APPENDIX 14
Memorandum submitted by the American Soybean
Association (R 18)
SUMMARY
In the present memorandum the American Soybean
Association submits to the Agriculture Committee of the House
of Commons its thoughts on the possibilities for the segregation
of genetically modified crops. It seeks to provide material for
reflection on the following points:
— the role and scale of global soybean
production in meeting the nutritional requirements of the world;
— the structure of the US soybean industry;
— its genetic resource base;
— the integration of biotechnology
into soybean production;
— the practicalities of distinguishing
transgenic soy;
— the implications of customers' requirements
for segregation of genetically modified crops;
— the experience of the US soybean
sector in meeting specific customer requirements through an "identity
preserved" (IP) system;
— IP as a response to European customer
demand for non-biotech soy products;
— the need for a clear specification
for IP in such products.
CREDENTIALS
1. The American Soybean Association (hereinafter
"the ASA"), headquartered in St Louis, Missouri, represents
32,000 producer members on national and international policy and
issues important to all US growers of soy.
2. Its efforts are underpinned by the soybean
producer organisations in the thirty producer states, and by the
United Soybean Board, which collects and allocates research and
development funds from America's 600,000 soybean farmers. Its
commitment to international markets is attested by its thirteen
international offices spread throughout the world, and by its
ongoing promotion program for US soy products to a wide range
of customers.
3. This is the second occasion on which
the ASA has contributed material to a UK parliamentary committee
on an issue related to developments in biotechnology. The first
was in June 1998, when observations were submitted to Sub-Committee
D (Agriculture, Fisheries and Food) of the European Communities
Committee of the House of Lords in connection with the Sub-Committee's
inquiry into the EC Regulation of Genetic Modification in Agriculture.
INTEREST IN
THE COMMITTEE'S
INQUIRY
4. To put the ASA's interest in the Committee's
inquiry into context, a short summary of the basic economic facts
may prove useful. The growth of world soybean production as a
source of vegetable oil and protein is a relatively recent phenomenon
in the history of the world grain trade. However, there can be
little dispute as to the contribution it has made since the end
of the war in improving nutrition generally and in responding
to increased demand in line with population growth.
WORLD SOYBEAN
PRODUCTION
5. Worldwide, about 50 countries have some
soybean production, mostly in small quantities and consumed domestically.
Since the 1970s, however, major soy product export industries
on the US model have developed in Brazil and Argentina, and there
are also substantial producers with few exports, such as China,
India and Indonesia. World soybean production now stands at over
150 million tonnes annually.
THE US INDUSTRY
6. The United States is the world's major
producer and exporter of soybeans, the principal world source
of vegetable protein, and a major source of vegetable oils and
other food products. Annex I and Annex II show, respectively,
soybean processing in schematic form and the range of products
derived from soybeans. Production is carried on mainly in the
Mississippi River basin, an area which can be considered broadly
as running some 2,000 miles north to south and a similar distance
east to west. Iowa, Illinois, Minnesota and Indiana are the leading
producer states. Certain Atlantic seaboard states are also significant
producers of soybeans.
7. Soybean production in the US grew from
a near-zero base in the 1920s to current levels in response to
growing demand from the world food and feed industries. It developed
strongly after 1945 in response to growing US and world demand.
Acreage immediately before the war had not reached the 5 million
mark. By the mid-1970s, it had increased tenfold. Since then,
it has been yield enhancement, through improved varieties and
cultivation techniques, more than acreage extension, that has
underlain increased output. That said, in 1999, US area planted
to soybeans was about 75 million acres, a figure which approximates
to the combined land area of the United Kingdom and the Republic
of Ireland.
8. The climatic conditions in which soybeans
are produced vary widely across the US, with 13 different identified
climate patterns requiring different approaches to variety choice
and to agronomic management. Soybeans are almost universally associated
in rotation with maize, and, depending on region, with other crops
as well.
9. Harvesting is concentrated between the
end of September and mid-November, and large quantities of product
have to be moved off the land and towards storage facilities,
crushing plants and ports, within a tight timeframe. This is achieved
by means of an efficient bulk commodity system, founded on high
volume barge traffic in the Mississippi River system, a high-capacity
railfreight industry, efficient port facilities, and the financial
support and price discovery offered by the soybean futures complex,
notably on the Chicago Board of Trade.
10. In 1999, US production of soybeans is
expected to reach a figure of over 75 million tonnes, of which
almost half will be exported to world markets, and over 10 per
cent of the total to Europe, mostly in the form either of whole
beans for crushing in various European port installations, or
of soy meals produced after oil extraction in the US.
11. Any development, such as a demand for
segregation, which blunts the efficiencies of commodity crop exports—and
we are not referring only to the US—will, if responded to
in a disorganised way, lead to the creation of burdens for the
world food system. It is our conviction that depriving commodity
crop movement of the liquidity it has acquired over the years
will lead to increased costs which will weigh indiscriminately
on both industrialised and developing economies, and will deprive
final consumers, in whose interest the trading system is supposed
ultimately to operate, of the benefits of one of the constant
technical improvements that food production undergoes worldwide.
12. Our interest in the Committee's work
is therefore centered on the way in which, and the extent to which,
we think that special customer requirements in the UK can be met.
We propose, with the Committee's permission, to explain this in
the remainder of the present memorandum, by defining terms, by
presenting elements of the problem that have not hitherto received
attention in the European debate, and by expressing our confidence
in the economic and environmental benefits of a technology which
we helped to develop.
THE GENETIC
BACKGROUND
13. The number of varieties of soybean cultivated
in the US runs into thousands, with seed provided by a range of
large- and small-scale multipliers to suit local conditions. As
with agricultural crops in general, there is an observable tendency
in most cases for a soybean variety, which may have been developed
and bred over 10 or more years, to peak in commercial use and
to decline into obsolescence over a rather shorter period as plant
breeders introduce further improved varieties to the market.
14. The genetic resource base is therefore
in a constant state of development and renewal, and about 100
new varieties, obtained through classical selection procedures,
enter commercial production each year. We estimate that there
are about 2,500 varieties on offer to soybean farmers in any one
year, classified in the first place into maturity groups corresponding
to the latitude under which they will be grown. Some idea of the
wealth of the germplasm available to public and private seed breeders
in the US can be gained from the fact that the USDA's soybean
germplasm collection in Urbana, Illinois, contains over 18,000
accessions, each of which is characterised according to dozens
of traits and compositional references.
DEVELOPMENTS IN
SEED BREEDING
TECHNOLOGY
15. With the development over the past 20
years of modern biotechnology, additional genetic options have
become available to soybean producers. The advent of recombinant
DNA technology has enabled precisely-targeted improvements which
have a favourable impact on agronomic practice, in terms of production
costs, both of inputs and labor, in terms of farm health and safety,
and in terms of good environmental practice.
16. The 1996 US planting season saw the
first commercial use of Roundup Ready (RR) soybean seed. The Monsanto
Company had begun to make available to seed breeders under licence
the right to incorporate into the genomes of their soybean varieties
the RR event, the effect of which is to impart to the soybean
plant enhanced tolerance to glyphosate, the well-known systematic
non-selective herbicide with low environmental impact, which had
been in use for nearly 30 years, and of which the best-known brand
name is Roundup, a trademark of the Monsanto Company.
17. Commercial plantings of RR beans in
the US, Argentina and Canada only began after all existing regulatory
requirements had been complied with in major export markets. To
date, RR beans are the only transgenic soybeans in production
that are exported to Europe, although authorisation procedures
are under way for others, both in Europe and elsewhere.
18. Of the 2,500 or so varieties currently
available for planting, approximately 1,000 are also available
or becoming available in converted form for use as part of the
RR herbicide application package.
19. Farmer interest in the package, nurtured
over several years of trials, was reflected in rapid uptake. The
key to the technique is "over the top" application to
soybeans (and to other crops) of glyphosate usually in proprietary
formulations at the post-emergence stage. This permits in most
cases elimination of other herbicide treatments, whether pre-planting,
post emergence or late season. It brings financial savings in
herbicide purchase and application costs, reduced loadings in
residues, and less disturbance of soil through compaction or topsoil
erosion.
20. The technology can be summarised as
follows. It works by eliminating crop damage from glyphosate application
to the emerging plant which would otherwise be inevitable. Damage
is avoided by the conversion, using a line developed through a
recombinant DNA technique, of the variety planted to render it
tolerant to glyphosate. Glyphosate works as a herbicide by blocking
the functioning of an enzyme (EPSP synthase) essential for the
synthesis of certain amino acids, without which the plant cannot
develop. The effect of the conversion is to enable the plant's
DNA to express in its leaf cells a variant of that enzyme of the
functioning of which glyphosate cannot block. The variant enzyme
thus offers, through a kind of bypass in the relevant biochemical
pathway, a means for plant development to continue normally, in
spite of the herbicide's presence.
PROBLEMS IN
DRAWING DISTINCTIONS
21. The variant enzyme, itself widely found
in nature in soil bacteria, expressed by the recombinant DNA segment
amounts to about a thousandth part of the soybean's protein which
constitutes about a third of the harvested weight. The variant
is 99 per cent identical in amino acid sequence to the enzyme
the function of which it takes over.
22. This degree of identity presents problems
for effectively distinguishing between RR and non-RR product.
It is what underlies our contention that there is no effective
difference in nutritional terms between the two classes, and that
the two categories are substantially equivalent. It is complicated
by the fact that the genetic variation between any two of the
thousands of varieties of soybean cultivated is likely to be far
greater than that which distinguishes a variety from its RR conversion.
23. This means that the difference between
two soybeans, one of an unconverted variety and the other its
corresponding Roundup Ready conversion, is utterly imperceptible
in a farm or a trade context without resort to sophisticated molecular
analysis techniques. It is further masked by the enormous range
of varieties, converted and unconverted, which would make up a
consignment. Yet it is this difference that is the sole basis
on which the demand for segregation of the soybean production
and delivery system reposes.
24. In the first planting season, about
2 per cent of America's soybean acreage was planted to RR beans,
with about 15 per cent in 1997, 30 per cent in 1998, and 50 per
cent in 1999, with as many as nine farmers out of 10 in some areas
having some RR production in their crop plan. The limiting factor
on RR acreage has tended to be the availability of seed, multiplication
of which sometimes cannot keep pace with demand. As noted earlier,
by early 1999, US seed suppliers had made licensing arrangements
with the Monsanto Company to incorporate the RR event into about
1,000 of their varieties.
THE ISSUE
UNDER EXAMINATION
BY THE
COMMITTEE
25. Segregation based on whether or not
rDNA technology has been used to introduce a novel plant trait
into soybeans which subsequently make up a given batch is of course
what the Committee is seeking to examine. The RR soybean is at
the centre of this issue, but there are many more biotech traits
in the pipeline, which will either reduce input costs in production,
or enhance output characteristics for nutritional or other reasons.
Output characteristics will give rise to crop separation on farm
so as to enable the additional value of the output traits to be
captured. That said, the only transgenic novel trait in the soybean
that has completed the approval process in Europe is the Roundup
Ready event, and it must serve as a model for what will be done
in respect of future practice.
26. The European regulatory background against
which these American developments took place was initially unproblematic.
The principal requirement was a decision authorising the clearance
of such beans for deliberate release into the environment under
Council Directive 90/220/EEC.
27. That decision (96/281/EC) was taken
by the European Commission on 3 April 1996, following a favourable
recommendation after detailed examination from the United Kingdom's
competent authority, and a qualified majority in favour of the
decision from the member states of the EU meeting within the appropriate
regulatory committee.
28. Neither the US nor EU regulatory authorities
saw any need to require separation of RR beans from other beans,
and the harvesting and marketing of all soybeans entering the
bulk commodity system has never therefore involved such separation.
29. However, with the entry into force of
the so-called novel foods regulation (258/97) in early 1998, the
European Commission decided that there were significant differences
between food products produced from crops with two biotech novel
traits in their genetic makeup (RR soybeans and maize derived
from a Novartis insect-resistant line) and decided to enact a
regulation requiring specific labelling of such foods.
30. It is clear that labelling requires
some effort to be put into the task of standing over declarations
or claims made on packaging, and that it implies drawing a physical
distinction of some kind. The process initiated by the Commission
has yet to be completed, and there are significant elements missing
from the structure of its labelling legislation for RR soy material.
There are as yet no indications of verification or sampling methods
which will give any convincing backup to the distinctions that
they wish to see drawn.
31. Debate has intensified in Europe in
the past year, and the Committee will be aware that, as a result,
the US soybean sector in particular has achieved an emblematic
status among European opponents of biotechnological innovation
in agriculture as something of a villain.
32. Misunderstanding, fuelled by misinformation,
and considerable confusion have resulted, partly because the structure
of the industry is poorly understood. There are mistaken impressions
which have gained ground about the respective roles of the Monsanto
Company, of the seed breeders, of the seed multipliers and providers,
of the various sectors of the grain handling and storage business,
of the crushers, of the bulk international traders and of the
financial underpinnings offered by the Chicago futures markets
for the soybean complex. There is also much confusion about the
way in which intellectual property rights are distributed and
drawn upon during the production process.
33. In order to cast light on all of these
aspects, we welcome the opportunity to set forth clearly for the
Committee's information what we see as the key elements to a solution,
and hope that any contribution we can make will be of value.
OUTLINE OF
A PRACTICAL
SOLUTION
34. We wish in the first place to re-emphasise
what we have often said, namely, that the ASA has consistently
favoured arrangements which facilitate delivery of product with
special clearly identifiable characteristics to customers with
corresponding requirements.
35. At the centre of this position lies
the concept of "identity preservation" which has been
applied for over 30 years between, in particular, US farmers and
Japanese importers of soybeans for traditional Japanese food products.
We see no reason why this concept cannot be adapted to meet any
demand that might come from Europe. It is however essential that
European regulators and the European food industry understand
exactly what in practical terms is available under such a system.
36. Hitherto, no standard specifications
or form contracts to underpin this kind of delivery of non-transgenic
beans have been elaborated, and, apart from some tentative fact-finding,
the ASA has not been approached by any customers in Europe with
a view to helping to draft them and recommending them to its membership.
The fact that EU labelling rules are incomplete have left all
of the participants in the chain, producers, processors, traders
and retailers, in a state of great uncertainty as to what legal
requirements are to be satisfied, and as to the practical measures
called for to satisfy them.
37. It seems clear that the success of labelling
in satisfying special customer demands on biotech crops will be
measured by the extent to which it accurately reflects a physical
separation between a commodity flow consisting of a mixture of
beans or meal without distinction between biotech and non-biotech
varieties, and a flow in which measures have been taken to exclude
biotech beans or meal.
IDENTITY PRESERVATION
AS APPLIED
TO NON-BIOTECH
CROPS
38. With this in mind, we understand the
requirement for segregation is predicated upon a demand for food
and feed ingredients that have no element of recombinant DNA technology
in their development or production. Such segregation is understood
to imply separate planting, cultivation, harvesting, transport,
storage, processing and delivery to the final user, with a view
to ensuring that no comminglement takes place between product
of varieties converted by the incorporation of an rDNA event in
their germplasm. In addition, we understand that such segregation
cannot sustain the risk of comminglement of residues in handling
and processing equipment, and in processing machinery.
39. However, even before the beans have
exited the farm, the first implication of the requirement is that
the final user is asking the farmer to contract to produce soybeans
using a specified variety or varieties. This implication has consequences
that cannot be easily glossed over, and must take into account
the varietal purity of seed delivered to the farmer, something
in which established international standards play a role.
40. We feel bound to point out, when we
consider the situation beyond the farm gate, that there are great
differences between segregation, which we see as an arbitrary
division in commodity crop handling and transport facilities,
and identity preservation (IP) which we see as a means of delivering
product to customers with special requirements. The two systems
are further compared and contrasted below and annexes III and
IV contain flow diagrams which illustrate the difference between
the commodity flow, whether under segregation or not, and the
IP method as applied over the past 30 years, notably in food grade
soy exports to Japan.
41. The principal characteristic of segregation
is that it is an arrangement whereby non-specialised crops are
kept separate from other non-specialised crops. For instance,
commodity crops like soybeans and corn are kept separate for obvious
commercial reasons.
42. Commodity crops, such as soybeans, are
developed under general standards set by the industry. Such crops
are not separated because they are produced in volume to meet
general food industry needs. All commodity beans produced to general
industry standards are commingled and enter the same transport
system, including those for export.
43. Segregation under the current commodity
transport system would require large-scale duplication of systems
for growing, harvesting, transporting and processing, without
the level of guarantee of non-comminglement that we are told certain
European customers require.
44. Identity preservation (IP), on the other
hand, is a known and tried system, particularly in trade with
Japan, under which a crop is grown, under contract, and handled,
processed and delivered under controlled conditions, through which
the final customer is assured that the product has conserved its
specific identity from the field to the point of delivery, conceivably
on the other side of the world.
45. IP works because product is mainly transported
containerised, under seal, outside the bulk commodity system,
using seaborne liner services rather than large dry bulk carriers.
The IP concept does not exclude bulk transport, but it is recognised
that the inevitable increased comminglement risk will give rise
to a loss of added value to the customer, and that this loss increases
as batch size gets greater. Maintenance of identity is not going
to be as successful in a 3,000 tonne holdful as in a 20 tonne
container load, although for some grades the customer may find
the bulk conditions acceptable. It should be emphasised that transport
is the most significant element in the additional costs involved
in providing Japanese customers with soy products of food grade
for traditional cuisine.
46. IP crops are intrinsically of higher
value to the end-user, and they involve additional expense, in
inputs and handling, to the farmer. These costs are reflected
in the contracts struck before planting. If however the IP system
is intended to conserve characteristics from the seed as planted
to the processed food as consumed, then steps must be taken to
prevent comminglement all the way through the processing, packing
and distribution chains as well, something that is not a part
of the arrangements with our Japanese customers.
47. Implicit in the idea of IP is the provision
of a tolerance agreed between grower and customer, under which
the contract is deemed performed if not more than a certain percentage
of beans entered into, but Japanese food industry customers appear
in general to regard 95 per cent performance as standard for their
contracts with US growers.
CONCLUDING EVIDENCE
48. We have never seen any reason why IP
cannot be applied to meet a demand for product not derived from
rDNA genetic technology, as long as there is a clear specification,
which carries within it provision for contractual arrangements,
notably on price and on performance benchmarks, between grower
and end-user, which take into account existing rules on the respect
of varietal purity standards in seed and reliable sampling and
analysis rules, and which admit that resort has to be had to obsolescent
herbicidal practice, with application costs and environmental
loadings in excess of what is available to the farmer under the
biotech option.
49. We have sought to place evidence before
the Committee which will enable it to draw conclusions based on
the realities of harvesting and handling large quantities of soybeans.
Our perception of these realities leads us to submit that the
IP system should be seen as the most practical answer to the question
posed by segregation demands. It will, within the limits of standard
tolerances in both seed supply and specific delivery obligations
freely entered into between producers and their customers, offer
a method of responding to a specific demand, at an agreed price,
while not depriving the world in general of the clear cost benefits
of a new technology.
7 October 1999
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