one plant to another during a breeding cycle. The private sec- tor makes extensive use of these techniques in their crop breeding work; less is done in the public domain, partly because of the costs involved. Decisions to invest in these new technologies involve economic choices, typically trading off increased costs (compared with conventional breeding techniques) against the benefits from speeding up the breeding cycle or spinning off new findings. The economic choices involved rely on empirical results; thus Morris et al. use an analysis of marker- assisted selection methods in maize breeding at the International Maize and Wheat Improvement Center (CIMMYT) to illustrate the issues involved. They also pro- vide an assessment of the future, both in terms of marker technologies and their potential impacts on breeding programs worldwide, giving guidance to developing countries faced with using their scarce research resources wisely in light of these new crop-improvement possibilities. BIOTECHNOLOGY MARKETS AND POLICIES-OVERVIEW 9 Part 5 groups together chapters that provide different regional and national pol- icy perspectives. The first two chapters, Chapter 11 by Eduardo Trigo and col- leagues and Chapter 12 by John Skerritt, summarize two separate but parallel efforts led by the respective regional banks (specifically the Inter-American Development Bank and the Asian Development Bank) to take stock of agricultural biotechnol- ogy throughout Latin America and Asia and to recommend regional policy and investment initiatives. In Chapter 13, Nicole Ballenger uses a chronological listing of op-ed pieces published by The Washington Post between January 1999 and November 2000 as a way of tracking public interest in and U.S. perspectives on agri- cultural biotechnology during this period. Ballenger also documents how research economists at the U.S. Department of Agriculture have responded to and sought to inform the policy and public discourse on these issues. Although the central concern is "agricultural biotechnology" the topics at issue are ever-changing (at least in terms of the emphasis placed on any one issue at any particular point in time) and wide-ranging. Part 6 presents some concluding commentary from Jock Anderson, Walter Armbruster, and Bob Richardson, complementing that of Brian Fisher, Bob Lind- ner, and Ron Duncan presented in earlier parts of the book. The three commenta- tors in Part 6 have very different institutional vantage points: an international financial institution, a nonprofit agency representing U.S. agricultural interests, and an Australian academic institution. Their comments reflect these differences but also raise concerns held more widely. Policymaking is usually a messy, often short- term, exercise. Many sense that in this case the stakes are particularly high, with potentially profound long-term consequences for the future of agriculture and food security worldwide. It also seems those making these policies are confronted with more than the usual dose of uncertainty and partisanship. I hope this book removes some of these uncertainties and injects useful economic ways of thinking into the biotech policy process. C h a p t e r 2 A g r i c u l t u r a l B i o t e c h n o l o g y — A n A u s t r a l i a n P e r s p e c t i v e o n a G loba l S c i e n c e Michael J . Taylor Biotechnology is without doubt a revolution as far as agriculture and the food processing industries are concerned. This is as true in Australia as it is else- where in the world. Whenever the status quo is challenged, differences of opinion can result. With the introduction of biotechnology to agriculture and food processing, the Australian experience is no exception. High levels of emotion and misinformation feature in the public debate about the technology in Australia including, unfortunately, reporting by the nation's electronic and print media. This makes it difficult to have a reasoned public discussion about the potential impor- tance of biotechnology for agriculture—not to mention our overall economic bottom line. Food security in the developing world, and biotechnology's role, have not fea- tured strongly in the public debate in Australia. I suspect this is true elsewhere in the developed world. Australians, like others, need to understand that biotechnology offers millions of people the promise of something that we all take for granted. By rejecting food products developed through biotechnology, we place at risk the con- tinued development of the technology and its availability to others who are not in our fortunate position. Importantly for Australia, the benefits of biotechnology are not confined to agri- culture and food processing. The capacity of biotechnology to contribute to the sus- tainable use of the natural resource base upon which Australian agriculture depends has not been fully recognized in the broader community. Real potential exists to use 12 MICHAEL J. TAYLOR the technology to increase the management tools available to deal widi serious envi- ronmental problems such as soil and water salinity. Biotechnology may well be a sig- nificant aid to how we manage these problems in the future, but the precursor must be improved public understanding and acceptance of the technology. For a globally oriented country like Australia, which exports more than two thirds of its agricultural production, being able to meet market demands and be competitive are important challenges. It is also important to understand the type of qualifications that might be placed on our products. This is something we are grap- pling with, along with other western countries. Australian investment in biotechnology is small compared with the countries of North America and Europe. The performance of the local biotechnology sector is nevertheless impressive. Australia has around 190 biotechnology companies oper- ating across the economy. Currently about 35 biotechnology companies are listed on the Australian Stock Exchange, representing an increase of more that 40 percent from 1999. Over the past two years, the value of most listed Australian biotechnol- ogy companies has grown strongly with a number showing a significant increase in their share price. In 1998-99, biotechnology companies in Australia earned about AU$965 million, almost half of that derived from export sales. U.S. biotechnology patents granted to Australians have increased 250 percent in recent years. This is more than double the rate of increase of such patents for the rest of the world. Traditional biotechnology such as plant and animal breeding have long been the mainstay of Australian agriculture. They will position the nation well to capitalize on modern biotechnology. Australia has already approved two genetically modified (GM) cotton varieties for commercial production, one an insect-resistant Bacillus thuringiensis (Bt) type and the other a cotton tolerant to a major herbicide. In both cases, the vehicle that brought these new biotechnologies into commercial produc- tion was improved local cotton germplasm. Future commercial releases of genetically modified crops in Australia are likely to be among those currently being field tested. More than 100 field trials of G M crops, mostly cotton and canola, have taken place in Australia. Australia's commitment to biotechnology research and development (R&D) is significant. The public sector spends in excess of AU$250 million per year on biotechnology research. CSIRO (the Commonwealth Scientific and Industrial Research Organisation), Australia's premier, publicly funded research agency, is investing AU$145 million in biotechnology research over three years from the year 2000. Australia's rural R & D corporations, a unique industry-government partner- ship, invest about 8 percent of their combined budgets, or AU$ 19 million per year, in research into agriculture and food applications of biotechnology. Other major areas of Commonwealth funding for biotechnology research include the higher AN AUSTRALIAN PERSPECTIVE ON A GLOBAL SCIENCE 13 education, health, and medical sectors, and the Cooperative Research Centres (CRCs) involving collaborative partnership between government, industry, and uni- versities. Commonwealth government policy for biotechnology is multifaceted. First and foremost, Australia is committed to maintaining the highest possible public health and environmental safety standards. The establishment of a national gene technology regulatory system is a case in point. Commonwealth, state, and territory governments worked together for some time to establish the Office of the Gene Technology Regulator to protect the health and safety of people and to protect the environment by identifying and managing risks posed by gene technology. This new system replaced a voluntary system of oversight that served Australia well for a decade and a half. Legislation to establish the new regulator was passed by the Com- monwealth Parliament late in 2000 and the office became fully operational in June 2001. The Commonwealth Government believes that information is a key to address- ing community and consumer concerns about biotechnology. In 2000, the Aus- tralian and New Zealand governments agreed through their health ministers to a new labeling regime for G M food. Australia's food standard will require that foods containing G M protein or D N A in the final product be labeled. While the standard is comprehensive and informative, it is practical in that products such as minor ingredients and highly refined oils are exempt and there is a 1 percent tolerance for unintended mixture. By any definition Australia's new G M food labeling regime is tight. This will raise important issues for Australia, both domestically and in a trade sense. In terms of nonregulatory policy, the Commonwealth government has adopted a whole-of-government rather than a sector-by-sector approach. A national biotech- nology strategy has been developed as a framework for Australia's approach to biotechnology. The strategy is intended to realize a greater return on the already sub- stantial public investment in biotechnology. Under the strategy, the Commonwealth government will deliver an additional AU$30 million. O f this, AU$20 million wil l provide support to help bridge the commercialization gap, the most critical barrier to biotechnology development in Australia. More recently, the Commonwealth government has announced further support for biotechnology through the estab- lishment of a new center, or centers, of excellence in biotechnology research and the expansion of a biotechnology innovation fund. These measures are part of the Com- monwealth government's overall approach to innovation. Unlike the United States, Australia has yet to adopt G M crops on a large scale with the exception of cotton. Canola is likely to be the next major G M crop to be produced commercially in Australia. For local farmers, deciding to adopt G M canola 14 MICHAEL J. TAYLOR will not be easy, given the domestic and international market uncertainty about the oil and products derived from the seed, including meat products from livestock that have been fed G M meal. Australian farmers will need to decide i f it is in their best interest to continue to produce traditional crops and to forego advantages offered by biotechnology, or perhaps seek to spread their risk and do both. Such a decision will require information on markets for G M and non-GM products. Iden- tity preservation, segregation, and certification must be key elements of any decision by Australian agriculture and food industries to supply G M and non-GM products. The whole area of biotechnology, particularly as it involves the modern tech- niques, is challenging the way government policy paradigms are structured in Aus- tralia and elsewhere. The chapters in this volume look at these issues on a global scale and consider a number of different perspectives. P a r t 2 L o o k i n g F o r w a r d o n a G loba l S c a l e C h a p t e r 3 R i c h a n d Poor C o u n t r y P e r s p e c t i v e s o n B i o t e c h n o l o g y Per Pinstrup-Andersen and Marc J . Cohen I n t r o d u c t i o n The current debate about the potential utility of modern biotechnology for food and agriculture and the associated risks and opportunities often ignores the differences between conditions in rich and poor countries. Positions for or against the use of genetic engineering in food and agriculture in industrialized countries are frequently extrapolated directly to the developing world. But food and agriculture problems dif- fer widely between poor and rich countries, and one would expect the most appro- priate solutions to also differ. It is important that each country, and population groups within countries, be in a position to make their own decisions regarding modern biotechnology. Attempts by wealthy countries, population groups, and advocacy groups to decide for poor farmers and consumers are paternalistic and unethical. This chapter first discusses the different perspectives and the reasoning behind them. It then discusses in more detail the risks and benefits associated with the use of modern biotechnology in developing-country food and agriculture. It con- cludes with a look at issues requiring future action. W h y S h o u l d P e r s p e c t i v e s D i f fe r? Rich and poor country perspectives on the use of modern biotechnology for food and agriculture differ for many reasons. Similarly, within any given country views 18 PER PINSTRUP-ANDERSEN AND MARC J. COHEN Table 3.1 Illustrative impact of a 33 percent reduction of food commodity prices on poor and rich consumers Poor consumers Rich consumers (percent) Assumed budget share on food 80.00 10.00 Assumed commodity cost share 70.00 10.00 Impact on consumer purchasing power3 19.00 0.33 Source: Authors' calculations. a. The budget and commodity shares used to estimate the impact of a 33 percent reduction in price are hypothetical, but deemed representative of typical poor and rich consumers. To illustrate the calculation, a poor person is assumed to spend 80 cents of every dollar of income on food, and 70 percent of that 80-cent expenditure entails the cost of commodities; thus, the commodity costs per dollar of expenditure are 56 cents. Reducing the price of those commodi- ties by 33 percent is equivalent to a 19 percent (0.33 x 56) increase in the income of the poor. The same method, with different budget and commodity shares, was used to estimate the income effect of a food price reduction on the rich. likely differ between poor people and the nonpoor. The factors deemed most impor- tant in determining these different perspectives are discussed below. The Budget Share for Food Application of modern biotechnology in food and agriculture may increase pro- ductivity and reduce unit costs in production and marketing. This may lead to higher incomes for innovative producers, reduced prices for consumers, or most likely a combination of the two. Consumers spending a large share of their budget on food are thus likely to be more interested in such productivity increases than con- sumers who spend a relatively small share of their budget on food. Low-income people in developing countries often spend 50-80 percent of their total disposable income on food whereas Americans, Australians, and Europeans spend 10—15 percent on average. Furthermore, the cost of the food commodity occupies a much larger share of the consumer price among the poor. Costs of pro- cessing and marketing tend to dominate in foods consumed by the rich. Unit cost savings in the production of food commodities are therefore likely to result in a larger price reduction for poor consumers (see Table 3.1). For these reasons, one would expect poor people and poor countries to emphasize reduced unit costs and prices for food. The Importance of Agriculture Insofar as farmers can capture the benefits of increased productivity, reduced unit costs, and lower production risks, they would likely favor the use of modern biotech- nology in production. More than 70 percent of the world's poor reside in rural RICH AND POOR COUNTRY PERSPECTIVES ON BIOTECHNOLOGY 19 areas, and it is not uncommon for 50-80 percent of a low-income country's popu- lation to depend directly or indirectly on agriculture. In contrast, 2—5 percent of the populations of most industrialized nations depend on agriculture for their liveli- hoods. Therefore, it is reasonable to expect that the application of modern biotech- nology in food and agriculture would be far more favorably received by low-income countries than by high-income ones. Another closely related aspect is the relative importance of the agricultural sec- tor in generating broad-based economic growth in society as a whole. Agricultural growth is essential in promoting rapid overall growth in low-income countries, while it may be of limited importance in industrialized nations. Market Power and Political Power Insofar as farmers expect to gain from the introduction of modern biotechnology in food and agriculture, they will try to influence political decisionmaking in favor of such technology. Farmers in industrialized nations have used political power effec- tively to gain access to large farm subsidies supported by fiscal resources and artifi- cially high consumer prices. At the same time, however, the market power of industrialized-world farmers has gradually deteriorated, as consumers gain a greater say. Thus, while European farmers continue to receive large subsidies by exercising their political power, they have been unable to exercise similar power in questions related to genetically modified (GM) food. On the other hand, farmers in low-income developing countries possess very limited political power and generally have been taxed rather than subsidized by their governments. Domestically, however, they continue to exercise a great deal of market power, as poor consumers seek low- cost foods instead of the more expensive products demanded by consumers in Euro- pean domestic markets. Like European farmers, farmers in the United States have also managed to maintain large farm subsidies, but unlike their European colleagues, they have not met strong opposition by consumers or government to G M food in the marketplace—at least not yet. Strong opposition to G M food in the European Union (E.U.) has resulted in severe restrictions on modern agricultural biotechnology, including limited approval for commercial use of new G M agricultural products. The opposition is driven in part by perceived lack of consumer benefits, uncertainty about possible negative health and environmental effects, widespread perception that a few large corpora- tions will be the primary beneficiaries, and ethical concerns. While European governments have tended to follow the desires expressed by advocacy groups, and most consumers are opposed to genetically engineered food, the U.S. government supports the farm sector and the private sector engaged in developing and distributing modern biotechnology fot food and agriculture. One 20 PER PINSTRUP-ANDERSEN AND MARC J. COHEN could argue that European consumers have gained a great deal of political power over agriculture in their capacity as consumers, while still agreeing to provide large sub- sidies to agriculture in their capacity as taxpayers. The possibility that the applica- tion of modern biotechnology in European agriculture could reduce the need for farm subsidies does not seem to enter into the European debate. To the extent that this potential contradiction has been considered by consumers and government, consumers seems to prefer to pay farmers not to produce G M food either through additional subsidies or through higher food prices. Such a contradiction is not prevalent in the United States. The Power of Advocacy Groups Another factor that has led to differing perspectives between rich and poor countries is the relative political power of civil society groups, including advocacy groups opposed to genetic engineering in food and agriculture. Such groups have success- fully influenced the debate and consumer and government attitudes towards G M food in Europe. Advocacy groups opposed to genetic engineering in food and agri- culture are also gaining power in developing countries such as the Philippines. The groups in developing countries often maintain close contact with European and international counterparts such as Greenpeace, Friends of the Earth, and the Soils Association. Those responsible for food and agriculture in developing countries do not always welcome efforts by multinational advocacy groups based in high-income countries to groom opposition to modern biotechnology in their countries. In a recent op-ed in The Washington Post, Nigerian Minister of Agriculture Hassan Adamu states: We do not want to be denied this technology [agricultural biotechnology] because of a misguided notion that we do not understand the dangers or the future consequences. We understand. . . .We will proceed carefully and thoughtfully, but we want to have the opportunity to save the lives of millions of people and change the course of history in many nations. That is our right, and we should not be denied by those with a mistaken idea that they know best how everyone should live or that they have the right to impose their values on us. The harsh reality is that, without the help of agri- cultural biotechnology, many will not live (Adamu 2000, A23). One might expect a similar statement from a European minister of health i f Africans tried to spur opposition in Europe to the use of modern biotechnology to develop a cure for cancer. RICH AND POOR COUNTRY PERSPECTIVES ON BIOTECHNOLOGY 21 Professor Thomson of the University of Cape Town, South Africa, puts it this way: Rich countries may engage in lengthy disputes about real or imagined risks. We suggest that is largely a luxury debate. From the perspectives of many developing and newly industrialized countries, agricultural biotech- nology's benefits are very real and urgently needed today and indispensa- ble tomorrow. The developing world cannot afford to let Europe's homemade problems negatively impact the future growth in our countries (Thomson 2000, 1). The African Biotechnology Stakeholders Forum also expresses concern about "mounting attempts to curb the evolution and development of biotechnology in Africa" and states "that those in the industrialized countries continue to assume they know what is best for Kenya and the rest of Africa" (ABSF 1999, 3). The president of the Federation of Farmers Associations in Andhra Pradesh, India, also expresses great concern about the failure of "certain well-known activist organizations in developed countries" to considet how modern agricultural tech- nology could improve the well-being of the poor in Asia. He suggests that we should "leave the choice of selecting modern agricultural technologies to the wisdom of Indian farmers" (Reddy 2000). However, while some advocacy groups fail to distinguish between rich and poor countries in their position on modern biotechnology for agriculture, many are beginning to recognize the opportunities this technology offers for improving food security and reducing poverty in developing countries. For example, in a recent position paper, Oxfam GB recommends donor support for "(1) public research into applications of G M technology of benefit to smaller farmers and low-income consumers in developing countries, and (2) regulatory and monitoring systems in developing countries" (Oxfam 1999, 3). Paarlberg summarizes what appears to be the position of many in developing countries: It would be unfortunate i f the same environmental activists in rich coun- tries, who previously waged an inspired and courageous battle to prevent the dumping of toxic wastes in developing countries, should now use their reputation to deny those same countries access to modern agribiotechnol- ogy. This is a powerful tool of science, not a toxic waste. It is the toxic qual- ity of the current industrial world debate regarding G M seeds that the developing countries should perhaps choose not to import (Paarlberg 2000b, 26). 22 PER PINSTRUP-ANDERSEN AND MARC J. COHEN Willingness to Take Risks The willingness to take certain risks is expected to differ between the poor and the rich, primarily because the consequences of taking or not taking these risks differ between the two groups. This relates to the levels of food safety demanded by the poor and those demanded by the rich. One would expect that increasing levels of food safety would tend to increase food prices. Thus, consumers may be faced with a trade-off between the quantity and quality of food they can acquire. Poor people would tend to place a higher premium on quantity until basic nutritional require- ments are met, even i f it implies lower levels of food safety. On the other hand, American, Australian, and European households, spending 10-15 percent of their budget on food, are prepared to pay a premium for even small increases in food safety and reduced uncertainty. The relationship between a society's income level and its desired level of food safety is illustrated not only across countries but also over time in any given coun- try. The food-safety level demanded by high-income countries today is quite differ- ent from that demanded by those same countries 50-100 years ago, when incomes were lower and food-budget shares higher. The implication for the introduction of modern biotechnology in food and agriculture is that higher-income people and higher-income countries would be less willing to take risks associated with geneti- cally engineered food, even i f those risks are very small or nonexistent. Globalization may impose the levels of food safety preferred by the rich on the poor at the expense of the latter's food security. The rich are likely to accept biotechnology that improves food safety—even i f it raises food prices—although this does not seem to be the case for G M seed that reduces the use of chemical pesticides such as Bt food crops. The possibility of reducing or eliminating pesticide residues in food through genetic engineering has not played a significant role in the European debate, even though European farm- ers rely heavily on synthetic pesticides. As shown in Figure 3.1, 75—80 percent of nationally representative samples in Canada, China, India, and the United States favored using modern biotechnology to develop pest resistance in crops and reduce the use of chemical pesticides. The percentage was considerably lower in Japan, and significantly lower in Europe. Different Health Problems While poor people in poor countries worry about their ability to acquire sufficient food to feed their families, rich households in rich countries are concerned about health problems such as obesity, cancer, diabetes, and heart disease. This explains at least in part why Europeans strongly support the use of modern science to develop pharmaceuticals to prevent or cure diseases of concern to them, while they oppose RICH AND POOR COUNTRY PERSPECTIVES ON BIOTECHNOLOGY 23 Figure 3.1 Selected countries of 25 surveyed on the use of biotechnology to grow pest-resistant crops that require fewer farm chemicals Percent China U.S. India Canada Japan Germany France Russia U.K. Spain Strongly or somewhat favor Somewhat or strongly oppose Neutral or don't know Source: Environics International, Ltd. (1998). use of such science to improve food and agriculture. Few people seeking a cure for cancer are likely to reject a cure developed through genetic engineering, and G M insulin is widely accepted to control diabetes. West African farmers unable to grow or purchase enough food to feed their children are much more concerned about improvements in food and agriculture than about developing a cure for cancer. One would then certainly expect the rich and poor ro differ on the priorities of modern science. This is borne out by an assessment of public opinion in selected countries (Figure 3.2). While a large majority of people in China and India favor the use of modern biotechnology both for treating human diseases and for developing pest-resistant crops, European populations are much more in favor of using mod- ern biotechnology to treat human diseases than for food and agriculture. In addition to concern about obtaining enough food for the family, the low-income mother in a developing country also worries about other health 24 PER PINSTRUP-ANDERSEN AND MARC J . COHEN Figure 3.2 Public opinion on the use of modern biotechnology in selected countries Percent 100 80 60 40 h 20 h 87 78 80 80 82 79 76 70 52 54 36 United States France Germany United Kingdom China India | In favor of biotech for human diseases ] In favor of biotech for pest-resistant crops Source: Environics International, Ltd. (1998). problems. These tend to be related to infectious diseases, many of which are associ- ated with unclean water, poor hygiene, and extremely low food-safety standards. She is thus likely to favor the use of modern science to solve problems related to infec- tious diseases rather than those related to chronic diseases. The Importance of Environmental Concerns Finally, differing environmental concerns between rich and poor countries are likely to lead to different perspectives on the use of modern biotechnology. Modern biotechnology, which would increase productivity in staple food production but with a potentially negative environmental impact, is mote likely to be accepted by the poor than by the tich, simply because of the ptessing food problems facing the poor. High-income countries are less likely to approve of the application o f modern biotechnology in agriculture i f there is even a small or unknown environmental risk, because concerns about impact on biodiversity are much more prevalent there than concerns about hunger and malnutrition. The opposite is likely to be true in poor countries. RICH AND POOR COUNTRY PERSPECTIVES ON BIOTECHNOLOGY 25 Figure 3.3 Percentage of adults who "agree1' that benefits of using biotechnology in food crops are greater than the risks India ~| China ~| Mexico | Canada | United States ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ] Australia | Nigeria | Brazil Italy | Japan | South Africa | Argentina | Germany ~| U.K. | France | 0 20 40 60 80 Source: Envlronics International, Ltd. (1998). Do t h e P e r s p e c t i v e s D i f fe r a s E x p e c t e d ? The answer to the above question is genetally "yes" but with some significant excep- tions. For the most part, governments of low-income countries and individuals responsible for facilitating food security fot people in those countries favor the use of modern biotechnology in food and agriculture. Public opinion surveys indicate that a larger share of the populations of some developing countries favor using biotechnology in food and agricultute than is the case for western European coun- tries and Japan. However, in some high-income countties that tely heavily on agri- cultural exports for foreign exchange, such as Australia, Canada, and the United States, there is stronger support for the technology (Figure 3.3). Moreover, there is increasing opposition from various advocacy groups in a number of poorer coun- tries, notably India and the Philippines. While most developing-country governments seem to favor the use of modern biotechnology, including genetic engineering for food and agriculture, enthusiasm fot the new technology differs significantly among countries. The Chinese govern- ment is eagerly promoting research based on molecular biology to develop G M food and other agricultural commodities, and it pethaps needs to strengrhen its 26 PER PINSTRUP-ANDERSEN AND MARC J . COHEN Figure 3.4 European support for the application of biotechnology in the production of foods and development of crops with increased resistance to pests, 1996 and 1999 Percent Food production Pest-resistant crops Source: European Commission (2000). regulatory system. India has yet to approve its first G M seed for commercial plant- ing, yet it has accepted food aid that is likely to be genetically modified. Large, middle-income developing countries such as Btazil, Egypt, India, and South Africa are promoting molecular biology-based agricultural research, but approval for com- mercial production is still very limited. Views on using modern biotechnology for food and agriculture also differ among high-income countries. While most E.U. citizens oppose the production and consumption of G M food, such opposition is less prevalent in Austtalia, Canada, and the United States, pethaps because of the importance of export agriculture to their economies. A recent study by Gaskell et al. (1999) showed that about 40 per- cent of the E.U. population and 60 percent of the U.S. population support the use of biotechnology in food production. European support for applying modern biotechnology in food and agriculture detetiotated from 1996 to 1999 (Figure 3.4). The viewpoint expressed in Japan seems close to that of the Europeans, maybe because of Japan's substantial reliance on food and feed imports. A perceived health risk partly explains the opposition in Europe (Figure 3.5). However, the perceptions of risks and benefits are based on very limited knowledge of basic biology, as Figures 3.6 and 3.7 illustrate. RICH AND POOR COUNTRY PERSPECTIVES ON BIOTECHNOLOGY 27 Figure 3.5 Percentage of sample population that perceives a serious health risk associated with consumption of GM foods, 1995 Sweden Germany Netherlands Denmark United Kingdom Norway United States Source: Hoban (2000). 10 20 30 40 50 60 70 HO W h y Does I t M a t t e r T h a t P e r s p e c t i v e s D i f fe r? Different perspectives leading to different policies and standards may conflict with current globalization trends. For globalization to continue in food and agriculture, certain policies and standards need to be synchronized. The biggest threat is that low-income countries will have to adopt policies and standards appropriate only for high-income country situations. Opposition to the use of genetic engineering in food and agriculture by the rich countries may hatm poor people in developing countries for at least thtee reasons. First, governments and high-income people in developing countries may follow the leads of the industrialized countries in accepting or rejecting the use of modern sci- ence for food and agriculture. A coalition is possible between those with decision- making power in developing countries, who are generally nonpoor, and governments and other decisionmakers in high-income countries. Such a coalition would behave much like a high-income country and might establish policies and standards that would harm the majority of the populations of developing countries, which are poor. This situation of course is not limited to the application of modern biotech- nology. It can be argued that rich people in developing countries may have more in 28 PER PINSTRUP-ANDERSEN AND MARC J . COHEN Figure 3.6 Ordinary tomatoes do not contain genes, while genetically modified ones do: True or False? Greece Germany United Kingdom Denmark United States Netherlands 20 36 40 45 51 10 20 30 40 Percent giving the right answer (false) 50 60 Source: Hoban (2000). common with the populations of high-income countries than with poot people in their own countries. Second, most developing countries will be unable to undertake agricultural research to develop the technology needed by their farmers and consumers without research collaboration and financial support from industrialized countries. I f indus- trialized countries decide to limit their molecular biology-based research to solving the health problems of greatest concern to them, developing countries will not get the support they need to apply molecular biology-based research to food and agri- culture. A few large developing countries including Brazil, China, India, and South Africa do have the capability to develop the necessary research capacity in food and agriculture; their efforts could provide some of the support needed by othet devel- oping countties. Third, different standards among countries with respect to G M food are likely to hamper ttade liberalization and agricultural exports from developing countties. This could be hatmful to low-income people in developing nations because most of them depend on agricultutal growth, which in turn, is likely to depend in part on expanded export earnings. Some developing countries that are considering the com- mercialization of G M crops have been warned by the E.U. that they may lose access to the European market not only for the commodities that have been genetically modified but possibly also fot those that have not been modified. RICH AND POOR COUNTRY PERSPECTIVES ON BIOTECHNOLOGY 29 Figure 3.7 By eating a genetically modified fruit, a person's genes can be changed: True or False? Austria Germany Denmark United States Netherlands 40 60 80 Percent giving the right answer (false) Source: Hoban (2000). Presumably, the reason for possibly not disctiminating between GM commodi- ties and othets is that most countries would have great difficulty keeping the com- modities separate. This was recently illustrated in the United States, where G M maize approved for animal feed but not fot human consumption ended up in processed food sold for direct human consumption. The G M maize (Starlink®) was simply mixed with other maize eithet on the farm or in grain elevators. Even i f developing countries agreed to label all G M food, the existence of G M food in a developing country could preclude that country from exporting labeled non-GM food to the E.U. This possibility has put pressure on governments of such countries as China and Thailand not to approve the use of G M seed for commercial production. Developing countries that might wish to use genetic modification to improve agricultural productivity and the nutritional quality of their foods might be faced with a choice: either use genetic modification for the domestic market and lose export opportunities, or forego the potential benefits to domestic consumers while maintaining export opportunities. T h e I m p o r t a n c e o f P r o d u c t i v i t y I n c r e a s e s i n D e v e l o p i n g - C o u n t r y A g r i c u l t u r e In low-income developing countries, agricultute is the driving force for broad-based economic growth and poverty alleviation. A healthy agricultural economy also offers 30 PER PINSTRUP-ANDERSEN AND MARC J. COHEN farmers incentives to soundly manage natural resources. To facilitate agricultural and rural growth, accelerated public investment is needed in a number of areas: • environmentally friendly, yield-increasing crop varieties, including pest- resistant and drought- and salt-tolerant varieties, and improved livestock; • access to productive resources (such as land) and appropriate inputs and credit; • extension services and technical assistance; • improved rural infrastructure and effective matkets; • attention to the needs of women farmers, who grow much of the locally produced food in many developing countries; and • primary education and health care, clean water, safe sanitation, and good nutrition for all. These investments need to be supported by an enabling policy environment including good governance as well as trade, macroeconomic, and sectoral policies that do not discriminate against agriculture. Development efforts must engage small farmers and other low-income people as active participants, not passive recipients; unless the affected people have a sense of ownership, development schemes are not likely to succeed. Public investment in agricultural research that can improve the productivity of small farmers in developing countries is especially important. The research should develop and draw upon the most appropriate technologies, including making bet- ter use of the insights to be gained from traditional indigenous knowledge. The pri- vate sector is unlikely to devote substantial resources to such work because it cannot expect sufficient returns to covet costs. Even minor increases in agricultural research aimed at the problems of small farmers in developing countries can significantly boost food supplies, while relatively small cuts can have serious negative effects. Benefits to society from such research generally exceed 20 percent per year, compared with long-run real interest rates of 3-5 percent for government borrowing. Yet these returns will not be obtained without public investment, and average annual growth rates of public agricultural research expenditures in the developing world have slowed since the 1970s (Alston et al. 2000; Alston, Pardey, and Smith 1999; Rose- grant, Agcaoili-Sombilla, and Perez 1995). Low-income developing countries invest RICH AND POOR COUNTRY PERSPECTIVES ON BIOTECHNOLOGY 31 less than 0.5 percent of the value of farm production in agricultural research, com- pared with 2 percent in higher-income countries (Pardey and Alston 1996). Continued low productivity in agriculture contributes not only to gaps between food production and demand in poor countries, but also prevents the broad-based income growth and lower unit costs in food production needed to improve food security. Efforts to raise longer term productivity on small-scale farms, emphasizing staple food crops and high-value cash crops, must be accelerated. Research and technology alone will not drive agricultural growth however. The full and beneficial effects of agricultural research and technological change will materialize only i f government policies foster and support poverty alleviation and sustainable management of natural resources. Also, it is critical that small farmers are put in decisionmaking roles and that they are informed about their options for improving productivity, reducing risks, and increasing the well-being of the farm family. T h e R o l e o f A g r i c u l t u r a l B i o t e c h n o l o g y i n A c h i e v i n g F o o d S e c u r i t y Although tissue culture and other biotechnological work is under way in several developing countries, very little transgenic seed material has been grown in the developing world. Only a few countries—Argentina, Brazil, China, Egypt, India, and South Africa—account for almost all the current developing-country research in agricultural biotechnology; therefore ex post assessment of its risks and benefits, and its relevance for the problems outlined above, is virtually impossible. Identify- ing similarities and differences between conventional breeding and modern biotech- nology can help ex ante assessment of the latter's likely risks and benefits. Comparing Conventional Breeding with Modern Biotechnology Within-species versus transgenic breeding. Molecular biology-based research includes both within-species and between-species research. The former may include tissue culture and marker-assisted conventional breeding, while gene transfer between species is usually referred to as "genetic engineering" or "transgenic" work. Although the terms "modern biotechnology" and "genetic engineering" are often used inter- changeably, the opposition, concerns, and uncertainties usually refer to the latter. There are four major differences between conventional plant breeding and genetic engineering. First, the human-induced transfer of one or more genes between species and from microorganisms and animals to plants is relatively new. While all plant breeding arguably involves "genetic modification," conventional breeding 32 PER PINSTRUP-ANDERSEN AND MARC J. COHEN crosses different varieties within a single species. Because of their recent origin, there is considerable debate about whether gene transfers across species boundaries entail significant risks to human health and the environment. A shift to private-sector research. The public sector, with support from philan- thropic institutions, has traditionally taken the lead in conventional crop research, especially in developing countries. As a direct consequence, improved seed was usu- ally freely available for multiplication and distribution. In other instances, the improved material was subject to breeders' rights, which may permit a royalty charge. But even in these instances, intellectual property rights (IPR) often did not extend beyond the initial varietal release. Having acquired the seed, farmers could reuse it without further payment, although reuse of hybrid seed would drastically reduce the yield advantage. Such practices are in keeping with the principle of "farmers' rights" included in the International Undertaking on Plant Genetic Resources. Negotiations are currendy under way to incorporate the Undertaking into the Convention on Bio- logical Diversity.1 In contrast, private-sector firms undertake the bulk of modern agricultural biotechnology research. Consolidation has proceeded rapidly in the agricultural biotechnology industry, with more than 25 major acquisitions and alliances worth US$15 billion between 1996 and 1998 (Serageldin 1999). Transnational life science companies protect IPR through patents that extend beyond the first release of a vari- ety that contains patented technologies. Thus, farmers cannot legally plant or sell for planting the crop produced with the patented seed without the petmission of the patent holder. Patent holders are currently seeking to enforce IPR through legal agreements and technologies that will deactivate specific genes. Use of legal instruments is widespread for industrialized country agriculture, but it does not presently appear viable for poor developing countries. Monitoring and enforcing contracts that prohibit large numbers of small farmers from using the crops they produce as seed would be expensive and difficult. Genetic use-restriction technology (the "terminator" gene) is the first patented component of the technological approach to intellectual property (IP) protection. Seeds containing this gene produce plants with sterile seed. This technology is inap- propriate for small farmers in developing countries, however, because existing infra- structure and production processes cannot keep fertile and infertile seeds apart. Small farmers could face dire consequences i f they inadvertendy planted infertile seeds. The Consultative Group on International Agricultural Research (CGIAR), which supports 16 Future Harvest international agricultural research centers, has officially rejected use of "any genetic system designed to prevent seed germination" (CGIAR 1998, 52) as a means of protecting IPR. In its October 1998 statement the CGIAR cited concerns about the spread of the trait through pollen, the possibility RICH AND POOR COUNTRY PERSPECTIVES ON BIOTECHNOLOGY 33 of the sale or exchange of nonviable seed for planting, the importance for poor farmers of saving seed, potential negative impacts on genetic diversity, and the importance of selection and breeding by farmers for sustainable agriculture. Rise of proprietary research processes and technologies. A third and related distinc- tion between conventional crop breeding and modern biotechnology relates to the patenting of processes as well as products. Most conventional breeding technology lies in the public domain and is frequendy employed by public institutions. The processes used in modern agricultural biotechnology are increasingly subject to IP protection, along with the resulting products. As the global agricultural research environment becomes increasingly propri- etary, will public agencies be able to maintain free access to the fruits of their research for poor farmers in developing countries? Basic but proprietary knowledge and processes may be needed in research, for example, on the so-called "orphaned crops," such as cassava and millet. These are critical staples in the diets of many poor peo- ple, but they do not offer promising economic returns to private-sector research and development efforts. So the public sector will need to develop disease-resistant cas- sava or drought-tolerant millet, whether through genetic modification or conven- tional breeding. So far, international agricultural research centers have acquired access to propri- etary technologies through commercial licenses, formal agreements providing limited- use rights for specific research, and informal arrangements. Sometimes, technology owners have permitted research but not distribution of the resulting products. Patent applications are country-specific, and most existing patents related to agricultural research are held in the industrialized countries (Nottenbutg, Pardey, and Wright this volume). Thus, i f a patent is not obtained in a particular developing country, that country's national agricultural research system (NARS) is free to use the research processes and traits in further research, adaptation, and commercial- ization. An international agricultural research center located in the country would have the same freedom to operate locally. Farmers in the country are free to use com- mercialized improved seed even though it may be patented in other countries. The country, however, may not be able to export commodities produced by such seeds to countries where patents are in effect. Private-sector corporations are likely to take out patents only in countries where they expect a sufficiently large commercial demand for the patented product. Similarly, since patenting is costly, holders of patents on specific aspects of a research process may limit their patent applications to a few countries where they can obtain significant economic gains by providing access to the patented processes. Thus, while all members of the World Trade Organization (WTO) must develop acceptable IPR regimes, many of the poorest and smallest developing 34 PER PINSTRUP-ANDERSEN AND MARC J. COHEN countries may not be greatly affected by the rapid increase in patenting of agricul- tural research processes and outputs simply because the patent holders will not take out patents in those countries. Furthermore, countries need not permit patenting of living organisms, other than microorganisms, to comply with W T O requirements. Less restrictive property rights regimes suffice. An implicit market segmentation is thus developing where research processes and traits patented elsewhere may be freely available in countries and for agricultural commodities of little interest to the pri- vate sector. Where required, agreements should be reached between developing-country NARSs and the major private-sector patent holders. These would explicitly seg- ment markets and make available the output of modern biotechnology for further research and adaptation to benefit poor farmers and consumers in developing coun- tries. Appropriate technology would become public goods in the poor and unprof- itable markets while remaining private goods in profitable markets. Future Harvest centers could help facilitate such agreements while continuing to collaborate with NARSs. Some firms have agreed to transfer proprietary technologies without charging royalties to developing countries where there are few potential commercial prospects. Monsanto, for example, has agreed to place its map of the rice genome in the pub- lic domain. The company has also agreed to transfer virus resistance technology to public research institutes in Mexico and Kenya working on potatoes and sweet potatoes, respectively. But so far such arrangements are few and generally involve the philanthropic arms of the private firms (Serageldin 1999; Qaim 1999). Adaptation versus direct transfer. A final difference involves the adaptation of developed-country agricultural research to developing-country conditions. Con- ventional breeding efforts that focused on solving specific problems in developing countries (such as low rice yields) adapted developed-country technology to local conditions. Most current applications of modern biotechnology focus on developed-country agriculture. In 2000, 76 percent of the land planted to G M crops was in developed coun- tries, with the United States alone accounting fot 68 percent of global G M crop area. Australia, with 150,000 hectares of commercial G M crops, accounted for 0.3 per- cent of 2000's total area. Among developing countries, the bulk of the hectares planted to G M crops were in Argentina and China, although Mexico, South Africa, and Uruguay also had commercial plantings. The G M crop area in the developing world increased by more than 50 percent over 1999 levels. Developing countries other than China with commercial G M plantings have a substantial number of large-scale, capital-intensive farms and produce primarily for industrialized-country markets. Herbicide-tolerant cotton, maize, and soybeans and insect-resistant cotton RICH AND POOR COUNTRY PERSPECTIVES ON BIOTECHNOLOGY 35 and maize account for 94 percent of global G M plantings. Both the area planted to G M crops and the value of the harvests grew dramatically between 1995 and 2000, from under a million hectares to more than 44 million. The global market for trans- genic seed grew from US$1 million to US$3 billion between 1995 and 1999 (James 2000a and 2000b). To date, little private-sector agricultural biotechnology research has focused on developing-country food crops other than maize. Moreover, little adaptation of the research to developing-country crops and conditions has occurred through the not- for-profit, public-goods-oriented channels prominent in conventional breeding efforts in the developing countries. Except for limited work on rice, maize, and cas- sava, mostly done by Future Harvest centers, little biotechnology research focuses on the productivity and nutrition of poor people. The Rockefeller Foundations agriculture program is one of the few examples. In 1998, it provided about US$7.4 million for biotechnology research relevant to developing countries, mainly through international agricultural research centers and developing-country NARSs, with a major emphasis on rice. This sum pales in comparison with the multibillion-dollar research and development budgets of the life sciences companies (Rockefeller Foun- dation 1999; Monsanto Company 1999). As with conventional breeding, the challenge is to move from the scientific foundation established by research efforts oriented toward developed countries to research focused on the needs of poor farmers and consumers in developing coun- tries. Direct transfer of much of the current crop of agricultural biotechnologies to the developing world is inappropriate. For example, poor farmers in developing countries may not be able to afford herbicides. More appropriate research for the developing world might focus on biotechnology and conventional breeding to develop alternative forms of weed resistance. The West African Rice Development Association (WARDA), a Future Harvest center based in Cote d'lvoire, used a com- bination of conventional breeding and tissue culture to cross African and Asian rice varieties. This resulted in a hardy, leafy rice that denies weeds sunlight. In addition to improving yields, this reduces the time women must spend weeding, allowing them to devote more attention to the childcare practices that are essential for good nutrition (WARDA 1999). Insect-resistant crops could have great potential value for poor farmers. So far, however, the development of crops containing genes from the Bacillus thuringiensis (Bt) bacterium, which produces a natural insecticide, has focused on the crops and cropping environments of North America and on production for developed- country markets. 2fr crops currendy available require knowledge-intensive cultivation2 and have proved transferable to larger-scale operations in developing countries such as Argentina and Uruguay. Nonetheless, debate abounds about the risks associated 36 PER PINSTRUP-ANDERSEN AND MARC J. COHEN with gene-derived pest resistance, such as harm to beneficial species and cross- pollination of wild and weedy relatives, but evidence is so far inconclusive. Research on crops and problems of relevance to small farmers in developing countries, including biotechnology research, will require expanded adaptive research engaging public and philanthropic institutions, including international agricultural research centers. Additional public resources must be allocated to such efforts. More- over, the public sector can encourage private-sector research for poor people by con- verting some of the social benefits to private gains. For example, the state could offer to buy exclusive rights to a newly developed technology and make it available either free or at a nominal charge to small farmers. As in developing technology for the market, the private research agency would bear the risks of failing to develop the technology or having some other research agency do it first. This arrangement is sim- ilar to that recently proposed by Harvard University economist Jeffrey Sachs for developing a malaria vaccine for use in Africa (The Economist 1999). There is no rea- son to believe that the social rates of return to agricultural biotechnology research would be less than those for conventional research. Without investment in biotechnology research oriented to developing-country agriculture, continued expansion of G M crop production in the developed countries may well harm small farmers in the developing world, as imported G M grain and feed crops undercut local production. Some developing-country consumers would benefit, but those consumers who also farm (a very high percentage of consumers in the poorest countries) could experience net losses. Also, the development of G M substitutes for developing-country export crops, such as high-protein rapeseed oil as a substitute for palm oil, could have a devastating impact on the livelihoods of developing-country farmers. Lessons from conventional breeding. Experience with conventional crop research offers some guideposts for assessing the likely risks and benefits of agricultural biotechnology for developing countries. Risks and benefits may be inherent in a given technology, or they may transcend the technology. The policy environment into which a technology is introduced is critical. For example, International Food Policy Research Institute (IFPRI) research found that in Tamil Nadu, India, adop- tion of high-yielding grain varieties meant not only increased yields and cheaper, and more abundant food for consumers, but also income gains for small and larger-scale farmers alike, as well as for nonfarm poor rural households. Increased rural incomes contributed to nutrition gains (Hazell and Ramasamy 1991). The benefits were widely shared because the Tamil Nadu state government has pursued active poverty alleviation strategies, including extensive social safety net programs and investment in agriculture, rural development, nutrition, and education, along with a fair measure of equity in access to resources such as land and credit. Where increased inequality RICH AND POOR COUNTRY PERSPECTIVES ON BIOTECHNOLOGY 37 followed the adoption of modern crop varieties, this was not because of factors inherent in the technology, but rather a result of policies that did not promote equi- table access to resources and development of human capital. Even in these areas, landless rural laborers usually found new job opportunities as a result of increased agricultural productivity, particularly where appropriate physical infrastructure and markets developed. On the other hand, successful adoption of modern crop varieties depended on access to water, fertilizer, and pesticides. Thus, inequality between well-endowed and resource-poor areas increased because of the properties of the technology itself. Like- wise, excessive or improper use of chemical inputs led to adverse environmental impacts in some instances. To some extent, this problem was offset by other charac- teristics inherent in the technology; by allowing yield gains without expanding cul- tivated area, the technology kept cultivators from clearing forests and marginal lands. Applications of agricultural biotechnology in developing countries could address some of these very issues i f research focuses on how to reduce the need for inputs and increase the efficiency of input use. This could lead to the development of crops that utilize water more efficiently, fix nitrogen from the air, extract phosphate from the soil more effectively, and resist pests without the use of synthetic pesticides. Such efforts, i f successful, would reduce dependence on pesticides, fertilizers, and other inputs, making the technology more readily available to poor farmers. Introducing agricultural biotechnology into developing countries could help increase productivity, lower unit costs and prices for food, preserve forests and frag- ile land, reduce poverty, and improve nutrition. Whether it will do so depends on whether the research is relevant to poor people, on the economic and social policy environment, and on the nature of the IPR arrangements governing the technology. Weighing Risks and Benefits of Biotechnology in Developing Countries The experience of the industrialized countries. In the industrialized countries, i t is generally assumed that the economic benefits of G M crops accrue primarily to the life science companies that develop the new varieties and hold the patents, along with the seed companies that distribute them (increasingly, these firms are integrated as a consequence of mergers and acquisitions). While farmers stand to gain from reduced pest management costs and, in the case of herbicide-tolerant crops, greater efficiency of pesticide use, the potential yield gains may mean reduced prices. Con- sumers gain through lower prices. There are social and environmental benefits to reduced pesticide use, though these could be offset by potential environmental and health problems.3 As G M crops have been commercially available for only about six growing sea- sons, information is limited on their economic benefits and distribution. Some 38 PER PINSTRUP-ANDERSEN AND MARC J . COHEN Figure 3.8 Distribution of economic surplus generated by the use of Roundup Ready® soybean seed in the United States, 1997 (Total net economic surplus, US$360 million) Other consumers 13.0% U.S. consumers 8.0% Monsanto 22.0% All farmers 48% *U.S. 50% •Others -2% Seed companies 9.0% Source: Falck-Zepeda, Traxler, and Nelson (1999) recent studies in the United States suggest that the teality may be more complex than conventional wisdom indicates. Falck-Zepeda, Traxler, and Nelson (2000) found that in 1996 U.S. farmers gained the largest share of the benefits from that year's Bt cotton crop (59 percent); while the gene developet, Monsanto, received 21 percent; consumers 13 percent; and the germplasm supplier, Delta and Pine Land Company, 5 percent. Falck-Zepeda, Traxler, and Nelson (1999) report that 1997 gains from herbicide-tolerant soybeans favored consumers even more (21 percent), while farm- ers gained fully half. Agribusiness's share was only 22 percent (Figure 3.8). Anothet soybean study confirms the global consumet gains and those of agtibusiness, but suggests that the ptice-depressing effects of the yield gains may wipe out any bene- fits fanners could hope to achieve (Moschini, Lapan, and Sobolevsky 1999). A study of Bt maize found that the ptice premium placed on Bt seed was so high that the gains from efficiency and reduced pesticide use may not justify the costs unless farmers face a relatively high probability of European corn borer infestation and their yields are higher than avetage (Hyde et al. 1999). This litetature suggests that, even undet monopoly or oligopoly ownership of the technology, farmers and consumers may gain from the technologies and the benefits to consumers may be larger than assumed. RICH AND POOR COUNTRY PERSPECTIVES ON BIOTECHNOLOGY 39 The potential benefits in developing countries. There are many potential benefits for poor people in developing countries. Biotechnology may help achieve the pro- ductivity gains needed to feed a growing global population, confet resistance to pests and diseases without costly purchased inputs, heighten the toletance of crops to adverse weather and soil conditions, improve the nutritional value of some foods, and enhance the durability of products during harvesting or shipping. Bio- engineered products may reduce reliance on pesticides, thereby reducing farmers' crop-protection costs and benefiting both the environment and public health. Biotechnology research could aid the development of drought-tolerant maize and insect-resistant cassava, helping small farmers and poor consumers. The develop- ment of cereal plants capable of capturing nitrogen from the air could contribute to plant nutrition, could also help small farmers, who often cannot afford fertiliz- ers. Biotechnology may offer cost-effective solutions to the scourge of micronutrient malnutrition, which affects hundreds of millions of poor people in developing countries, through the development of vitamin A and iron-rich crops. For exam- ple, GolderiRice™, which is rich in beta carotene, a precursor of vitamin A, has been enginee