business one to two pesticide applications, compared with a more typical four to five, were required. "Alabama is the biggest success story, and areas of Texas probably had the biggest problems," says Phil Hutton, chief of the microbial and plant pesticide branch in EPA's biopesticide and pollution prevention division. Budworms were becoming increasingly resistant to synthetic pyrethroids and causing catastrophic crop damage in Alabama. Farmers there planted an estimated 60 to 70% of their half million acres with Bollgard. In Texas, where Bollgard made up 3% According to the data, cotton growers reported an average 7% improvement in of about 3 million acres planted, some yield. The company charges a technolo- farmers were so disappointed about havgy licensing fee of $32 per acre. Taking ing to spray that they are suing Monsanto, into account this fee, along with supple- reportedly for misrepresenting the prodmental pesticide applications needed in uct's effectiveness. Monsanto, which exsome areas, farmers saw a $33-per-acre pects to sell more Bollgard in Texas this advantage compared with insecticide- year, responds that the size of the unhappy group is "very minor relative to the treated, non-Bollgard cotton. Bollgard employs a gene from a bacte- number of growers we have." To reach the market, transgenic crops rium, Bacillus thuringiensis (Bt), to produce proteins—to control bollworm and must maneuver through a new realm of budworm—considered among the most pesticide regulation. Up to three federal environmentally safe insecticides. Accord- agencies—the Environmental Protection ing to Monsanto, the use of Bollgard elim- Agency, the Department of Agriculture, inated the need for spraying 250,000 gal of and the Food & Drug Administrationtraditional insecticides in 1996. Cotton may be involved. Under FDA policy, few growers use about $400 million to $500 mil- products require approval, but many companies have sought the agency's blessing. lion worth of insecticides annually. USDA oversees field testing and reHowever, Bollgard didn't kill all the bollworms, and about 40% of the fields views a plant's environmental impact to planted with Bollgard had to be sprayed, determine if it can "deregulate" the plant. says Monsanto. Unexpected high boll- Its research arm is involved in plant genetworm infestations, say most agricultural ics, and it also studies related agricultural researchers, contributed to the need for management issues. EPA gets involved bespraying. Monsanto emphasizes that only cause transgenic plants often produce pes-
BETTING THE TRANSGENIC FARM
First plantings of engineered crops from Monsanto and others are serving as agbiotech'sproving ground Ann M. Thayer C&EN Houston
I
n the past two years, transgenic cotton has hit the southern cotton growing region in a way almost unimaginable for a new product. The Monsanto-developed genetically engineered seed will take more than about 2.5 million of an estimated 14 million acres of cotton plantings in 1997. But this success has not been without controversy. In only the second year since launching its Bollgard cotton, Monsanto may capture close to 20% of the market. Plantings of insect-resistant corn and potatoes and of herbicide-resistant soybeans, while significant in 1996, are expected to increase two- to 10-fold this year. Potential markets are big—transgenic seed sales are projected to reach more than $6 billion by 2005. And Monsanto clearly believes biotechnology is a strong business proposition. The company has "put its money where its mouth is," says one analyst, spending nearly $2 billion in recent acquisitions and, by many estimates, as much or more on R&D over the past 15 years. The first transgenic crops have made significant inroads for a technology that many believe could change agriculture and help address the world's growing need for food. Developers are designing such crops to increase productivity, reduce or alter pesticide use, and offer disease resistance. But engineered crops are cutting wide swaths through uncharted areas of regulation, agricultural management, and scientific understanding. Even as the spring planting season begins, data from the 1996 cotton crop continue to be compiled. In 1996, U.S. farmers planted Bollgard on nearly 13% of cotton acreage. A Monsanto survey of about 40% of farmers who used Bollgard found that 80% were "satisfied or very satisfied" with the product's performance. About 2% said they would not purchase it again.
The 1996 U.S. cotton harvest ofnearty 9 billion lb Is worth about $7.2 billion.
APRIL 28, 1997 C&EN 15
business ticides or, for heibicide-rcsistant crops, are associated with pesticide use. EPA now acts under the Food Quality Protection Act, signed into law in August 1996 (C&EN, Sept. 23, 1996, page 38). The new law changes regulation by, among other things, requiring new standards for pesticide tolerance, considering pesticide risks and benefits, and initiating new reviews of minor-use and microbial pesticides. Microbial pesticides are a linchpin in the approval of some transgenic crops. Although the current U.S. market of about $100 million is only a few percent of the overall pesticide market, biopesticides are popular infruit,vegetable, and certain niche applications. Bt's benefits, especially for food or handpicked crops, are that it degrades rapidly, does not present any human or animal hazards, and does not harm beneficial insects. To protect the continued use of Btbased biopesticides, EPA is requiring companies developing transgenic crops to submit and implement pest resistance management (PRM) plans as a condition of product registration. These plans are attempting to set up conditions that prevent or postpone insects developing resistance to Bt proteins. Until now, PRM plans have not been a mandatory condition of pesticide registrations. Some registrations even limit market penetration. EPA has put restrictions on the amount of some varieties of corn, resistant to the European corn borer, that can be grown in southern cotton states. EPA's reasoning is that, without such limits on some crops, insect exposure to Bt would increase, as would pressure to develop resistance. Specifically for corn, concerns center on feeding by a secondary pest, the corn earworm. The pest, Helicoverpa zea, which has a broad feeding range, is variously known as the cotton bollworm, the sorghum headworm, the soybean pod borer, and on tomatoes, it's called the fruitworm. "Restrictions are part of a normal process of learning how to use new products," says Jerry Caulder, chief executive officer of Mycogen. The San Diego company, majority owned by the Dow Chemical and Eli Lilly joint venture DowElanco, sells insect-resistant corn and several Bt-based biopesticides. "You start with some constraints, then those constraints get looser, and, in the end—when the science is in and you see there are no problems, and people know how to use the products better—the constraints go away." Others are not so optimistic about the 16 APRIL 28, 1997 C&EN
eventual course regulation will take. Some companies are questioning EPA's role in regulating transgenic crops, even saying they'd prefer to have USDA in charge. Mandated PRM plans are drawing fire for singling out transgenic crops and for being required when the scientific basis is weak. However, companies involved tell C&EN that they are cooperating fully with EPA, working with the agency to develop effective PRM plans. "These companies do not want to kill the golden goose," says Sano Shimoda, president of BioScience Securities, Orinda, Calif. "They have spent hundreds of millions, even billions, of dollars to get here. The last thing they want to do is short circuit a very conservative, very responsive regulatory process [by taking] shortcuts, rushing things through, and creating problems that would mount social and possibly political response."
Cotton, corn get 90% of insecticides Potatoes 7% x
Wheat, soybeans
Cottor 55%
Corn 35%
1995 U.S. use s 265 million lb Source: Department of Agriculture
As for carrying out its PRM program, W. Randy Deaton, technical manager for cotton at Monsanto, doesn't believe that "EPA asked Monsanto to do anything that it wouldn't have done itself, because the company sees it as in its best interest." However, in response to the fact that the plans are now mandatory, he adds, "There are other solutions. [Companies] are motivated, and I think we as an industry can help police ourselves in various ways that involve EPA and other stakeholders." EPA held a public meeting in March to ask for comments on the creation and implementation of PRM plans. In May, the agency will hold a similar meeting in College Station, Texas. Then EPA will digest all of the data it has been collecting, including reports from Monsanto and others on the cotton crop and follow-up research, and review its regulatory actions and any adjustments to PRM plans.
"Resistance is extremely important, and EPA takes it very seriously," says Hutton. "Some people seem to think we need to take it more seriously and some people less, depending on where you sit." Whether the agency also will hold a scientific advisory panel meeting, as some have asked, will "depend on what we see from these hearings," he says. Many groups that oppose genetic engineering or that characterize the first cotton crop as a failure are using the regulatory arena as a place to speak out. Ineffective transgenic plants, they believe, will cause the development of Bt resistance among cotton pests that also prey widely on other crops. However, the first, if not the only, case of resistance in open field populations occurred in diamondback moths from the use of sprayon biopesticides. Jane Rissler, senior scientist at the Union of Concerned Scientists (UCS) in Washington, D.C., is critical of EPA for not acting fast enough. "We're taking a big chance by using these management plans and not revising them after the first year," she says. "I'm not saying resistance has developed, but we certainly are setting up the conditions to [create] resistance. We could well be accelerating the loss of Bt." Transgenic plants expose insects to Bt proteins throughout a growing season, thereby increasing the selection pressure for resistance. To counter this, PRM plans can rely on two premises. Thefirstis that the insects receive a "high" dose of a toxin when they feed. The second is that farmers plant some amount of nearby acreage as a refuge in which nonresistant insects can grow and breed with any resistant ones that arise. "Our biggest concern going into the second season follows from what looks to us as a failure in a key component in the resistance management strategy the first season," says Rissler. "It looks like the plan that the companies and EPA were relying on . . . is not working for some pests. What the Bt cotton situation showed was that not all the bollworms were killed, so, in fact, there was not a high dose." "We never represented anything other than the fact that we didn't have a high dose for cotton bollworm," says Deaton. Monsanto says Bollgard offers about 90 to 95% protection against bollworm and a higher level against budworm. "The entomologists that we worked with knew that and even had results to point to. It was published in the
Using plans similar to those for cotton, Monsanto's Bt-based insecticidal potatoes, which target the Colorado potato beetle, generally are considered a success in controlling the pest. PRM plans for corn do not require "structured" refuges in the first few years because the amount planted should be small compared with non-Bt com acres. "You have to realize that for each one of these pests, it's a whole different ball game," says Hutton. Although PRM studies were started during several years of field trials, Hutton says, "it takes quite a bit of time to learn enough about the biological associations and then what's going to happen with the transgenic plants. It's something that has to be looked at and corroborated and repeated in another [growing season]." But Rissler and others believe that more information should have been gathered before using the crops on a large scale. "Our hope has been that they'd wait a couple of years and do more research," says Rissler. "We're not saying 'don't ever commercialize these [crops]'; we're saying 'commercialize them responsibly.' "All this should have been worked out before they commercialized these things," Rissler says. "They should have had Cotton genetically engineered to be Insect resistant (left) [better] resistance manproduces larger bolls than unprotected cotton. agement plans and gotten a higher dose, if posResults from Monsanto's cotton crop sible. It's just an irresponsible use of the "didn't surprise us here at EPA," says Hut- technology." Refuge effectiveness is another major ton. "We knew we didn't have the high expression levels that we did for the bud- area of debate. Farmers planting Bollgard worm. And we had a feeling that there must plant non-Bt cotton on either 4% of may be occasions like this. The idea of re- their acreage and leave it untreated or on sistance management is an emerging field 20% and treat it with non-Bt pesticides. [for] a brand new emerging technology of Opinion is divided on whether these refuge transgenic plants," he comments. Because sizes are adequate. For example, UCS, based it still is reviewing the data, EPA is not on studies from some entomologists, sugmaking any changes to the PRM plans for gests that 40 to 50% of acreage should be non-Bt crops that are left untreated. the current growing season. Of course, crop loss can be significant Current PRM plans are based on the best available data and models, say sup- on the untreated acreage. And farmers, porters, and EPA's PRM work group has as two observers state, are "not in busicalled them "adequate" and "workable." ness to raise [bugs] and may be unmotivated to plant attractive refUges." Refuges always can be made larger, says Deaton. "It will reduce the risk. But the This article is available on trick is finding a balance between that the World Wide Web at http://pubs.acs.org. Click and creating too much cost to the growon "What's New" or "Hot er in terms of the value he extracts from Articles." using the technology."
literature, presented to EPA, and never presented any other way." Rissler calls Monsanto's portrayal "revisionist history." She says that "when the resistance management plans came in [for registration] it looked like ... there was not a high dose. But the agency and the company in a sense 'pretended' there was a high dose" and, she says, approved PRM plans based on assumptions about high doses and effective refuge sizes. Charles M. Benbrook, a Washington, D.C.4>ased agricultural consultant who submitted comments to EPA in March for Consumers Union—a Yonkers, N.Y.-based nonprofit organization that, among other things, publishes Consumer Reports— makes the same accusations against EPA and Monsanto. Consumers Union, UCS, and Environmental Defense Fund have called on EPA to suspend current transgenic plant registrations and halt new ones.
ACSIII PUBS
EPA's PRM work group states in Bollgard's registration that "there are many outstanding data gaps that do not allow the work group to make any definitive conclusions about the potential success of Monsanto's proposed resistance management strategy." The group therefore requires the company, as it does of others with approved transgenic products, to report annually and provide additional research data, specific monitoring plans, and field validation of the refuges and their efficacy. No one argues that gaps, such as those in basic pest ecology, exist in the scientific understanding. Instead, they argue about how these gaps should be filled; what assumptions can be made; how quickly resistance will develop, if at all; and the direction regulatory and farming practices should take in the meantime. The bottom line is a lack of consensus among academic, government, and other scientists about many aspects of PRM. "It's such a complex situation that we don't really have a good handle on it yet," says William H. McGaughey, entomologist at USDA's Agriculture Research Service in Manhattan, Kan. "It's a question of how quick and how successful we are in devising strategies to prevent resistance—it's inevitable only if we turn everybody lose and let them plant transgenic varieties fence row to fence row." McGaughey, among the first researchers to study insect resistance to Bt, calls current PRM plans "experimental." "We don't know yet which way the situation is going to go with regard to resistance," he explains. "It's going to take a few years and more intensive use of the transgenic crops before we have enough selection pressure to really cause resistance to develop." But, he adds, "through regulation or through natural market forces, it may be that these plants are not that widely adopted and, in that case, resistance may not arise that quickly." Company managers are not at all discouraged—in fact just the opposite—by Monsanto's experience. In the next few years, alfalfa, canola, soy, sorghum, and wheat containing Bt genes are expected to reach the market, further increasing insect exposure to Bt toxins. Monsanto and other companies say they are looking at a variety of approaches, including the use of multiple Bt-genes, or non-Bt genes, to address resistance problems. PRM plans will only be effective if growers implement them. Under EPA registrations, companies have responsibility for developing and providing instructional APRIL 28, 1997 C&EN 17
business larger if technology licensing fees were smaller. Shimoda believes these fees will fall as competition increases and "input" traits such as insect and herbicide resisGenetic trait Crop Companies tance become more generic. 3 Insect resistance Corn Mycogen , Novartis, Monsanto, "I think [biotechnology] is extremely 6 DeKalb Genetics widely accepted. It just isn't very deep," Cotton Monsanto says Caulder, with markets limited someMonsanto Potato what by supply and by the newness of Herbicide resistance Canola, soybeans Monsanto products. Many factors—including seed Cotton Monsanto, Calgenec varieties, insect levels, weather, and oth6 Corn DeKalb Genetics , Pioneer Hi-Bred er environmental conditions—will affect Virus resistance Squash Asgrow Seedsc both the need for and performance of transgenic crops. "Most farmers are exSpecialty oils Canola Calgene0 tremely aware of biotechnology and how 0 Slower ripening Tomato Calgene , Monsanto, DNA Plant it is replacing a lot of the pesticides that Technology11 they have used in the past," he says. Increased pectin Tomato Zeneca Plant Sciences What farmers have yet to deal with, a Majority stake held by DowElanco. b Monsanto holds about 40% interest, c Monsanto in process of acquiring Caulder explains, is the "output" side of company, d Majority stake owned by Mexico's Empresa la Moderna. biotechnology, when crops are engiSources: Biotechnology Industry Organization, company information neered to have new protein, nutrient, or oil profiles. The technology will have "a materials to farmers on product use and pany did in 1996, to make sure that farm- drastic effect on the type of product they on how to monitor and report on resis- ers understand the effectiveness of Boll- are selling," he believes, changing traditance. Growers generally must sign tech- gard and the possibility that spraying tional crop salesfromcommodity to specialty markets. Many next-generation bionology licensing and PRM agreements may still be necessary. when they purchase seed. Improper use of transgenic crops could technology crop products, say producThe situation is creating new relation- lead to long-term product Mures, explains ers, are on the horizon. ships between producers and customers. Albin Hubscher, vice president for marketProducers also are starting to make for"The educational process is extremely im- ing at Novartis Seeds. "We didn't spend 10 ays into countries overseas. Among these portant," says Mycogen's Caulder. "And years developing technology to see it go companies are Monsanto, Mycogen, and one of the changes in the seed industry is away in [a few] years," he comments. For Novartis. Although the U.S., Canada, and that companies are putting more and the past few years, Novartis has run tech- Argentina are considered receptive to more agronomists, and not just salesmen, nology learning centers and "challenge transgenic crops, Europe is full of contenout in the field to work with customers." days" to introduce transgenic and other tion, fueled in part by groups such as Greenpeace and the Pure Food Campaign. Monsanto is "very, very pleased with new fanning technologies. the way [PRM plans] were implemented Hubscher anticipates the planting of Although the European Union's policyby growers," says Deaton, calling the lev- insect-protected corn will rise from makers are approving transgenic crops, inel of understanding and cooperation about 500,000 acres last year to about dividual countries are refusing them. How"outstanding." Monsanto "decided to 5 million or more acres this year. Europetake a very proactive stance and encour- an corn borer causes about $1 billion age growers to do the right thing," he worth of damage in the 80 million acres says. The company hired 24 people to of corn planted annually in the U.S. The visit individual farmers, survey refuge transgenic corn seed market potentially plantings, and answer PRM questions. is worth about $1.9 billion per year. More than 40% of Bollgard growers Besides technology fees, companies were visited, and the response from them typically price transgenic seeds at a prevery positive, says Deaton. According to a mium. "But the grower is better off with Monsanto survey, about 98% of fanners these technologies than having to spray properly planted refuges. The 2% who did chemicals or losing yields," says Hubnot were given "clear instructions" and scher. "No customer accepts something told the Monsanto representatives would just for the sake of its being new; it has revisit them in 1997. If farmers do not fol- to bring value—and that is potentially low the PRM plans this year, Monsanto in- greater efficiency." tends to revoke their licenses. More seed, different varieties, and As a consequence of the 1996 cotton new products will become available. season, Deaton says the company has Farmers, according to analysts and manlearned a lot that will "help everyone do agers, are extremely open to trying new a better job of managing their Bollgard products if they increase productivity crop." Growers' expectations for Boll- and offer better economics. Market acgard may have been too high last year, ceptance therefore has not been a major suggest several industry observers. Mon- hurdle, although analysts, such as Shimo- European corn borer, the leading crop santo is trying, as Deaton says the com- da, believe market shares could be even pest, Is the target of transgenic corn.
Genetically engineered crops are reaching the market
18 APRIL 28, 1997 C&EN
Roundup Ready soybeans are selectively resistant to Roundup herbicide.
ever, European farmers are starting to put pressure on the governments, says Hubscher, because "it's a competitive disadvantage not having the technology." The landscape of companies creating and marketing these products also is changing dramatically. Major chemical firms have acquired or taken stakes in all of the leading small agricultural biotechnology companies. Pioneer Hi-Bred, which markets seeds with genetic traits licensed from several other developers and has its own research programs, may be the only remaining independent company. Although the small companies are at least temporarily disappearing, the interest from large companies is considered a validation of biotechnology's perceived value and impact on agriculture's future. For many large firms, the quickest way in was to buy the technology. Monsanto, which already had significant internal programs, still acquired Calgene, Agracetus, and Asgrow Agronomics, and has taken stakes in DeKalb Genetics and Ecogen. To provide an outlet for its technology, Monsanto has established major positions in corn, soybean, and cotton seed marketing through acquisitions or partnerships. Analysts tell C&EN that Monsanto is not yet finished buying. Like Monsanto, DowElanco has a stake in Mycogen, which in turn has its own downstream seed businesses. AgrEvo, a joint venture between German firms Hoechst and Schering, bought the DutchBelgian company Plant Genetics Systems last year. Novartis Seeds, created from the merger of the Ciba and Sandoz businesses, now too has greater market presence to compete. Companies such as DowEanco, Zeneca, DuPont, BASF, Bayer, and American Cyanamid will offer some competition to transgenic crops with new pesticide chemistries. Insect-resistant crops developed by chemical firms also may bite into
their own sales of insecticides. Yet many companies are extending their herbicide positions. Monsanto (soybeans and canola), American Cyanamid and Pioneer (corn), Rhone-Poulenc and Calgene (cotton), and AgrEvo and Pioneer (corn) all have herbicide-resistant transgenic crops on the market. Monsanto gets accolades from analysts for its strategy to continue capitalizing on its Roundup glyphosate herbicide, a more than 20-year-old product. Roundup brings the firm an estimated $1 billion to $2 billion in annual sales. Analysts say the company has been increasing capacity, improving production processes, and reducing costs so that others will find it difficult to compete even when the product loses patent protection in 2000. Farmers planted about 1 million acres of Roundup Ready soybeans in 1996, and expressed an 85% or greater satisfaction level, according to Monsanto. Planting is expected to jump this year to about 10 million acres, or about 15% of U.S. acreage. Most dealers are sold out of the seeds, says Shimoda, and report that they could have sold twice as much. Monsanto also says farmers are planting
about 600,000 acres of Roundup Ready cotton. And the company is introducing limited quantities of cotton engineered to be both herbicide- and insect-resistant. According to Shimoda, both products were sold out by mid-March. Environmental groups are concerned that herbicide-resistant crops will transfer genes to other wild plants (C&EN, Aug. 21, 1995, page 8.) Another objection is that they promote or prolong the use of traditional chemical pesticides. However, changes in farming practices using transgenic crops are showing that farmers may need smaller amounts or fewer applications of some herbicides. Developers of transgenic products say biotechnology is not a panacea but rather one approach among many to meet agricultural needs. Last year was significant because of the large-scale introductions of many transgenic crops. This year and the next few are expected to hold even more importance in whether transgenic crops take hold. Actual field data will flow in from PRM programs and inevitably influence regulation. And the business will start to generate meaningful revenues and profits.^
Poor response plagues U.K. spending survey Despite existing in an economy that is one of the strongest in Europe, the U.K.'s chemical industry plans to boost capital spending only 5% this year over last year's levels, according to a newly released survey of investment intentions of the U.K. chemical industry. Results of the survey, compiled annually by the Chemical Industries Association (CIA), were tinged with caution, however. Uncertainty over the state of the economy and political developments, CIA warned, could wipe out even that predicted rise. Last year's survey, in fact, predicted there would be a 14% rise in spending over 1995, but official figures suggest that—at $3.36 billion—there was instead a 0.6% decrease in real terms. Presenting the survey results, Nick Sturgeon, economist at CIA, noted that the weakness may well continue: Companies indicated increased uncertainty in planning ahead for 1998 and 1999, with attendant spending plans over those years lower than for 1997. Survey forms, which were shortened and simplified from previous years to try to boost response, were sent out to all 200 CIA members in January, said Sturgeon. However, only 40 companies responded—those 40 firms accounted for 35% of
the official estimate of the industry's capital spending in 1996. In 1996, the survey had responses from 79 companies, accounting for 57% of spending. For the most part, the decline in coverage resulted from a lack of responses from the larger companies that had previously responded to a more detailed questionnaire. Said Sturgeon: "We were disappointed." CIA will reevaluate its survey questionnaire and results before next January, he added. Also noticeably reduced from previous years was the attendance at the survey seminar. That reinforces the question forming about the survey: Who benefits from the information gathered? "The companies know what they're up to and how the U.K. fits in their global context. Whose interest is this in, really?" asks one securities analyst who used to attend the survey seminar but did not this year. His answer: The U.K. government is the sector most pertinently concerned with investment plans by the country's chemical industry. Which leads right back to the question of political uncertainty— which gives CIA some serious thinking to do about the future of its survey. Patricia Layman APRIL 28, 1997 C&EN 19
