UNITED STATES DEPARTMENT OF AGRICULTURE

WASHINGTON, D.C.

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ADVISORY COMMITTEE ON :

BIOTECHNOLOGY AND 21ST CENTURY :

AGRICULTURE (AC21) :

FOURTEENTH PLENARY MEETING :

:

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A meeting in the above-entitled matter was held on Thursday, December
14, 2006, commencing at 8:36 a.m., at the USDA, 1400 Independence
Avenue, S.W., Room 107A, Jaime L. Whitten Building, Washington, D.C.
before:

Dr. Michael Schechtman, Designated Federal Official, USDA

Dr. Patricia Layton, Chairperson

[A P P E A R A N C E S]{.underline}

Abby Dilley, RESOLVE

Kathy Grant, RESOLVE

Cynthia Sulton, HW&W

[MEMBERS OF THE AC21 PLENARY COMMITTEE]{.underline}

Nancy Bryson

Russell Kremer

Sarah Geisert

Carol Tucker Foreman

Duane Grant

Margaret Mellon

Michael Dykes

Sharon Weiner

Elizabeth Milewski

Lisa Zannoni

Adrian Polansky

Alison VanEenennaam

Kathleen Jones

Nicholas Kalaitzandonakes

Bradley Shurdut

Carole Cramer

Daryl Buss

Gregory Jaffe

Jerome Slocum

Marcia Holden

Steve Pueppke

Randal Giroux

[PRESENTATIONS]{.underline}

[Page]{.underline}

Bruce Knight, Under Secretary

of Agriculture 51

Dr. Drew Kershen,

University of Oklahoma 62

Dr. Bernice Slutsky,

American Seed Trade Association 143

[P R O C E E D I N G S]{.underline}

DR. SCHECHTMAN: Welcome and good morning everyone. I see we have a few
members that are probably trying to struggle to get here in the fog this
morning. This is the fourteenth meeting of the U.S. Department of
Agriculture\'s Advisory Committee on Biotechnology in 21st Century
Agriculture for AC21. My name is Michael Schechtman and I\'m the
Executive Secretary and Designated Federal Official for the AC21.

To my left and right are our facilitators, Ms. Abby Dilley and Kathy
Grant from the organization, RESOLVE, and Ms. Cynthia Sulton from the
organization, HW&W, who are our partners in helping us make the advisory
committee process work. To my left is the AC21 Chair, Dr. Patricia
Layton, who is also Chair of the Department of Forestry and Natural
Resources at Clemson University. She\'ll have some thoughts for you all
in a little while.

I\'d also like to introduce to you Mr. Jeremy Stump, who is Senior
Advisor to the Secretary for International and Homeland Security Affairs
and Biotechnology. We were also expecting to have for a while this
morning Under Secretary Bruce Knight who is the USDA Under Secretary for
Marking and Regulatory Programs. He is stuck in traffic in the fog and
will be here shortly. They\'re here to follow up briefly on a current
issue we discussed last time, namely, the detection of unauthorized
transgenic rice in commercial long grain rice supplies.

Thank you, Jeremy, for coming and we will thank Bruce when he arrives as
well. I\'d like to welcome our committee members, including one new
member today, Ms. Nancy Bryson, whom I will introduce in a few minutes.
Welcome to our discussion today. And, of course, welcome to our *ex
officio* members, of whom I think three are here at this point. We will,
as usual, have a very full agenda so we ask that when the meeting is in
session conversations need to be limited to those between members. The
public will be invited to participate by providing comments for the
committee and USDA this afternoon between 3:30 and 4:45 p.m.

For any members of the public who request to speak during the public
comment period, and I note that we have no audience at this point today,
nonetheless, should any come I will need hard copies of their comments.

We\'ll be preparing as usual Minutes of this meeting and a computer
transcript of the meeting will also be available within several weeks.
We hope to get all Minutes and all meeting announcements up on the web.
The AC21 has a website linked to the overall USDA website. It can be
reached through USDA\'s new main biotech portal at the main USDA site at
www.usda.gov by clicking on agriculture, then on biotechnology, then on
the committee name.

Should any members of the press appear, they will, of course, be welcome
to speak to us or with any members of the committee at any time during
breaks and before or after the meeting but not while the committee is
actually in session. Dr. Layton and I will be available for questions
and comments at the end of each day of the meeting.

I\'d like to request that all members of the AC21 as well as any
members, people who may be in the audience, and press, should any be
here, please shut off your cell phones and beepers while you\'re in the
meeting room. I\'m doing that as we speak. Bathrooms are located on
either side of the patio just outside this door. Women on the near side
and men on the far side.

For information of members of the public, again, should any be here, let
me indicate that the AC21 has two distinct charges from the Secretary of
Agriculture in its charter. First, examining the long-term impacts of
biotechnology on agriculture and the work of USDA, which this committee
has interpreted to mean over the next five to ten years and, secondly,
addressing pressing specific biotechnology related issues identified by
the Secretary.

The committee earlier this year completed a significant piece of work
dealing with that first charge and the resulting document entitled
Opportunities and Challenges for Agricultural Biotechnology, A Decade
Ahead, was presented to the Deputy Secretary of Agriculture at our last
meeting.

Over the next two days the committee will continue work on its next
project fitting under the second charge for the committee on the impacts
of coexistence and considerations for agriculture. The committee will be
reflecting on its discussions from the last meeting, refining its
charge, considering whether and how to address the relevant portions of
what I might call the old issues discussed in previous reports in a way
that adds some new value and listening to and reflecting on a series of
presentations on a few relevant topics from some outside expert
speakers. I\'ll have more to say about the upcoming work a bit later.

Just outside the room there\'s a table with meeting documents and
background documents on them. Please take only one copy. For this
meeting we have a few background documents which include the official
AC21 charter, the AC21 by-laws and operating procedures, a package of
biographical sketches of all the current AC21 members, all the new, and
the draft meeting summary prepared from the 13th AC21 meeting held on
August 29th through 30th of this year.

We also have as background the earlier two reports that were developed
by consensus in 2005 and 2006 on the table outside. I hope that all
committee members have looked them over in preparation for this meeting
so the copies are largely for the public who may be interested. Finally,
for general information, the follow up on a topic that was discussed
briefly at the last AC21 meeting, there are two press releases stapled
together that were issued on November 25th concerning USDA actions
relative to the detection of unapproved transgenic rice and commercial
long grain rice supplies. One concerns regulatory action taken by USDA
APHIS regarding the regulatory status of the rice line in question and
the other concerns preliminary results of an investigation around the
rice variety; results that were released to help rice growers in their
planting and seed purchases for the 2007 growing year.

Now specific for this meeting we have just have two official topics. The
first, the provisional agenda for this meeting. Second, a preliminary
outline of potential topics for inclusion in the report which was
prepared at the last AC21 meeting. That outline is also found in the
summary from the last meeting but I thought it would be useful as a
stand alone. And then a third document which was prepared by Nicholas
Kalaitzandonakes on this committee since last time, based on that
proposed outline.

Nick kindly volunteered to turn the outline into a preliminary concept
paper or draft work plan by just flushing out descriptions of each items
based on the discussions as captured on the flip charts from last time.
This was circulated to members last week. I\'ll have more to say about
this document later in the morning when we actually turn to the work at
hand, but, for now, let me just thank Nick for his hard work.

Please note on the agenda for this meeting that there are breaks
scheduled this morning and afternoon. For members of the public who wish
coffee, coffee is available in the cafeteria downstairs. Also, on the
agenda, let me note again that we are planning for a period of one and a
quarter hours for public comment from 3:30 to 4:45 p.m. today. We want
to be responsive to the needs of the public and we\'ll see as the
meeting progresses how we need to structure that time.

Members of the public, if you wish to make a comment and you have not
done so already please be sure that you have signed up at the door so
that we can plan that time. Now, from USDA\'s perspective there are a
few main objectives for this meeting. First, the further work on the
coexistence topic framed around the following draft statement of work
developed during the last session and that is, "In an increasingly
complex marketplace, what issues should USDA consider regarding
coexistence among increasingly diverse agriculture systems." Second, to
consider and perhaps further develop a draft concept paper organized
from an outline of issues generated during the last committee meeting
which I mentioned a moment or two ago. And, third, to consider outside
presentations on topics suggested during the previous meeting, including
transportation and infrastructure issues, legal issues, and seed supply
issues.

Let me note that the words in that draft statement of work are just
that, draft, and I know that it will be the subject of further
discussion. I\'ll note for the record that in an e-mail to me one member
has questioned the use of the phrase, "increasingly complex
marketplace."

So, there will be further discussion. We will also do one other thing,
as I mentioned before, offer committee members a brief opportunity for
interaction with our two guests from the Secretary\'s office regarding
the transgenic rice issue. If Under Secretary Knight could make it here
through traffic and fog in time then we\'ll be able to do that and move
our time around a little bit to accommodate his arrival.

Let me give you one other pair of updates right now regarding committee
business. The committee charter is currently being renewed as it has to
be every two years and we expect the renewal to be completed before the
old one expires so we\'ll be well set on that front. That\'s sometime
next month.

Also, as you all know, we put out our annual request for nominations for
the committee in November and we are now sorting through the
applications we\'ve received. The nomination period closed on December
11th but others that are postmarked by that date are still arriving.

I will just remind everyone that members\' terms this year are expiring
either in February or in April because we had a delay a couple of years
back on making one round of appointments. We are likely again to make
two sets of appointments over the next few months. We will try to make
all of the terms end at the same time so that we can get out of this
little bit of extra staggering.

What I\'d like to do now is to finish up my remarks and ask the newest
member of our committee, Nancy Bryson, to briefly introduce herself and
tell us what she sees as her role on the committee. Nancy.

MS. BRYSON: I\'m Nancy Bryson. I\'m an attorney in private practice here
in Washington with a firm named Venable. Prior to that, I was General
Counsel here at USDA from 2002 to 2005 and saw the issues related to
biotech from a variety of perspectives. I also participated in a few
dialogues with some of over the last year on peaceful coexistence.

In private practice now I have a range of clients along the food chain
interested in various agricultural issues and all very much focused on
what\'s going on in the marketplace in terms of different kinds of
production and I look forward to using my expertise and participating
with the committee and giving advice to USDA in this important area.

DR. SCHECHTMAN: Thank you and, again, welcome Nancy. To help Nancy as
well as members of the public in attendance to identify all of our
committee members why don\'t we go around the committee and ask every
member to identify him or herself and just briefly indicate your
affiliation. If we can start in this direction.

MS. DILLEY: Sure. Abby Dilley with RESOLVE.

MS. GRANT: Kathy Grant with RESOLVE.

DR. DYKES: Michael Dykes with Monsanto.

MR. KREMER: Russ Kremer, farmer from Missouri and President of Missouri
Farmers Union.

MR. KALAITZANDONAKES: Nicholas Kalaitzandonakes, University of Missouri.

MR. SLOCUM: Jerry Slocum. I farm in northwest Mississippi.

MR. JAFFE: Greg Jaffe with the Center for Science in the Public
Interest.

MR. GRANT: Duane Grant, a farmer in Idaho. I do a lot of work with the
wheat guys and the sugar guys.

MR. GIROUX: Randy Giroux, Cargill.

MS. JONES: Kathleen Jones, Food and Drug Administration.

MS. WEINER: Sharon Weiner, State Department.

DR. MELLON: Margaret Mellon, Union of Concerned Scientists.

DR. POLANSKY: Adrian Polansky, Secretary, Kansas Department of
Agriculture. I\'m representing the National Association of State
Departments of Agriculture.

MR. PUEPPKE: Steve Pueppke, Michigan State University.

DR. HOLDON: Marcia Holden, National Institute of Standards and
Technology.

MS. GEISERT: Sarah Geisert with General Mills.

DR. SHURDUT: Brad Shurdut, Dow AgriSciences.

DR. CRAMER: Carole Cramer, with the Agri-biosciences Institute of
Arkansas State University.

MR. CORZINE: Leon Corzine. I farm in Central Illinois, primarily corn
and soybeans and feed cattle and past president of the National Corn
Growers Association.

DR. BUSS: Daryl Buss, University of Wisconsin, Madison.

MS. SULTON: Cindy Sulton from HW&W.

DR. STUMP: Jeremy Stump. Good to see you, Nancy. The Secretary\'s
Office.

DR. LAYTON: Pat Layton, Clemson University of Clemson, South Carolina.

DR. SCHECHTMAN: Great. Thank you all. Now, I would like to turn to our
committee chair, Dr. Pat Layton, for your thoughts and guidance as the
committee moves forward.

DR. LAYTON: Thank you. It seems like it\'s been forever since we were
here but it was just recently in August but that does seem a long time
ago because I think I had a whole semester go by since then so in the
world of academics that is a lot of time. Ask any of my freshmen. And,
believe me, it\'s been a tough semester.

I am happy to be back. I reviewed all of the documents again yesterday
afternoon. In fact, I came in purposely to do that because, as many of
you know, I missed one day of last time and the second day, because I
didn\'t get here until three in the morning, I was sort in a dull buzz
all day long and hopefully it won\'t be hard getting out of here this
time as it was last time and I don\'t know why, but, August seems to be
harder month than any other month to get out of D.C. because I didn\'t
get home until like in two in the morning that morning either. It was
like the meeting from I don\'t know where.

But, the meeting went interesting last time and I think that we had a
lot of discussion. Some of you were not here at that meeting. There were
several presentations on the first day. Most of those are covered. All
of them are covered in your meeting summary and I wasn\'t here for those
presentations either so I was, you know, reading to glean and remember
what was said during that period.

The second day I believe we did a lot of work that it boiled down to,
quite frankly, flip chart notes, and I think for some of you who also
might not have been here on that second day you may look at that and go,
well, what did they talk about. Well, we talked about quite a lot and I
think there was a process in which we put a lot of ideas on the flip
charts and then in the afternoon we actually went back and narrowed
those down and said are those really different than that and we came out
with, you know, a sort of a compendium of flip chart notes and I really
want to thank Nick for taking all of those ideas and taking those flip
chart notes and ideas that were presented at that meeting and kind of
putting them into some meat around it in his paper which kind of
explored those topics very well.

However, I still, and I just personally felt like I was sitting there at
the end of the day, and I don\'t know if I was I didn\'t have enough
sleep or not, but, really and read it again yesterday and I\'m like,
okay, how are we going to do this. And, so, in that respect I think we
laid out a very challenging agenda and we have some very interesting
speakers lined up today and tomorrow \-- today \-- they\'re all today
\-- to further educate us on some of those \-- today and tomorrow, I
thought there was one tomorrow \-- to further educate us on these issues
and I think we\'re going to have plenty of time for discussion but I
hope that we walk away from that discussion clearly articulating what we
want to accomplish because the Secretary\'s Office has asked us to
finish this in two meetings, yeah, in two more meetings.

So, as, again, we are all faced with \-- this committee seems to do
this. We get deadlines and we have to work very hard to get things going
and I want to make sure that we get our charge done because that was \--
I grew up saying you can\'t turn things in late and you got to do it on
time so if you give us a relief it would be helpful, but, just kidding.
Okay.

I think that we really do have a really lot of hard work to do today
because, as we know, the last meeting, before we turn a document in
tends to be a challenge and we always make it. I\'m totally convinced
we\'ll make it this time, but, really that means that we have today,
tomorrow, and one more meeting to really form the meat of a paper.

And, so, I am going to ask each of you to dig in your heels and get your
work gloves on and let\'s get this work done over the next two days and
then the next meeting and we have a lot to do but I think it\'s going to
be an extremely interesting paper when it\'s done. I think it\'s also
interesting that ever since we\'ve really took this up we\'ve been
dealing with the rice issue which I think is an extremely interesting
example of coexistence issues.

And, so, when Under Secretary Knight comes in I\'m going to turn to you
all at that point in time and ask you to give us a briefing on that and
any other thoughts you might have about coexistence and how we are
moving down this path. You\'re welcome to add at that time, and please
take my ribbing as just getting us all awake here in the morning and
revved up.

But, because Under Secretary Knight is not here, I thought we\'d move
just quickly and let our facilitators step into the agenda and summary
from last meeting and give us a brief review and then you\'ll sort of
know where we are too and what we have to accomplish this week and then
as soon as the Under Secretary comes in we\'ll turn to you if that\'s
okay.

So, thank you very much and let me start by happy holidays to all of you
and if there are any parties tonight just come in tomorrow right on
time. That\'s all I ask then. Okay. Abby. Cindy. Sorry. Sorry.

MS. SULTON: This will briefly summarize the Minutes or summary that you
got in the mail, e-mail, for the August 29th-30th meeting, the 13th
Plenary Session of the AC21. After the welcoming and introduction of new
committee members at that meeting we did use the Minutes from the past
meeting and also discuss the new topic and in that discussion Dr.
Schechtman provided some statistics on agricultural production for both
organic and biotech crops.

We then had five presentations on coexistence. Allen Williams gave a
perspective of an organic and conventional corn farmer. Don Cameron, a
perspective of an organic, conventional, and biotech farmer, and Caren
Wilcox, CEO of the Organic Trade Association provided the perspective
for that association. Lynn Clarkson spoke on meeting the challenges of
biotech-averse markets and Nick, our committee member, spoke on the
economics of alternative security requirements under conditions of
coexistence.

The committee then turned to the charge and we had a bit of a discussion
about how we might want to reword the charge and at the end of the day
the new language that was drafted and it is still in draft form was
previously read by Michael in his opening remarks.

As Pat said, we then came up with kind of a brainstorming on topics
which resulted in an outline with some sub-categories that Nick then
took and worked out into this draft paper that we have. The committee at
the meeting agreed to start discussions with an examination of what is
happening in the current marketplace. Also, current domestic and
international, it was stated the current domestic and international
marketplace should be described with respect to the six categories and
then the future marketplace considered given several variables.

At that same meeting, the Chair presented the committee\'s report
entitled \"Opportunities and Challenges in Agricultural Biotechnology,
The Decade Ahead\" to the USDA Deputy Secretary, Chuck Conner, who
accepted the report on behalf of Secretary Johanns. We did have public
comment at that meeting from a Ms. Teresa Pope from the Missionary
Society of St. Columban Office for Justice, Peace, and Integrity of
Creation who spoke about such issues as the profound repercussions of
the deliberations of this committee of the world\'s most vulnerable
populations.

As the meeting concluded, and we developed a work plan to go forward and
discuss the next steps, we agreed that the next steps would include the
development of a draft of a work plan to structure the work on
coexistence. We further agreed to review topics identified during the
meeting that might also have been discussed in previous sessions and/or
included in reports which the committee has submitted to the Secretary
in order to determine what, if any, new leads need to be developed on
these topics relating specifically to coexistence. The final
determination was that we would determine what additional information
would be needed by the committee and develop efficient and perhaps
create a means of gathering it.

The meeting concluded with that work that\'s done. If there are any
corrections to the summary at this time we\'d be open to them. If not,
I\'d ask you to please submit \-- oh, yes, Leon.

MR. CORZINE: I have a couple of sort of technical in nature on Allen
Williams\' presentation in the bullets on how he operates. It\'s on page
7.

MS. SULTON: Okay.

MR. CORZINE: If you go down to bullet, one, two, three, four, the
reasons appear in economics is he usually raises his own seed. I know
specifically in corn, and I think maybe in soybeans also, he does not
raise his own seed so you want to clarify that.

MS. DILLEY: Specific to what kind of seed? Is that what you\'re \--

MR. CORZINE: Yeah, like for corn production he does not raise his own
seed. And I\'m not sure if he does for soybeans. Do you know, Russell? I
don\'t think \--

MR. KREMER: I don\'t think he does, no.

DR. SCHECHTMAN: I do recall him actually saying something about raising
his own seeds. We\'ll have to go back and look at what he said and this
is only intended to be a summary of what he said so we\'ll go back and
take a look and see.

MR. CORZINE: I think you should clarify even if he does on some, maybe
some crops. What he raises mostly in that area is corn and soy and he
does not. I mean, I wasn\'t certain. He may on some of his soybeans but
he does not on this.

DR. SCHECHTMAN: On his blue corn as well?

MR. CORZINE: Right. He doesn\'t raise that.

DR. SCHECHTMAN: I\'ll check.

MR. CORZINE: Because it\'s a hybrid. But, it doesn\'t get into those
seed purity type issues, but, it\'s not grown on his farm. And then on
the next bullet he uses, he doesn\'t grow conventional seed, especially
here in the specified corn. He uses, he doesn\'t grow.

DR. SCHECHTMAN: Got it.

MR. CORZINE: Okay. Thank you.

MS. SULTON: Thank you. Any further corrections and modifications to the
Minutes? We then ask that if you have any further ones that you submit
them to Michael by next week so that we can finalize the Minutes and
post them on the web. I\'ll turn this over to Abby.

DR. LAYTON: Can I ask a question?

MS. SULTON: Uh-hmm.

DR. LAYTON: There was a question I had and it\'s just knowledge because
I wasn\'t here for his. He says he has it tested for two approved
biotech events, rootworm and corn borer. Are the genes for rootworm and
corn borer, are they genes to prevent rootworm and corn borer? I wasn\'t
sure how that was phrased.

DR. SCHECHTMAN: It\'s bad phrasing. That should be changed.

DR. LAYTON: Because I\'m sitting there thinking, God, I missed that
gene.

DR. SCHECHTMAN: You\'re right. Resistance to corn borer and resistance.

DR. LAYTON: And are they two separate ones?

MR. CORZINE: Yes. And actually there are several events for each of
those control measures so I\'m not sure and I don\'t think he was
specific on what ones he really did test for.

DR. DYKES: That was the point I was going to raise. You talk about
biotech events but then you mention rootworm and corn borer so that\'s
multiple events so I think for this document it would be important to
point out the kind of events that you test for without reference to
rootworm or corn borer necessarily.

DR. SCHECHTMAN: We\'ll check.

DR. DYKES: Because you\'re testing for corn borer or rootworm. You\'re
testing for the event.

DR. LAYTON: Yeah, that was kind of mine because I read that and I was
like \--

DR. SCHECHTMAN: Well, we\'ll try to clarify these two things.

MS. SULTON: Anything further? Abby?

MS. DILLEY: Okay. So, for a quick review of the basics of the agenda
just to go over a couple of things that have already been said in terms
of what we talked about last time and where we are and then the
discussion and then how the agenda will shape our work over the next
couple of days to move it further along and meeting our charge.

Again, the language that the committee developed last time, I think
there are a couple of different steps that we worked through at the last
meeting. One was to try and wrestle with the terminology "coexistence"
and I believe at that time we had talked about the fact that we were
equating that with fostering choice for producers, customers, and
consumers and using that as kind of the principle, if you will, of how
we were interpreting coexistence.

And if that was the case then looking at issues in an increasingly
complex marketplace what should the USDA consider regarding coexistence
among increasingly diverse agricultural systems and the way we define
that to further develop that concept was looking at what\'s happening
currently in the marketplace and where are some of the potential
pressure points and issues.

Last time we had a series of presentations, a lot of which looked at on
the ground growers, what are they doing in terms of managing different
market demands and what they\'re growing, and how they\'re making
choices between different kinds of conventional, biotech, and organic,
and I think Allen at least grew all of them and Cameron, didn\'t he, or
were there just two?

DR. SCHECHTMAN: No. Allen only grows two.

MS. DILLEY: Okay. So, trying to make some choices and then also Lynn
Clarkson talking about how he manages his customer demand to meet those
market needs and what are some of the challenges there and that was some
of the categories of what we had fleshed out further in terms of looking
at key topics within that.

But, had looked at a lot of issues in terms of where the market
pressures in the current marketplace and then talking about looking
forward, where might either additional market pressures that are already
there and may become or potentially may require market corrections, if
you will, because we started looking at this in terms of its
interconnectiveness and fostering choice with how the market is either
working or not working and looking at some of the other dynamics that
may make those pressures increase or decrease and both at the domestic
levels or the international level.

That was kind of our over-arching framework of what we were looking at.
So, fostering choice among growers, customers, and consumers, and then
looking at it in terms of an increasingly complex marketplace with
diverse agricultural systems and how do you continue to foster choice in
that both now and in the future.

And, so, looking at it that way and then a lot of the discussions were
what are the dimensions of that and that\'s when we came up with a whole
bunch of flip chart notes in terms of what are some of the topics, if
you will, that may be important to look at with regard to doing that
analysis and then we, at the break, had clumped those into six big
categories which I believe is one of the handouts that you had.

So, we had regulatory standards and a listing of things under that and
that was a lot of the discussion that we had talked about and sampling
and some other issues. Compliance and stewardship and had not made a
decision whether that could be lumped into an even bigger category with
the two. I thought we\'d be perpetual lumpers and splitters discussion.
And then the infrastructure issues, market structure, and access,
externalities and information. And those are the big topics.

And, so, the work plan coming out of that and the thinking in terms of a
work plan was to flesh out that just conceptually in terms of looking at
it through a market lens, market economics or dynamic lens and framing
it in that way within those six categories and then having some
presentations particularly in the areas where the committee has not
deliberated.

So, we talked a lot about AP and we\'ve talked about IP and we talked
about other things. Part of our work that needed to take place and
needed to take place during this meeting is looking at what topics
we\'ve already discussed. We don\'t want to reinvent the wheel. Can we
reference previous documents or previous discussions that the committee
has had? There may be particular things relative to this notion of
fostering consumers, customers, producer choice that we need to have a
particular additional piece that needs to be discussed with regard to
coexistence and, so, doing that analysis as well as looking at those
topic areas that we haven\'t had as much information presented to the
committee or we haven\'t had as much discussion and putting that on the
table in order to do that additional analysis of looking at what\'s
happening in the current marketplace and where those pressures may
increase, decrease or what\'s happening with those other dynamics in the
future with the potential introduction of new technologies as well as
the introduction of new agricultural products.

And, so, that was how the overall working framework that we had so for
the presentation we have two areas or three areas that we\'re
concentrating on. One is the infrastructure and transportation and
that\'s Mr. Stitzlein who will be coming tomorrow, that presentation.
Bernice Slutsky will be here to talk about seed access, availability,
those types of issues, some of which we touched on at the last meeting
from a grower\'s perspective, and then other areas is the liability or
legal framework and how that theme \-- what are those issues today in
the current marketplace, how are those tools being used, how could they
be used, not only for the legal and liability issues, but, also for the
dispute resolution I think you also asked him to touch on, and then
thinking about that in terms of a tool for future, how that might be
used for future market pressures, etc.

And then it\'s a looking at those areas in a little bit more detail and
then also by tomorrow afternoon, looking at, okay, what else do we need
to \-- let\'s do the analysis of areas we\'ve already touched on and
what, if anything, additionally we need to address on topics that we\'ve
already covered to some degree and then what are some new areas where we
don\'t have any information that we really need that\'s really critical
to our deliberations on coexistence and what do we need to gather and
come up with some potentially some range of ways we can gather that
information, whether it\'s just through presentations or we use other
mechanisms and then how do we complete our work between now and the goal
of completing a paper by early summer.

So, that was kind of the organization, if you will, or, the thinking in
terms of looking at the agenda. So, if you look at the agenda overall
we\'ll spend some time looking at the paper that was developed based on
those six categories and the premise of if you\'re fostering choice and
you\'re looking at it through a market lens and where there may be
market imperfections or where it\'s working fine, some of that
discussion of the six categories so we get grounded again in terms of
what are we trying to do and how are we doing it.

And then we\'ll move into the presentations. Drew Kershen is going to
talk about coexistence and legal liability, as well as other issues, and
sometimes talking about that particular topic and then after lunch
we\'ll come back and Bernice Slutsky will be here to talk about the seed
accessibility, availability issues and then also we\'ll do some of the
analysis this afternoon.

That\'s why the reports are out there in case you haven\'t had a chance
to think about it to prompt your memory of what we have talked about and
then over the course of the committee\'s existence and looking at those
in terms of where \-- now that we\'ve talked about that and AP and
we\'ve talked about these dimensions of it, what else, if anything, do
we need to talk about regarding coexistence.

We\'ll have some time for public comment from 3:30 to 4:45. As has been
our tradition, if we don\'t need all that time for public comment we\'ll
use that time, I\'m sure, to do additional work and then take a moment
to review status of work through today and get a sense of what we need
to do the next day, if we need to do any agenda fine-tuning at all, and
then we\'ll come back tomorrow and start up again at 8:30.

And, Mr. Stitzlein will be here to talk about transportation and
infrastructure issues, which is one of our categories we had
highlighted, and then continue talking about potential market issues in
the three areas; some of the presentations as well as other areas
depending upon time; and then come back to the paper in more detail
depending on where we get today to make a determination as to how we
want to advance the discussions, whether we\'re going to use the paper
structure, what kind of reorganization or any fine-tuning we want to do,
or, how we build off of that document or our discussions over today,
deliberations today, continuing those discussions.

And then, by time for adjournment have some time to make sure that we
have decided how we want to conduct our work over the next couple of
months and with the notion of our next plenary session sometime in
March, right, we were thinking for the next plenary session. So, that\'s
what we hope to accomplish. Everybody on the same page in terms of what
are we trying to accomplish and what does our work look like between now
and our next meeting and beyond?

So, any general questions about the agenda or how we\'ve organize the
two days? Leon?

MR. CORZINE: I got one. I\'m the one who brought up the issue of the
increasingly complex marketplace. I think we need a little discussion.
It is now the time to discuss that because whether that\'s going to set
the tone as we move forward because it\'s sort of a quasi-mission
statement, if you will, or short-term mission statement maybe is a
better way to put that.

MS. DILLEY: Why don\'t we hold that and Michael\'s going to make that
some introductory comments and then we\'ll just get right into the
premise, if you will, and that goes to your statement as well as the
rest of some of our working assumptions because that would be totally
appropriate to bring it up then, but, I know Michael wanted to make some
introductory \--

MR. CORZINE: I yield to you, Michael.

MS. DILLEY: \-- wise thought.

DR. SCHECHTMAN: I yield to you, Michael.

DR. DYKES: I\'ll hold mine.

MS. DILLEY: That\'s definitely a substantive piece so I just wanted to
see if people had any comments on the agenda and then we can move into
that. Michael wanted to bring that up. So, I need general questions
about the agenda; does it make sense.

DR. SCHECHTMAN: Just a note. We will postpone our brief discussion about
rice until the Under Secretary arrives and we\'ll jump right into this
and we may need to make adjustments depending on his arrival time. So,
we\'re checking on him now. Okay.

So, the committee is now returning to your work project. You and I can
see are anxious to do it. Leon is ready to jump in. And you\'ll recall
the last meeting was the first time that you all worked on this topic.
As I indicated last time, what USDA wants out of your discussion
generally is consideration of coexistence issues among different types
of agricultural production and what USDA will need to think about with
the view towards addressing or minimizing them in the future.

It obviously starts with the premise that a variety of products produced
to different specifications are being grown now and may be grown in the
future as the committee has acknowledged in its previous reports. At the
last AC21 meeting we had a series of, I think, five really excellent
presentations which are now all uploaded on the AC21 website which help
both to frame what farmers are doing in their field now as well as what
some of the challenges are in the marketplace for delivering products
that meet consumer or customer expectations.

At this meeting we are using presentations again from invited outside
expert speakers who delve more deeply into a few aspects of the
coexistence topic, legal, infrastructural, and seed issues. More about
the presentations in a little while.

At our August meeting, in addition to presenting the previous reports to
the Deputy Secretary and to a lot of interesting discussion with the
invited speakers there were a couple of main thrusts to the committee\'s
efforts on coexistence. First, on coming up with a working definition or
interpretation of the charge to the committee that committee members
felt captured the topic in a way that would be appropriate for their
discussions, and, second, on coming up with a list of relevant
sub-topics and a potential way to organize them for discussion.

As I mentioned earlier, a draft statement of the charge is now the
following. In an increasingly complex marketplace, and I know we\'ll
talk about that word, what issues should USDA consider regarding
coexistence among increasingly diverse agricultural systems. I have no
doubt that you will all continue to refine the precise wording of the
statement, but, I think it provides at least a relatively clear and
neutral reference point for discussions.

Let me note that in your discussions last time there was quite a bit of
back and forth around whether a modifier like peaceful or respectful was
necessary or even appropriate and indeed whether the term coexistence
would ultimately be used in the report.

Now, as practitioners of respectful coexistence as members of this
committee, I\'m confident you\'ll be able to come up with the
appropriate term. As part of that discussion though around this language
came from enthusiasm for the overall concept of coexistence as one
fostering choice for both growers and consumers and furthering the
notion that \"respectful\" coexistence may sometimes be challenged when
what is referred to as market imperfections arise. And, again, for the
non-economists on the committee I\'m sure we\'ll have further discussion
of what that means.

Now, also at the last meeting a number of the topics relevant to the
overall charge were identified by the committee and then with the
specific help of Nick Kalaitzandonakes and with his economist market
perspective they were organized into an outline which was provided as a
handout. The main headings which each contain several sub-topics are as
you\'ve heard and seen, regulatory standards, compliance and
stewardship, infrastructure, market structure and access, externalities
and information.

At that meeting Nick also volunteered to flesh out these topics into a
concept paper that the committee might be able to use as a straw man to
work from, something in between a concept paper and a work plan if you
all find it useful. The aim again was at that point just to flesh out
the outline with the specific ideas that were mentioned at the August
meeting, not for Nick to insert his own perspectives.

Now, we\'re particularly grateful to Nick for taking the time because he
managed to prepare this paper not only around a busy travel schedule,
but, also around a case of the flu that knocked him down for a few
weeks, so, thanks again.

I should remind everyone that the paper, of course, has no status at
this time apart from that of a meeting document for your consideration
to determine if and how it might be useful for the committee. Now, in
the last couple of weeks since we received the paper I and the
facilitators wanted to get a reading on the paper from a few committee
members. Knowing what people\'s schedules are like, including my own, we
didn\'t even try to assemble a formal work group to take a look at it.

We did try to contact a few committee members to see if they might have
time for a quick look over of the document but ultimately we only got
one committee member, which was Russ Kremer, to take a quick look at it
along with Nick and me in a quick phone conversation. So, this was not
any kind of formal ballot process of any sort, but, do appreciate the
additional eyes besides me and the facilitators, but, at this point the
document is nearly as Nick wrote it and it will be in your hands for
discussion.

Now, there are two levels at which you might consider discussing it. The
first is without polishing the individual words in the document and
recognizing that all the details would still be up for discussion, are
the general themes that need to be included in the document there. If
the answer is yes or if it would be yes with not too much added then how
should the document be used in aiding the process of preparing the
AC21\'s report.

Is it a document that could serve as a basis for further fleshing out
into the report? Would it be a template for another document that would
look quite different? Would it be used just as background? Those are
some of the questions you need to consider.

The second level, which I would suggest you only after the other
discussion and then only if the document is considered to be useful to
the committee as a starting point or a template, is to then dive into
the nuts and bolts of the text and maybe make it a little friendlier for
non-economists. It\'s the same thing for papers written by scientists
for general audiences.

I\'d like to offer a few thoughts about the work ahead for you at this
meeting. You\'ll recall that at the last meeting you were all given an
assignment to review the three earlier reports to see how they might
overlap on topics that might be under consideration in this current
report and to be able to offer your views at this meeting as to what new
and different the committee might wish to say on those topics that would
be relevant in the current report. We\'ll begin those discussions later
this morning.

You\'ll also have a couple of scope issues to consider for the report as
well, some of them topics that did not get entirely resolved last time.
First, the question of how and to what extent to include consideration
of potential products in food crops that are intended for non-food uses
or to refer to the issue or to those particular products in the
document.

Second. How to frame your discussions in a format that USDA will find
useful; that is in a win for agricultural producers and consumers
context, not the real winners and losers context. And, thirdly, how to
address a future that is, if I can say, certainly uncertain, but, that
at this point seems destined to include an increasing range of new crops
for bioenergy uses at the very least.

Let me indicate again as I did last time that we at USDA place a high
priority on a short succinct report. We\'re interested in what are the
relevant considerations and we do not want to sacrifice progress on the
report or delay it appreciably by struggling to develop consensus
recommendations if that\'s the way the discussion is tending.

Again, we\'d be happy to receive recommendations, consensus
recommendations, but, we would rather get a lay of the land and have you
be able to move onto new work with reasonable speed. I\'d like to
bolster this thought again about the need for a succinct report by
talking about timing. USDA would like to receive the report after two
more meetings of this committee. That is, by late spring or early
summer.

I want to encourage you to take that deadline seriously and bear in mind
\-- bear that in mind as you look over your outline. I would suggest
that what may be necessary are some fairly hard choices, some triage to
focus on what can be accomplished in this window of time. The triage
might be on topics covered or it might be on explanatory material, but,
I would just note that Nick\'s concept paper is already four
double-spaced pages in length just explaining what the topics are.

If, in looking at the draft paper, or at the outline itself, you see
that there\'s too much there, acknowledge that, perhaps indicate what
you can\'t help to cover, and move on. A focus report of some bullet
points would be a good \-- not a bad thing.

With that, I know we\'re going to turn the discussion this topic over to
Abby and Cindy to talk about the current paper and then topics discussed
previously. But, I note that Under Secretary Bruce Knight has finally
made it through the fog.

Well, then I guess we will continue on our discussions here for a little
bit then.

MS. DILLEY: Maybe what we can do is talk about the statements that\'s
relevant to the charge because that\'s important. We won\'t go into the
paper yet, but, we\'ll go turn to on to Secretary Knight and Jeremy
Stump maybe after the discussion of the wording. So, Leon, why don\'t
you go ahead and then, Michael, you had a comment as well on that.

MR. CORZINE: Well, I do think it\'s important that we pay attention to
and have a statement like this that kind of does set our direction of
what we\'re supposed to be working towards but I question the
increasingly complex marketplace statement because you can say it\'s a
complex marketplace now but I\'m not sure that we can say it\'s an
increasingly complex market.

In some instances it may be. But, I can tell you, in the Midwest, I can
show you examples where it\'s going the other way because as products
get approved around the world, in Europe specifically, it\'s less
complex as we have more usage of transgenic products, biotech corn, for
example, and different genetics where it\'s working better it really is
not a complex marketplace issue and especially with the ramp up of
domestic markets, ethanol industry specifically, and the feeding of the
co-products, it is a less complex issue in many areas.

If we\'re going to help the USDA at some point, Michael, I think we need
to have time to take a look at suggestions for USDA on the refuge area
issue and the maintenance of the products that are out there today
because really that is a bigger issue as far as maintaining the
integrity of the technology because the real world as we\'re seeing
15-20 bushel an acre increases with the biotech products that are out
there compared to the same genetics conventional and you have to have 20
percent and if you look at the economics it\'s going to be very
difficult to make sure that we do get that 20 percent refuge.

MS. DILLEY: Let\'s hold onto that refuge piece of it because I think
that\'s getting into the issues. Let\'s come back to the description of
the marketplace because I think that\'s how you wanted to start talking
about this. And I guess one of the questions, I mean, I think we\'re
trying to get this notion that the marketplace is maybe very dynamic. I
don\'t know, maybe increasing complex doesn\'t make sense in terms of
relative issues that there is a notion of the marketplace is changing
more rapidly or keeping up with marketplace dynamics is a little bit
more complex.

That\'s I think what we were trying to wrestle with and maybe that\'s
not from your perspective that\'s not what\'s happening.

MR. CORZINE: From my perspective it is a complex marketplace depending
on what you\'re trying to do and what market you\'re trying to hit. And
that says it. Why you need that in front of it?

MS. DILLEY: So it doesn\'t really need the increasingly. Okay. Randy,
question or comment?

MR. GIROUX: Yeah, just a question. The standard question on scope and
then I\'m sorry I missed the discussion at the last meeting. When we
talked about coexistence in the marketplace are we talking about all
forms of coexistence, producer coexistence, buyer coexistence, consumer
coexistence? I mean, when we define marketplace are we talking about the
domestic marketplace, the food marketplace, the feed marketplace, or the
international marketplace? Answers to those questions very much change
the whole dimension of the discussion of coexistence.

So, before we start attacking the paper and working specifically on
coexistence it might be useful for us to define the scope very clearly
on what\'s in scope and what\'s out of scope. It may help us get to it
quicker. And we may choose not to include everything in scope. So, I
would like to see at your discretion a discussion what exactly do you
mean by this word, coexistence, and I think I\'m hearing marketplace
coexistence, not necessarily producer coexistence. We can discuss that.

And, secondly, when we talk about marketplace are we talking about
international markets, or, are we talking specific segments of the
marketplace or grains and oils.

MS. DILLEY: Can you, just for me, can you define marketplace coexistence
versus the other kinds of coexistence because I\'m not sure what you\'re
asking. I mean, it\'s important and I don\'t know how to get my arms
around it.

MR. GIROUX: Yeah. Also, I\'ll just give you what was bothering me on the
plan when I was flying in is when we\'re talking about market
coexistence, which means the ability of consumers to choose different
types of products, that doesn\'t necessarily mean that producers have
coexistence so it may not be possible that a farmer in the middle of
Nebraska surrounded by GM acreage would be able to produce that. A
product with very low non-GMO content. That\'s just, you know, \-- so,
are we talking about individual producer\'s coexistence, ability to
serve any market they choose or are we talking about the market in
general being able to serve those specific needs of consumers?

Because I think they\'re two different topics, at least in my mind.

MS. DILLEY: I think that\'s a really good question and I think that was
part of the discussion. I mean, the way we had talked about it last time
was looking at all three of those, you know, and maybe that\'s \-- is
that doable to say customer, consumer, and producer can you have
coexistence where other pressures were that makes it really difficult
and those examples you just gave is a perfect example.

So, we were talking about it. My recollection is we were talking about
preserving at all those three levels, not just marketplace, but, also
producer and customer, if you will.

MR. GIROUX: That\'s fine and I don\'t want to rehash the discussion, so,
but I\'d like to see that scope. I didn\'t anywhere in the
documentation.

MS. DILLEY: Yes, yes.

MR, GIROUX: And then I still would like to address what the definition
of the marketplace is at some point.

MS. DILLEY: Yes. And then your other question, I think we were primarily
looking at domestic but we knew we had to talk about international to
come to agree but the primary focus was on domestic, I believe. Maybe
I\'m wrong. You\'re nodding so there has to be bullets when you start
talking about when you\'re looking at it.

You can\'t ignore international obviously so how would we manage that
and then the other piece was, and I think this was, Leon, where the
increasingly complex kind of came in, but, it doesn\'t make sense
whether it\'s a more diverse agricultural systems was introduction of
new technologies, introduction of new products and what happens with
kind of our sense of where coexistence is or isn\'t, what are the
pressures now and then how did that change in terms of looking at new
technologies and products and does that get more complicated or less or
are there different pressures.

So, we need to capture how we\'re defining marketplace and if we\'re
equating coexistence with choice customer/producer then we need to be
explicit about that since that part of our scope and then I think we
need to get some handle on what are we talking about in the marketplace,
maybe saying that it\'s a complex marketplace, it\'s not necessarily the
notion of increasingly complex.

Michael, did you have a comment?

DR. DYKES: If you look at the statement coexistence being an
increasingly diverse agricultural systems I guess agricultural systems
could be defined very broadly to be for the entire food feed chain. But,
I think Randy raises a good point and that is so what are going write
about to send to the Secretary to consider as you look at the issue of
different types of agricultural systems existing in the marketplace and
how much you get into depth in all these things are going to \-- I mean,
your point about bullet points, it may be the place that we just, you
know, list a series of bullet points under each one of these that are
considerations to be thought about because defining the term in and of
itself is going to be an issue as well and I think it has to be
somewhere around choice.

But, the considerations about each of these different aspects with
regards to what\'s happening today and the things that drive all those
things, I mean, the point Leon was making about ethanol, it\'s going to
change. It changes in the markets themselves changes. You know, there
were products that used to go to Europe a few years ago that no longer
go. It certainly changes dynamics around coexistence in the production
systems and in the marketplace.

So, we may not be able to nail all these things down but we just might
be able to identify drivers and factors that influence it so that if you
look at it at any point in time you can come back and review those
drivers and see if they\'re still there and what influence they may be
having at that time because those drivers\' importance and significance
can change over time.

If we had been writing this three years ago we wouldn\'t have been
talking about the impact of ethanol on some of these issues. Ethanol
just driving and changing APHIS productions are going to change things.

MR. CORZINE: Well, since nobody else is jumping out there I didn\'t want
to monopolize here, but, see, it is a complex system. We realize that.
But, I\'ve already said it once. But, really, we do have a lot of
instances where it\'s less complex and I think in the marketplace as
well as out in production as you get tolerances, as you get events
approved. But, also as new events come on then it does create some new
challenges too, so, I guess I just don\'t want to from the outset make
it look like, well, we\'re getting increasingly complex and so we\'re
going to have increasing troubles.

We do have a lot of things in place that are working and it\'s a dynamic
environment, dynamic marketplace that is changing so it is complex. But,
my problem is saying it\'s an increasingly complex. It is a complex. So
I think you can drop that word out and I think it is a lot more
relevant.

MS. DILLEY: I think that\'s fine. I don\'t think there was any intention
of making that equating that to a negative connotation of increasingly
complex but if it comes across that way and your sense is that it\'s
more the dynamic nature of an already complex marketplace, I\'m not
suggesting that that\'s the terminology; that that\'s not necessarily
the issue. I think what we\'re trying to understand is what is happening
in terms of the marketplace currently and then in the future if you\'re
adding these other factors.

Even if we went back to our scenarios piece or the future looking and
went through how\'s the market going to be affected and what does that
do to coexistence that\'s what my sense was, that\'s what we were
thinking about the last time, so, it\'s increasingly complex and I
don\'t think it\'s a particular important piece of it. But, if that\'s
troubling to you, I don\'t know. I don\'t see any problem with modifying
that.

Nick and then Duane and then Nancy and then we\'ll go over to the right
side. Nick?

MR. KALAITZANDONAKES: I\'m going to try to react to both statements, I
guess, from Randy and Leon. From a complexity perspective, this is a
very complex issue because it connects to everything, right. It connects
to production, it connects to supply chain issues, it connects to
consumers and to draw boundaries around any one issue that means that we
choose to ignore something out there.

Is the marketplace any more complex today than it was five years ago,
absolutely it is. It\'s more global. We have asynchronized approvals all
over the world. We have more trades coming in. We have more market
implementation. I mean, we have \-- I mean, there\'s no question that we
are far away from a commodity market that everybody delivered number 2
yellow corn to their local elevator. So, is it a more complex system? It
is.

So, from my perspective, if this document is going to be so succinct and
useful to anybody at the end of the day acknowledging the issues is one
approach, but, to me, it would be a lot more useful if we acknowledged
what the issues are and then at the end of the day decide what are the
two, three, five most important issues that anybody should be looking at
that have inter-temporal significance.

And in my view, there are those issues that are going to have
inter-temporal significance irrespectively of whether you\'re looking at
it not only from just the producer issue or whether you\'re increasing
everybody in the supply chain, whether you\'re looking at trade A versus
trade B and how many additional trades are going to come into the market
and so on.

So, to me, the discussions should go into the direction of here are the
issues, but, then let\'s figure out what are the two, three, four bullet
points that really anybody should be paying, spending most of their
energy focusing on and that\'s where I believe we should be directing
our attention.

MS. DILLEY: Okay. Duane and then Nancy.

MR. GRANT: So, the discussion, I guess as I think about coexistence and,
you know, perhaps it\'s because of we all tend to come at this from our
own perspective and background, the coexistence to me hasn\'t been an
issue that is insurmountable out in the countryside, okay.

So, as this discussion around coexistence has evolved in this committee
I think for me the way to try and find a pathway forward is to try and
decide what is driving the list of opportunities or solutions, if you
will, that we may have to bullet point or at least the discussions that
we may want to bullet point for the Secretary and it comes down to are
we going to address coexistence from the market standpoint or from a
producer\'s standpoint and if the discussion is that we\'ll address
coexistence from the market standpoint it\'s a completely different
discussion than if it\'s being addressed from a producer\'s standpoint.

I\'ll try and rephrase that a little bit. So, if we want to have a
coexistence policy that protects the ability of a market to emerge and
then source products to fit that market that\'s one form of coexistence.
If, instead we want the marketplace to be dynamic and emerge as it will
but then protect the ability of producers to service a particular market
that\'s a different point of coexistence and the solutions, the entire
discussion that you have are different.

I think if we attempt to suggest policies or opportunities to protect
the ability of markets to emerge the discussion would become too complex
and we really won\'t get anywhere and I don\'t think we really have the
expertise to try and figure out what kind of markets will emerge and
which ones won\'t.

On the other hand, if we want to suggest opportunities for producers to
respond to marketplaces, that\'s a narrower discussion and I think it\'s
within the charge of the committee and we could probably get there. So,
I\'d like to see us kind of stay away from questions that arise from a
particular marketplace\'s right to exist, opportunity to exist, and some
of what\'s in Nick\'s paper really kind of focuses on that area of
responding to market needs and I think the marketplace is too dynamic
really to try and put a place of coexistence issue or policies or
opportunities that could respond to the marketplace.

MS. DILLEY: Okay. Nancy?

MS. BRYSON: I would just make a comment that USDA has a really broad
legal mandate in this area which is to look after the interest of
American agriculture which do relate very much to markets and how much
we can sell and support that sector of the economy.

It seems to me, although I wasn\'t here for the first discussion that
the role may be of the word increasingly in the original charge had to
do with the, as you\'ve mentioned, Abby, dynamic or evolving nature of
the marketplace and it\'s not just that it\'s complex. It does seem to
be rapidly changing.

And one of the challenges, it seems to me, for USDA is to figure out how
a big agency like USDA can respond to a dynamic, rapidly evolving
marketplace because governments tend to operate in a slower fashion so I
would vote for some consideration of that word dynamic in there to
capture that idea.

I have to admit to being confused by what diverse agricultural systems
was supposed to mean. I didn\'t know if that related to different forms
of production or what exactly it meant so I was just a little bit
confounded by that.

MS. DILLEY: That was kind of our shorthand way of saying that the
diverse agricultural system\'s not wanting to link it only to what\'s
happening now in terms of organic and biotech and conventional but
looking at it down the road of there may be other agricultural systems
and who knows and do we want to put it around those particular
parameters or do we want to expand it.

MS. BRYSON: So, are we using systems to refer to a particular type of
agriculture like biotech, conventional, or organic?

MS. DILLEY: Actually, it was meant to be the opposite which is trying to
open it up to a broad range of agricultural products and production
systems given that organic kind or production is linked to a process and
others are more kind of driven by testing or standards and I totally get
them confused.

But, it\'s the whole thing that was shorthanded and it doesn\'t mean
anything. It\'s a question and so we need to come back to that. We have
been so shorthanded that it doesn\'t make sense and I\'m sure we\'ll
have to revisit that.

DR. LAYTON: Nancy, sometimes we put shorthand on it and then we have to
go back and actually define it at the end of our topic so that we know
that we were talking about and everyone will understand what we were
talking about.

DR. SCHECHTMAN: I think what we need to do now now that we have gotten
Under Secretary Bruce Knight here is that we will take a short detour
back and have just a little bit of follow-up on the topic that we
mentioned last time which was the issue around the rice varieties, the
unapproved rice variety rather that was detected in long grain rice and
just a little update on where we are on that. You\'ve all received the
new press releases so maybe I can turn to.

DR. KNIGHT: Thank you, Michael, and I think you\'ve introduced Jeremy.
You know Jeremy Stump is here from the Secretary\'s Office as well.
Before I get into the details on rice let me just give you a couple of
over-arching things on my personal perspectives on FACAs and advisory
committees and the role that you can provide which can be
extraordinarily valuable if you really step up and rise to it.

I\'ve had the luxury of chairing a FACA or two. I\'ve had the luxury of
staffing a few of them over the years and there is a tremendous
opportunity there if you can, and I know as I look around the room and I
see very zealous advocates for many different perspectives, the
intersection of that zeal and those various perspectives can be
extraordinarily valuable for the Secretary, or, myself, or, Jeremy, any
of us that are in a position of having to interpret all that advocacy
and bring it together in a manner that makes for the best policy.

Now, the challenge in doing that is you only meet a couple of times a
year and, so, you\'ve got to always be rising to the challenge of
looking far enough out in the future to be able to anticipate what those
things are going to be to be able to look at those.

And an issue like what we\'ve just been through on LL rice 601, you\'re
not going to be able to anticipate the details of that particular issue
but whether you\'re able to provide advice to myself and others as to
have we learned lessons from this that indicate there are places we need
to look at as it pertains to regulation.

Are there lessons learned here from the practices that actually go about
in the field; are there challenges that we see out there in the
marketplace and be able to perhaps provide that advice that when you\'re
in the midst of making those policy decisions one may not be able to see
as clearly and crisply as a FACA can from looking afar and being able to
see that.

And, that\'s why I mention that because I have found advisory
committees, when they hit that zone, to be extremely valuable in
bringing able to provide the agency, provide the Secretary, provide the
Department with the ability to better define an issue, see the
directions of that particular issue, see both sides of that issue and
the dynamic of bringing very divergent opinions together in an advisory
committee.

I found it to be extraordinarily beneficial in having a forum in which
everyone really grows to appreciate the others' perspective, grows to
value the others' perspective and opinions, their facts, their science,
to be able to come together and really be able to discern the right
policy role. And, so, I look forward to seeing the outcomes of this
effort as I do of many of the advisory committees that are out there.

Of all the advisory committees out there you probably have perhaps one
of the toughest jobs in seeing and predicting what the future may be and
what the challenges that USDA may face or anyone may face as it pertains
to biotechnology and each of these issues. I don\'t envy the whole team
here\'s position of shepherding this process because it\'s struggling
and challenging to see above the nuances of the individual words that
you\'re trying to put on paper and really recognize that those words are
symbolic of the much larger discussion that occurs and that\'s why I
wanted to sit in on this.

I apologize for my tardiness. The Gods of traffic were not smiling this
morning. If anybody has the ability to find a biotechnology product that
will speed up traffic it\'ll have immediate worldwide acceptance. I do
want to say thank you to everyone who has, especially the folks from
outside of the Washington, D.C. area who have taken the time away from
family right ahead of the holiday season. There\'s probably no tougher
time to climb on a plane and go sit in a two day meeting than the first
part of December with all the various festivities that occur, so, I
appreciate very much your commitment to being here.

On the rice issue, we\'ve been through several months of difficulty and
thorny issues on LL rice 601. Certainly, the issue that I get the most
questions about is where are we on the investigation and I have to hold
back very confidential at this point but the investigation has proceeded
along very well; has been a very robust investigation; and I hope to be
able to have conclusions from that meeting in the near future.

You all are probably aware, we did release some preliminary indications
a couple of weeks ago as to which particular variety of rice that we
were able find it in and that was Cheniere and only in 2003 and we chose
to make that extraordinary step of releasing that information in a
preliminary manner primarily because the rice industry is wanting to
take steps of its own to make sure that the crop for next year has no
products of biotechnology in it and further cognizant that you need
several months of lead time for the seed industry, the rice industry,
and everybody else to be able to make those steps in the appropriate
manner.

We released that information so that they could tell exactly which
variety they needed to focus on and they could develop their interim
strategies to be able to do that. You also know as well that the company
in question, Bayer, also asked for us to take a look at deregulation of
LL 601 because that was basically the same science, the same product as
has already been approved. We were able to take that through the
regulatory process not unlike what\'s been done several other times
before with products of similar actions.

And, so, that has been approved for deregulation which basically
formally states that it\'s safe for it to be grown in the environment in
the United States. Now, there\'s still a great deal of work to be done
to end up getting these products accepted worldwide. And the impact of
this unfortunate incident is that rice producers are basically shut out
right now of the European market, not unlike the scenario that Leon
Corzine\'s been through before on some other incidents.

The industry is working very rapidly to be able to regain that market.
Many of the other markets around the globe have continued to, to accept
U.S. rice and folks have been very pleased with very measured responses
that have been out there.

I\'d be willing to take any questions folks might have.

MS. DILLEY: Questions? Michael?

DR. DYKES: Bruce, just so I\'m clear on what you just said and I
apologize, I\'ve not read the release, but, LL 601 was found in one rice
variety only in 2003?

MR. KNIGHT: One variety of rice, Cheniere, in the 2003 foundation seed.
So, it was not in the 2004 or 2005 foundation seed; only in the 2000
foundation seed. So, and these are extraordinarily low levels to begin
with. That information provides the rice industry with the ability to
really start drilling down and moving forward.

They are going to be asking that no Cheniere be planted this year to be
able to help bring that completely of the system.

MS. DILLY: Nick?

MR. KALAITZANDONAKES: I had two, I guess, interrelated questions. One
is, I was wondering if you could give us a little bit more detail around
market response, Europe and elsewhere and also whether the issue of
testing and different testing standards in Europe has taught us anything
about testing standards in the future around GMO\'s and adventitious
presence?

MR. KNIGHT: As we\'ve tried to keep the European market open we had a
team between the Foreign Ag Service, GIPSA, Grain Inspection Packers and
Stockyards, went over and were working on standards, those protocols.
We\'ve had excellent dialogue back and forth with the European Community
on the protocols. The underlying testing we got good acceptance and
understanding on. We had quite a gulp on a few of the things such as
sample size and how far to go with the testing in making sure that you
had things that were commercially practicable and there were many
requests for things that we found that were not commercially practicable
to do and would not agree to those.

MR. JAFFE: I understand you said the investigation is still ongoing and
obviously you can\'t talk in details about it. Can you give us an
estimate of when that investigation will end? I mean, is it within the
next couple of months or is that a couple of years for this
investigation?

I guess the first question is an idea of how far along or when it will
end. Secondly, when that investigation is concluded will you make the
results of that investigation public and to the public, the history of
APHIS and BRS in the past has not been to make very much of their
investigations public and usually it\'s been a very long lead time from
when the investigation reach conclusion to when they\'ve those
investigations public and that, from my perspective, has not been a very
public and the USDA has sort of been looked at as sort trying to protect
the guilty party as opposed to using them as a deterrent out there to
prevent future activities.

And, so, I\'d like to get your feeling on this case. It\'s been a very
public incident. What can the public expect in terms of information
about it?

MR. KNIGHT: Pertaining to your question on the time line you gave me a
parameter of two months to two years and it will be completed within
that time. And \-- I just can\'t give you a time. It is going very
rapidly.

I, myself, am very committed to transparency. I have a very high
personal commitment to transparency and I look at each decision as we
move along and try to move as many things into the public domain as I
can. Philosophically in today\'s information age one must be as
transparent as one possibly can be, and for federal agencies this tends
to be a very different dynamic than in which most folks in
decision-making have grown up in, excelled in, and their world
experience has been, but, you have to have a very high level of
transparency.

So, I\'ll look hard at things when I have the investigation on my desk
as to which things I would recommend that we make public.

MS. DILLEY: Mardi?

DR. MELLON: Well, it seems to me that the agency knows \-- I mean, that
the Department knows that you\'ve got, I don\'t know how many thousands
of traits that have been field tested over the last 15 years, many of
which pose the risk of being the next LL 601.

I guess what I\'d like to know is what \-- how does the department look
at this issue? Are you simply going to sit back and wait for the next
time one of our export customers discovers one of these unapproved
traits in product and causes a scandal and then we\'re going to react or
is there some effort to try to figure out the degree to which our
products are vulnerable by doing some proactive testing of our own and
trying to respond in advance?

So, I mean, my question is, are we trying to \-- are we just going to,
you know, pretend that we don\'t think that this contamination is
ongoing and wait for others to discover it or are we going to try to do
something about it proactively?

MR. KNIGHT: First off, as a regulator, we don\'t pretend anything. But,
I have a world of respect for the kind of work and the excellent place
you\'ve been over the years on many of these issues. Now, I\'d welcome
the chance to sit down with you and talk about them, which things you
would recommend that we take a look at that may be more proactive on
some of those things. The door is always open in that area.

DR. MELLON: Thank you.

DR. SCHECHTMAN: One more question and then I think you had the next
thing on your calendar. I know we need to take a break to be able to go
on and have our first speaker on time.

DR. DYKES: Bruce, I guess one of the things that we as collectively in
the food chain have talked about for a long time the necessary
adventitious presence standards, somehow to formalize this and to say
here are the rules of the game, and here\'s how we\'re going to do early
food safety assessments so when these kind of things occur we\'ve got
something, we\'ve got a policy in place.

The OSTP is capable and that group made a stab at that, but, EPA now,
something two months ago, basically current policy. Are there ongoing
discussions today inside the three collective agencies as to really,
really are we going to put forward a policy on adventitious presence so
we\'ve got some road map on how we\'re going to deal with these things?

Because I think it\'s to Mardi\'s question as well and we\'ve been, I
believe, years at it.

MR. KNIGHT: Those questions are ongoing. That work is ongoing. At USDA,
you know, I\'ve only got so many staff. 601 diverted a lot of folks off
of that, you know, but, that remains a priority for us and it remains a
priority for the regulatory team at APHIS.

MR. STUMP: Bruce, if I could, I think this is to Michael\'s question as
well. Part of my role, and, again, maybe I should go into a little bit
of what I\'ve been asked to do, I\'ve worked with the committee before
in 2001 and as you obviously know some of you from my time on the Hill
and of course my different roles here at the department was asked to
take over our Homeland Security office, the creation of it after 9/11.
Before Bruce was confirmed I tried to steer the ship of MRP as the
Acting Deputy Under Secretary.

Secretary Johanns has asked me to come back to the Secretary\'s Office
to be in a senior advisor role on several issues, more in a coordination
internally, but, also to have an external voice. I\'ve worked in the
past quite a bit with NSC, the agency, and OSTP and with that I think my
role now is to help bridge that gap between our regulatory partners,
EPA, FDA on issues such as AP.

So, part of my new responsibilities is to kind of be that liaison to the
other departments and to OSTP to try to drive that force further. So,
I\'m committed to doing that. As I mentioned before, I\'ve got a couple
of other small issues of avian influenza and Homeland Security I\'m now
responsible for too. But, I do want everyone here to know that I\'m glad
to be back, glad to be back working with all of you, my door is always
open.

DR. SCHECHTMAN: Thank you both very much. I think what we\'re going to
do is deviate slightly from the agenda because we had to do that thus
far and maybe just take a ten minute break and we\'ll that time to get
set up for the presentation that will be in a little while and also
we\'ll have a little bit of time to go back on the agenda to get caught
up to that point.

MS. DILLEY: Right after the ten minute break we\'ll come back to the
paper and then to the presentation at 10:45.

DR. SCHECHTMAN: Thank you both very much.

(Whereupon, a brief recess was taken)

DR. SCHECHTMAN: Thank you all. We\'re going to be revising the agenda as
per usual and moving directly into our first presentation for this
meeting. Again, we\'ll have two presentations today, one before lunch
and one after and we\'ll start our presentations with the presentation
from Professor Drew Kershen who is the Earl Snead Centennial Professor
of Law at the University of Oklahoma. Professor Kershen will speak to us
today about coexistence and legal liability issues.

Thank you, Dr. Kershen, and welcome.

DR. KERSHEN: Thank you very much. Let me begin with just a very brief
introduction of myself. I grew up on a farm in Hereford, Texas and my
father still lives on that farm, a former stockman. And I have been
teaching agricultural biotechnology law and policy since 1997 is when I
began to focus on it and I now teach a three hour course on this in the
law school. That\'s on a rotating every other year.

And I try to keep up with agriculture biotechnology on a daily basis,
particularly the legal aspects of it much more than the scientific
aspect. And, so, I have done some work about this already. My topic is
coexistence and legal liability, a topic with which you all are fairly
sophisticated so some things I\'ll say will assuredly be simplistic and
things you\'ve heard before, but, I think they\'re worth stating.

Of course, when we\'re talking about coexistence we seem to raise
adventitious presence which simply means the presence of things in crops
that aren\'t meant to be there and that can be a lot of things, insect
parts, it can be plastics, it could be wood, it could be weeds, it can
be other crop seed, those kind of things. And, really, in chemicals it
really means spray drift of pesticides, herbicides, things like that.

With respect to transgenics it means pollen, it means parts, it means
seeds, it means co-movement and inter-mixture and I think all these are
relevant to our topic of coexistence and liability because it turns out
that coexistence is something that\'s been happening for a long, long
time in agriculture.

Adventitious presence is something that\'s well-known in agriculture and
we really have two agencies that have dealt with this for a long, long
time, the Association of American Pesticide Control Officials who dealt
for years and years with the issues of pesticide and spray drift of
pesticides, herbicides, those kind of things, and, of course, the
Association of Official Seed Certifying Agencies which have dealt with
the issue of purity for seeds and they had to deal with coexistence for
a long, long time.

And, so, it\'s both historical and widespread, the whole issue of
coexistence, and has been for a long time in agriculture. And what this
means is when I returned to coexistence I heard the themes already said
this morning. I think they\'re really primarily three things in
coexistence. First of all, there\'s good husbandry. That means following
good agronomic practices, best management practice, using appropriate
technology, taking appropriate care of your equipment, proper
maintenance and use of that.

There\'s neighborly cooperation that is the need for communication
between farmers and one another. As you can see, my talk is heavily
oriented towards the producer end and that was one question raised, when
I raise about coexistence primarily at the farm level. I will talk a
little bit broader than that, but, primarily at the farm level and so
we\'re talking about neighborly cooperation, communication between
neighbors about what they\'re planting, about what they\'re doing. A
friendly attitude towards one another between neighbors so that they
present facts, are trying to be tolerant and understanding of one
another and so we have neighborly attitudes, a friendly attitude and an
apology and a prompt response.

Neighborliness means at times if you make a mistake, making an apology
and having a prompt response. And then thirdly we have the issue of
quality of choice so that farmers can choose to farm the way they see
fit for their particular situation and more particularly we\'re talking
about in this context is conventional, organic, and transgenic
agriculture as three separate systems go. I don\'t mean separate in the
way we sometimes talk about them, but, they can be viewed as three
separate systems.

So, what I really want to say and re-emphasize again is is that
coexistence issues are not unique to biotechnology. They\'re simply not.
There\'s been spray drifting for a long time. There have been other
kinds of coexistence issues in agriculture and then finally one that I
haven\'t mentioned at all about, which I have written, is the whole
issue of straying animals and the whole issue of how you handle straying
animals.

And, so, they\'re all very similar and very analogous and we have a body
of law that deals with this. What I want to say in terms of spray drift
very quickly is the AAPCO people have \-- did a study in 1999 about
spray drift. You can see the results a little bit up there. In a three
year period it averaged about 2,800 complaints a year, but, of those,
only about 800 a year really led to any kind of administrative action.
Most of them were really just neighborly communication kinds of issues
that once there was some discussion it disappeared. About 800 lead to
regulatory enforcement. That\'s regulatory enforcement in terms of the
kinds of written warnings or administrative penalties or something like
that.

And, by the way, the AAPCO people deal not just with the farmers. They
also deal of course with pesticide for households and things like that,
so, not all these are related to agriculture, but, the significant
number of the largest number of complaints comes from the agricultural
sector.

And, yet, despite this number, and I didn\'t do an exact detailed
research of this, but, I did a quick search of this, despite this, there
were simply one or two when pesticides are recited again to be used
widely relatively I consider it a minuscule number of neighbor versus
neighbor lawsuits. That\'s not administrative, this is actual physical
lawsuits \-- actual lawsuits that have been filed in law courts seeking
some kind of damages.

Since 1946 I have found 71 cases. Now, I\'m not saying there aren\'t
more, but, I don\'t there are very many more and the point of that is,
that\'s about, as it says, 1.18 cases per year. Well, being a practical
lawyer, I quickly decided I\'m not going to specialize in pesticide
cases to make a living. And, so, this is what I can really say.

Now, coexistence is also, as I said, not unique to biotechnology and it
exists in agriculture generally. We have two ongoing coexistence
disputes right now being discussed by the Departments of Agriculture.
One is in California. It\'s an issue between seedless and seeded
mandarin groves and that is, as you can understand, seedless are not
meant to have seeds. Seeded mandarin groves produce seeds. They grow
side-by-side, the pollen inter-pollinates. That means the seedless
mandarin groves wind up at times with some level, small, but, some level
of seeded mandarin oranges in theirs and there\'s no easy way to detect
this and it does affect market and they\'re having quite a discussion
right now in California about how to deal with seedless and seeded
mandarin oranges where they are grown one against another and how you
begin to solve that.

I\'m not going to get into that, but, just to say the fact exists.
Secondly, in Oregon right now, the brassica seed growers. Brassica is
cabbage, things like cabbage and broccoli and those things. There\'s a
big industry of the seed growers, particularly that goes to Japan, and
what\'s happening is neighbors are beginning to grow canola,
non-transgenic canola and canola is a form of brassica, and it raises
real problems about them meeting their standards when they ship to Japan
because Japan is trying to insist on a zero tolerance for canola seed in
their brassica seed, whether it\'s GM or non-GM canola. They don\'t want
canola.

And, so, it\'s raising a real problem and I\'ve actually been on the
phone several times with the Oregon Department of Agriculture as they
called me and asked some questions about this on this issue.

MS. DILLEY: Are these legal cases?

DR. KERSHEN: No. This is right now just a neighbor to neighbor and
they\'re trying to sort of, I\'ll use the word, mediate it through the
Oregon Department of Agriculture. And, so, we have those two kinds of
cases right now which have nothing to do with biotechnology, but, raise
basically the same and identical issues, not quite the same, but, pretty
well identical issues.

Then, of course, we have the recent spray drift case which maybe all of
you are familiar with out of Minnesota about a year and a half ago or
two years ago, which was foraging bees that went on the timber land and
picked up Sevin pesticide on the timber land and then came back to the
hives and the hives began to die and so it\'s kind of a pesticide drift.
I decided the case there and I decided the large articles that have
about it. It\'s wonderful to read. I think it\'s just great fun. It\'s
fun to read about foraging bees, at least to me, and a about a spray
drift case.

But, anyway, so that\'s a recent spray drift case that we talked about.
Now, we come to transgenics and talk about the coexistence in terms of
transgenics. Well, first of all, you do have pollen drift and pollen
drift really depends on understanding the flowering and the seed
dispersal and really the biology of the plant and really the distance of
20-30 meters for corn, and I use this because this is the only crop
that\'s grown in Europe right now that\'s approved for growing and is
growing in Europe is transgenic corn, at a distance of 20-30 meters the
adventitious presence level is below the 0.9 percent of the EU label at
20-30 meters. That\'s basically a crop the distance of this room.

It is below the low of adventitious presence for the EU labeling and at
50-60 meters it\'s below the adventitious presence that is proposed,
haven\'t made it up yet, that is proposed for the seed standards of the
EU which is 0.3 to 0.5 percent. That means that pollen doesn\'t go very
far and it means that with distances in terms of if you have pollen
that\'s like this that they can be met at relatively short distances.

And other crops are quite similar. You can think in terms of distance.
You can think in terms of buffer rows. You can think in terms of offset
plantings so that you get different flowering time. You can think of
typical agronomic factors that impose basically hardly any cross at all
and distances then that in terms of this. And, by the way, where I grew
up, this 20-30 meters is basically what is the distance from one field
to another if you\'re crossing a county road which means if you\'re
separated by a county road you\'re basically have gotten below the
adventitious level of the EU labels and a little bit greater distance
below the EU proposed seed label.

I also want to say, as of July of this year, and I don\'t think it\'s
changed since July, I know of only one case of farmer versus farmer
relating to adventitious presence between an organic farmer actually and
a transgenic farmer that actually occurred in Germany and it related to
whether the neighbor farmer could participate in some transgenic field
tests that were going on and the transgenic farmer \-- the organic
farmer was unsuccessful in that lawsuit.

There are no other farmer versus farmer lawsuits in the United States or
Canada or as I know of around the world. There\'s that one lawsuit,
farmer versus farmer. Now, we do have some lawsuits and I\'m talking
about lawsuits that have been filed and things, we do have a successful
lawsuit of course in the StarLink situation which was against not a
farmer but against a seed developer and that was for an unapproved
variety of a transgenic form and that is a successful lawsuit.

There are have been two other lawsuits that have been filed along the
same line against the seed developers. The sample case which also grew
out of a StarLink point in which the court basically dismissed that at
least as a class action but also dismissed it basically on all the
causes of action and it was, I would say, considered unsuccessful and
Hoffman v. Monsanto Canada which is on appeal which is a class action by
organic farmers, particularly organic canola farmers in Canada, that,
thus far, has been unsuccessful in Canada too.

And, so, those are the lawsuits of which I\'m aware. Furthermore, with
respect to the compliance requirements, overall the compliance has been
high by American farmers. And that\'s also been true in Canada. So, if
you\'re talking about transgenic crops the compliance has been good and
there really have not been farmer to farmer lawsuits. There have been
some of these major lawsuits which we\'ll talk about in a minute,
particularly with LL Rice.

Let me just show you. This is from Europe. This is not transgenic corn
to non-transgenic corn. This is pollen flow to non-fit regular yellow
corn and you can see the distances here and you just follow it out. if
you start at the one meter you can see the one meter has quiet a bit of
intermingling. When you finally get to ten, however, at the bottom, not
very much. By the time you get to 17 at the top, which would be
basically for you your top right, notice, very little. This is below the
adventitious presence at 17 meters.

And, so, the next slide, another example of it, you can just see the
distances, one, four, eight, ten twelve, seventeen. As soon as you get
to 17 the adventitious level is just very, very low and it\'s below the
adventitious presence levels for the EU labeling and for the EUC
standards.

From all this I draw the following conclusions. That is, that in terms
of coexistence, zero tolerance is not achievable without a ban on
chemical or transgenic agriculture or the ban on another form of
agriculture going back to the seedless mandarins or the brassica case.
If you\'re going to insist on zero tolerance then basically somebody\'s
got to be forced out of business.

But, by following reasonable, agronomic practices, conventional,
organic, and transgenic agriculture can easily coexist and you\'ve heard
from farmers that when you listened some of those farmers that you heard
from last time, I\'ve heard them speak on panels too, they clearly do it
on their own farms much less with respect to their neighbors.

And, so, they get along with themselves quite well. They aren\'t divided
down the middle of their body and in some kind of cognitive dissonance.
They\'re doing quite well and so can other farmers in terms of following
reasonable agronomic practices. If you\'re going to have stricter
standards than what the EU or other states then I consider that to be
contractual standards and that to be at the risk of the processor and
the farmers who sign those contracts. They should be accountable for any
stricter standard because they\'re going after the premium that flows
apparently with signing that contract.

Let me just talk about some legal liability issues very quickly with you
and that is the major one I want to talk about right now I think today
is, in fact, the issue of markets and exports arising out of a case or
the situation with the Bayer Crop Science and the LL Rice 601. As you
know, there have been a number of class action lawsuits. There was a
motion filed just yesterday or just a few days ago, I don\'t remember
exactly which, to consolidate these, but, the two major ones that I\'m
familiar with at least are the Gerridge Farm case (sp.?) which is in the
Eastern District of Arkansas and the Kenneth Bell class action which in
the Eastern District of Missouri.

And I quoted there in the next line one of the allegations of the class
action law suit. And I\'m going to read it because I think it\'s worth
reading and then I\'ll make a comment about it. "Given the structure and
operation of the U.S. grain production and handling system, Bayer\'s
testing, growing, storing, transporting, and disposing of LL Rice 601
was improper."

If that is upheld, which is basically an argument for zero tolerance, it
means you can\'t even test the crops, much less grow them, store them,
transport them, or dispose them. It means you can\'t even test. It means
basically arguing for shutting down the use of transgenics in the United
States and elsewhere. That\'s one of just many, many paragraphs in the
petition in one of the cases.

The petition in the section part is about 30 some pages long so this is
just one of the paragraphs, but, if that were to be upheld it basically
means a zero tolerance and basically means no one could afford then to
even engage in the testing much less the commercialization of this.

The reason I say it is because what they\'re primarily seeking is what
is considered in law pure economic loss. That is, they\'re considering
loss for market fluctuation, that is what happened on the Board of
Trade, and for what happened in terms of the loss of the export market
in terms of Europe and the problem with that under American law,
Canadian law, and, by the way, most of the law around the world, and
I\'ve done quite a bit of looking at this and some other people I know
have too, is that that\'s not a compensable loss.

In almost all legal systems around the world that kind of fluctuation in
market or loss of export markets does not involve a physical damage and
because it doesn\'t involve a physical damage it has not traditionally,
and I\'m not saying the courts wouldn\'t change their mind, but, it has
not traditionally been considered to be a compensable loss for a lawsuit
and, as I say, that\'s proved not only in American law, Canadian law,
it\'s proved basically around the world.

And the reason for that is that when we begin to think in those terms
you begin to realize the damages would be indirect, speculative, often
the result simply of speeding up people\'s special sensitivities, those
kinds of things, and the courts then say, it\'s just too vaguely remote.
There\'s a concept in law called proximate causation. Not saying you
couldn\'t say this isn\'t a cause of that. It truly is. but, whether
it\'s a proximate cause in the sense of is it too remote, too indirect,
too speculative, for that reason pure economic loss for a long, long
time, not related to transgenics, just a finding in transgenics has not
been a compensable loss.

I also want to say that this case differs significantly from the
StarLink case because LL Rice 601 was not approved at the time that this
occurred. LL Rice \-- the transgenic event had been approved in several
crops already and LL Rice 601 itself has now been deregulated as, you
know, from just reading the papers and I\'ve read the notice in the
Federal Register, but, also as we\'ve heard from the Deputy Secretary
today, it\'s been deregulated.

Because of that, this is a quite distinct case in my opinion from the
StarLink case and I\'m not involved in these cases. No one\'s called me
about these cases.

All I\'ve done is read about them. But, I would just say this. Just
because there\'s been these lawsuits filed should not lead to the
conclusion there\'s going to be any liability imposed. That\'s not to
say Bayer won\'t maybe try to settle it, won\'t say aren\'t trying to be
helpful right now by managing them, but, the huge damages that are being
asked you shouldn\'t think that this is a winning argument in a class
action. In fact, they\'ve got to overcome major hurdles right there at
the pure economic loss, which, by the way, is what they lost \-- which
the class action group lost on in the Monsanto decision.

I go into that a lot if you want more about that, but, that\'s not the
point of this quick talk. Let\'s just go on then. Thank you.

MS. DILLEY: Before you go on, I\'m not a lawyer and I\'m not quite sure
I follow legal argument, but, I get the physical damage piece, but, if
they have a testing, growing, storing, transporting, and disposing
program does that mean it\'s okay or is there some notion it was
inadequate given the structure of the U.S. grain.

I don\'t understand that statement and whether \-- how it links to
physical damage. I\'m just not understanding the legal \--

DR. KERSHEN: Well, the argument that that relates to is that their basic
argument as I saw it in that part of the petition was that Bayer knew
that there would be difficulty in the European market. Because they knew
that difficulty and because they knew the system could not be fooled,
say, foolproof, that because of that it was even improper to go forward
with that period.

And now that doesn\'t mean, however, it\'s physical damage because all
we\'re talking about there is I said market and that\'s the pure
economic loss. In fact, it\'s my impression that very few of these
farmers will be able to establish any kind of physical damage, meaning
any kind of pollen drift or actually commingling.

MS. DILLEY: So, that\'s separate from their systems were inadequate and
that may be the case?

DR. KERSHEN: Well, there are other allegations. For example, there\'s an
allegation about what\'s called maintenance, per se, that is, whether
Bayer followed the regulatory requirements. But, as you heard this
morning also, this relates \-- we\'re talking about sales that occurred
in 2006 it looks like, and we\'re talking about a situation, actually
the foundation seed is the 2003 foundation seed. There\'s a lot of
problem with causation in there and Bayer has clearly in their answer
said we\'re not the cause of this, we didn\'t do this, we don\'t know
who did, but, it\'s not us. And, so, there\'s lots of issues going on
there that are clearly in debate is what I\'m saying.

So, just so the lawsuit\'s been filed you shouldn\'t jump to any
conclusion about liability in either in terms of causation, in terms of
liability under standards, or, particularly for the damages side.

Now, let me just go on here. I want to talk about organic certification
and some of the issues about spray drift. First of all, this one just
shows it\'s the easiest because this is from the NOSB standards. This
just shows that organic, if they believe that they\'ve come in contact
with impermissible pesticides they certify or can test but it\'s the
certifier\'s duty to bear the cost of that and to consider that cost of
doing business which means they figure that in there through the cost of
what they charge their growers as far as their services. And, so, it\'s
not put on the person who sprayed the pesticide, it\'s put internal to
the person who is seeking the organic certification.

Next one talks about organic certification and spray drifts. This one
relates to tolerance and there\'s a tolerance of 5 percent of the EPA
tolerances. Five percent of the EPA tolerances as a maximum level of
pesticide. They have set \-- organics has set tolerances for pesticide.
They\'ve also set tolerances for conventional grain and this shows that
you can set tolerances and we haven\'t in the United States yet set
tolerance about transgenic, but, it\'s clear they do it for other
prohibitive substances and, so, it can be done is what I\'m saying.

Why don\'t we just talk about the pollen drift in organic certification.
Adventitious presence through pollen drift does not affect organic
certification either of the form or of the crop itself so long as the
organic operation has not used excluded methods and takes reasonable
steps to avoid contact with excluded methods which means if the organic
farmer has taken reasonable steps and then has adventitious at a low
trace level, which is what we\'re talking about, it cannot under
American law, by the way, not under Canadian law, not under European law
either, affect either the organic certification of the farm, or of the
product and, so, you can\'t lose your organic certification for these
reasons in terms of pollen drift.

MR. KALAITZANDONAKES: I understand that the European organic standards
are product-based, not process-based. Is that \-- am I mistaken on that?

DR. KERSHEN: The European standard in terms of organics are basically
process-based like ours. That is, it\'s the method by which you grow.
It\'s the way you go about doing things. They are not involved in
testing products about certain thing and the easy permission \-- it\'s
been more debated in Europe than in the United States what I\'ve just
said, but, the EU Commission has stated that the adventitious presence
is basically the same standard as is applied in the United States. You
didn\'t intentionally use them and you\'ve taken reasonable measures to
avoid them, and, in fact, there\'s no need to test for adventitious
presence in terms of \-- now, I\'m only talking about approved crops.

And, so, it\'s a very similar standard to what exists in the United
States. And it is process based in the sense that we\'re not out there
testing the product. We\'re not verifying the product as having certain
kinds of quality standards of lacking certain kinds of those kinds of
things. It is very similar to the United States in the process. That is,
the method by which you grow, yes, in terms of that.

Now, this is just to state that in 2002 by the Organic Foreign Research
Foundation, I don\'t know of any recent updates, but, 92 percent of the
organic farmers or 938 respondents had no direct costs involved at all
related to transgenics. Four percent had payments for testing season
inputs, but, as I said, they have an obligation to avoid these
substances. They have an obligation to take reasonable methods.

And, so, this is not really additional cost to them. This is where
they\'re taking legal methods to comply which has obligated their
obligation under their certification standards, under their commitment
to grow organically.

Two percent reported positive tests. All these were \-- I don\'t have
all the tests, but, assured that they were all trace amounts and then
four percent claimed some kind of a market loss. I\'ll talk about that
in a minute. But, these are almost assuredly all from voluntary contract
risk from product specification.

What this means is in terms of lawsuits and legal theories and the
likelihood of recovery is that adventitious presence alone almost
assuredly is not going to be a compensable claim. De minimis spray drift
or commingling, which is unavoidable, is not going to resolve in legal
liability. I would be very surprised for it to pull that and the fact
that we\'ve had no lawsuits over it I think is a good example of that
aside from the ones we\'re talking about, market loss, that\'s a
different thing, farmers versus farmers.

Morever, to gain end you must prove adverse effects, some kind of
significant damages. I could go into the individual fact-finding but
it\'s a factual matter that\'s unlikely on most fact patterns and,
again, when you get to the market loss you\'re talking about clear
economic loss which raises real questions about what is compensable law.

And if you were to think of significant adverse effect really the spray
drift if more likely to cause it than would transgenic crops, and, as I
said, there have been very few spray drift cases. And, furthermore, you
must identify the responsible party. Causation is going to be a tough
issue in all of these cases. Very tough.

Which of all these farmers is the source of it and, so, you\'re going to
have real problems in terms of meeting these requirements in my opinion.
Now, you can bend to the theories, strict liability. That\'s about ultra
hazardous activities. I think courts are highly, highly unlikely to use
that theory for transgenic crops. However, a few states do use that in
their four theories for a spray drift, but, almost all is limited to
aerial spray drift as opposed to a farmer spraying with a boom out in
the field.

You can think of negligence. That it\'s fair to use reasonable care.
This is the standard most states use for spray drift cases. This is the
standard they use for other kinds of adventitious presence such as
straying animals generally as some form of negligence. Straying animals
almost often gets into trespass which is a strict form of strict
liability or doesn\'t have a kind of reasonable standard of care to it.

But, most states do use negligence for spray drift and that would be
possible for transgenic crops too. What I\'m emphasizing here though is
this is no different than the way farmers have always operated under, an
obligation to engage in good husbandry; an obligation to be reasonable
in the way they farm and that\'s a known standard and that drives home
the point to me. I also think there\'s no reason for a different legal
standard for transgenics than there is for other kinds of adventitious
presence kind of problems.

Trespass. I think it\'s unlikely to result in damages. Just to give you
an example. Your neighbor\'s dog runs across your yard, maybe even does
something he shouldn\'t do in the yard, but, when they do that, yeah,
you maybe have the damages of going out and cleaning up but is it worth
fighting a lawsuit on that; are you going to get more damages, not
likely.

And, so, you have to realize, trespass, you can maybe theoretically
establish trespass, but, you\'re going to have de minimis damages and
it\'s not going to be worth a lawsuit over that and then you have now
you\'re going to ask are pollen like bees because the Minnesota case
ruled that bees, foraging bees, should not be considered trespassers. At
least that\'s one way you can read the case. Is pollen more like bees
because the reason the bees are not being considered trespass is nobody
could control them. That\'s just the way nature works. Does that sound
to me a lot like pollen flow? And so I\'m wondering now whether bees are
going to be a trespass claim in light of the case in Minnesota and
nuisance courts are going to insist on reasonable accommodations.

That\'s the whole point. Neighbors get along with one another. They\'re
going to insist on reasonable accommodation. No one is going to be
imposed 100 percent, zero tolerance on somebody else. That\'s not
reasonable accomodation. That\'s saying we\'re going to get rid of you.
And, in fact, I don\'t think courts are going to do that and, moreover,
courts will not protect unique sensibilities. There\'s a doctrine in
nuisance law which says we will not protect unique sensibilities. Unique
sensibilities may well include organic sensibilities about the
sensitivity of inner markets and I think courts are unlikely to protect
those. So, I don\'t think nuisance is going to work.

This gets to legal obligations under contract obligations, yes, there
have been farmers who have suffered losses because they couldn\'t meet
their product specifications under contract. But, the key to this is
they voluntarily accepted these contract specifications. They
voluntarily agreed to these products and they did it because they were
going to get a higher premium from meeting that standard. At that point,
it\'s on the former him or herself to meet those product standards.

They have to bear the cost and failure to meet your contract is your
risk that you take when you enter into those contracts and that has led
the International Federation of Organizations of \-- International
Federation of Organic Agricultural Movements to issue this statement in
2002 in their meeting. "Organic certifications are not implied as a
GE-free certification." And it goes on.

"Organic producers and associations shall actively inform the consumers
of this fact to ensure fair marketplace claims and to avoid future
debates about consumer deception." In effect, what they\'re saying is,
be careful about your contracts, be careful about what you promised
which means the following.

If a farmer promises a GE-free and doesn\'t meet it they accepted the
risk on their own and they really violated with the IFOAM said which is
don\'t get into any of those kind of contracts.

This goes to my last point. Farmers who engaged in certain kinds of
contract relationships need to pay attention then to honor their
contract specifications and they have to ask themselves very carefully,
can I meet those specifications and the real proof is, because I\'ve
advised farmers, including organic farmers, don\'t make promises you
can\'t control. Because you can\'t control it, you\'re at risk of other
people. If you make a promise that it\'s going to arrive in Rotterdam
GE-free, boy, you\'ve just given way the farm because there are a lot of
people who use Rotterdam but they ain\'t allow you.

And, so, I had a farmer who recently sent me some contracts and I sent
them back and said, strike these clauses. If they won\'t do it, don\'t
enter it. I said, because they\'re putting a risk on you and, so,
you\'ve got to understand your contract specifications and you\'ve got
to understand the following situation that you cannot control and
that\'s really the issue is if you\'re going to be above and beyond what
the legal standards are, including the European legal standards, then
you have to be aware that I can meet those standards and product
specifications and that risk is on me at my cost.

It\'s not my neighbor\'s obligation to help me meet this standard so
that I can run a high premium. But, traditional legal rules being the
party seeking the higher premium is the party who has to bear the cost
and that\'s true in Europe too. They\'re having that debate right now,
the coexistence debate going on in Europe, though they are tending to
put the burden on the transgenic farmers. I agree. I read that. But, the
traditional rule, they\'re the same. It goes against the traditional
rule for all the reasons we believe that\'s the way it should be done.
That\'s not \-- I don\'t think is what\'s going to happen in the United
States.

And now we\'re just into the references. I have written a number of
articles on this. I\'ll be glad to answer questions on this, but, the
rest is just references and i really do thank you for giving me this
opportunity to appear before you and I hope I\'ve given you some
information and I\'m hoping for questions as long as Michael says
questions are open.

(Audience applause)

MS. DILLEY: Carol.

MS. FOREMAN: I\'m Carol Tucker Foreman with Consumer Federation of
America. And my question is going to the Chair, Michael. If Mr. Kershen
is correct and these issues are all settled under law I\'m not sure why
we are spending our time as an advisory committee addressing these
issues.

If they are not settled and my family down in Arkansas thinks they\'re
not, so, then I have to ask what speaker is going to address the
position of the Gerridges and the Bells and other folks who thing these
issue is not settled? That\'s the question.

MS. DILLEY: You want to address that now?

DR. SCHECHTMAN: Well let me start on this and then I think we\'ll come
back to this. I don\'t think that all of the issues around coexistence
\-- I mean, I certainly don\'t think that we at USDA think that all of
the issues are settled. Whether there is a question around whether there
is \-- whether there are unresolved legal issues that may be a subset
and I don\'t claim to be the expert on the legal side to be able to
address that.

Now, I don\'t know if you\'re asking for only or specifically about the
legal issues or about the whole package of things related to
coexistence.

MS. FOREMAN: It seems to me that in each of these cases Mr. Kershen\'s
raising them because clearly there\'s a controversy at some level about
them. If that\'s the case then I want to know who is going to address
the other side of the issue if it\'s in dispute?

DR. SCHECHTMAN: I don\'t have an answer for that right now. We\'ll have
to take that into our discussion.

MS. DILLEY: Duane.

MR. GRANT: So, in much of your presentation, Dr. Kershen, you drew
analogies between a spray drift and the long history going back to 1948
of how spray drift issues have been resolved and you drew analogies
between how those issues have been resolved and how you believe that
transgenic trespass, if you will, would be resolved. And I don\'t mean
to be too technical with that term, but, you get where I\'m headed at.

Yeah, we\'ve had transgenic corn for 10 years and in a very limited
number of crops. Do you think that the precedent is clearly established
at this point or do you think that perhaps as transgenic crops are
introduced in other wider range of farm products that that analogy will
hold true, I guess is my question?

DR. KERSHEN: I think that to a significant degree it will hold true,
but, it won\'t hold true in every situation and I do think the \-- I
don\'t know how it will play out, for example, as we expand into
transgenic crops for biofuel. I don\'t know. I don\'t know how it will
play out because I don\'t know how courts will respond in terms of
classifying, for example, growing biofuel.

The second thing would be also true with respect to pharmaceuticals,
plants that are growing for pharmaceuticals. Courts may be more willing
to classify that as some form of over-hazardous activity and be more
willing to classify that, therefore, as a strict liability situation and
that may give rise to more problems because part of that is going to
also relate to the issue of the kinds of regulations and those
regulations will be different and, therefore, not only is the strict
liability, but, also then what\'s called the negatives per se. That is
negatives proved by the fact that you didn\'t follow the standards
imposed for that particular kind of crop.

So, I do think that there\'s a likelihood that those could well turn out
to be different. So, I think the underlying analogy is still going to
hold in many ways and the underlying biology is really not going to
change. That is, it\'s very likely that the corn, you know, if it were
growing out and was being transgenically changed so that it\'s a better
corn for ethanol or a better corn to produce some kind of pharmaceutical
that that corn, in terms of its pollen drift and stuff, is not really
going to differ from what\'s here unless something very unique happens
with respect to the genetics.

But, as a practical matter, it\'s not going to change the science about
how far a pollen flows, the wind, what wind does to pollen, the
likelihood of actually being viable when it reaches the target, the
likelihood that it can compete once it reaches the target and those
things really aren\'t going to change.

So, I think a lot of the analogy is still going to apply as correct,
even though occluded there will be distinct and different issues that
will arise, particularly arising out of how it\'s regulated and the
obligation of five of those regulations and then how courts respond in
terms of whether they think this is unique in a way that is what we
consider ultra-hazardous for an area or a region.

So, I do think that you have a spectrum here. I think crops will be
really more at one end, biofuel is probably the middle, and I think
pharmaceutical crop will probably be more at another end. That\'s not to
say we won\'t reach the same result and all, but, I say it is to say
that I think we can think about them and likely may think about them
differently.

MS. DILLEY: Randy.

MR. GIROUX: First of all, thanks a lot for clarifying in my mind some of
the legal issues around coexistence that I\'ve had. It may not be the
whole answers, as Carol mentioned, because with anything in law it takes
two lawyers, so, to have an argument. But, I think it does raise, and I
thank you for raising this so I can make this comment, if not question,
about coexistence and distances.

In your presentation, and admittedly, if only looking at the producer,
it also echoes the conclusions of the food safety authorities regarding
coexistence in Europe which talks about that at a certain seed
tolerance, at a certain distance, coexistence is possible and to meet
the labeling and traceability requirements of European labeling on
finished food products.

That\'s a frustrating conclusion for my sector of the industry because
it suggests that consumers buy their food products at the farm gate and
while the farmer can meet a .9 percent coexistence levels negates the
whole sectors of the industry that exists beyond the farm gate to where
the consumer buys a branded food product off the shelf, you know, a
retail store.

And, in fact, if you look at the same report it diminishes or almost
negates the level of adventitious presence that is going to occur as
part of storage, handling, processing to the client consumer as to where
the labeling actually applies, not on the farm gate product. So, thank
you for raising that, but, I do raise in this committee, there is lots
of AP that goes on along the supply chain. It does not end at the farm
gate and, so, when we do talk about adventitious presence and
co\--existence we need to talk about coexistence of supply chains, not
farmer coexistence alone, particularly if we want to talk about meeting
labeling thresholds, what thresholds for approval.

So, just thanks for bringing those slides up which allows me to make
that comment and make sure everybody on the committee understands where
my position is on that. Thank you very much.

MS. DILLEY: Greg.

MR. JAFFE: Yeah, thank you very much for your presentation. I had a
question on the slide that you talked about with the Bayer crop sign
from the LL Rice 601 lawsuit and I was confused about a couple of
things. Again, going back to what Abby had asked you. You had so said
that under this cause of action that it be put in that it be said that
they could never meet that standard and I wasn\'t sure what you meant
there. I mean, what happens if events came out that Bayer had, in fact,
violated the testing requirements for doing their testing of LL 601 and
that\'s the reason that it got out there, or, what happens if they
hadn\'t properly managed their seeds to the standard of care of the
industry and were grossly negligent or didn\'t, you know, meet the two
standards of care. Wouldn\'t those be factual situations that would fit
into that situation?

We don\'t know the facts. I don\'t know any of the facts as to how those
seeds got out and how the rice got into the thing so I guess I was
confused because as a lawyer I think I could come up with factual
scenarios that would fall within that that you were so saying this was a
tautology, but, that statement just couldn\'t be wrong, you couldn\'t
meet them; that if you met them it meant that the whole system \-- it
was independent of Bayer\'s actions.

And it seems to me it is relevant to Bayer\'s actions in particular.
That was my first question.

And the second one is you sort of also said LL Rice 601 is now an
approved commodity in the U.S. and somehow that changes basic different
than StarLink and I don\'t \-- the U.S. doesn\'t approve commodities so
I\'m not sure what you mean there and if you\'re talking about the
recent action that USDA recently took, StarLink had been deregulated by
USDA so I\'m not sure how \-- again, I wasn\'t sure of your analogy here
as to why \-- what was done by the USDA recently makes this different
than StarLink.

MS. DILLEY: So you want to know actions that will be relevant in terms
of a legal situation and then also how this is different from StarLink.

DR. KERSHEN: Yeah. The paragraph I took was \-- the comment\'s correct,
that we don\'t \-- they\'re going to develop lots of facts and those
facts aren\'t developed yet. And negligence, per se, is one of the
allegations. Now, one allegation being that they violated the standards
and regulations and the protocols from the gauging the testing and, if
that were proven, then I think that\'s a different case and then that
wouldn\'t fall.

This paragraph really came out of where they were talking about the
structure of the market and the allegation right then. Since I don\'t
have it, I can\'t remember exactly what was the title of the cause of
action, but, I picked this out because in light of this it is clear in
the way it\'s planned that they\'re really arguing that you simply
can\'t do it, period, because if even if you complied with all the
standards; even if you\'re not the cause of it; that you knew that it
wasn\'t foolproof and, therefore, it cannot be done in light of the
impact on the market and that\'s the pure economic loss kind of
situation.

And, so, I did pick it out, but, you\'re right. There are other causes
of action in there that are very fact based that are going to be subject
to being \-- subject to proof or non-proof, whatever is going to turn
out to be. That it\'s going to continue to have issues about causation.
It\'s going to have issues about damages because I said there are pure
economic loss damages and it\'s going to have a number of issues related
to liability and damages in that sense.

So, but, this was taken \-- you\'re right, this is taken not out of
context, I picked this out, but, it doesn\'t give you the full context
because I didn\'t put the full context on it. But, this allegation here
was in a claim which basically means that if this allegation were to be
upheld that you really simply have to stop the testing. That\'s
different from the perception. There are lots of facts. I\'m in complete
agreement with you.

The case isn\'t over. I\'m not predicting where the case is going to go.
I\'m not involved in the case. And, so, there\'s going to be lots more
to go on, but, it\'s also not an open and shut case the other way in any
sense that liability is likely to occur or not likely to occur. This is
just subject to argument and it\'s unresolved right now.

And, so, I agree with that. The second thing about why, about what did I
mean about the approved commodity. Under the StarLink situation, what
happened is what the court ultimately held there is that because it was
an unapproved crop, meaning it was not allowed for food use, it was
approved by the USDA, but, because it involved a situation that wasn\'t
approved for food use that it made it an adulterated product under the
FDA and, therefore, it wasn\'t marketable anywhere.

And the court really focused on that and used that as a linchpin of the
decision which led over into the settlement of approximately 110 million
dollars. I understand there was actually more money paid in that
overall, but, the settlement was about 110 million dollars related to
StarLink.

What I think here is, it\'s my understanding, and maybe I\'m wrong, but,
my understanding is the FDA is saying that this is safe. The FDA has
said there\'s no problem with this being eaten. It\'s been approved for
food there. It is approved by the USDA. It\'s been approved by the EPA
because it was in other crops and in that sense, as the Secretary said
this morning, the markets have gone on.

In fact, I read yesterday that the markets are up in terms of exported
rice to a number of countries around the world that haven\'t been
concerned like Europe. It doesn\'t mean there hasn\'t been a loss in
Europe. It just means the market is up.

That\'s why I get to this issue about how speculative all this is
because the market, in terms of the actual product being shipped abroad
is actually higher right now of rice than last year at this time. So,
you get into all of those kind of factors. And the point again is that
this, therefore, is not a crop which is an adulterated crop which can\'t
be sold anywhere. It\'s being sold around the world. It\'s being sold in
the United States right now and because of those things I think that
this case is substantially and significantly different.

Now, that\'s a factual difference. We can make arguments about whether
that fact ought to really count or not, but, that fact I think matters.
It matters to the listservs that I\'m on and the lawyers I talk to,
which is a pretty broad range, they think this is a significant fact and
fact difference in terms of this, between Liberty Link rice and between
StarLink corn.

MR. JAFFE: Just if I could follow up for a second. You\'re right that
StarLink was not under the FDCA because it was a pesticide and
pesticides are required to be approved and have a tolerance set and the
pesticide was approved but a tolerance was not set for foods and so we
were not allowed to have it in human consumption.

DR. KERSHEN: That\'s right.

MR. JAFFE: Liberty Link is not a pesticide so it was not required to get
an approval at EPA. EPA only approves pesticides \-- under the FSPCA EPA
does not require to get an approval from EPA and FDA only approves food
additives and this wasn\'t a food additive. So, there has been no \--
there is no approval at all that this is safe by the FDA, just so
you\'re clarified.

There\'s a voluntary consultation process \--

DR. KERSHEN: You\'re probably right about that.

MR. JAFFE: And, so, FDA has the burden to show it\'s adulterated. Any
biotech developer, if it\'s not a pesticide in a crop can sit there and
put that into the marketplace and only FDA has to come forward and show
that that\'s adulterated. There\'s no approval process or whatever.

So, when you said it\'s now an approved commodity, I was confused
because there is no approval for that at FDA. It was recently
deregulated at USDA but StarLink was also deregulated at USDA and the
deregulation has nothing to do with food safety. It only has to deal
with whether it\'s a harm to agriculture or the environment and that
dealt with whether it could be planted so until USDA deregulated it, it
wasn\'t allowed to be legally planted all over without getting a permit.
Now it can be legally planted. But, it has nothing to do with the food
supply for whether it\'s safe to eat.

And I wanted to clarify \--

DR. KERSHEN: No, but, the FDA has said and all of USDA that they have
seen no problems in terms of this and this has been in other crops
that\'s been used and it\'s been approved and used.

MR. JAFFE: It hasn\'t been approved in those other crops as a food. The
Food and Drug Administration, that doesn\'t mean they\'re not going to
take an action, they\'re not saying it\'s adulterated, they\'re not
saying \-- they\'re not going to go after any of those companies or try
to get that food off the market, but, they have not approved it as safe
to eat.

And I just wanted \-- your slide said it was an approved commodity. If
you\'re talking about the FDA, it\'s not an approved commodity. If
you\'re talking about being allowed to be planted it is at USDA.

MS. DILLEY: Let me go to Russ and then Michael, Mardi, and Nancy.

MS. JONES: Just a clarification before you \--

MS. DILLEY: You have to speak up.

MS. JONES: Just a clarification. Greg is correct. This wasn\'t approved
by FDA because FDA does not approve biotech products. They do approve
food additives and we don\'t believe that LL Rice 601 contained food
additive. In addition, based on the information that we received from
the company we did issue a statement, it\'s on our website, we don\'t
think there\'s any safety issue associated with consumption of this LL
Rice 601.

MS. DILLEY: Russ, and then Michael, Mardi, and Nancy.

MR. KREMER: Thanks, Drew for being here. I\'m Russ Kremer with the \--
representing the Farmer\'s Union. We work a lot with farmers, moderate
and smaller type farmers on the market development so they\'re
developing a differentiated type product and work with all of these
classifications of products and crops. And one of our, you know,
classifications of customers are those that are looking for, you know,
zero tolerance or more tightly regulated type products and, of course,
we have some producers in areas that are even looking at, you know,
getting some local control, local ordinances, and county ordinances
passed so they could have this area where they could possibly grow these
type products.

I guess my question is, as there are more local ordinances that prevent
the plantings of transgenic crops, things like that, how does that
change the landscape as far as the, you know, legal issues and liability
issues in that particular area? You know, do you see it changing?

DR. KERSHEN: I don\'t think it changes the legal landscape about
liability. I do think it changes the issue about how you go about
coexistence and that\'s why I agree with Michael that the legal issues
about coexistence are a subset; it\'s not the whole ball of wax. And
there are other ways to go about coexistence, including farmer
districts, grower districts, those kinds of things.

We use growers districts already in several kinds of crops. We\'ve done
it, for example, with canola for quite a while. There\'s a difference
between oil canola, cooking oil canola, and industrial oil, rapeseed and
we\'ve done that through farmer districts. There are other kind of
farmer districts that also exist in some and that\'s being imitated to
some extent in Arkansas and Missouri with respect to at least in
Missouri the ability of farmers to voluntarily band together and form a
district.

And, so, it doesn\'t seem to change the issue about legal liability so
much as it changes the issue about how farmers are going to coexist and
if they were to form, for example, a cooperative or a grower\'s district
if the state law authorizes a grower\'s district then, of course, you
have to comply with that and failure to comply with that might then give
rise to liability because you didn\'t comply with that.

It\'s a different way of going about coexistence. Now, at the borders
though you\'re going to have the same kind of issue just like in the
canola example and rapeseed example, there are fields of rapeseed that
abut cooking oil canola, but, the tolerance level is, I think, set at
two percent and it\'s always way, way below that and within just a few
rows, I mean, it just drops off to nothing so when you mix the seed
together you\'re way, way below that tolerance.

And, so, when you\'re thinking in terms of the tolerance you have to ask
where are you measuring. Are you measuring outside one row only, are you
measuring the field, those kinds of things, because it will drop off as
you go through the fields significantly.

So, I think grower districts is one thing you all should think about. I
think some farmers may want to move that way, particularly if they\'re
talking about things like come after our seedless mandarin or our
brassica. I know in Oregon one suggestion they are talking about there
is the creation of a brassica seed grower district and everybody in that
district would be required then to avoid planting of canola, whether, as
I say, a biotech canola or whether it\'s just regular canola.

And, so, they\'re thinking about going that way in terms of \-- to try
to resolve this issue. It raises other issues as all choices do. It
raises other issues about what about those farmers who don\'t have seed
contracts. Will they have to have them? Are they being \-- are they
having their land imposed upon? How do you solve those kind of things?
But, grower districts is one way to think about this.

There are a number of ways to think in terms of grower districts and we
do use those in the United States already to a limited, a very limited
degree.

DR. LAYTON: I have a question. Can I ask that question real quick just
to clarify a grower issue? Is that crop based only so that if, for
example, you were growing something that is insect pollinated, it\'s a
whole different thing than a wind pollinated growing district?

DR. KERSHEN: I hadn\'t thought in those terms, but, it is basically, as
I understand it, primarily a seed only crop oriented. It\'s not \-- it
isn\'t the district governs all the crops. It\'s generated towards one
crop and that crop is because of need for safety or market
differentiation, those kind of things.

DR. LAYTON: So, things, a crop meaning things that cross each other
because brassica and canola are different crops but they\'re a cross.

DR. KERSHEN: They\'re closely related.

DR. LAYTON: Thank you. That\'s just what I want to know.

MS. DILLEY: Michael, then Mardi, and then Nancy.

DR. SCHECHTMAN: Yeah. I wanted to follow up actually on Carol\'s comment
from earlier and if your analysis of the legal situation is correct it
may be that in many of the cases farmers who are uncomfortable about
some aspect of their ability to farm the way they\'d like may have
difficulty in making particular kinds of legal cases.

But, I think it\'s clear that certainly at some level discomfort exists
out in the countryside among some farmers at least and I guess the
question is that obviously have not been so many cases of farmer to
farmer lawsuits, but, I think there is some discomfort. You have a sense
of what the level of that kind of problem is that doesn\'t reach the
level of a lawsuit and, if that is out there, what kind of mechanisms
short of lawsuits might work to help resolve them?

DR. KERSHEN: I\'ll respond this way about the level of discomfort. First
of all, let me just go back to the slide from the Organic Foundation.
Really, it was about 8 percent of their respondents, 928 respondents, so
you\'re talking that was the level that they were talking about from
discomfort.

Ninety two percent had no difficulties at all. However, and, so, that
would be one statistic. But, I have another impression or several other
impressions. One of them arose from a talk I gave last year in Kansas
City to mediators, ag mediators. And ag mediators told me or said at
that meeting, didn\'t say to me personally, we weren\'t talking, but, it
was at part of the meeting, they said that the concern about transgenics
is fairly significant.

They\'re seeing it in terms of mediation and, so, the question then
becomes, well, how do you deal with that, as you said. So, the concern
is out there. How do you deal with it? Well, you can deal in ways other
lawsuits, for example, mediation is one example, but, I want to back up
from that. You can do what some states are doing right now and I know
South Dakota has done it with respect to alfalfa. They put together a
coexistence committee and they came up with some guidelines about how to
coexist and South Dakota, as I understand, has now come up with \--
they\'re voluntary guidelines, but, they\'re coexistence.

And that gets to the point that I said there are really three things.
There are good husbandry, there\'s neighborliness, and then there\'s
farmer\'s choice. And if you deal with those three things and I think
most of the world communities are willing to do that.

And then if you have some kind of coexistence guidelines so the people
can look and if you have extension services which are going out and
helping farmers to understand how to grow, how to deal, how to do these
kind of things, then it seems to me that you often won\'t need and
won\'t have lawsuits and that has been pretty well the experience, by
the way, in the spray drift cases too. A lot of these are where, you
know, it\'s good husbandry, good communication, and it is then a
willingness to tolerate choices. That farmer needs to use a pesticide, I
don\'t want to use a pesticide or I don\'t want it used right now or I
don\'t want it used next to my crop.

And, so, there are ways there then to really deal with it in terms of
coexistence guidelines. You could, of course, make those mandatory. Some
of the countries in Europe are thinking about making their coexistence
really statutory, or regulatory, meaning binding as a matter of law,
but, many others are just creating them as voluntary guidelines.

And, so, I think the whole concept of coexistence guidelines that
probably may need to be done to assist crop by crop because the biology
is different, but, that kind of thing, but, they an be worked out and,
as I said, my understanding is South Dakota has done this with respect
to the introduction of herbicide round up ready alfalfa and they\'ve
done that for there and I know it was not \-- I won\'t say it was easy,
but, they sat around and I believe they\'ve come up with guidelines for
coexistence.

At least that\'s my understanding. I haven\'t talked with anybody from
there, but, that\'s my understanding. So, the answer is, yes, there are
lots of ways, coexistence guidelines, mediation, other ways of doing it.
And many of these things are just all neighbor to neighbor if neighbors
are getting along. Sometimes neighbors don\'t get along and I know that
growing up in a rural area.

I know that when cattle stray onto your land then sometimes the cattle
are never found and part of the reason that cattle are never found is
because that neighbor got tired of the other neighbor never fixing his
fence and, so, he just thought that maybe if he never found his cattle
that just might teach you a lesson.

MS. DILLEY: Mardi, Nancy, and then Steve.

DR. MELLON: I guess I would just like to underline Randy\'s point that
the modes of contamination are far more than just pollen drift during
field production. You need to consider seed mixing as well as biological
transfer of genes and you need to consider it at the seed production
stage and on farm production and then post-farm handling and transport.

And, so, all of those I think \-- contamination at all of those stages
could have consequences. The other thing I just wanted to be clear about
is that if a situation would arise where a food company had suffered a
loss of, you know, economic losses as a result of people no longer
buying a brand of food that they thought was contaminated, would those
losses be compensable?

DR. KERSHEN: No. That\'s clearly economic and they wouldn\'t have any
compensation to that, in my opinion. The likelihood is almost zero,
zilch, of having any chance of doing that. They have to develop and
protect their own markets and, so, the answer to the last question is I
see no chance for that happening in terms of being able to recover at
that level.

But, let me come back to your first point, which I think is absolutely
correct. In fact, I didn\'t focus on it and I\'m sure maybe I have a
slide about it, but, if you\'re really talking about the coexistence, I
talk about coexistence distances, and buffer rows, and those kind of
things, all those are true. But, I did point out, I guess it was the
second slide or third slide, that we have a long history of the seed
certifying agencies. Even with seed, they dealt with these issues in a
long, long time and I say that\'s really important because if you were
to really ask me where is it most likely that we\'re going to have an
issue of adventitious presence I would say it\'s going to come out of
the seed and that\'s apparently what happened with respect to the LL
rice. It came out of the foundation seed.

How it got in the foundation seed, as I said, those facts are yet
undiscovered. But, if you were to really ask I would say it\'s the seed
that\'s more likely. It\'s not pollen drift. It\'s really not likely to
happen a whole lot in commingling in terms of elevator stuff unless
somebody, and this does happen at times, just literally picks up the
wrong bin and moves it or things like that and those things can happen.

But, if you\'re ready to talk about guidelines, probably the guidelines,
the place where they really ought to focus and be most careful will
almost assuredly be seed.

DR. MELLON: And then I guess my last is just a comment that, you know,
the legal train is very hostile as you\'ve pointed out to people who are
kind of unwilling recipients of either pollen drift or transgenic traits
and so I think we need to keep that in kind when we look at statistics
on how many folks have chosen to go to court.

I mean, if the law in the state that you\'ve described, this is not a
place that a lot of people are going to go with a lot of hope. And that
leads to arguments about whether, you know, this is a technology that
for some reason does to me that there be changes in the law other than,
you know, those that are going to be worked in the ways that you\'ve
described, through the courts.

DR. KERSHEN: Yes and let me add that I talk about lawsuits and I did
talk about class action and, for example, on the Bell class action it\'s
a 70 page complaint. I\'ve read it all. The first \-- this is by memory,
but, I\'m close \-- the first 37 pages of the paper is just listing the
plaintiffs. First 37 pages is 37 pages of such and such a farm, such and
such a farm, Drew Kirshen doing business as, etc. First 37 pages is the
plaintiffs.

The last 30 pages basically is the substantive legal complaint. So, in
that situation there are lots of farmers who joined into that class
action and, remember, I only gave two Bells out as additional class
action people. I don\'t know how many. And there are several other class
actions out there.

But, in terms of incidents, LL Rice, you know, it depends upon how you
count. I count that as one, but, you could say, well, it\'s way more
than that.

MS. DILLEY: We have three more cards up. Nancy, Steven, and Randy.
We\'ll take those and then transition.

MS. BRYSON: Drew, I have a question for you on economic loss also and
just to give a little context to my question there isn\'t a private
right of action under the statutes that the federal agencies use to
regulate biotechnology similar to those in some other environmental
statutes that lets private parties sue to enforce the regulatory
requirement.

So, in the absence of those, you see these sort of class actions that
are based on common law liability claims. And my question for you is,
could the lack of a regulatory approval in your view constitute physical
damage that would get you out of this pure economic loss analysis? It is
a physical difference.

DR. KERSHEN: It is different. I don\'t think so. The Pure Economic Loss
Doctrine has required physical damage because they\'re trying to limit
it in terms of response for causation so it\'s not legally remote so
it\'s not speculative so it doesn\'t get into the kinds of things such
as grocery stores claiming loss and those kinds of things. I don\'t
think that\'s going to deal with the issue of physical damage which is
what the StarLink litigation, the class action really focused on was the
physical damage.

And when you read the sample case, and you read the Hawker case, which
is out of a decision there out of Canada, both of them talk about that a
lot and, in fact, the Hawker case completely threw out all the cause of
action. The only one they allowed to stand related to regulatory
environmental at that point, regulatory obligations. And, so, if you
have regulations, I do think the \-- let me rephrase something I said.

I agree with you that the federal law does not give a private right of
action and I don\'t think anybody\'s interpreting or making that
argument right now. They\'re making the argument under state law, but,
there\'s no reason a state court couldn\'t look at the regulation and
then using the theory of maybe the per se in effect say that you
haven\'t done that and, in effect, through a state court action create a
private cause of action, but, it\'s not an implied the cause of action
under the federal law directly and you couldn\'t sue in federal court
and it wouldn\'t be like the environmental statute which gives rise to
citizen suits.

But, I do think the state courts through their common law could
emphasize more the negligence per se building off the federal regulation
and in that tactic sort of becomes a round about way of creating a cause
of action that\'s a private cause of action.

MS. DILLEY: Steve and then Randy.

MR. PUEPPKE: I wanted to ask your thoughts on the issue of intent that
relates to one of your conclusions which starts as a fairly strong
conclusion. You said that zero tolerance is not achievable without a ban
on chemical or transgenic agriculture. Yet, there are those out there
who \-- there are some out there who would ask for zero tolerance. Does
that mean that they disagree with you on this point or do they
understand what you\'re saying on this point?

DR. KERSHEN: Well, I think there would be some people who disagree. They
would say you could do it. But, everything I read from the agronomists
and everybody from the market chain say it\'s just not possible; that
you\'re going to have to have some level and then you say well, what\'s
the level and the you get to what\'s the level of testing, you know, and
is it 0.9, is it 0.1, is it lower than 0.1. You get to the testing
levels, those kind of things like that.

But, because of accidents, because of human error, it\'s just not
possible if you\'re going to really insist on zero tolerance and if that
zero tolerance is going to have a consequence which would be a
significant and severe consequence particularly like if you got into the
pure economic loss then nobody could afford to do it. Nobody would be
willing to do it or at least they\'d have to be very, very brave to do
it.

So, I think one answer is some people disagree. Now, I\'ve come to the
idea here by Mr. Kremer and that is you can go to grower districts and
grower districts would, in fact, mean that if everybody complied within
that district you\'d be close to zero tolerance and you might be able to
do that if you then put a buffer around it.

The question is, who is the person who is going to bear those buffer
costs? Who\'s going to bear those buffer costs? Is it the people within
the district? Does that mean that some farmers are going to literally
get paid to just leave their fields fallow or have certain things so
they buffer everybody else and, in effect, sort of give contributions
from I made so much money but I have to share it with you because you
provide the buffer? I mean, there are ways to think about it. People
aren\'t talking in those terms.

Or, do you make the buffer outside? If it\'s outside how do you do that
because the statute only says this would be in the district that they
have power. They don\'t have power outside. They don\'t have power to
impose on the outside the district. But, within the district you could
come close to zero tolerance.

Now, the final thing I\'ll say is that I think some people do, in fact,
want to insist on zero tolerance because they are pretty well convinced
that it\'s zero tolerance that is the risk of the legal lottery gets
high enough that in fact it will drive biotechnology from existence,
from private existence, and that is in fact their goal and they say
that.

And, so, I can point to things that say that and you can see this
particularly when you begin to talk at the international level about the
Article 27 of the Biosafety Protocol and about the issue of liability
that\'s addressed in Article 27. Very many people who talk there say the
reason they want the kind of liability that we\'re proposing, which by
the way, some have proposed damages for ethical concern, social
concerns, emotional damages. If you are going to have to \-- and, oh,
one of them is loss of competitiveness. That if they had to pay for loss
of competitiveness for all the other crops, that is all of the seed that
wasn\'t sold, all the seed that wasn\'t produced, as you can see, no one
could afford to go forward.

I think those people believe that legal liability, if they could get it
passed, would be a way of driving the technology out of existence and I
think that\'s their goal because they\'re explicit about it. I\'m not
making it up. I can point you to the website.

MS. DILLEY: Randy, did you have a question?

MR. GIROUX: At this time I withdraw my comment.

DR. SCHECHTMAN: Thank you very much.

(Audience applause)

MS. DILLEY: So, we have 45 minutes between now and lunch and one of the
things we wanted to do was come back to getting us grounded on what the
charge is and how we want to go about doing that and something came up
about the discussion of the legal tools issue.

So, I guess one example of thinking about our charge, I come back to
some of the discussion before the presentation, Mardi\'s point about
being proactive and Nancy\'s comment about USDA has a pretty broad
mandate so what is it that we want them to pay attention to or think
about and I guess even looking at with the recent presentation it seems
like the legal setting is a pretty high standard to meet in terms of as
a tool to resolve some of these issues so, short of getting into legal
issues, then what are some of the tools that USDA might think about
encouraging or offering or helping to develop or look at more closely or
just kind of an example of maybe some of the thinking the committee
could do or the way I\'m trying to organize it in my own brain.

Or what short of the legal system there may be some things that the
committee wants to talk about in terms of legal structure, but, also
just short of that, what are some tools like grower districts, other
kinds of tools that help foster that, coming back to foster grower,
customer, consumer, choice. Because if you play out some of those
scenarios if the growers can\'t grow it then maybe the customers can
look elsewhere to find those and then the growers may not be able to
have that choice that kind of puts a constraint somewhat on that choice.

So, the market may still operate. I come back to you, Randy, in terms of
just because some choices are eliminated doesn\'t necessarily mean the
market can\'t function. So, whose choice are we really trying to look at
or foster and how does that play out is what I\'m trying to organize in
my brain and is that the length to which we\'re looking at these issues
and looking at what we want to put before the USDA to think about.

Sarah, you had a comment?

MS. GEISERT: You know, I think it\'s really a build off of Randy\'s is
we kind of talked in-house and looked back over the many years we\'ve
been, you know, with organic as well as traditional and the use of
transgenics. You know, it really comes down to what part of the supply
chain are you in and so I think that\'s a legitimate discussion. And
then every crop is different and so as we\'ve looked at it, you know,
you run into the complexities and we would say on the most complex scale
has to do with corn.

And for us, you know, it started with spray drift. That\'s when we first
had to have conversations and those were uncomfortable initially with
neighbor farmers but they worked out. You know, we had issues that you
dealt with with super sweet varieties versus sweet varieties as there
were traditional differentiations in the marketplace not unlike the blue
corn, the yellow dent, number 2 corn, and so I think then you go to the
other end of the spectrum as we deal with other, you know, crops that
consumers ask us, you know, to develop and deliver, and, so, those raw
materials.

So, I think part of the challenge is if you go down to consumers where
we don\'t really negotiate tolerances, you know, that market, you know,
we made decisions based on the feedback that they give us in the
marketplace and then we address that back through the various stages of
the supply chain.

So, I do think that when you talk about coexistence, you know, what part
do you focus on and I think that really is a critical question to
answer, what part and then what crops and how would you define because
they\'re very different and perhaps there\'s opportunities, you work it
through to look at to enter the spectrum, you know, sort of a case
study. There are probably other perspectives on one of the more
difficult ones to manage that might allow you to flesh out what some of
those ideas to help facilitate coexistence may be or help identify what
the issues are, but, they are strikingly different challenges we face
and we do it based on risk.

And, so, whether we need to work more closely with seed and the farmers
earlier in the supply chain it depends on a risk profile and the data
that we gather over time versus the various further stages of the supply
chain and they all have different characteristics based on the crop or
the raw material that we\'re interested in working in.

So, I think that really is the big question, what do you want to focus
on so that we can accomplish the task at hand and what parts will the
market take care of in a different way? So, I would echo Randy\'s
comments that it\'s very different depending on where you sit in the
supply chain.

MS. DILLEY: So, really I guess one question is turning to what USDA has
turned over doesn\'t really limit that scope because their scope is very
broad and then the question is either get more fully defined by the
Secretary or it\'s more fully defined by committee. So, that\'s the
questions. How do you accept the parameters on the discussion.

Nick and then Michael.

MR. KALAITZANDONAKES: So, I would make a comment. First of all, I
totally agree with Randy that this is a supply chain issue. It\'s not a
production agriculture issue. So, in my view, if we restrict the purview
of this issue we\'ll not have done a service to USDA.

Secondly, I think part of what we heard from Drew today follows very
closely some of the discussions we had in the previous meeting which is
what the legal system is sorting through versus what the market is
sorting through and at the end of the day in my view what we should be
focusing on is what is the substantive issues that the market is not
sorting through by itself and the legal system is not sorting through by
itself.

So, the question isn\'t whether the legal system is a low or high
threshold. It is what it is. And the question isn\'t in my view what the
market, whether the market has little or more of a difficulty. It is
what it is. And, you know, for us to actually have any opinion on it,
would be not only pretentious but we have no information to begin with
to begin to address it.

So, the question in my view is, and that\'s what Michael, to your point
what economists talk about when economists talk about market failure, is
what is that the market can do effectively by itself and the legal
system can do by itself and what is that really policy intervention can
be justified on.

And, so, to me, if we can do this effectively, in other words, come down
to the issues that really need any policy attention that markets cannot
deal with them, that courts cannot deal with them effectively, that\'s
then what USDA should be advised to look into. And that might not be
crop specific and hopefully it\'s not going to be crop specific and
it\'s not sector specific. It\'s broader issues that touch on it.

MS. DILLEY: And, I guess that\'s a further explanation, a premise of
yours of the paper and then you would highlight those areas from your
sense you need to look at to say that these may be areas and that\'s the
discussion that the committee needs to have where the market and the
legal framework are not sorting through as quickly potentially as to the
discussion of whether or not they are and then what to do about that.

MR. KALAITZANDONAKES: Right. And I want to point out something here
because I think part of this discussion on coexistence, not in this
committee alone, but, the scientific discussions we\'ve had, the policy
discussions we\'ve had, quite often are theoretical in quarters. It
could be or it might be the case, right, but, a lot of the presentations
that we\'ve heard had been here\'s how this is being done in the
marketplace and so what we\'ve heard is that in fact just because we
have a theoretical risk doesn\'t mean that necessarily is a practical
one in reality.

So, separating those two issues in principle from which actually need to
be paying attention are two separate things.

MS. DILLEY: Michael and then Adrian.

DR. DYKES: I would concur totally with what Nick just said which is the
thing that I\'m wrestling with in my own mind. What are we really
chasing? And I think the last thing that Kershen pointed out, a lot of
the coexistence today has been about efforts to stop the technology.

So, if you start with the premise that it has to be zero on a lot of
theoretical fronts the whole premise behind that is, oh, so, you can\'t
achieve that so then I guess we\'ve got to stop it. I think if we take
that sub-set out, which is in many debates, especially international,
but, if we come back to the points Nick\'s talking about so we\'ve had
the factual presentations on what is the status of the law, whether
that\'s good, bad, or, indifferent. It is what it is. It is our system.
And we\'ve had the factual presentations from the growers and the fact
that we hear consistently as coexistence had been going on for many,
many years and of many different aspects.

And every time we have another presentation we have another aspect of
coexistence, the seedless versus the seeded mandarins anew. We\'ve heard
several examples of how that\'s been dealt with throughout the chain.
I\'m anxious to hear what are, not the theoreticals, but, what are the
real things that aren\'t getting addressed relative to coexistence
throughout the market chain, be it at the commingling at the handling
end, be it back at the producing end, until we can come up with what
those actual real world issues are I don\'t know how we\'re ever going
to address this because you get the coexistence is a huge issue.

It has to do with organic. You can\'t grow organic if you got
transgenics in the world and all these things. The presentations we\'ve
heard don\'t bear that out. They just simply don\'t bear that out.
You\'ve got producers doing all three different kind of agricultures on
their own farms of many different crops.

I take it from what Nick said. Those are the kinds of areas we need to
get to. What are the things that aren\'t being done in the real world
that really need to be thought about from the Secretary\'s perspective.

MS. DILLEY: Adrian.

DR. POLANSKY: I\'m not sure exactly where to start and where to try to
get clear here and maybe that\'s some of the thought process that\'s
beyond just myself. Certainly, you know, the linchpin to delivering
whatever, whether it\'s organic, conventional, various traits, whether
it\'s white corn, or, industrial canola versus food canola, that even
though certain the production at the production level doesn\'t solve all
the issues, but, if you can produce it you can have seed that is \--
that provides those various options and you can produce it.

Certainly, from my perspective as I\'m looked at how the marketing chain
works with various kinds of traits, whether it\'s \-- since I was a
producer I always go through it with white corn \-- if there\'s a reason
to produce white corn rather than yellow corn as there has been for a
long time and the seed suppliers supply the seed that\'s pure,
adequately pure, and the producer can produce it, the marketing thing
there will be a way to market that through the marketing channels
without whatever words we want to use from, you know, increasing the
level of blending, mixing, contamination, whatever words we want to use.
You know, is that what we want to talk about or do we want to talk about
how has it always worked and what USDA needs to provide or whoever in
terms of guidance, in terms of who that process can work.

I don\'t know. It\'s obvious to me that producers can produce if there
is a small tolerance of all kinds of different kinds of options, pretty
much within any crop that I know of. It\'s worked for a long time. If
that\'s a premise, I mean, if that\'s a fact, then those same kinds of
techniques, whether it\'s at the production level, the seed production
level, or, the marketing chain can work. All we have to do is study how
does it work and apply it to what hasn\'t necessarily been going on
prior to the transgenics entering the marketplace.

I don\'t know. That\'s too simplistic or complicated, I don\'t know,
but, that seems to me to be at least where I\'m settling at.

MS. DILLEY: The question you were raising, Adrian, is if it\'s an issue
of coexistence has been going on and we just need to study those tools
that have helped encourage that then that\'s one way to look at it or
are they going to be adequate for future and then what are additional
tools necessary are the two questions that I heard you asking is what
you\'re asking the committee to think about it.

Carol.

MS. FOREMAN: Yeah. I was interested in Bruce Knight\'s comments. I
thought that what I heard him saying was that the value of the advisory
committees is they bring different perspectives to issues so here\'s a
different perspective.

I don\'t think the U.S. Department of Agriculture exists only to protect
production agriculture. It\'s paid for by all the taxpayers in the
United States. I think its overarching obligation is to act in a way
that benefits the largest number of people possible. And I always have
trouble when I am asked to accept the notion that USDA\'S primary
function is to be an advocate for a particular type of agriculture. I
think there ought to be advocates for everybody in the country and that
we\'re not even talking about that, we\'re talking about one kind of
agriculture versus another.

We say that we\'re interested in overriding consumer preferences and
choices, but, I got to tell you, we haven\'t had any presentations that
have talked about that. We\'ve had a legal presentation with no
counter-presentation about why people think that this is an unsettled
issue and it is clearly unsettled because there are cases out there.

So, I feel real strongly that we have to have some balance in the
presentations. I\'m having a little trouble understanding why we\'re
having this discussion about adventitious presence. We have a labeling
and traceability report that deals with it. We have the report that we
just gave the Secretary at our last meeting and it has 26 issues and I
think eight of them are on adventitious presence.

What is it that we haven\'t said about adventitious presence? What is it
that we\'ve said that makes the department unhappy that they want us to
go back and talk about adventitious presence again? Somebody\'s going to
have to tell me why what we have done before is deficient before I can
be supportive of spending my time doing it again.

And, finally, you know, I really object to being told that to address
the subject and do it in a few pages with bullet forms. It\'s not the
assignment I got being as a member of the committee at least to provide
advice and counsel. If adventitious presence is so complicated that
neither of our previous reports have addressed it, I don\'t think we\'re
going to address it this time with a list of bullets.

MS. DILLEY: So, you raised three things, Carol. One is I think in terms
of trying to sort through what if anything else we want to say about AP
as part of the analysis we need to do because you\'re right. We\'ve
talked about that topic so there may not be a need to revisit that issue
and that\'s the question I think for not only AP but other things that
we\'ve talked about, do we need to come back to any portion and why.

And I think the committee needs to ask that and do the analysis and
that\'s what we were planning to start that this morning but we\'re not
going to get to that until this afternoon, but, I think that\'s a very
good and appropriate question. The other piece is there\'s always some
portion of the meeting dedicated to exactly how are we approaching this
and does that make sense logically to everybody.

And I think Nick put out a paper or a logic flow. I think part of this
is you\'ve got to try it on a little bit. I mean, the premise is looking
at where might there might be places where either the market\'s not
addressing it or other things are not addressing and, so, what should
USDA look at and categorize things. And, so, I think one of the things
we should really do before we kind reinvent the wheels is maybe look at
that in terms of how does that highlight and does it get up to the
conversations we want to have as a committee to be able to put our arms
around.

And, I don\'t know. I mean, maybe, to me, one of the questions is some
people\'s market imperfections are another \-- are other people\'s in
the food chain, the whole fostering choice, their opportunity and
they\'re taking economic advantage of that. So, I mean, part of that I
think is a discussion the committee actually needs to have and that\'s
beneficial because what you would say if it\'s a market imperfection
that needs a new policy and some people might not and I think that is
where, if you follow the lines of his, you know, some of the value is
understanding that in terms of the different perspectives. That\'s the
conversation that we need to have.

So, how we organize to have that conversation is a big piece and what
information we use to supplement that discussion also is important.

The last piece, you know, whether we can do it in the time frame, do you
think we need to come back to visit that in terms of our work plan and
how do we do whether it\'s called triage or whatever else in terms of
ending up with a product that has some value from the perspective of the
committee and for the USDA and I think we need to wrestle with that a
bit in terms of meetings, as we all know is not that much time, and
it\'s a tall order.

So, we definitely need to sort through that and figure that out. Carol
and then Greg and then Mardi.

MS. FOREMAN: You got close to what I hoped you would say because \-- but
not quite. At least not specifically enough.

MS. DILLEY: You\'re going to say it for me.

MS. FOREMAN: I\'m going to try.

MS. DILLEY: Okay.

MS. FOREMAN: Clearly, there is a market for products that don\'t have
adventitious presence. If we\'re going to talk about consumer
preferences and choices we have to have some way to address why is it
that there are people out there who think that\'s important and how much
do you have to do to address those concerns.

I can\'t say as a given that there\'s no market value to not allowing
adventitious presence so I don\'t know how we address it and I think it
may be and it may not be that easy to identify, but, I think we do.

DR. SCHECHTMAN: I think that the point that you raised that there is a
market for them and that it is important to take into account that there
is a market and that there are people who are trying to meet that
knowing full well that the consumers may not know exactly what zero
actually means in the supply chain, but, I think the question from my
point of view, what would make sense, would not be to go back over the
issue of why they want that because I think we talked about consumer
preferences, the reason for those preferences earlier.

But, simply put, \--

MS. FOREMAN: When?

DR. SCHECHTMAN: I thought it was in the most recent report, but, let me
just finish the point. But, not to place a value judgment at all on
that, but, say that it\'s a market and it\'s a market that we\'re trying
to serve.

MS. FOREMAN: Michael, it doesn\'t work to have detailed descriptions of
why it\'s illogical and why it\'s not legally supportable and not have a
discussion of why people \-- why there\'s a market for it. What drives
it? Is it to keep biotech out? Hell, that may be the case. But, we have
new members on the committee who weren\'t there and you had like, I
think, one day of presentations on consumer concerns of two, shortly
after I came on the committee. So, I\'m not \-- you know \-- you\'re
going to have to address what\'s the other side of this.

DR. SCHECHTMAN: Let me \--

MS. DILLEY: Right. I think \-- I mean, your point said there are
different markets in terms of and how you meet those markets just like
the situation where growers can\'t \-- if you can\'t grow in a
particular spot that\'s a problem for a grower and grower\'s choice.
But, for somebody like a customer they may be able to go someplace else.
Well, does that mean the market\'s working for the customer it might be
because they can go elsewhere, but, for the farmers, it\'s not working.

And I think your example is, well, if a consumer wants that and that\'s
what they\'re demanding but they can\'t get it is that a market failure.
And I think that\'s part of the discussion that we need to have. It\'s
all that different dimension of what the market failure and from whose
perspective and does it merit policy to change that and what are the
implications of that. That\'s what \-- I think that\'s the conversation
we want to have.

DR. DYKES: I thought that\'s what Nick laid out earlier.

MS. DILLEY: Right.

MR. KALAITZANDONAKES: That\'s exactly right.

MS. FOREMAN: I really think that you have addressed it solely from the
market standpoint but not from the consumer.

MS. DILLEY: And that\'s why we need to have the committee develop the
paper.

MS. FOREMAN: Right. And that\'s why we have to have somebody \--

MS. DILLEY: That\'s right.

MS. FOREMAN: \-- who comes in and talks about why that\'s the case.

MS. DILLEY: Right.

MR. KALAITZANDONAKES: So, can I respond to this? I think you\'re right
on the ball so to the extent that we can bring somebody who can give a
presentation as to why and how market demand that is out there, for
whatever reason, for whatever consumer preference is, and what factors
are driving them, that somehow that market is not being serviced and
what size of that market is. I think that would be extremely valuable
because then we begin to address the issue, here is a potential market
failure.

That\'s exactly the \-- so the kind of draft or the kind of approach
that is being proposed does not actually isolate any one segment of
producers or consumers and that is what I\'m suggesting; that as soon as
you start picking out consumer segments, producer segments, crops, and
so on then you start dealing with details.

Instead, let\'s talk about the big issues and the framework and so the
framework is what is being out there that is not being serviced and
addressed and why and what can a policymaker do do that would address
it.

MS. FOREMAN: I\'m sorry, we have already had four or five very specific
presentations about why it\'s not possible. There have been two other
reports that we did, why it\'s not possible, why it costs too much
money, why it\'s not fair to the farmers who raise genetically modified
crops. I want presentation about why it has a market failure. I\'m not
willing to start with it has a market failure because there\'s all in
everybody\'s head there\'s all these presentations that have been made
about the details about why it really isn\'t rational.

MS. DILLEY: All right. Okay. And I\'m sure we\'ll look at the things
that need to be assessed. I don\'t see any problem with having somebody
who comes in and says this is a market that needs to be serviced and if
it\'s not it\'s a market failure.

MS. FOREMAN: I want an explanation of why the markets fail and the
reason I\'m pursuing this is this the second time I\'ve made the request
and we haven\'t yet even talked about even somebody do it and I\'m not
happy and I know it\'s the second meeting and not one part of this issue
that I raised three or four months ago has been addressed by having a
speaker to address it.

DR. LAYTON: As the Chair, can I ask you for \-- do you have a list of
people who are acceptable or who the committee would find acceptable
speakers?

MS. FOREMAN: Will the committee find acceptable speakers?

DR. LAYTON: That was the wrong phrase.

MS. FOREMAN: Do I think that there might be people who can fill \--

MS. DILLEY: Can we hold that off? I mean, I think that\'s a question you
need to consider and come back. There are going to be people other
people want and there are other presentations that people want that we
need to sort through as well so, I mean, we\'re kind of getting ahead of
ourselves in terms of making sure that at least we\'re on track with the
general concept that we can work with.

Greg, I believe you\'re next and Mardi and then Sarah.

MR. JAFFE: I mean, I just want to reiterate one of Carol\'s earlier
points which is, again, at least from my perspective and my mind I\'m
having trouble getting around the idea of is this \-- you know \-- I
look at things as Venn diagram-type things. We\'ve got coexistence with
a big circle with coexistence and in there I see most of that\'s
basically taking up at least of our discussion with adventitious
presence and thresholds.

And the question is, is it completely taken up by that or are there
other issues in coexistence because I think that I looked at the reports
we\'ve done and we\'ve talked about coexistence a lot and Randy and I
and others in the traceability and labeling report and also in the last
report and I don\'t think we should go back over that over again.

We made recommendations. We talked about those things already. Now, I
think those were primarily from the supply chain perspective and if
we\'re going to do it from the producer perspective we didn\'t go into
grower districts or we didn\'t go into, you know, what\'s happening on
individual farms and we also didn\'t go into it very much on the
consumer end.

We did \-- most of the traceability and labeling report and my review is
very much from the middle of the supply chain and everybody else not
really what\'s happening on the farm level and not really what\'s
happening in the supermarket but everywhere else.

Just let me finish.

MS. DILLEY: I didn\'t say a word.

MR. JAFFE: Okay. So, but to me, I think that\'s what we need to grapple
with is what is \-- what are the issues in coexistence because the
presentation we just heard this morning was all about thresholds and
adventitious presence and the a lot of the other presentations and
everything else we have and even in Nick\'s paper I circled eleven times
the word AP was used and it was just like every paragraph had AP in it.

I\'m not being critical, Nick, in writing that, but, I do think we need
to come to grips because I do think \-- I mean, we\'ve spent four single
spaced pages talking about AP in the traceability and labeling report
and I don\'t have a good feel about what are the issues around
coexistence that we want to talk about other than AP and thresholds.

MS. DILLEY: Right, right.

DR. SCHECHTMAN: If I can just say one thing. I think your point about
not going over old material and having a really high threshold for what
is new to say about those topics is really important.

MS. DILLEY: Okay. Mardi, then Nick.

DR. MELLON: Well, I guess I look at it from yet another point of view,
but, I think we\'ve talked about adventitious presence a lot. I think we
made very few recommendations and have really not confronted the issue
at all. I mean, I want to \-- I mean, what interests me is why \-- I
mean, a lot of people seek \-- you know, on one hand you could listen to
our last speaker and you could think well this is easy, you just set
these little thresholds and whether it\'s for organic or international
trade and all these issues will go away.

If it were easy the USDA might have had either done it or even joined
the issue in public discussions and it hasn\'t done that. As far as I
know, its AP policy doesn\'t even use the word, adventitious presence.
It doesn\'t acknowledge that there\'s a problem. Almost doesn\'t
acknowledge that there\'s an issue. Now, why is that? Why is that the
case?

I mean, I think it is \-- I don\'t really know why, you know, it is the
case. We seem to be able to talk about a lot of other issues more openly
and more \-- even if we have to talk about them forever because they\'re
important, but, you know, why is it that there is this \-- at least it
looks like a kind of unreality, a failure to acknowledge that there\'s a
problem. I think it\'s because it actually or at least in part because
if you start talking about setting thresholds we\'re going to go soon
from to the idea that you are setting thresholds for all of these traits
that have been tested out there, field tested, out in the open
environment, and could very easily be in our food system right now and a
lot of those have never been looked at by the US \-- by the FDA, much
less subjected to their, you know, to their kind of indirect process.

So, and if you start talking about whether you can set thresholds for
things that have never been even examined you start backing up into the
issues of the adequacy of the regulatory system for assuring food
safety. People don\'t want to get there because it\'s very hard to say
we don\'t care about having this much of \-- you know \-- you can\'t \--
I mean, I don\'t even want to go into all the difficulties, but, just
think about whether can you set one percent? Are you sure that you want
one percent of all of the things that have been field tested out there,
some of which were never intended for the food supply at all?

You know, what scientific grounds would one assert that that kind of a
threshold is safe or, you know, should be acceptable in the marketplace?
I mean, to me, those are the kinds of problems that we have never \--
you know \-- we\'ve never gotten into and I mean, I think even if we
can\'t solve them we could at least \-- you know \-- we could at least
surface them.

I mean, it seems to me I understand the legal significance of all the
precedents for drift, and white corn, and all of that. That\'s out there
as a background for considering the way these issues are going to be
taken up by courts. But, in fact, white corn is not regulated. We don\'t
need to get approval to sell white corn in the marketplace. It is not -
there can\'t be a zero tolerance for it because it\'s not independently
regulated.

All of the biotech on the other hand has to be approved for the
marketplace event by event by event, either *de facto* or legally. So,
those are huge differences in terms of setting \-- in setting thresholds
that are legally and from a market perspective acceptable in all the
contexts that we\'re talking about.

So, I guess, I mean, I don\'t see that \-- I see that we\'ve kind of
nibbled around the edges of some of these issues, but, we really
haven\'t addressed even one of them. But, having said that, I would also
like to say that I think one of the things that we, understanding that
this is a food chain issue, or a food supply issue, it also, from my
perspective, is very much of a farmer issue and it is one where there
might be opportunities for us to make recommendations that are in this
overall context of people trying to serve what I think is a very
legitimate market and that there are things that the department could do
that could make it possible for farmers to serve that market and that
effort would not be initiated by assuming that the problems don\'t exist
or that they can all be handled in an informal way; that we could, you
know, we could make \-- that it is perhaps \-- that there are perhaps
opportunities for us to make it better for American agriculture at the
producer level but only by admitting that there\'s a problem, not by
thinking about the reasons why it shouldn\'t be.

MS. DILLEY: So we\'ve got two more \-- two cards up and I think all
these things we need to come back to this afternoon. I think a couple of
things. We need to do the analysis because obviously the difference
between why we talked about AP and for some of you we talked about it
enough and others, we\'ve talked about it but we haven\'t resolved some
fundamental issues. It\'s a decision we\'re going to make it in terms of
what is doable or not doable in the time that we have and how we\'re
going to approach our work.

So, those are pretty key things to resolve. If I could take the two
cards then we\'re going to break for lunch but we have to come back to
some of these and make some decisions.

DR. SCHECHTMAN: Sarah, can I go before you? I just want to make the
point that I know Bernice is coming in this afternoon at 1:30 and she
has a flight to catch so we\'re going to need to be back here quickly on
time and if we can keep the comments fairly short before lunch so we\'ll
have a chance to out and get back and we can revisit anything that we
have not done enough for.

MS. DILLEY: Sarah and then Nick.

MS. GEISERT: A brief comment and I think you know Carol\'s comments on
the consumer reviews as an opportunity so we, too, would be interested
in hearing more comments and perhaps what we hear from our consumers
today. And I think one of the things that we need to consider is what
has evolved and I think as you look back from some of the kind of the
early work in organic and you see what consumers expected have there
been dramatic shifts that have occurred and what have been the causes
for those.

And I think that\'s the hard part has to translate consumers\'
expectations and try to understand the totality of their expectations
which is a constant challenge that we face. If we\'re going to be able
to do that then how do you play that back into USDA policy because I
think, you know, Mardi, you kind of mentioned, it\'s sustainable
agriculture, it\'s a whole host of soft side issues that often come up
that, you know, you try to regulate and try to manage and do I think
there\'s been dramatic shifts as the market has grown so in our
perspective we faced I would say new challenges.

We faced them at a greater degree as the market has grown because of
what consumers expect or what they perceive for them to expect so I
think trying to understand that is, you know, let\'s try, but, I think
that is one of the challenges as you have an increase in maybe the
segregation or the diversity in the marketplace.

It creates additional challenges to tackle and I think that\'s a bit of
what the consumer perception you\'re trying to get at is and for us to
say what has changed and are there factors that we need to address that
hasn\'t been addressed because it\'s probably been out there. There may
be some welcomed complexities added over the years, but, certainly as
that market segment grows and that\'s - there are just some additional
burdens that we face trying to meet those needs and I think they are not
always about tolerances.

So, I think if we\'re able to find the right speaker maybe that would be
helpful but I think it\'s a bit of trying to look back and say what has
really changed and where do we look to the future to go because if
you\'re assuming organics are going to grow and those consumers want
that choice, which, so far, I believe we\'ve been able to meet but it\'s
a small segment of the market and that has allowed us some flexibility
to meet it as it grows meeting their defined expectation can be an
increase in change.

MS. DILLEY: Nick. Then we\'ll break for lunch.

MR. KALAITZANDONAKES: Yeah, I just want to make a very simple comment.
First of all, I know for sure this four-pager is being referred to as
Nick\'s report. It isn\'t really Nick\'s report. What I did was I took
the flip charts and put them into words and so what I\'m trying to say
is if there are 8, 10, 15 references to adventitious presence isn\'t
because I made them but because everybody else in the committee made
them.

But, the reason I\'m bringing this up is because that is important in
itself and because every presenter who came in and gave a presentation
on coexistence did mention the issue of adventitious presence and
purity, including myself. And the same happened with the presenter
today. So, maybe trying to address the issue of coexistence in the
absence of adventitious presence, thresholds, purity issues and so on is
just not doable because those issues are interconnected.

So, how can you cleanse the issue that we\'re trying to discuss from
what had been discussed in the past. So, if the approach is, okay, we
are happy with what we\'ve said before, and I was not a part of that
committee and so I have no opinion, that if we\'re happy with that then
maybe the subset is being taken and put in the report.

But, the point is in my view as somebody who has been doing research on
the issue of coexistence for the last 7-8 years you can\'t talk about
coexistence in the absence of this issue. So, I don\'t know how you
would separate those issues.

MS. DILLEY: That the committee\'s dilemma.

MR. KALAITZANDONAKES: Yes. So, if anything, the framework is not a set
of issues.

DR. LAYTON: Again, Bernice Slutsky, who you know used to sit right here
next to me when she came is going to be our next speaker in her new role
with the American Seed Trade Association and she is going to be here at
1:30 and has a flight to catch so please, out of respect for her, and
because we love her, can we please be here prompt and at our seats ready
to go at 1:30. As you all know, there are dining rooms downstairs that
are very fast, very quick, and I encourage us all to be here and ready
to go at 1:30. Thank you very much.

(Whereupon, a luncheon recess was taken at 12:28 p.m)

[A F T E R N O O N S E S S I O N]{.underline} 1:30 p.m.

DR. LAYTON: Thank you. It is 20 seconds and counting.

(Discussion off the record)

DR. SCHECHTMAN: Thanks everyone. Our second presentation for today will
be from Dr. Bernice Slutsky who most of us on the committee know very
well in her previous role as the Secretary\'s point person on biotech
and, therefore, a prior participant in this process here. She\'s now
vice-president for Scientific and International Affairs at the American
Seed Trade Association and she\'ll be providing perspective on assuring
the diversity of seed supply.

Welcome back and thanks, Bernice.

DR. SLUTSKY: Well, thanks. It\'s a real pleasure to be here and to see
everyone again. I thought what I\'d do this afternoon is let me give you
kind of a thumb shot view of the seed industry to the extent that we
keep these kinds of data on the diverse nature of the seed industry,
where the potentials are, and also where, you know, our research dollars
are going to and then to make sure that I covered what you need me to
cover I thought \--

(Discussion off the record)

DR. SLUTKSY: As I was saying, what I\'d like to do is give you a sketch
of the seed industry, the diverse nature of the seed industry and where
those sectors of the industry where we see the most growth potential,
some preliminary data on where our industry is putting its research
dollars, and talk about a few things that we see in terms of challenges
and opportunities for us over, you know, in the future and what\'s
happening right now.

And then just to make sure I cover everything that you need, you know,
in terms of your discussions I thought I\'d leave quite a bit of time
for discussion and I\'ll try to answer your questions as best I can.

So, first off, this is kind of just a general overview of where we see
growth potential from 2001 to 2010. As you can see, it\'s really the
place where you see the most of the projected growth is in the
horticulture seeds.

And this is just looking at the value and the annual production in
different areas and where the export value is and you can see that maze
has the highest export value and that, you know, there\'s quite a bit in
terms of value of seeds that\'s exported around the world. Vegetable
seed, you can see that has a very high export value as well.

You can see some of this reflected when I show you the dollars that are
put into research in those sectors as well. And those are just to give
you an idea of where the U.S. seed industry sits within the context of
the world seed industry values and where the U.S. seed industry is a
seven billion dollar industry and its representatives have 21 percent of
world seed sales and the total world market is 34 billion.

In the 2010 forecast for seed sales, so, there\'s a significant increase
for both the U.S. and the world and as you can see, the U.S. percentage
of the world seed sales is projected to remain pretty steady. Now,
again, this will show you a breakdown of our sales by crop and the high
percentages, not surprisingly, was grain seed and again horticulture
seeds are a significant percentage of our sales and our vegetable seeds
and oil seeds.

And what we\'ve been trying to do, and I\'ll be honest, the seed
industry as a whole probably hasn\'t been that good at defining itself
by statistics and gathering statistics about itself. It isn\'t as good
as I think other industries and where we\'re starting to do that in ASTA
and trying to get kind of a sense of where our members are putting their
research dollars, the type of research they\'re doing so that we can
show kind of a composite of the industry.

And, you know, I think the most significant aspect when we look at
research into seed is that it\'s very diverse and people are trying to
think biotechnology, transgenic, but, it\'s a very diverse array of new
technologies that our research dollars are going into. A significant
number of dollars are going into basic germplasm research; new ways and
more efficient ways of doing conventional breeding; use of molecular
markers in breeding, and, of course, transgenic traits is a significant
portion of research dollars are going to the basic economic traits,
quality traits, pharmaceutical traits, and the same is true for
non-transgenic kind of traits; again, quality traits.

I can tell you that we just had probably our biggest meeting of the year
last year. It was our corn and soybean research conference and biofuels,
biofuels, biofuels was heard over and over again and, you know, the
opportunities that people feel, you know, optimism really in that area
and a significant portion of research dollars, you know, for seed
because as ASTA always says, you know, first the seed. It all starts
with the seed. And, you know, producing seed varieties that are more
efficient if you\'re trying to produce biofuels.

And also, you know, seed treatment, although less dollars are being
spent on seed treatments. I think relatively the focus is really on the
germplasm rather than on the external treatment of seed and also what we
call novel processes and one significant area I think is packaging. The
packaging of seed is becoming more and more diverse.

MS. DILLEY: What\'s priming?

DR. SLUTSKY: That\'s for germination, you know, so they germinate more
efficiently. And this presents some very preliminary data. We just sent
out a survey to our companies asking a number of questions related to
research and development and, again, we\'re trying to get a better sense
of how much much \-- how many dollars have been put into research and
development, have been put into the industry as a whole. Eventually
we\'ll break it down into sectors and where those dollars are going.

And, if you remember that it\'s a seven billion dollar industry and the
preliminary data, and I don\'t think I can say that this is a final, you
know, in terms of the total dollars that \-- if you look at new price
research and existing product support we\'re talking about 500 million
dollars put into research.

And, again, this is from the same survey and that personally was really
struck by how much money and what percentage of expenditures are going
to basic germplasm research and then not surprisingly going into trait
research and also that of relatively less is going to seed treatment in
other processes.

And, you know, just to kind of expand on the last slide, again, we had a
number of talks at our conference last week and probably when they
weren\'t talking about biofuels they were talking about ways to improve
the germplasms, particularly in corn, and maintaining the diversity of
that germplasm and how to use molecular markers and how best to use
molecular markers in that germplasm.

And then this is again from the same survey to give you kind of a
preliminary idea and to give us a preliminary idea of where, you know,
those investment dollars are going in terms by crop and, again, corn and
feed grains are a significant portion, but, also vegetables, which, you
know, isn\'t very surprising as much research dollars are going into the
vegetable area. And also forest and turf grasses. So, those would be the
three big areas.

And this slide here is to remind everybody that ASTA also represents the
organic seed industry and we have an organic committee and that organic
committee has \-- is sponsoring corn on an organic seed database and the
Organic Material Review Institute is the keeper of that database and the
purpose of this database is to \-- is a place where growers and
certifiers to go when they want to see whether organic seed is available
for a particular crop. And that\'s the website if you want to go and
look at it. You know, you can click on the crop and see where the seed
is going.

Again, just to give you an idea of where, you know, research is focused
in terms of germplasm research and a lot of effort now is going to
marker seed selection and in a sense most of the effort is to make it
more efficient, to make it faster, and to be able to bring new traits to
the market quicker and so markers are really going to be key to that and
by using molecular markers you can go develop pedigrees much quicker and
that allows you to really identify a trait if you want more efficiently
and then to eventually get that trait into a commercial product more
quickly.

We also last week heard some very interesting talk about new ways of
doing forward breeding and essentially, and I\'m not an expert in this,
but, instead of, you know, taking a line that has the desired trait in
it and, you know, backcrossing them, backcrossing them to your elite,
you know, germplasm background there are ways where you can manipulate
the GM so you essentially \-- the trait goes into your elite germplasm
very quickly and you have two or three generations to get \-- to make it
stable and so you can cut out a significant amount of time in getting an
elite germplasm with a desired trait to the market and to the producers.

And, then also, I don\'t think that you would be surprised that there is
a lot of work on new trait delivery methods using mini-chromosomes for
example which allows you to introduce new traits without having to
introduce the gene into the chromosomes of the plant which gives a lot
of flexibility in terms of what types of traits you can put in and,
again, allows you to get those parts to market a lot faster.

This is really a list of where we see the future for us in terms of the
challenges for the seed industry and, you know, clearly some
opportunities, but, you know, we\'re growing in niche markets since \--
that means that we have to have a more diverse array of seeds and traits
and qualities and there\'s \-- you see more vertical control of those
niche markets in order to give the customer what they want there\'s more
vertical control of the supply chain. And, so, often that is controlled
down to a particular farmer\'s field and in terms of one of our
companies providing a particular seed lot to that farmer\'s field and
then the integrity of that product is maintained throughout, you know,
the supply chain until it becomes a product for the end user.

And we\'re going to see more and more of that and the seed industry will
need to respond to that. Also, we see more geographically specialized
seeds. As I mentioned before, biofuels is clearly an area where people
putting a lot of efforts; biotechnology; organics; and a varied array of
distribution channels and diverse packaging.

So, essentially what I\'m saying is we have to diversify and our
companies have to diversify in terms of how they meet what is a more
varied customer need and that\'s making those chains from producing
quality seed to the end user a little more complicated and less
fungible.

So, I think that that\'s really particularly for where you\'re talking
about coexistence, to me, that\'s the bottom line. So, I\'m going to
leave it there and then answer any questions you may have.

(Audience applause)

MS. SULTON: Mardi.

DR. MELLON: Well, it\'s nice to see you again, Bernice. We spent the
morning talking about adventitious presence and the possibility that the
LL 601 Rice contamination originated during seed production. Is the Seed
Trade Association addressing those issues; is there any testing going on
to determine kind of the levels of contamination in seed; any efforts to
kind of try to figure out where the contamination\'s coming from and how
it might be prevented?

DR. SLUTSKY: Specifically for LL 601 or anything else?

DR. MELLON: No, just across the board.

DR. SLUTSKY: We do have a couple of ways that we\'re addressing that
adventitious presence and the first is the International Seed
Federation, which is our parent organization, has a working group on
adventitious presence and we\'re focusing on a similar scope of work as,
I don\'t know if you talked about the food and feed effort in
adventitious presence, but, we are focusing on a similar scope as there
are for food and feed and, so, we\'re starting with those biotech events
that have been approved in either the country of export or the country
of production. It most likely would be the country of production or
cultivation, but, not approved in the country of import and how to
address that.

And that\'s going to be very complicated. And we know that and, so, what
we\'re first doing is looking at the environmental safety assessment
that\'s normally done in those countries that have mature regulatory
systems and with the idea that it\'s most likely that they\'re more
similarities in how those countries do their environmental safety
assessment than differences and, so, that will be the place where we\'ll
start to kind of look at how countries normally do those assessments and
then to see if there\'s an approach, using a safety assessment approach,
not a threshold approach, as to how you would address those situations
when you have an event that\'s been approved someplace but hasn\'t been
approved and that were found at different levels in the country of
import.

DR. MELLON: So LL 601 hadn\'t been approved anywhere?

DR. SLUTSKY: No, but, I thought we were talking generally. Okay.

DR. MELLON: So, but, you\'re going to look at the asynchronized
approvals, approved one place and not others.

DR. SLUTSKY: That\'s where we\'re starting for our international effort.

DR. MELLON: But, you might move on to look at the traits that have just
been field tested but have never been approved?

DR. SLUTSKY: Well, the other, and this is ASTA specific, we have a
stewardship committee. It\'s a new committee and we are going to be
looking at \-- our focus won\'t be on field test to be put on us. Our
focus will be on handling of seed. There are other efforts that are
ongoing that are more focused on the field testing stage and, you know,
we will connect up with those efforts and there are some around the
table that are involved in that.

But, we\'ll do what we know best and that is how you handle seed in such
a way that you give the customer what they want. You maintain a high
quality of seed. And that would be the focus of our stewardship
committee. It won\'t be solely on how you handle biotech seeds. That
will surely be a big component of it, but, that won\'t be our sole
focus.

DR. MELLON: Thank you.

MS. SULTON: Leon, then Randy.

MR. CORZINE: Maybe you can answer, at least as I understand it, I know
at least of the seed companies are now either at or working towards ISO
9000 or above standards and do you see the industry going that way? I
see that maybe \-- it looks to me that it makes sense even outside of
the biotech because the higher seed appearing in genetics, you know, are
better whether you\'re talking conventional or transgenic. Is that going
to be the standard for all of the seed industry, do you think, and I\'m
assuming, I think, I guess my opinion is that that will help the whole
purity issue as well.

DR. SLUTSKY: I think the main thing I\'ve raised is coming to ASTA is
it\'s very hard to talk about seed and that how you handle corn seed and
how you handle grass seed [and trocities for the]{.mark} different types
of seed may be very different and, for example, on our stewardship
committee I and certain that we will have to have, you know, different
\-- my hope is to have a set of best practices.

And I suspect, I\'ll be very surprised if we don\'t have different types
of best practices depending on the type of seed that we\'re dealing
with. So, I don\'t know that \-- I know that there are certain \-- for
certain crops, and corn is one of them, where they are working towards
standards, you know, ISO 9000 standards. I don\'t know. I can\'t answer
that and I don\'t think it\'s true for other types of food right now.

MS. SULTON: Randy.

MR. GIROUX; Thank you. So, we are talking about coexistence and as I
told Michael, I did read all the notes as I was coming on the airplane
and one of the comments made by one of the speakers, and I believe the
corrected language this morning is, if the lack of availability of
non-GMO seed. Now, I don\'t know if that\'s true or not.

And then we hear from some of our growers in our non-GMO programs that
they can\'t find good hybrids. All the good hybrids are GM. And, so, you
mention this massive influx of non-GMO, so, can you speak to the
members, is that reality or is that perception that there isn\'t good
quality non-GMO hybrids on the market?

DR. SLUTSKY: Well, I mean, I would say this is what I can say is our
members will provide the type of seed that their customers want and
that, for example, for corn there is significant effort to maintain a
diverse elite germplasm in corn, significant effort, both by the
industry and by industry-public institution cooperative efforts.

We have a group that meets throughout the year and their sole purpose is
to, you know, make sure that, you know, the elite germplasm for corn is
maintained in a diverse way and I would assume that that means biotech
and non-biotech.

I know that for example in cotton, which is another crop that has, you
know, high penetration of biotech varieties, that there are \-- that
cotton farmers like certain non-biotech elite lines and those elite
lines are kept there because there are, you know, some of our customers
that want them. And, so, we know the reg, but, you know, we don\'t get
complaints from producers that they can\'t find the hybrids that they
want.

So, maybe there are some farmers out there that can\'t. I don\'t know.

MS. SULTON; Brad.

DR. SHURDUT: Yeah. First, this reflects back to Margaret\'s question
which I will later is I\'m still trying to assimilate the whole notion
of unapproved events and how that fits into the coexistence discussion.
To me, it seems very peripheral to coexistence and maybe gets back to
the scope of what we\'re talking about.

But, that being said, I know Bernice mentioned and alluded to other
activities. I just didn\'t want to leave a gap or a misperception that
when it come to unapproved events there aren't other industry efforts
outside of ASTA. They\'re there to look at, you know, how you sample
for, look for unapproved events in your seed stock, your foundation
stock, your breeder stock, etc., so, companies are very diligent in
doing that, again, because it\'s in another association, most namely,
BIO, where they\'re doing a lot of that work and through the member
companies. Just wanted to, you know, put that on the table and recognize
that that is occurring.

DR. SLUTSKY: And BIO and ASTA, you know, we \-- our separate efforts
will be in OR (sic) in a sense because members of BIO, although we
pretty much the same members in terms of the trait providers, but, their
efforts will be focused on more biotech specific areas which is
appropriate and ours will be focused, as I said, on seed, be it biotech
or not.

And I don\'t see that there will be, you know, any gaps. If anything,
we\'ll probably overlap a bit.

DR. MELLON: Could I just follow up and ask whether you have a similarly
seamless association with the public plant breeders?

DR. SLUTSKY: Well, we have a lot of cooperative efforts with the land
grant universities and primarily not necessarily, you know, through ASTA
itself but through our members and there\'s a group of commercial plant
breeders that \-- Council of Commercial Plant Breeders \-- but is it a
part of ASTA that they meet when ASTA meets and I know that they have
cooperative efforts with the land grant universities.

There are efforts and ways, you know, of enhancing the maize germplasm
that is \-- again, that\'s not an official ASTA activity but we
facilitate it happening by having them meet when we meet and our
members, you know, are part of that effort so it\'s not, you know,
ASTA\'s not paying for that effort, but, we\'re \-- I guess I would call
us facilitators of the effort.

MS. SULTON: Nick?

MR. KALAITZANDONAKES: I just want to make a comment in response to what
Randy said and I don\'t know I can actually talk about this with Randy
directly or make the comment for the benefit of everybody. Okay.

So, Randy, I actually started doing some work on this and what \-- the
research is not done yet, but, what we found is, for example, in 2006
there were roughly a little bit over 2,000 hybrids that we could
actually find that were sold in the U.S. And \--

DR. MELLON: Corn?

MR. KALAITZANDONAKES: Corn. This is all corn. And I\'ve been trying to
trace back my multiple years of how many hybrids we had in years before
biotech. So, I haven\'t done that yet but I have counted one that was
way back in \'97 so, you know, close enough. And at that time we managed
to county roughly about 750. So, what has happened, certainly we have
shown a growth in the number of hybrids and certainly there\'s a very
significant number of hybrids even for very, very small markets for
conventional hybrids in 2006.

But, this came to an overview or trying to address is that the
conventional base of germplasm shrinking and we haven\'t seen yet now
with 70-80 percent adoption rates, you know, in all likelihood you would
see a shrinkage, but, you would kind of expect that.

DR. SLUTSKY: Again, if I could just add something and this is going to
corn again, but, I know that we have - it\'s a corn and soybean
basically search committee and \-- and their purpose is to really
promote students to go into traditional plant and plaint breeding
because our concern is that there won\'t be the expertise there in plant
breeding. And, you know, we had a very lengthy discussion as to what we
could do and there wasn\'t a specific outcome yet of that discussion to
help, to see if there\'s a project literally done by ASTA, it would have
to be done by a public institution, to get \-- to essentially update the
baseline for the diversity of the maize germplasm so that we have
something to compare against to make sure that, you know, the germplasm
isn\'t becoming more narrow over time.

And, again, we don\'t have \-- we weren\'t able to think of the best way
to do that, but, I bring that up just to let you know that there is \--
that it\'s not in anyone\'s best interests certainly to have a shrinking
germplasm.

MS. SULTON: Adrian.

DR. POLANSKY: Mine\'s just basically kind of a comment, just a follow
up. I certainly agree with what you just said and in terms of diversity
of ability to have seed available, conventional seed available as far as
at least the area of the country that I\'m familiar with there is, has
been a diverse state of seed available.

On the other hand, biotechnology does bring some advantages in terms of
productivity, whether it\'s resistances or whatever other \-- I think it
was mentioned here earlier this morning, earlier today, that a trait or
whatever, brought a 20 bushel yield advantage. Well, that\'s part of the
reason why biotechnology is significant and important. That doesn\'t
mean that traditional breeding techniques ought to be abandoned, but, it
does, I think, to expect the traditional breeding would have that same
yield potential or the same disease and traits and disease resistance is
not practical either. That\'s why the technology has advantages to
society, I mean, it\'s much beyond producers. There are a lot of hungry
people in the world.

But, anyway, to expect that there wouldn\'t be yield advantages in terms
of productivity would mean we wouldn\'t be here today talking about
where biotechnology fits into to coexistence and all this if it didn\'t
furnish some significant advantages.

DR. SLUTSKY: And if I could just make another comment. When we look at
where, you know, research dollars have been spent I mean, the vegetable
seed market is a significant portion of the seed industry\'s research
that\'s being spent in the vegetable food market and and also this
diversification of seed, I mean, clearly coexistence is an important
component, you know, in terms of diversification of our food value chain
and as it becomes less and less functional.

MS. SULTON: Abby.

MS. DILLEY: Well, I just had \-- did you call on me?

MS. SULTON: Yes.

MS. DILLEY: I just had a lead-in question for Bernice coming out of USDA
and I guess it\'s building onto what you already said in terms of a
question of what your perspective is in terms of the role of the public
sector and USDA and it seems like there\'s diversity and integrity of
germplasms but then there\'s also a seed availability and then they\'re
not the same thing and so what role the public sector plays in terms of
availability; some of it may be market information; but, some of it that
may just be availability or acceptability and you\'re being asked in
terms of how USDA could play a role in terms of addressing those perks
that the private sector may not for whatever reason but what about that
that are?

DR. SLUTSKY: Well, if there is lack of availability of seed \--

MS. DILLEY: Yes.

DR. SLUTSKY: I think, again, it\'s going to depend on the crop and the
public sector has always kind of filled in the gaps where, you know,
there\'s not enough return for the private sector and so I\'m not quite
sure, you know, what else to say about that other than of course
there\'s a role.

MS. SULTON: Randy.

MR. GIROUX: So, the time of coexistence and one of the issues that came
up a lot was this whole idea of seed being contaminated, for lack of a
better word, with GM traits. And, so, can you comment for me on what
mechanisms exists within the seed trade or the ASTA members to test seed
and then is there any \-- as priority to that, are there \-- can you
make any comments on what level of performance of the seed testing labs
that do the testing for them because if it\'s bad, and you can\'t make a
silk purse out of a sow\'s ear, so, what do we know about testing seed
for GM traits and how \-- what\'s the performance of that industry
today?

DR. SLUTSKY: Wow, that\'s going to be a tough one to answer across the
board, but, I think different companies take different approaches in how
they test. Some companies test in-house. Some companies use third party
labs. And, so, it really depends on the company and what I can say is I
have visited a number of our companies and the quality assurance/quality
control programs and to my relatively naive eye admittedly because for
some of those crops I wasn\'t familiar with and this is very impressive
and it has to be because, I mean, just think about it.

If they\'re providing seed to their customer and that seed doesn\'t
perform the way it\'s supposed to be performing they\'re not going to be
a very profitable company and I know that a great deal of testing is
done and this is if seed is going to the EU, for example. And there\'s a
significant number of dollars being spent by companies who want to sell
seed to the EU for those crops for which there are biotech traits in
testing to meet the EU labeling standard.

I don\'t know if that answers your question or not.

MR. GIROUX: No, it doesn\'t really. So I know that the USDA GIPSA has a
proficiency testing program that looks at testing labs and the ability
to test for certain traits. Does the seed industry have something now?

DR. SLUTSKY: No. We don\'t \-- I mean, ASTA doesn\'t have a program like
that.

MR. GIROUX: Can you comment on the seed trade more specifically than
ASTA? Is there anything else going on around performance?

DR. SLUTSKY: I mean, we have \-- you know \-- there\'s the American
Association of Seeds Certifying. ASTA has certain standards and there\'s
the American Association of \-- there\'s a lot of these associations \--
the American Association of Seeds Certifying Agents who also has certain
standards. AMS has standards. They have what they call proficiency
standards so you can apply \-- you know \-- you can apply for
essentially the AMS stamp of approval for the quality of your seed. I\'m
talking about quality in general.

And there\'s Seed Certifying Testing Institute, I think it\'s called,
that is probably going to merge with AOSR so there are a number of
different \-- number of different third party organizations that can
certify, you know, how seed are sampled and tested.

MS. SULTON: Russ.

MR. KREMER: Yes. Thanks, Bernice, for the subject area and showing an
adverse seed supply and it is very near and dear to my heart to talk
about coexistence. I guess I\'m concerned as a family farmer and I do
see it firsthand that the problems and challenges that we have in a very
concentrated, consolidated business structure, does that concern your
trade association?

To give you an example. You know, when I\'ve given talks to some of the
presidents of smaller seed companies that, you know, when they show us
their germplasm, you know, they say the source of my germplasm from a
seed company that, you know, controls the biotech crops as well as
organics, as well as vegetable crops or whatever and then they seem to
have a tendency to push one.

In fact, he says he\'s forced to buy 75 percent of his genetic needs as
biotech. And I\'m just wondering whether that concerns you as well as a
consolidation of the industry. To me, that\'s almost counter to what I
believe a fair, competitive, affordable system of acquiring seeds.

DR. SLUTSKY: Well, I mean, we don\'t have the position per se on
consolidation. You know, we as an organization we represent the large
seed companies and the very small seed companies of which there are
quite a few. And we want to represent all of them fairly and they all
have a voice in what we do.

And I guess our concern would be and we haven\'t seen significant
evidence of this, if our customers weren\'t able to get the product they
want and just have to say we have not seen evidence of that. And I would
expect that we would. So, in terms of, you know, who we\'re asked to
represent and how represent them it\'s one member, one group, if you
know what I mean.

MS. SULTON: Carol.

MS. FOREMAN: I was interested, Bernice, because I think you said that
there was increasing demand in vegetable seeds. Did I hear you say that?

DR. SLUTSKY: There're a lot of research dollars that go into those.

MS. FOREMAN: Is there anything coming out the other end? Have you got
new and different traits that \-- are there any \--

DR. SLUTSKY: Are you talking about biotech or just in general?

MS. FOREMAN: Well, actually I mean in general, but, I\'d like to know
both specific and general.

DR. SLUTSKY: Yeah. I\'ll be honest. I can\'t answer you on specific, you
know, \--

MS. FOREMAN: I\'m actually interested to know that.

DR. SLUTSKY: You should come to our \-- we have a vegetable and flower
conference.

(Discussion off the record)

MS. SULTON: Leon.

MR. CORZINE: Bernice, I\'ve had the opportunity to visit some of the
vegetable production and it is impressive. The research that\'s done
there and to our surprise there\'s actually some new biotech products
out there that not many people know about that are being used after
several years and the good thing is it is more into disease resistance
and fungus issues with squash and some other things.

But, on the diversity of seed I\'ve also been impressed and your
figures, I think, are real because what I see in our area and our family
farm we have more choices than we\'ve ever had before on what we buy and
as an organization we watch pretty closely what availability is because
we need good based genetics \-- I mean good based genetics are good
based genetics whether the biotech\'s trait is in them or not.

And have these things, as I mentioned earlier, about refuge areas that
are a very important requirement and, so, we watch that closely and it
is there.

Now, it just makes economic sense for the industry, as I see it, the
more they can do to the purity all the way from corn and soybeans to
vegetable seeds, it\'s an economic advantage for them. And that\'s why I
was curious about if everybody\'s moving towards the ISO and that\'s an
international standard you mentioned ISO 9000 and it doesn\'t matter if
you\'re in Austria or if you\'re in Italy or if you\'re in the U.S.

DR. SLUTSKY: Right. Right. And that\'s certainly the advantages of that.
Like I said, I think there\'s different parts of the seed industry that
are probably moving faster towards something like that than others.

MR. CORZINE: I think your association would work pretty well with us
because we do keep an eye on that to make sure that we do have what we
need for the 20 percent refuge area and the diversity there as well.

DR. SLUTSKY: Right.

MS. SULTON: Mardi and then Duane.

DR. MELLON: I just wondered if you could \-- you did say that there were
coexistence issues with vegetables and I\'m kind of wondering what they
might be. I mean, my understanding is that there are other you know,
other than the Freedom Two squash there really aren\'t biotech
vegetables out there to speak of. And, so, I just wondered what you were
referring to.

DR. SLUTSKY: Okay. I don\'t remember saying that specifically. I guess,
when I was referring to coexistence I was thinking of it more broadly,
not just biotech versus non-biotech. But, you know, again going to the
point where you have an increasing number of niche markets and all those
markets have to exist together and I think that\'s the point I was
making. They do now and, you know, the market has always worked that out
and I think that was the point I was trying to make.

DR. MELLON: Thank you.

MR. GRANT: So, this is actually similar to a follow up to that but with
a different twist. First, the sugar industry is commercializing under
British Sugar beets and I know that one of the seed suppliers has
elected to move their GM seed production exclusively to the U.S. So, as
a framer for the question I also know that seed production is a big deal
in part of Idaho and there was quite a bit of concern on the part of
some of the opposing producers when there was a transgenic version of
that crop being commercialized and I\'m concerned about a lot of
potential loss of corn markets. I don\'t think that\'s actually occurred
in that seed industry.

So, this is a question. It\'s been ten years since the first \-- eleven
now since the first transgenic crops were commercialized in the U.S. Has
the American seed industry noticed any kind of a shift in their ability
to sell into ex-U.S. markets with the wide variety of seeds that we
offer? Has there been a noticeable shift?

DR. SLUTSKY: No is the short answer. Not because of biotech. Now, for
some seed if we \-- you know \-- if there\'s a market for, you know,
melon biotech seed and there\'s, you know, a significant biotech
component to that food a lot of money and effort is putting into making
sure that the seed we sell meets those standards, and particularly if
they\'re government, you know, regulatory standards.

So, you know, that has added a cost to the company. There\'s no doubt
about that. I\'ll be honest. I think phytosanitary issues have a lot
bigger impact on our seed exports than anything else. In fact, that\'s
our \-- on the international front, aside from intellectual property,
that part takes top priority.

MS. SULTON: Nancy.

MS. BRYSON: Bernice, do you think that USDA could be doing more from a
public sector standpoint to preserve the diverse germplasm sort of
enhanced \--

DR. SLUTSKY: When I sat at USDA I had the utmost respect for the
National Germplasm Program but since coming to ASTA it does only
increase. I mean, we work with them a lot. They come to all our meetings
as does AMS. So, we have a very close working relationship with those
parts of USDA and APHIS on the part of partnership, you know, that deal
with different aspects of our industry.

So, for example, under the FAMTA, the Field Area Material Transfer
Agreement that was recently negotiated, we were in constant contact and,
in fact, we went as advisors to USDA to those meetings and because of
course, you know, they wanted whatever was negotiated it had to be done
in a such a way and to a certain extent I think it was, so, that you had
reasonable contractual arrangements. And because that would place
constraints on USDA\'s holdings as well so other than \-- I don\'t know
if I\'m allowed to say this or not, but, I\'ll say it, other than, you
know, probably providing them with some more money they \--

Well actually \-- can I make a comment?

UNIDENTFIED SPEAKER: You\'re in the private sector, go ahead.

DR. SLUTSKY: My comment is if this committee is looking at other
recommendations to make to USDA that haven\'t been raised before about
things that are important for either coexistence or supplying all these
diverse clients in every market that\'s available, the one thing I heard
that I would hear from you is the importance of assuring a very diverse
germplasm, the most diverse that we can have that has the whole range of
seeds.

And, so, in terms of a recommendation to USDA, if there are areas where
it would be helpful for the germplasm center to have more resources it
would be useful for us to know that.

MS. BRYSON: Well, I know that there are some centers that have more
sophisticated facilities than others and depending on where the U.S.
Government comes out in terms of whether they will put those holdings
into the multi-lateral system \-- I don\'t want to get into all this
stuff on the subject area, but, depending on the way they come out with
that, you know, that could be an added burden on them in terms of
paperwork and all that.

MS. SULTON: Michael.

DR. DYKES: Yes. You know, I would almost argue that there\'s an increase
in diversity of the germplasm available for the last two years and I
think it\'s driven by two major things. One is I think the increased use
of markers and the computerized throughput, the ability today to surf
through thousands and thousands of crosses is possible that in just the
last few years would not have been possible to have done.

So, we\'re looking for corn, cotton, soybean germplasm across millions
of crosses from the farm because we\'ve got the market. We know what\'s
happened. We\'re doing it over a much \-- over larger numbers and we\'re
looking at globally at germplasm supplies that in the past years just
could not have managed all those. So, I think that\'s one of the things
it\'s done.

I think also just the fact that it has the capability we can look for
others so instead of looking at corn germplasm limited to the U.S.
we\'re looking at tropical varieties because we can put markers in there
for just the one or two things we want to look for in a tropical variety
without all the other things so that today we can bring those one and
two single bits of things, positive kinds of things out of the tropical
varieties and introduce them.

So, my argument would be and I think as part of what we\'re seeing in
the marketplace is we\'re able to bring changes and a much more diverse
application of global germplasm and mixes of that than we ever have
before. I think one example of that\'s been if you look at cotton.
There\'s been an introduction of a new cotton variety that has gone from
zero to probably a 25 percent market share in the last six, seven years
that originated from an Australian variety.

DR. SCHECHTMAN: It\'s non-transgenic.

DR. DYKES: It\'s non-transgenic. We said some other things we\'re losing
sight of. And the thing that I always explain to audiences is we don\'t
sell genes to farmers alone. If you\'ve got the very best genes but
you\'ve got a five year old germplasm, you know, it\'s kind of like
putting an XM radio in a Model T. You just don\'t do much of it because
farmers don\'t want that. They want the very best, the very latest
germplasm with the most traits, the very latest stacked types of traits.

So, this thing about what is the trait of the germplasm, it\'s both. If
you don\'t have the best of both you\'re not in the market. So, I think
we\'ve done a better job of that in my view, Nancy, over the last few
years just because of science and capabilities.

DR. SLUTSKY: The molecular \-- the use of molecular markers has really,
in my view, revolutionized how we do plant breeding. And I wish I had
brought a \-- I didn\'t know if I did have permission to bring it, it
was someone else\'s slide that was put up at one of the presentations in
our meeting in Chicago, but, they had two pie charts comparing clear
germplasm, I think it was 50 years ago, around that time, and where it
is now and the one from 50 years ago had, you know, a 25 segment, all
different colors, and the one, you know, now was a whole rainbow of
different colors and representing, you know, the diversity of that
germplasm.

And, so, I think, you know, you\'re absolutely right and, you know, the
project that ASTA is funding is to, for example, in corn providing a set
of molecular markers for corn that will be, you know, publicly available
when the project is done and it will be published in a peer review
journal and, you know, so the world can use those markers.

So it\'s really to no advantage to, you know, to not enhance, you know,
the pot we use to make these new varieties. So, once it becomes a
variety then, you know, we\'re going to fight tooth and nail for that
intellectual property, but, you know.

MR. CORZINE: Bernice, years ago the seed industry, the university
system, and corn growers were involved with the federal government on
mapping and \-- \-- and as we finished that up there was a great deal of
effort and work and a lot of coordination to make sure that that\'s all
public.

Everybody has access to that, right, and that\'s still the case so, you
know, I think we\'ve opened up a lot of things to make more available to
the public sector to add to diversity to pan out what Michael\'s saying
and I\'ve tried to say that we\'ve got more diversity than we\'ve had
before about ten years ago.

MS. SULTON: We certainly thank you, Bernice, for taking the time.

(Audience applause)

(Discussion off the record)

MS. SULTON: Well, the next thing on our agenda is to reflect a little
bit on our previous reports and essentially began this discussion
somewhat this morning. But, the instruction to the committee that went
out was to review the topics that were identified in previous reports
and discussions that we\'ve had to see if there\'s anything more that we
needed to say about those topics, specifically as they relate to
coexistence.

And, so, I wanted to open the floor to that discussions hoping that you
all had a chance to look at both the labeling and traceability study as
well as the last report that we gave to the Secretary back in August and
to solicit from you your input about the topic there that even need to
have something more and new or of great importance to USDA as it relates
to coexistence as well as hopefully we want to maybe avoid because
we\'ve addressed them completely.

Surely you\'ll enjoy re-reading those reports.

DR. DYKES: It would have been enjoyable to have re-read them but I
didn\'t re-read them. I have a pretty vivid memory of what\'s in them.

I guess my comment on that, that\'s a difficult question to answer until
we know and answer the question about what is the framework of this
report. If the framework of this report is going to be adventitious
presence then my conclusion is unless there\'s something new about it
we\'ve not already said, we\'ve opined on it at length to Carol Tucker
Foreman\'s point, not consistent with Mardi Mellon\'s that maybe we\'ve
not done it.

But, Mardi\'s coming at it from a different angle on the unapproved
stuff. To me, until we decide on the framework for what really this
problem coexistence is that we\'re \-- I don\'t think that we\'ve
defined the problem and I don\'t think we\'ve set the framework to what
we\'re going to talk about.

So, if we say we\'re going to talk about a framework that is only going
to be adventitious presence and if becomes simple as to have we said
enough already or have we not said enough. If we\'re going to define the
problem it is not adventitious presence then it\'s irrelevant to what we
said in the other report.

So, I guess, for me, I\'m having a hard time determining how to define
what that is because I have to warn you, I don\'t yet know what the
problem is we are addressing on coexistence in this report as it is
today.

DR. LAYTON: So, your question kind of goes back to Greg\'s question was
there\'s a big diagram and there\'s one circle sitting inside the other
basically and that big \-- what\'s the size of AP inside the other
circle if the outer circle is coexistence, what\'s left over.

DR. SCHECHTMAN: And what else is availing coexistence.

DR. LAYTON: What else is in the coexistence circle that\'s not in the
adventitious presence circle. And then Mardi\'s question would be is
there a piece of the adventitious presence that we didn\'t discuss
before.

DR. SCHECHTMAN: Right.

DR. LAYTON: I got it. Okay.

MS. SULTON: What I put up on the board, these are the big topics that we
identified in the last meeting relative to coexistence; not all of them
because of the size of the paper there.

(Discussion off the record)

MS. DILLEY: When we initially did this we had this discussion last time
it was regulatory standards which one sub-category under that was
adventitious presence and then we listed out all these things, but, if
AP is the overwhelming issue and we don\'t want to talk about it then it
will be a short report and even a further report on a further
discussion.

MS. SULTON: Jerry.

MR. CORZINE: The presence of unwanted stuff is the challenge of
coexistence. I mean, that\'s \-- you can\'t mention coexistence without
recognizing that adventitious presence is one of the challenges. Why
don\'t we just say that and leave it at that and we can refer to the
other 28 pages.

But, you can\'t talk about coexistence and pretend that adventitious
presence is not an issue. It is an issue and we\'ve discussed it enough.
So, why don\'t we say it\'s an issue and I don\'t care how big the
circle is, maybe it\'s so big there\'s not a whole lot of other stuff to
talk about, but, let\'s not talk about the other stuff.

MS. SULTON: Brad.

DR. SHURDUT: This gets back to Michael\'s point. I\'m still struggling.
We keep putting up frameworks to describe an issue that I really
haven\'t heard this group really articulate what the issue is that
we\'re going after. AP to me is in the solutions space area. If you
define an issue then the solution space says AP is part of it and then
what\'s the policy opportunity around AP or something else.

But, again, I get back to what\'s the issue. I haven\'t heard a lot
about things being broken. For a lot of things I think Nick brought up
before when you look at market mechanisms and legal mechanisms and all
that there are ways to deal with a lot of what we\'re dealing with today
and I really have \-- and then the other aspect is what\'s still broken
and what is in the policy opportunity that we can forward, you know, up
through USDA.

So, I\'m still back on step one before we even look at what are some
regulatory standards. I don\'t see a framework to discuss those aspects
until we define that issue I think more clearly.

MS. SULTON: Greg.

MR. JAFFE: I just wanted \-- I agree with you, Jerry. Like I was trying
to say before is that I do think that AP and thresholds are a major part
of coexistence. The question is are they the overarching thing that if
you saw the AP and threshold thing the rest of coexistence would go
away. But, there are other issues in coexistence that are important. If
AP and thresholds and so important to it and the overarching thing then
I think we\'ve discussed those a lot in the other reports and I\'m not
sure who much more consensus or how much more we\'ll be able to go into
other than framing it in a slightly different way in coexistence in this
report.

That\'s all I was trying to get at is, I mean, if really in the end the
major issue behind coexistence is AP then I think we did a fair amount
on AP and I\'m not sure even the committee may have changed it a little
you can get any farther on AP that it\'s worth spending a lot of time on
it.

DR. SHURDUT: You\'re going to deprive Sarah the opportunity \--

MS. GEISERT: No, Ron\'s walking me through it.

MR. JAFFE: What I\'m trying to figure out is are there other issues that
are important in coexistence that one could be solved or addressed
without AP. You know, even if you weren\'t to tackle the AP issue are
there other things in coexistence that one could raise with the
Secretary that would be important and have value and move the debate
along or solve some of the problems of coexistence or really AP and
thresholds, if you solve that problem all the rest of it would go away,
in which case I think we\'ve \-- I don\'t know, maybe you might have a
different view, but, we\'ve spent a lot of time the first couple of
years on this committee on AP and I think we got away. I\'m just not
sure we\'d get farther that would be valuable.

MS. SULTON: Which gets us back to my initial point. Michael?

DR. DYKES: Yeah, I agree totally with Greg. I think AP and thresholds
are part of coexistence. To me, I have to keep it pretty simple or I get
lost so, okay, we agree that\'s there. At some point in time we\'ve got
come back and say is there even less to be opined on that topic or not
and if there is we can do it. If not, we will take steps we\'ve already
done on it.

But, to me, what a fruitful discussion is what is the rest of the piece
of that problem that\'s not AP and thresholds or what\'s that other list
of problems that we can reach a consensus on that, yes, these are the
other things that are in that puzzle of things called coexistence and
then we decide what those are and the framework and how we\'re going to
talk about those and then we come back and determine and decide have we
said what needs to be said on AP and thresholds or is there another
approach; is there more to be said about that.

To me, it\'s a dichotomy so park that say, yeah, that\'s a piece of it.
Let\'s have a discussion about all the other things that are out there.
I think that\'s what we\'ve never talked about.

MS. DILLEY: Well, I think we have. I think it\'s in the paper. I mean, I
think that in terms of transparency or a potential provision in market
infrastructure and some of these other pieces was our first run at that.

DR. DYKES: Okay. Well, we should go through the paper and say once we
got the \--

MS. DILLEY: I\'m defining the problem, but, I mean, if that still
doesn\'t answer the question of what\'s the problem I think that that is
the question the committee\'s wrestling with is, is there a problem? And
the problem is being defined as choice of customers, consumers, and
producers looking at it through these different pieces so the question
of seed we haven\'t actually addressed that yet. There\'s still that if
there is we haven\'t answered that yet then maybe that\'s a role for
USDA. I think that came out of it.

Well, if there is, yes, there\'s a role for USDA but how do we get it to
actually answer that question. I don\'t know if there is a way to answer
that question. Or, if there is not enough transparency or information
flow and the way it is explained here for like some markets, like
specialty markets for organics have allegedly attracted less attention,
if that\'s a market imperfection and that would make it more efficient
to expand, then, yes, we need to focus on additional information and I
think that\'s the way we had set this up is we have to have that
discussion in order to define the problem and define what the problem is
is and then we talk about what might be a ways of addressing it if it is
a problem.

I don\'t think we can answer it without having a discussion. That\'s
kind of our dilemma here is we don\'t know how big of an issue it really
is until we actually have a discussion.

So, I think the paper actually lays out a way to have that discussion
but as with all committees we keep asking the question and then not
having a discussion to be able to get to the next step. So, at some
point we have to take a launch that this makes the right framework to at
least have that discussion.

Mardi, you\'re going to put your card up.

DR. MELLON: I agree that we need to define the problem. I think it is
just \-- but it\'s frustrating on many levels. USDA gave us this issue
to talk about. I mean, part of my frustration is, what does it think is
the problem? Why did that rise, you know, from the agency\'s point of
view.

MS. DILLEY: It\'s coexistence, not AP now.

DR. MELLON: Yes. In terms of coexistence, whatever the problem they gave
to us. Now it also \-- I mean, it seems to me that \-- so I\'m
frustrated there. It seems to me that there are real problems. I think
we heard from the organic community. They do not feel that they are
being given the same level of resources and support so that they can
compete on a level playing field \-- you know \-- with either
conventional agriculture or certainly with the biotech industry.

Russ\'s concerns about the \-- I mean, the inability to find
conventional seed, the subtle ways that the seed industry \-- I mean,
you know, Bernice is saying every company gets a vote. Well, you know,
some animals are more equal than others and I can tell you in the seed
association if you\'re \-- you know \-- the big guys are going to get
more priority than small ones and, you know, those issues of
concentration are of interest to a lot of people. They do to them seem
to restrict the availability of seed and the ability to compete.

But, and I would say from the consumer point of view it\'s my choice as
a consumer is to get food that doesn\'t have biotech in it. I don\'t
have that choice. And I guess I\'m being told that\'s not a problem,
forget about it. That I don\'t appear to have that choice in the
American food system. I\'m being told that that\'s not a choice that
you\'ve got.

Now, we could \-- and then the question is, is that a problem or not? As
I said, I don\'t \-- I mean, I don\'t know. We can \-- I think there are
a lot of consumers in that category. They would like to be able to
choose food that doesn\'t have even low levels of biotech for all kinds
of reasons. All these reasons. Those folks are simply \-- that market is
not being served.

And I don\'t know who \-- you know \-- it\'s hard to say \-- it is an
issue whether you frame that as a problem.

DR. LAYTON: But, Mardi, is that market being served less than the market
that says I don\'t want rat hairs in my coffee?

DR. MELLON: I don\'t think that \-- I think that there is no market for
I don\'t want a large number of rat hairs in my coffee.

DR. LAYTON: I want zero rat hairs.

DR. MELLON: But, I don\'t think there is a market for I want zero.

DR. LAYTON: For either. For biotech crops or for \--

DR. MELLON: No, no, I think people feel differently about biotech than
they do about rat hairs and, in fact, for some people \--

DR. SHURDUT: Well, I do too.

DR. MELLON: And I can make the argument that they should care more about
rat hairs or that they should care more about biotech, but, that\'s what
I\'m \-- and I realize I\'m just, you know, I\'m kind of going around in
circles, but, we either \-- we can question those choices. We can say
well as a committee we know that there are some flaky folks out there
who appear to want food that doesn\'t have even low levels of biotech in
it, but, that just ain\'t going to happen in the U.S. and that\'s the
end of the discussion.

We don\'t honor those requests. We think they\'re crazy. They don\'t gel
with our views so, you know, let them take a walk. Or, we can take a
different view and say that there is a problem because it is a choice in
the marketplace that, you know, a number of people given a chance, they
would choose that food and we could see if we couldn\'t take steps that
would make more of that food available, allow the farmers who want to
produce that food, and there are a number of them out there, to enable
them to do that.

But, it does \-- you know \-- it does hinge on what we\'re willing to
define as a problem.

MS. SULTON: Michael, you had your card up before Mardi raised her
question.

DR. SCHECHTMAN: I want to thank you. I mean, I think part of the reason
for having this discussion, I think that\'s only part of it. But, I
think that is in fact one part of it that I mean, obviously the organic
sector is a very fast growing sector and I mean, one could argue the
reverse, that that does work, it\'s growing so fast, obviously it must
be doing well. But, \--

DR. MELLON: No, it\'s not. It\'s getting screwed in terms of resources
from the USDA.

DR. SCHECHTMAN: Yeah, and, I mean, and I think there\'s a distinction to
be made in terms of whether the resource allocation is enough versus
poor core research for example and whether that\'s a part of coexistence
or whether, for example, information about the markets that\'s going to
help organic producers know what their consumers want and meet the
particular needs.

I mean, I think there\'s a set of different tests of things, but, I
think the other reason that USDA has been interested in this topics
again what was talked about earlier which is that markets are becoming
increasingly specialized, not just organic, but, there are getting to be
more vertically oriented. Different types of products with different
specifications and whether or not you want to say that it is getting
more complex or not. All of these things are going to keep being
produced out there. Some will be biotech. Some will not. But, there are
going to be many more of them, whatever "them" is.

And that\'s the general issue that we\'re sort of looking towards the
future. Now, in terms of the issue of coexistence and where AP fits into
that, I mean, I think the tool that measures when there\'s a coexistence
problem at present is when someone detects something that they don\'t
want there. That having been said, you know, I don\'t know how much more
the committee is going to want to say about that that underlies all of
these discussions that someone identifying a problem, and that\'s
usually the way that it happens, is what triggers someone\'s concern
about there not being coexistence, but, there are still a whole host of
other things that were mentioned at the last meeting as possible things
that might contribute to farmers working better, markets being served
better, producers having a better sense of what consumers want, farmers
being able to get to the seed that they want, possibly, you know, just a
whole host of other things that don\'t focus specifically on the
adventitious presence trigger portion of it.

So, and I think, you know, without trying to minimize that piece of it
in any way I think that there are a host of other things because we
don\'t want to minimize the problem that we\'re talking about, whether
or not everyone sees that as a problem and I think that people take
different views. But, there\'s a segment of folks that see this as a
problem and the marketplace is certainly tending towards increasing
stratification and that creates at least a theoretical issue towards
going to the future and making sure all those things work together.

MS. SULTON: Duane.

MR. GRANT: So, I think it\'s a little bit constructive to look to at the
presentations that we\'ve had and what we thought we knew going in and
what we think we know now after listening to the presentations. I think
there was a general sense at the beginning, and maybe I\'ll just speak
for myself here, but, I think it\'s fair to say that there was unease on
the committee about how coexistence is actually working out on the farm
and we had our first round of presentations and found out that, in fact,
it was working pretty well.

And there was unease about the legal liability and we had a presentation
this morning that said that there\'s not a huge issue there. It\'s
definitely not a trend line of ever increasing lawsuits between folks on
different sides of the fence, one growing biotech and one growing non.

And, so, I think there\'s value in that and if we\'re looking for what
we want to put a report I think it\'s probably valuable to say that no,
we\'ve looked at it, we\'ve heard from a number of producers on, you
know, every discipline, from organic to conventional to transgenic and,
in fact, out in the countryside it\'s working pretty well.

We\'ve got systems in place or other more elaborate tools that we\'ve
heard some about this morning as far as production zones if we want to
go there. We\'ve got tools there if the participants in the industry
want to do that they can do that. So, in the countryside coexistence
really isn\'t that big of an issue. The tools are in place.

There\'s value to me in this committee to say that because there are
debates globally around quote systems and I think it would be valuable
for folks in the U.S. to say that, in fact, at the farm gate we really
don\'t have a significant issue. We have methods that\'s in place to
resolve those issues.

On the other side, I think it\'s also been instructive to listen to the
market end and I perceived that discussion today, the market works and
if it wants non-GM it simply expects non-GM and somebody finds a way to
provide that at whatever the cost is. And it hasn\'t always worked out
to manage as a producer but, when I look at why, again, it gets back to
the AP and the threshold issue.

Wheat, for example, we haven\'t been able to commercialize the
transgenic wheat just because simply we have a half of our market
outside of the U.S. and thresholds and adventitious presence prevent us
from making that transition. So, you know, the issues, as far as finding
solutions, are AP and threshold related. Other than that, I think it\'s
pretty useful to say that within the U.S. we\'re at thresholds that
operate in our marketplaces. We\'ve pretty well looked at coexistence
and it\'s working. We\'ve got systems that are working.

MS. SULTON: Nick.

MR. KALAITZANDONAKES: I guess my comment is going to be very similar to
Duane\'s only from a slightly different perspective which is how does an
issue get on the table or makes it to the document as an issue? Is it
sufficient for any one of us to say it\'s a problem or somebody told me
or there\'s some elements out there or do we actually have a higher
threshold to demonstrate that there\'s somehow is an issue and what is
that threshold?

And I\'m going to use an example because we\'ve had a lot of discussion
about seed today. So, we\'ve heard from Mardi and Russell that, for
example, the organic industry is not getting enough attention on the
seed side. And, so, the question is, how do we know that that\'s an
issue? And I\'m posing this. I\'ll preempt the discussion. What kind of
numbers do we now have or can bring to the discussion to actually have
any forum discussion about much of a problem that is?

So, I was struck, for example, in November I was in Europe to discuss
the issue of thresholds with the European Commission and I, by accident,
went to the European Seed Association meetings and I was struck by a
single statistic which I found absolutely unbelievable.

So, here\'s the corn, seed corn industry in Europe, which is almost as
large as in the U.S., and, so, they have their annual meetings and they
have presentation after presentation and they are talking about acres
and so on and they reported these three acres apparently about organic
seed for corn in Europe.

And, now, you know, we all know that certainly the European organic
industry is not under-subsidized. The European Commission and the
European Union has spent a lot of money. There\'s a lot of research and
I was struck by the fact that there were less than 400 acres of organic
seed for corn in Europe and the seed suppliers were complaining that
there\'s no demand and they\'re about ready to close the program. And I
was just absolutely taken aback because I was thinking that if there was
any place that the seed market for organic corn would be would be in
Europe.

And, so, I\'m using this as an example where there is some \-- at some
point we have to come up with some minimum benchmark or minimum
threshold of argument where a problem doesn\'t make it into the
discussion just because we think that is a problem, but, we still bring
in data.

And I would very much encourage to take a little bit more time and bring
diverse opinions, both from one side of the argument into the other,
but, also hold the presenters to the standard that says bring evidence
in. Whatever the position is, I am perfectly happy to listen to biased
positions. I have no problem, but, bring in evidence that allows the
rest of us to actually show through what is fiction and what is reality
because I think at the end of the day that\'s where the biggest issue
is.

And if we keep producing laundry lists of anything that we\'ve heard or
somebody said that it\'s a problem then we are not really doing a whole
lot.

MS. SULTON: Adrian.

DR. POLANSKY: I like what the last two people said; most of what I was
intending to say. But, I would add just one more thought. And certainly
I understand that there are consumers that want to buy other than
genetically enhanced food products. I mean, that\'s clear.

On the other hand, there are some others, even though not in the food
safety system whether it\'s got insect parts or rat hairs or whatever,
but, I will feel a whole lot better when wheat is not produced with
vomitoxin in it and not fit. That\'s my value system says that\'s
important and some of us would like to consume wheat that doesn\'t have
wheat scab and vomitoxin potential even or maybe some of us would like
to be able to eat peanuts that don\'t have allergens.

There are legitimate reasons why some consumers in this country and the
world world like to have those opportunities. So, we\'ve got two
different, at least it\'s much more than that, but, at least two sort of
general value systems here that coexistence in my view needs to be
successful so that both of those value systems can have at least almost
everything they want and without telling one or the other that they
can\'t have most of what they want.

And what\'s just been talked about here, I think, is instructive and I
would just put that on the table.

MS. SULTON: So you want to articulate the reasons why people would want
things to remain separate, is that what you\'re saying, is the reason
for coexistence?

DR. POLANSKY: What I\'m trying to indicate is that some have \-- I mean,
don\'t know how to say it to articulate it better, but, there are those
that because of whatever reasons want to have non-biotech food to
consume.

MS. SULTON: Right, I agree.

DR. POLANSKY: There are other \-- and I can\'t argue with that because
that\'s a fact. On the other hand, there are some of us, and I think a
significant number of people, that understanding the choices that there
would be would make a different judgment and so we\'d have two basic
groups of people that would like to have two different sources of food.

So, that\'s why we\'ve \-- why there\'s a need to come to some
understanding of how these different sources of foods can be produced
and go through the marketing system and reach the consumers that
they\'re intended to reach without one or the other saying, and that\'s
what I guess is a concern to me is one of the other side saying that we
have to set up a coexistence process that we have to choose one or the
other and that\'s what I hear, I think, at least to some degree.

And, to me, that\'s not \-- that\'s not a reasonable choice and it
doesn\'t make sense to me so and I don\'t know if that clarifies it at
all that my value system is that if they\'re biotechnology I can have a
more nutritious food product and I want to be able to choose that. I
don\'t want to be precluded from that nor do I want to preclude somebody
from not.

Again, that\'s why it\'s important to resolve the coexistence and how do
we move forward to reasonably provide those choices.

MR. KALAITZANDONAKES: I just wanted to make sure. I\'m not where Adrian
is. I\'m not exactly in the same place. I wanted to know whether we are
not servicing those two. I don\'t care what\'s driving their
preferences. And Adrian just said and Mardi previously said that there
are people out there that are not being serviced and my question is, how
do we know? So, that is my question.

I don\'t care why, what\'s driving their preferences. I want to know how
do you know that a subset of people are not being serviced by the market
because up to now the argument has been that the market is actually
working pretty well. So, I want evidence of that. There are segments of
people out there that are, in fact, being precluded from making
decisions so I want to make sure that this is initiated and that\'s the
kind of evidence I would like to have.

DR. SCHECHTMAN: I just have one thing to say on that and that is that I
think it\'s still a little bit of an open question. I think not everyone
will necessarily feel that everything is fine if simply you say that the
markets are working and that people are getting things. And I think this
is part of what you were driving at, Mardi, that if we say that people,
that consumers may be getting products, but, farmers of a particular
slice of producing things may still not be getting a fair shake in the
overall process and that\'s maybe part of the question that you could
argue that the legal system is resolved and the markets are producing
products but still not everyone is being treated equitably and I think
that\'s part of what you had in your chart but it\'s not simply the fact
that markets are working.

MR. KALAITZANDONAKES: But, let\'s articulate how that is working out. In
other words, why people are not getting a fair share and a fresh shake
and how does that work.

DR. SCHECHTMAN: And where\'s the information.

MR. KALAITZANDONAKES: Exactly.

DR. DYKES: And to put words in there, fair, equitable, I mean, as
defined by whom.

DR. SCHECHTMAN: I think that\'s a perfectly legitimate \--

DR. DYKES: It works.

DR. SCHECHTMAN: I think to explore and to look for the evidence for what
the problem actually is I think is a fair question.

MS. SULTON: Carol and then Leon.

MS. FOREMAN: Yeah. I was to respond on two or three things. I think one
of the big issues is there is \-- people here advocate establishing
adventitious presence levels that you would have to accept as meeting
the standard for organics. So, even if it nobody\'s been denied right
now, if the given is that we\'ll have in organic products a certain
level of genetically modified products and they still are organic then
some people will, in fact, be denied, even if they\'re not being denied
right now.

It\'s hard to argue that anybody\'s being denied access to non-allergic
peanuts since there aren\'t any. The technology hasn\'t produced and the
market has not chosen to market non-allergic peanuts or peanuts without
aflatoxin or any of the so-called nutritious fruits and vegetables that
everybody tells me are sure to be there if we just get out of the way
and they\'re there. There may be a market for them, but, they\'re not
there now and the question is will they ever be economically feasible, I
don\'t know.

Two points. I agree with Nick about having the discussion of what the
reality is and one of the things that I feel strongly that we need to
have is a speaker who takes a different point of view than the one we
heard this morning. There\'s a lot of people who think that they\'re
including folks in Arkansas and Mississippi who think that the legal
issues aren\'t settled.

And, frankly, I think the notion that this is about rat hairs \--

DR. LAYTON: I was going to say \--

MS. FOREMAN: Really? Yeah, I know, but, it\'s come up so many times and
other people around the room say, yeah, and it\'s inherently derogatory
and negates the value of somebody else\'s position that they want
organic without GM corn in it. I tell you that if today the FDA decided
they wanted to establish for the first time a limited number of rat
hairs or beetle crusts in flour it wouldn\'t happen today. It happened
at a time where you have the information, instantaneous information to
pass on that we have now, and, as a matter of fact, in my youth when
everything was really boring I\'d put out a press release about rat
hairs in flour and it would always get a little flurry out there.

It wouldn\'t happen today. It wouldn\'t. So, whether you like it or not
we\'re dealing with a reality of information technology that lets me and
other people know something that they may not have known before and
they\'re going to object. I think if we\'re going to do this examination
of reality I\'ve got a list of people that I think have a different
reality than some of the folks here and dated about that.

MS. SULTON: Leon and then Mardi.

MR. CORZINE: I think this discussion is really useful and it does get
to, I\'m like Nick, I would like to see a presenter or somebody with
real data so we can get away from some perceived things. And I think one
thing that is perceived that is not reality is that we, in production
agriculture who are also consumers, that we do produce for the
marketplace. There is a market demand. We produce for that market
demand.

There is more market segmentation, if you will, and I call that market
opportunities whether it is for organic production, whether it is for
Taco Bell, or, whether it\'s for, we have Frito-Lay in our area. We\'ve
got Staley, [Dayton Miles (sic?)]{.mark} has food products or for an
ethanol plant and they\'re being different things, different specific
traits in corn or so any other grain that will enhance the production in
those. [Hardiless]{.mark} worm corn helps me, bigger flakes, and we have
some biotech traits that are helping us on the way, but, as we do that I
have these opportunities and so does Duane, or anybody else that\'s out
there producing and part of that you look at what is available and what
a consumer wants and I think we\'re producing for the end user or the
consumer. Duane is, I am, and then it backs up to Randy or General Mills
or ADM and we\'re talking about the food chain and we\'re talking about
being able to identity preserve.

We\'re doing more things with containerizing. But, the point is we\'re
producing for the marketplace. If you look at organic, I could grow
organic if I want to grow organic. I can get the seed, I can certify. It
takes three years to do it. I can do all those things and I think the
organic folks, if they want to, a lot of their sales, and Lynn Clarkson
talked about it, he\'s the guy that markets to the organic market, gets
a very nice premium for that, and it is a perceived value.

And also part of that perception, if it\'s not a zero level of GM, it\'s
a small level and that\'s what a certain segment of the market, for
whatever reason, wants. So, but, it is a small market. And we talk
about, okay, organic production is growing and it is. But, if you look
at it by comparison the growth of biotechnology, and there\'s a reason,
an economic reason for it, just there is no comparison as far as the
growth is tremendous and the biotech arena, if you want to compare that
to the organic arena, and that\'s why there is more research into that
arena than there is in the organic arena because of what the market is
asking for and what the opportunities are for return on investment. I
mean, that\'s it; universities as well.

I think you can make the reasoning in many places if you look at percent
of markets there\'s maybe too much research going into organics because
of where you look where the real growth markets are and potential. One
of the things, you know, research that I want and I think it is a
reasonable want is drought tolerance. Well, you know, I can\'t have it
today, but, am I going to have it in a few years, yup, I am, and I\'m
going to have some other things that are going to help enhance my
production and enhance the bottom line on my family farm and that\'s
what we\'re after and we\'re going to supply the marketplace.

And I think Adrian said it very well about reasonable choice. You know,
there are some things that I don\'t know if USDA should worry about
addressing. I might [want to grow on the water so I won\'t have to turn
on the light to find it at night,]{.mark} okay, but, I don\'t think
that\'s a reasonable request and, you know, if you get to every single
request that somebody wants and if you cannot meet that, is that a
market failure, I don\'t know, maybe it is, Nick, but, you know, it\'s
not a reasonable request.

And I think that if there is a market demand you \-- we are going to
supply it. So, I really get back to what you mentioned, Brad, earlier
on. I would like to see really where the problem is and then we go after
it. Let\'s see, because we have had examples. I really expected Lynn
Clarkson to talk about the problems or the other side because we
considered him sort of the other side of the marketplace but we work
with him.

And, like I say, I\'ve looked into delivering grain to him for the
reasons I\'ve already stated. So, we have taken care of a lot of these
things as far as coexistence, does it work, yeah, it does work. Now, is
there still that segment, let\'s see it. Let\'s get something so we
really know what we really should be talking about.

Now, I think there may be something in between here between what we get
on the shelf in the organic part of the store and on the farm, what
we\'re growing, and we saw part of that because Lynn Clarkson, again, is
part of that, but, I think we have infrastructure problems in the food
chain no matter which end of the spectrum you\'re talking about because
we\'re going to be talking about even volumes of products as we get more
efficient but also for the small niches and all those specific markets
that are going to be out there and I think that\'s where maybe we can
really drill down and do something that is significant and of value to
the Secretary and to USDA because there are some areas there.

But, first, let\'s get to what are the coexistence problems: what is the
problem? We\'ve taken up a number of presentations and I guess we can
keep getting presenters until we get everyone of us gets one to say what
we want them to say.

MS. SULTON: We\'re now at 3:15 and we need to take a break and get back
here by 3:30 so could we come back to this question in 15 minutes?

DR. SCHECHTMAN: Yeah, and we will check at 3:30. Before you all get up
and go out we\'ll check at 3:30 to see if we have any public commenters.
I just wanted to do something off the record now.

(Discussion off the record)

(Whereupon, a brief recess was taken)

DR. LAYTON: I have inquired and there has been no one signed up for
public comment. I\'m asking again. Is there anyone here in the room and
the hall who would like to make public comment? Going once, going twice,
going three times. Okay. It appears that we have no one who would like
to participate and make public comment at this time. So, therefore, we
will check again at about 4:30 to ensure that there is no one who has
come in late to make public comment during that public comment period
and I will turn the meeting back over to Abby.

DR. SCHECHTMAN: Just one little comment. We\'ve had a request from our
transcriber that if you have blackberries and phones that you shut them
off. They make static for the recorder and the transcripts \-- it\'s
hard enough to transcribe a meeting without added static so if people
can shut them off it would be much appreciated.

Okay. So, we\'ll turn back to Abby.

MS. DILLEY: I would suggest that we pick up the paper, that paper,
because it did come out of our conversation from last time. And if you
look at the middle of that second page it talks about today the U.S. is
the single largest biotech and organic producers and one of the largest
non-GMO crop exporter in the world and then you talk about \-- and then
there\'s a paragraph under that that I think are kind of the premise of
some of the discussion which has been coexistence is closely tied to
underlying market forces and if it\'s about \-- coexistence is about
fostering producer, consumer, customer choice. Such trends should be
preserved in advance.

And then you start looking at where there may be market inefficiencies
or where potential public policy could address some market
inefficiencies and that may be both reasons that we want to focus on.
Then the question becomes have we defined the problem and that\'s really
the issue of looking at these categories and saying have we heard enough
information, have we talked about some pieces and not, that e could feel
like we had a good hearing about that topic and then where have we not
done that.

And, for example, pursue the uniform standards. I think we spent a fair
amount of time with that topic at the last meeting particularly with
some of Lynn Clarkson\'s comments about the market, whether that\'s
working or not working, and I think we asked him directly, do you think
regulatory standards are necessary and he kind of \-- my interpretation,
and I know Leon, you had an interpretation, my interpretation was kind
of no, I don\'t really want them now because I\'m actually working with
them really well to my advantage but in the future I\'m not sure that
that\'s going to be true and, so, you know, that may be but in that
particular case so there\'s kind of a maybe for now we don\'t want them
but maybe in the future we will and then that question becomes, well,
how do you know it when \-- how do you know a market imperfection when
it is one and when it isn\'t one and what kind of appropriate policies.

So, then the question becomes, well, what if anything \-- what if any
other information you need to talk about on that particular piece of it
and then I would rather than starting there because we always seem to
gravitate towards that particular topic of AP and acceptable protocols,
etc. is look at the other categories.

So, improvement and compliance. To me, this is like going through an
inventory of we have to go through some of this to ask the ultimate
question of do we have a problem or don\'t we have a problem. But, the
next category is improvement and compliance in market stewardship, if
necessary. So, this is where the dispute resolution mechanisms come up
and third party verification and contract enforcement teams and
resolution, you know, talks about dispute resolution mechanisms are
being tapped more regularly now.

So, why is that? Is that indicative of an increasing problem? Or maybe
they\'re kicking into gear and that\'s the best way to handle them and
they\'re working well and maybe that\'s something that we need to talk
about and note and it would be interesting to get some of those state
agencies in here to talk about what do you see out there.

This is just an example. I\'m not suggesting that we do that, but,
that\'s kind of one of those topics, those issues. Reductions in
imperfect competition and market power. So, again, market access, access
to credit, those issues. What do we need to know; who do we need to
bring in, either bring in or where do we need to seek that information
to ask the question do we have a market problem here or don\'t we. Is it
functioning efficiently or is it not.

And if we can just have that conversation through each of these
categories and then ask the question, are we missing any categories or
how do we prioritize when we need to get information and from whom and I
think that comes back to Carol\'s comment of we need to bring in
different people, some who say they absolutely have a problem and that
could help enlighten us as to whether there\'s an issue or not.

But, that\'s what I would suggest we do is we go through those
categories and do that kind of kicking them around a little bit and see
where we need to have additional information and where we get that
information.

Nick.

MR. KALAITZANDONAKES: Should we let people advocate why any one of those
issues is an issue? In other words, take the approach that at least one
of us should believe that there\'s an issue that is not being addressed
by the market that there an equity issue potentially and somehow
advocate for that and then discuss it and then maybe explain or decide
that there\'s somebody.

DR. SCHECHTMAN: I think also recognizing \-- I think there\'s two
pieces. There\'s one, the question of advocacy but there\'s also the
possibility that we need to get more information before we dismiss some
issues. So, it may be before we get to the advocacy that we go through
and we see where we think we need more information.

MS. DILLEY: Does that make sense to people, kind of walk through these
categories a little bit and see if we\'re \-- okay. So, let\'s start
with the issue of uniform standards and look at the improvements in
compliance and market stewardship and to look at that. Again, this is
kind of the asymmetry, reduced information on all these asymmetries.

DR. DYKES: Why don\'t you start with the last one and work it forward,
maybe?

MS. DILLEY: Okay. You want to start at the bottom and work up?

DR. DYKES: That\'s one we\'ve never talked about at the top.

MS. DILLEY: We can start. That\'s good. By the way, the potential
provision of improvements in market infrastructure, I mean, we could
have this conversation because we\'re going to talk about this tomorrow
with Jim Stitzlein\'s presentation. So, and this did come up as did a
lot of these other ones did with transport and storage infrastructure
came up the last time we talked about this.

So, additional thoughts about this particular piece or what questions we
want out of tomorrow\'s presentation? Carol?

MS. FOREMAN: We are starting on page 4 and this copy says the bottom of
page 3 I believe. Okay. It does occur to me that we\'re talking about
ongoing changes, adopting the importance of operating in a global
marketplace. It may be possible that particularly with regard to
sustainable agriculture and, therefore, organics, we\'re going to be
moving toward more locally sourcing, especially as energy prices rise
and Sarah and I were just talking at the break that one part of the
organic market may decide that the real value they\'re pursuing is local
sourcing as opposed to national sourcing.

So, this is obviously just a kind of a sidebar to it, but, I don\'t know
if it\'ll happen, but, that may be the section to the overall
international rule.

MS. DILLEY: Yeah. Again, interesting question and actually Pat and I
were talking about that the other day and since it was cheaper to get to
Argentina by ship versus across country so energy costs and how that
affects markets. So, yeah. Sarah, you had a comment and then Michael.

MS. GEISERT: Yeah, but I would think on this one that it\'s really going
to echo what Leon was talking about. I think our experience has been is
that there is more segmentation going on in the market and, you know,
there are differences if you\'re talking about grain crops and
commodities versus maybe fruits and vegetables.

So, I think as you look at the infrastructure and it\'s impacted by, you
know, consolidation, centralization, decentralization, that as you
further and further segregate the market so we may want certain
varieties of corn because it helps with our corn flakes or our marketing
conditions are such that such a plant in Buffalo performs differently
than our plants in California. The better we get data and our ability we
may then go back and said, differing specifications, and then the system
would say, now, we want to make sure because we\'re paying a premium
throughout the supply chain that we would want to be able to assure that
what we are paying for we\'re obtaining and a portion of that has to do
with segregation because, you know, especially in a more fluid grain
supply there are adequate complexities and we do see markets working to
take care of that with different on-farm storage or different handling
in the elevator systems and on through.

But, I do think as you see technology advancing outside of just plant
breeding and our ability to know our production facilities and other
sort of production facilities we hone in characteristics and traits that
work best make our operations more efficient.

So, I do think this will be one that will be with us a long time as it
continues to evolve. Whether there\'s a need for USDA to play a role, I
do think segmentation, diversification in the marketplace, is just
starting to proliferate more and more whether it\'s trait-driven or
whether it\'s just data-driven throughout the system and so I know
we\'ve struggled at times of trying to make sure that we are able to
secure throughout the supply chain those traits that we have advocated
and paid additional costs for.

So, I think this is a real issue, not an issue, it is a real component
of risk that we work to manage. It\'s how do you segregate throughout.
So, I think it\'s deserving of some additional thought.

MS. DILLEY: Michael, Nancy, then Randy.

DR. DYKES: To follow up on some of the comments Carol\'s made. You know,
we could proceed going forward increased segmentation which may result
in smaller lots so containers versus string carloads of things. Small
quantity versus large silos full of things. May see increases in the
cooperative movement maybe once again from where we used to be because
you\'re going to have small local growers for niche markets so
collective coming together may be a result.

You may see if it continued to be produced locally and make local
production direct to restaurants and retailers happen you won\'t see the
production go to a collection processing center for inspection and
oversight to QAQC types of things. It goes straight from the grower to
the restaurant to the plate. From an FSIS perspective and those kinds of
things it may require more resources. How are you going to be there to
do those because you don\'t have a centralized collection point where
you can look at it.

So, you\'re going to go look at every farm, either on the farm or in the
restaurant in order to be able to assure those kinds of things. Or, even
if it\'s doing it retroactively, if there had been an issue,
epidemiology-wise how are you going to track those kind of things
because they didn\'t come through any kind of centralized processing
place.

So, you may not have had data to go back on. So, just some of those in
my mind, some of those complexities and those are depending on the crop
and they may or may not be biotech. I could make that argument for a lot
of this that won\'t be biotech types of issues. They\'ll just be issues
unique to maybe cilantro or green onions or whatever it may be.

UNIDENTIFIED SPEAKER: Oysters.

DR. DYKES: Or oysters, you know. So, I could foresee some of those
things in infrastructure if you\'re talking about the Department of
Agriculture and you look four to five or ten years and you think that
you may see more and more of that kind of thing happen.

MS. DILLEY: Nancy and then Randy.

MS. BRYSON: Michael, your comments helped me. Actually, I was trying to
envision what kind of public policy initiatives fall in this category
because, Sarah, yours mostly sounded like private industry initiatives,
managing supply for your particular products. And I was just thinking in
terms of the USDA programs if we gave this sort of recommendation what
are we really thinking about, changes in GIPSA, changes in farm co-ops.

MS. DILLEY: He\'s not to the recommendation point.

DR. DYKES: I mean you might even see rural development loans for
refrigeration units if he\'s talking about things required. If you\'re
talking about small growers, say you\'re going back to brown eggs, small
grower\'s got 50 hens, you may need to see some kind of collective
community refrigeration units because no one producer could justify the
cost. Just a thought. I don\'t know.

But, I mean, these are all kinds of things that kind of ginned up in my
mind that the way things used to be when we were all much younger and if
we think about the way we\'re going now, the local and knowing exactly
where your eggs come from or where your milk comes from, I mean, we\'ve
been there 40 years ago or so.

And if you think about the infrastructure that we had then versus the
infrastructure we have today, go back and look at that report.

MS. DILLEY: Randy next and then Carol.

MR. GIROUX: I\'m hoping that Jim\'s going to cover a lot of this
transportation stuff tomorrow because, in fact, the intuition I\'m
hearing around the table that we\'re glued to words, segment stores can
handle, and the reality that most of the growth today is in larger
volumes and higher and I think a lot of that\'s attributed by biofuels.
That\'s my speculation is that there is going to be a drop in generic
commodity again and it\'s starting with a lot of larger storage and
transportation infrastructure.

Again, it\'s kind of intuitive to what the food industry is looking for
so I think it\'s going to be a complicated subject to talk about and I
hope Jim sheds some light on it for us.

MS. DILLEY: Good question. It\'s a good question to pose to Jim
tomorrow. Nick?

MR. KALAITZANDONAKES: I guess the one point I want to make, and I know
that Russ is going to continue on that line, is that the beauty of
markets is that they will perform in ways that are unsystematic and
unplanned and they will often have some very surprising results. So what
we have seen across the country is emergence of small and large new
generation coops; we have seen LLCs of farmers who are not only
producing in very specialized ways; not only are making investments in
very specialized assets, but, also are reaching local and far away
markets either directly through the internet or by pooling their
specialty products and this is happening across the board.

I\'ll just use one example for our state and Russ is going to give you a
lot more examples. Our soybean association has facilitated new
generation coops active in dairy production and milk production. I mean,
this is the soybean association that has done it. It has also helped
start farmer coops active in specialty corn production as well as
soybean processing through specialty soybean processing plants and
biodiesel plants.

So, my point is, that all of these investments are happening because
there\'s both capital, capital as in a lot of capital that is looking
for a good home everywhere in the United States and in addition to that
there is a market and what Carol described is actually on the money.
There is growth in these local markets.

And, so, all of these markets exist. They grow. But, at the same time
there is also production that is taking place to meet those demands and
so policy is not necessary in those particular cases unless we actually
maintain that there\'s a credit constraint, there is a storage
constraint, there is an infrastructure constraint and in my view, you
know, looking at all of these kinds of businesses across the United
States obviously USDA is offering through Rural Development a lot of
credit through credit programs, a lot of subsidies for those programs.

But, I\'m not really sure about a lot of other policies, but, Russ might
have a better idea on this.

MS. DILLEY: Okay. Russ.

MR. KREMER Yeah, thanks, Nick. I would like to continue and I\'d like to
\-- I was going to compliment Michael on his visionary idea where this
food system could go to. This is what does excite me about it as we talk
about more of these technicalizing things and opportunity for rural
businesses and family farmers and where we\'re at.

Our organization has organized and got actually for some reason places
that are segregating out and doing everything from natural pork to
natural beef to organic dairy goat milk, cheese, and we just completed
an equity drive for certified sustainable farmer-owned kiln drying wood
systems or system.

But, my experience is, is that these type of niche products, it does
take community-based, smaller, segregated entities, both production and
processing-wise, because we have experience, have had bad experiences
using, you know, toll facilities that are, you know, ultra large that
actually lose the stuff.

I mean, this all makes sense as far as regional, more segregated, more
community-based and more farmer owned and policy does make a difference.
Policy, because there are barriers. You know, why haven\'t these sprung
up all over the place? Money, number one. I mean, our organization had
to take into our own hands and establish a credit union for farmers that
basically allowed the mid-resource farmers to get into the wood co-op
and dairy co-op type things.

I think, you know, providing incentives for these smaller entities for,
you know, government agency purchases, for instance, which is lacking,
so, policy does make a difference so I sure would like to address later
on, but, certainly, I love this whole decentralized visionary aspect of
having more segregated type processing and production units, more
community-based growers.

MS. DILLEY: Are you finding that access to credit is an issue?

MR. KREMER: It\'s a huge issue. It\'s the number one issue.

UNIDENTIFIED SPEAKER: Always.

MR. KREMER: But, unfortunately, money is everything. It\'s all about
money or the lack of money.

DR. LAYTON: But, that has nothing to do with GM. That\'s just small \--

MR. KREMER: It does have to do with \-- I mean, in this regard as we
talk about infrastructure and if we talk about, you know, that the ideal
situation is to have more specialized entities that are actually doing
the processing out in more regionalized areas, yes, money is a huge
factor and issue in infrastructure.

MS. DILLEY: Okay. Carole?

DR. CRAMER: If I listen to actually what the three guys over there just
sort of articulated as the concept that in one place things are becoming
more segmented and there\'s more specialization and I\'m actually happy
about that because I was one of the people that really wanted to work on
specialty crops and if we\'re hearing what\'s going on we\'re actually
talking about more and more of the market even in commodity crops being
specialty crops because of the segregation.

And I think that we\'ve seen a lot, but, surprisingly, it\'s not as
broken as we thought. In fact, it doesn\'t appear to be very broken.
But, what are the thing that USDA can do to make it more efficient and I
think if you start thinking about a lot of these sectors more as
specialty crops I think there are even from the point of view of the new
technologies and the detection of screening and things like that there
may be ways where you can create compositional analyses that would be
much more universal where you don\'t have to have \-- I mean, it took us
how many years to sequence the human genome and now we have technologies
that can do that in a week.

We can sequence a bacterial genome in an hour. And, so, there\'s a
variety of things that you could imagine that is not just policy but
even developing new technologies that would allow you to have routine
screening that would not just do whether there\'s GM\'s where you can do
GMO profiling for certain strains that would allow you to have a quick
test to say this is my, this is the flake one, but, you could also have
in the same thing things like your total anti-oxidant content, your
mycotoxin content, things that, again, take it to a point where you\'re
bringing going back to what are the safety compositional characteristics
that are important for the industry and kind of standardizing that.

But, you know what, it\'s amazingly \-- if you do it in each \-- for
broccoli and Brussels sprouts and you do it in each little company and
create those analyses it\'s expensive, but, if you do it in 388 well
plates, run through where you basically make it as cheap as screening
for strep in a food lab.

DR. SCHECHTMAN: So, that will be your next business?

DR. CRAMER: Sure. But, I mean, I think that there really are changes in
technology that make all these things much, much more efficient.

UNIDENTIFIED SPEAKER: Make them possible to start.

DR. CRAMER: Yeah. I mean, if you\'re talking about screening every
imported geranium for the five bio-defense plant pathogens before they
come into the United States you have to drive, you know, basically two
penny, two cent dipstick technologies to do that. So, there\'s the
ability to put resources into making those sorts of things accessible to
high food agricultural applications.

MS. DILLEY: Duane.

MR. GRANT: As Carole just kind of expanded my horizons, thank you,
because where I was going to come from when I first put up my card was
to say that we\'ve listened to Michael\'s comments early on about going
back to brown eggs versus white eggs, I guess, and white eggs are
produced in mass and brown eggs are produced at 50 at a time. I\'m not
sure Michael wants to hear it so I\'m really sure so it\'s not fair to
really put any meaning into it, I guess, but, the idea was you\'re
either moving back away from technology and biotech or you\'re moving
forward and that was kind of how the discussion was being framed up.

So, I want to again say thanks for expanding my horizons, Carole,
because perhaps the ability to really test and measure and understand
what we\'re offering to the marketplace really will have value. We\'ve
seen that to a point so far, but, not very much value, not enough value
where you can really afford to go to the extremes of market segmentation
and offer specific wheat to a particular buyer and its protein and its
test weight and the standards that we\'ve used for years.

But, if we really can through this type of technology start to
understand where more value is at, maybe the differentiation is much
greater than just simply, you know, traditional versus technical and if
that\'s the case then perhaps \-- then I could kind of buy into the
route for some policy and perhaps even some assisted investment in
trying to create that value.

If it\'s just either/or I think we\'re there already and I think the
marketplace is already accommodating those two distinctions.

MS. DILLEY: Any other comments in terms of some of the market
infrastructure pieces and route and we\'re going to take another run at
this tomorrow after the presentations, but, any other thoughts on this
one right now? Have we heard from you or can we open it up to the next
category? Okay.

So, I was just trying to go through the list here. Improvements in
market information and transparency. This came up the last time and one
of the comments that Nick did put in here is that transparency is the
linchpin of well functioning markets and then is there market
inefficiencies in terms of how much some of the specialty markets are
getting attention or there\'s transparency or not and I think that\'s
one area that we had talked a little bit about the last time.

And, so, kind of additional thinking on that would be helpful. Thoughts
on that? You\'re furrowing your brows over there. Daryl.

DR. BUSS: I guess the question I had and I was trying to remember the
discussion about the argument that smaller specialty markets like
organics were attracting less attention. I was trying to recall the
attention from the public or USDA or I just don\'t remember that.

MR. KALAITZANDONAKES: The USDA. Actually, the Organic Association
basically mentioned the point and I think you made the point that there
is not enough data information about production costs and market access
and market demand. I don\'t know. Am I articulating it correctly?

DR. MELLON: Yeah. That is one of the several places where the organic
folks are not as well served as the rest of the sector. The people
don\'t even gather the information about them so that you could answer
it and ask some of these questions on the basis of data so at that very
fundamental level.

MS. DILLEY: So, there\'s gathering market information, going out and
doing survey and analyses, that kind of piece of it, and then there\'s
the transparency piece which I think also was part of this discussion.
And I\'m trying to remember if that was where market access fits in or
not. That may be a different category.

MR. KALAITZANDONAKES: It was. Much of the discussion as I remember it
was around getting enough information about the data and analysis on the
market side so that people have enough information to respond to.

MR. GRANT: I think another component of that though, when you get into
segmented markets they\'re not near as transparent. They\'re not as
visual. They\'re not as reported. The larger commodity markets are and,
so, if folks are going to claim the segmented market system there\'s a
need for more significant information so that the market can function,
not just simply isn\'t what\'s out there.

MS. DILLEY: Steve.

MR. PUEPPKE: It was sort of going to be my question. Is this just the
way it works when you\'re small or is there something unique about
agricultural or about organics?

MR. KALAITZANDONAKES: Yes. It\'s true on both accounts, I guess. I mean,
you can think of it in two different ways. You can think of it as, yes,
it\'s true that most of the small markets and specialty crops are not
being regularly reported, but, at the same time you can think of it
that, you know, we do have USDA research that goes into some really
small specialty vegetables but probably not as much as events and, so,
you can make both arguments fairly effectively. So, I think there is
certainly somebody able to \-- we need more information or data.

MS. DILLEY: Pat, did you have a question?

DR. LAYTON: Yeah. I was going to ask if we have some specialty markets
tend to be more vertically integrated where you\'re actually contracting
with somebody to produce something that\'s small so I guess the question
is are those markets private and, therefore, could not be transparent?

I just want to make sure that we\'re not trying to make everything
transparent if there\'s private information there that\'s \--

DR. SCHECHTMAN: USDA collects a lot of proprietary information \--

DR. LAYTON: So they can do it.

DR. SCHECHTMAN: \-- which has been aggregated so that it loses that \--

DR. LAYTON: Proprietary report.

DR. SCHECHTMAN: Yeah.

DR. LAYTON: Okay.

MR. KALAITZANDONAKES: No, it can be done. It can be done. It would take
more money and it would take more effort and it would take, you know,
broader coverage.

DR. LAYTON: Let me just state that it is not just small crops and
specialty crops that USDA does not do data on. They also don\'t do data
on the number one crop in most of the southern states which is trees,
so, they don\'t do it on any. I mean, it\'s not across the board. I
mean, you know, if you\'re not corner serving \--

DR. SCHECHTMAN: Actually, they collect a lot of data on a lot of crops.

DR. LAYTON: But, it\'s not easy to find or get through or have analyzed.

MR. CORZINE: If we\'re looking for recommendations for USDA there is an
element of the segmenting markets now, doesn\'t have to be organic, but,
some of those regionalized or maybe even just county-wide markets, they
don\'t want to change from where it is because they don\'t want to have
regulation over them like we do with a larger market and so it\'s a
little bit of be careful what you ask for.

MS. DILLEY: That\'s the question. You\'re right. I mean, so the
question, is that a market inefficiency or not?

MR. CORZINE: Well, I don\'t know and also the State of Illinois had an
office, Moseley\'s office in Brussels, and they spent like 90 percent of
their time on organics, promoting organic products. The State of
Illinois had an office in Brussels. Now, because of economics in the
state they ended up closing it just maybe two years ago, but, you know,
there is, and I don\'t know how many other states are doing that, but,
they did, but, I think it\'s a real thing of, one is, you can miss some
regulation if you stay in that more direct locally owned or locally
grown co-op or anything so there has been a big growth in co-op LLC
activity for some specific markets, also in the ethanol industry.

That\'s how a lot of the farmers owned to get some more money in that
whole area. Whether we make a recommendation, you know, the rural
development funds, and, Russell, that would be one of the best ways if
you\'re talking about a capital of ways to get as far as this group a
recommendation I would assume.

MS. DILLEY: Greg, a comment?

MR. JAFFE: Yeah, I mean, maybe my memory\'s not very good from our last
meeting and maybe I just don\'t understand this topic. But, I mean, you
know, I thought we were supposed to work on coexistence here and this
doesn\'t seem to have anything to do with it. The only thing to do with
coexistence is somehow market efficiency; that somehow market efficiency
will achieve coexistence.

What does that mean? Does that mean that therefore if we get things
cheaper? What is the goal of market efficiency? Is it the goal of market
efficiency to have things close in a different specialty segments,
closer in price? I don\'t understand co-efficiency \--

MS. DILLEY: The \--

MR. JAFFE: What?

MS. DILLEY: The fostering of choices.

MR. JAFFE: But, efficiency fosters choice or does efficiency foster
price which fosters choice? You know, when I think of market efficiency
I think of things that are trying to get things \-- I mean, changing
infrastructure and things like that is making things cheaper. I didn\'t
hear anybody saying that we didn\'t have the infrastructure or the
transport.

If there\'s a lack of transport we need more but it\'s expensive and
more efficient, we use it more efficiently, smaller containers or
whatever, smaller market, then things will be less expensive. So, I\'m
\-- again, maybe it\'s because of the economic language we\'re using
here or something like that, but, everything is evolving around market
efficiency and I\'m not seeing the link between market efficiency and
coexistence, our topic, our overall topic, to see why these topics are
unique.

And, in particular, I\'m looking here on improvements in market
information and transparency and I read this section and I\'m thinking
of the section, and, again, it sounds very supply chain related. It
doesn\'t talk about \-- I don\'t see \-- and, again, maybe it\'s my
naive view of coexistence, but, we\'ve talked a little bit today about
coexistence between farmers or producers, talking to your neighbor. Is
there information on what your neighbor has or information about what
kind of contract you might want to enter into that you think you can
actually satisfy in terms of non-GM or something like that.

I don\'t see that kind of information here. I don\'t see information to
consumers at the far end. I see information about smaller markets and
less attention and relevant to decisions, but, none of this seems to me
that talks about information to the consumer.

Am I eating organic or what does organic mean; is organic 100 percent or
what\'s the value of eating organic or whatever the information is? So,
again, I\'m bringing it up here, but, I thought of it a little bit in
the last one also. So, I still wasn\'t sure what is the problem related
to coexistence and again, I\'m having trouble making the link between
market efficiency and the coexistence issue. I understand the market
efficiency I think means a lot of these cases is, again, decrease in
price or making things more available.

MS. DILLEY: Right.

MR. JAFFE: But, I\'m not sure what\'s the problem that we\'re trying to
solve.

MR. KALAITZANDONAKES: So, this isn\'t my argument. I will convey the
argument that is made.

MR. JAFFE: Not to you.

MR. KALAITZANDONAKES: No, no, no. I can articulate what the argument was
that was made. And the argument was if you do not have enough
information in the marketplace consumers and producers can\'t meet each
other that is a market inefficiency. That\'s a market failure. And, so,
if because of asymmetry of information, you have a number of people who
want to buy something and you could potentially have producers that want
supply but then have sufficient information to know that there\'s an
opportunity, they don\'t produce it, that is a market inefficiency. That
was an argument for the CEO of the Organic Association that because
information about our market and our products and our market demand is
not there, much like for all the other products, that market is not
being serviced because people don\'t have enough information to produce
for it so that\'s the argument.

MS. DILLEY: But, and I think expanding out to your other points though,
Greg, the information exchange that grower to grower is critical as well
as the information to consumers. So, it\'s matching up those different
choices being able to meet each other in the marketplace, I guess. And
it\'s not \-- the market inefficiency piece does not say it all, but, if
you take the category of information and transparency I guess that
expands out and one piece of it is what Nick was just talking about and
then there are other pieces like yours that you were just referring to,
the grower to grower, or, the consumer \-- between the consumer and the
producer.

DR. LAYTON: Can I just say that if this paragraph were pulled out, I
don\'t understand what it has to do with coexistence. When you said
that, which you just said then I understood what it had to do with that.

MR. KALAITZANDONAKES: Again, I\'m not advocating one way or the other.
I\'m just describing what was said and why and what the rationale is.

MS. DILLEY: Yeah, there\'s one piece of it and then I think we needed to
expand it out to capture some of these other things. The whole piece of
information flow or tools for information and I think actually that
might open the concept there that you had talked a little bit about to
facilitate information flow and what are the tools out there to do that.

DR. SCHECHTMAN: So, this is again helping potential producers and
suppliers compete who may have particular kinds of products for which
there\'s not the information. That coexistence on the market level
scale.

MR. JAFFE: A lot of this is all written at that market level scale, but,
we haven\'t decided whether we\'re doing with that market level scale we
did with the producer level scale or I mean the farmer level scale or at
the consumer level scale and so that\'s why I was \-- you know, this all
seemed to me that we\'re only in that supply chain area which, again, I
would argue a fair number of these issues were covered in the
traceability and labeling report which was primarily about issues around
the supply chain. It wasn\'t issues around the consumer or issues around
the farmer. So, that\'s why I guess that\'s what\'s confusing me here.
This is the only thing we\'re working on.

MS. DILLEY: It\'s not. We\'re broadening it out. I mean I think we\'ve
got a structure here but the question is do you want to broaden it out
to any of the things we want to broaden it out to.

MR. JAFFE: Because USDA finding out more data about some of these
markets I don\'t think is going to help the farmers coexist with their
neighbors nor is it really going to help the public understand better
about the different products in the segmented market. The supply chain
decides what percentage of production should go into organic or other
things.

DR. SCHECHTMAN: It may help farmers make decisions about what they
should be planting.

MR. JAFFE: Right, but, it won\'t help them \-- that\'s not a coexistence
issue for them. That\'s an issue for what\'s make money. That\'s just a
market issue. That doesn\'t bring a coexistence issue. Coexistence is
how do they do that and coexist with other markets and other things that
have been growing on their land. Those kind of information things are
very different than data about the market.

DR. SCHECHTMAN: I think that raises the question of what we mean by
coexistence which obviously we\'re going to \--

MS. DILLEY: Existence versus coexistence.

DR. SCHECHTMAN: Yeah.

DR. LAYTON: Okay. One more follow up. I think that you could take this
all the way out to if the information was there throughout the supply
chain and it was transparent then would this lead to labeling
information? Does this statement go all the way there?

MR. GRANT: Are you just trying to wake us up, Pat?

DR. LAYTON: I\'m not trying to wake you up.

MR. CORZINE: I\'m kind of with Greg here because I think it is pretty
much a stretch that this fits into the coexistence discussion. I mean,
you can make the case for the inefficiencies, does it help with
promoting or help with the market development, maybe, but, that sure
isn\'t coexistence and I think Greg maybe right as far as this level but
also at the in-use level or the grocery sales. I don\'t really think it
fits very well.

MS. DILLEY: Okay. So, but, our category in terms of information exchange
and transparency of information, he mentioned other categories too, the
relative grade of discussions and information there and potentially with
consumers, that may be a category of issues and maybe the way it\'s
framed in this particular paragraph doesn\'t fit, but, the overall
category of information, it seems like we spent some time talking about
different dimensions of that.

MR. CORZINE: Well, and it might help that the transparency thing was
linked to the whole market development piece, but, it doesn\'t really
help coexistence and issues around that.

MS. DILLEY: Well, it certainly seemed like it was a big piece of Drew
Kirshen\'s presentation to the farmer to farmer discussion information
exchange. Wasn\'t it? Or, did I not hear that?

MR. GRANT: But, I don\'t think that case \--

MS. DILLEY: No. What I\'m saying is it doesn\'t fit here. You\'re right.
But, if you just took out information and transparency and take a
different tack on that I think it potentially does.

MR. KALAITZANDONAKES: So, does anybody argue for policy for that?

DR. SHURDUT: Yeah, I\'m struggling with it so how does that fit into a
recommendation about the USDA pull or grow (sic), are communications
really happening, and where do you take it from there?

MS. DILLEY: Do we have to read to that end point yet?

MS. BRYSON: What about trying to frame this is in Carole\'s constructive
specialty crops, those specialty crop ideas being looking at the range
of choices that are out there in the markets that people want to make as
being \-- as encouraging USDA to look more broadly at tools that
facilitate the development of more specialty crops market, one of which
would be market information, consumer. You could put the information in
the transparency piece in there if we like Carole\'s approach.

The coexistence does relate to having all these different choices
available, right? And you only have choices if you have a specialty
crops that you can choose from, whether they\'re organic or whether
they\'re natural; or something else.

DR. MELLON: We do and this does go back to what we define as the
problem. This does go back to what we define as the problem. And it
seems to me that this analysis kind of flows out of a definition of what
the problem is trying to provide products to satisfy market demand or
segments of consumers and we, define the problem that way that we wanted
to have the ability to supply different sets of consumers with different
product. We were led to, you know, thinking about how we can provide \--
how you can make these kind of smaller niche markets work.

But, I\'m still not sure that that\'s really, you know, what the problem
is because you can see that we kind of get off track here so I would
still say we probably need to go back and, you know, agree on or talk
even more about what the problem is we\'re trying to solve and then ask
\-- you know \-- and then come up with an analysis or suggestions for
options or solutions that flow from the problem because I\'m still not
sure that we have framed the problem this generally and that\'s it just
tried to kind of help different consumers match up with different
producers.

MS. DILLEY: Carole.

DR. CRAMER: My well articulated response just went away but I\'ll go
ahead anyway. If I think of what we did at our last plenary and some of
the stuff that Russ talked about is concepts that I can\'t always store
seeds. You know, there\'s been talk about niche markets out there, how
do we make these things available? And if you think about coexistence
and the infrastructure of coexistence for commodity crops and these big
things it\'s well developed and there are ways to keep these things
separate.

And, so, the question is are \-- is that sort of information and
communication and segmentation and opportunity available across the
spectrum and is there anything that USDA can do to facilitate that? If I
watched how my teenage boys approach the world it\'s all internet based.
And, so, the question is, is this something at the government level that
these sorts of matchmaking situations should be facilitated or is that
something that should be developed from a private sector or
organizational sector point of view; that if there\'s a need, who\'s the
driver and who should be sort of the person who is the gatekeeper of
this information?

If it\'s a commercial issue or an availability issue or, you know, a way
to make multiple sectors function effectively and I\'m thinking not just
where do I find seeds, but, if you\'ve got a place to go that says,
okay, I\'ve got, you know, 10,000 acres of such and such, what are my
options to take this and plant the market at appropriately and, you
know, is there something in all of that as far as transparency,
opportunity, utility as far as communication that would support multiple
sectors coexisting?

MR. GRANT: I think I would just add on to that again, Abby, that if
that\'s the definition of coexistence that we\'re going to use then we
probably need to come up with another term because that\'s not the
definition of coexistence that\'s used in trade globally. You know, when
you talk about coexistence definition that the Europeans are using as
they\'re having their debate about coexistence, it doesn\'t at all
envision this kind of affirmative nurturing of a wide array of offerings
to the consumer. It\'s more, you know, it\'s a different definition.

DR. CRAMER: I may have sounded more warm and fuzzy than I had to, but,
it\'s the concept that there\'s an infrastructure that supports the
segregation and what is the transparency and information availability of
that structure. And, so, if you want to ensure that your product is
moving into the right segmentation in a broadly \-- you know \-- in an
intensely segmented marketplace then are there mechanisms that
facilitate that such that commingling and these other things don\'t
serve as a barrier but that the markets can proceed effectively
together.

MR. GRANT: So, I think I get the under \-- how you\'re laying it out and
I don\'t completely object. I just think that it\'s a departure from
what \-- I mean, I would have to think that\'s a departure from what our
charge really initially was, I would think, and perhaps not and I don\'t
want to second guess where the Secretary or USDA was trying to head with
this. But, that\'s just so far removed from what the conventional
working definition of coexistence issues are that I have a hard time
getting there.

On the other hand, I fully agree that, you know, a totally dominant
market sector can smother other sectors and make it almost impossible
for something new to find a way to the market and if that\'s what we
might mean by coexistence then we should call it affirmative
coexistence.

DR. LAYTON: What I was trying to do was come up with a mechanism whereby
the concept of information and transparency fit with coexistence and if
that\'s not the case then should we all take the plunge and say this
thing is out, take that out.

(Discussion off the record)

MS. DILLEY: You know, we\'re coming to that point where I\'m a little
bit at a loss because we\'ve got three options here we\'ve been talking
about all day long which is we knew what the specific charge was. What
did USDA think was the issue with coexistence. We\'re got the committee
used to come up with a definition and we\'re been trying to do that
which we can really build from so far or we can have people come in from
outside and define the problem for us or present the problem with data
and we\'re talking around the issue and we haven\'t really figured it
out yet.

Maybe because it\'s 4:30 in the afternoon and my brain is a little
fuzzy, but, Jerry, you\'re going to solve it for me now?

MR. SLOCUM: I\'m going to ask you maybe if the Secretary\'s interested
in coexistence, it\'s happening and he well knows that. If it\'s
happening with some success he well knows that. What\'s the effect on
farm policy?

MS. DILLEY: Foreign or farm?

MR. SLOCUM: Farm. Farm policy. It\'s happening at a much larger rate
today than when the current Farm Bill was written. That\'s assured of
that. You\'ve got this new mandate for biofuels that will consume a lot
of acreage of U.S. farmland and it\'s going to drag people back into the
commodity business to some extent because it\'s pretty profitable all of
a sudden.

And what does that mean to farm policy and what the Secretary\'s
interested in? We don\'t know what he\'s thinking. Maybe he\'s thinking
those kind of things. Maybe that\'s some of the things he\'s thinking
about. Is he thinking about our rural infrastructure and rural
development? Probably so. That\'s part of his task. Is he thinking about
a respectful, peaceful coexistence among different groups who all happen
to be in agriculture? Yes, he probably is. He has a steady stream of
people through his office.

DR. SCHECHTMAN: Yeah, and I\'m his on-the-job man.

MR. SLOCUM: Yeah, on-the-job man, that\'s exactly right. You know, he\'s
got \-- and he\'s got a huge constituency and farmers are one piece of
them and consumers are another piece of them. And we\'ve learned it
today and we\'re learned it before today but it\'s really forced me
every time I come to these things consumers are an integral part of it
and, you know, the Secretary is answerable to those people. It is the
Department of Agriculture and there\'s no people that work in this
department that don\'t work with farm policy and just work with consumer
issues. It\'s huge.

So, maybe those are the kinds of things he\'s thinking about. You know,
the impact of this on farm policy, impact of this, is there that large
group of consumers out there that really would like a non-GM source of
food and if it was all affordable that\'s what they would get? We don\'t
know that, but, you all, you intuitively think it must be because
you\'re scared to death of having to make a genetically engineered wheat
or corn or whatnot in your food strain so you must intuitively think
it\'s there. Maybe that\'s what he\'s thinking about. Maybe that\'s the
kind of questions he wants to ask us, noodle around with a little bit.

I don\'t think he\'s as worried about data processing with respect to
how big the organic market is. That sounds like to me the trade
association ought to be answering those questions and finding that out
and giving that back to all those guys that want to be organic farmers.
Maybe he wants to know is transportation really an issue. Does Lynn
Clarkson know what he\'s talking about when he says it costs more to get
from Chicago to the East Coat than from Buenos Aires to the East Coast?

DR. LAYTON: He does know what he\'s talking about. Same scenario.

MR. SLOCUM: Okay. It would be interesting to know that.

DR. LAYTON: But, he knows that.

MR. KALAITZANDONAKES: He knows that.

DR. LAYTON: He knows that. That\'s why we import.

MR. SLOCUM: Does he think that\'s okay?

DR. LAYTON: Has he done anything about it?

MR. SLOCUM: Can he?

DR. LAYTON: I don\'t know.

MR. SLOCUM: I don\'t know. I mean, you work him up to the well and I
think he knows that and it won\'t hurt a thing to say that to him but
then you could point out some of these things that are out there in the
next five to six to ten years that say, you know, these things could
become a larger issue than they are today. And they may very well, at
some point, then threaten the success of where we are today and they may
very well at some point then threaten, you know, the success that we\'re
having today.

Here are the guys who say it\'s working. Look at all the guys that
talked last time that says it\'s working. Every one of them said there
is one thing we\'re concerned about or two things were really concerned
about or three things, you know, don\'t fix it too soon because I\'m
making a lot of money in the system right now. There are bigger things
that may affect me somebody, which is fine with me.

DR. SCHECHTMAN: A number of those guys said, well, you know, we\'re
sourcing this stuff now but we can envision that the production of all
of these things is going to go off shore.

MR. SLOCUM: Don Cameron tells you that the future of American
agriculture is going to 14 crops on a farm in California. The future of
American agriculture biotechnology and, two, that our organic production
is going to be off shore soon because of the labor issues; not just
labor costs but labor issues. He\'s in California which has the largest
number of immigrant workers in the United States. Half of them are in
that one state. There\'s never been an issue there. There\'s fixing to
be.

MS. DILLEY: Greg, then Daryl, Mardi, Nick, Russ.

MR. JAFFE: Something of Duane\'s got me thinking a little bit. He was
saying, you know, if we were going to consider defining coexistence in
here we\'d have to come up with a different term and I think he\'s
right. I mean, I think other parts of the world, especially in Europe,
coexistence has been this really big issue and maybe we need to look at
how they define it to see what the definition is and something like
that.

I mean, they\'re writing laws about this. They\'re writing laws about
all kinds of things to try to achieve coexistence, whatever they mean.
And, I was reading the Pew Report on Coexistence and it was an
interesting speaker yesterday just to prepare myself. There was some of
the fence in versus the fence out kind of thing. And, clearly, in Europe
the idea is the biotech farmer has to fence himself in, you know, so he
doesn\'t affect anybody else and what\'s the reason behind that? Is it
the labeling; is it the consumers, or, whatever it is, but, that\'s
clearly the debate that goes on in Europe about this kind of thing.

And I think where we might able to add value, I mean, obviously the
United States has not that kind of an issue with coexistence that the
rest of the world is having with biotech crops and the question is why?
Is it because some things are working; is it because we don\'t have
labeling? Is it because we have big enough markets and as Lynn Clarkson
said, by not having thresholds we can market to all the different
segments in a reasonably efficient manner?

I mean, if this group was \-- committee was to come out and say we
don\'t want thresholds because thresholds actually would hurt the
ability to do things in the United States that would be a major fight to
come out of this committee and I would love Lynn to sort of evaluate
because of some of the biotech companies but I\'d like the argument to
say, we don\'t want to have adventitious thresholds so we don\'t, but,
to me, actually what we might do to build value is to sort of \-- I
mean, the rest of the world thinks coexistence isn\'t possible.

If we\'re finding that it is possible at a farm level or at certain
levels and some of the reasons why, articulating those, maybe the
Secretary knows about them but the rest of the world doesn\'t know about
them very well, but, also articulating where some of those things may in
the future go wrong would be very helpful, I think, to people because of
changes that we anticipate like in preparing for the future; changes we
anticipate are going to happen as organic increases in its market share
or as people become more concerned as biotech gets into food crops
instead of commodity crops or something like that, that might be
helpful.

But, I\'m thinking about this and the fence in and the fence out and is
the reason in the U.S. is it because biotech is a majority and so,
therefore, now is the fence out as opposed to the fence in and is that
why it\'s working because in the United States. I don\'t know what the
answer is to some of these things are. I think some of our speakers came
up with some interesting things.

MS. DILLEY: It\'s a good question.

MR. JAFFE: But, I tend to think that we should somehow define
coexistence related to the rest of the world\'s view of coexistence and
then talk about what\'s unique about the U.S., both in what\'s working
and what issues are going to be raised. To me, that would add some
value. We may not talk about recommendations specific to that USDA and
something that can be implemented right away, but, it would give an idea
to the Secretary and the staff and other people about where this topic
is going and why are things different here than they are in other
places.

Because, clearly, this is \-- although it\'s an issue related to biotech
and clearly does not have the same \-- it\'s not highlighted and it\'s
not as important as it is in the rest of the world and there are reasons
for that.

MS. DILLEY: So, if you were to pursue that line of thinking is why are
the discussions different here than there and what can we offer as
something on that; basically how you do your analysis?

MR. JAFFE: Well, I mean, I was reading Michael\'s thing or whatever the
notes from the other one. I mean, that struck me like there were some
facts there that said we were the largest, you know, producer of organic
in this country. We\'re also the largest producer of biotech crops in
the world. We\'re also the largest exporter of non-GM products in the
world so how do we do all three of those and if we do all three of those
something has to be working somehow.

It\'s not working perfectly, but, how could you have all three of those
facts existing at the same time.

MR. GRANT: At an average of 1.6 cases a year.

MR. JAFFE: You know, something has to be working. Now, could we have
things more efficient, we sure could, although I would come back to what
the purpose of that efficiency is. Is it just to reduce the cost of
somebody to make things closer because organic is more expensive or
we\'re trying to bring it down. Is it to better use our infrastructure?
I mean, efficiency just for the sake of efficiency, I mean, some of
it\'s fine but it may not be the government \-- my view may not be the
government\'s role to bring efficiency quicker into a market that will
bring efficiency anyway unless there\'s some other, again, if there\'s a
lack of information to certain consumers, or, a lack of markets that
aren\'t being achieved that might be a different reason to bring \-- to
get efficiency.

DR. LAYTON: That\'s good. Daryl and then Mardi.

DR. BUSS: Well, I was thinking along the lines that Jerry was in terms
of trying to think about if from the standpoint of the Secretary in term
of what would be valuable to me. And on a number of occasions at
different meetings we\'ve talked about such and such, whatever it was,
more attention, more resources from USDA.

That\'s really not very helpful because the reality of it is that
USDA\'s going to have fewer resources and, so, I\'m thinking I\'m the
Secretary, what would be helpful to me is to have some sense of triage
where does AC21 think that the department could get the most bang for
reduced bucks trying to deal with issues around coexistence.

If it\'s an agreement that we think A and B are the top priority targets
that\'s where you get the most value I would think that would be a very
valuable contribution, not because that A and B are new items. We
probably beat them to death. But, what should the priority be?

So, I would think there\'s an administrator who has to make that
decision all the time and that\'s what\'s helpful to me, not if we had
more resources we could do thus and so. It\'s not going to happen.

MS. DILLEY: And I think that actually you could link that with Greg\'s
points too, you know, if things are working \-- some things are working
well and some things may not be working well in the future then where
you put your limited resources to help improve the things that are
working or help adjust the things that may not.

Mardi.

DR.MELLON: I\'m thinking about the point of view of the Secretary. One
of the things might be seeking while I agree with \-- I agree that
coexistence isn\'t a problem, a big problem in the U.S. Certainly, at
about the federal policy level. And I also agree with Greg that kind of
thinking about why it\'s not might be useful. It certainly would be a
very interesting exercise because just articulating why one thinks that
that is the case, you know, would be useful.

But, it seems to me that the Secretary would, while you\'ve ceded there
isn\'t a big problem at the federal level, kind of at large, there are
problems for the Secretary at the local and state levels. There are
moratoriums being enacted all over the country. There is a building
momentum in state legislatures around the country that address a kind of
coexistence sometimes explicitly, sometimes metaphorically. That seems
to me to be another reason that the Secretary might want to have thought
through this issue and approaches to it that might help.

MS. DILLEY: Nick.

MR. KALAITZANDONAKES: Yeah. I can in a round about way this is working
really well. I\'m actually not kidding in this discussion because really
what we\'re talking about, you know, I said market failure but, you
know, what we were talking about. Jerry said what are the two things
that are priority. Daryl said, yeah, tell me what are the two most
important things. Then Greg said, okay, well, you know, why if all of
this is working then why is really that we should get. We\'re all
talking about the same thing right?

And not only that, but, we\'ve seen a process by which some of the
elimination could in fact take place. You know, we went around the table
and said, look, people said, you know what, this is improvement on
market information doesn\'t sit well, it doesn\'t fit, it\'s not
important. I don\'t know why. So, this might very well be a process by
which an elimination takes place because really it doesn\'t make the
cut, okay.

So, my point is in a real, probably not exactly perfect organized world
from a facilitator\'s take, but in a way this to me is exactly the kind
of discussion that will get us there and to the extent that we can
pinpoint the two-three major issues.

No, let me address a couple of comments that Greg made. No, no, I very
much like what he said. First of all, this refers to the very first
sentence in the document is how Europe defines coexistence. So, let\'s
make sure that we are all on the same page on this. I have used the
exact words, word for word, that the GFC is using to define coexistence
so that because I find that the knowledge is just fine.

DR. LAYTON: That whole first sentence?

MR. KALAITZANDONAKES: Very first sentence. So, now, I\'m sorry, the
first two sentences in the first paragraph, okay. So, \--

MR. PUEPPKE: Came from whom?

MR. KALAITZANDONAKES: GFC which is part of the European Commission,
okay. Now, so, \--

MR. PUEPPKE: Sorry, to have interrupted.

MR. KALAITZANDONAKES: No, no, not a bit.

MR. PUEPPKE: Is there a potential for biofuels changing that in the
future?

MR. KALAITZANDONAKES: Let me just \-- I\'ll give you my opinion on this,
but, let me just address two of the issues that Greg raised which I
think are essential. So, the absolute European Union has spent years and
probably will spend a lot more trying to decipher how they\'re going to
get out off, of their regulatory policy in terms of the way they\'re put
together.

But, there\'s a tremendous contradiction between what they\'ve done and
what we\'ve done and there are definitely reasons why this happened but
this, in my view, lends tremendous value to not only point the
difference but also describe in three words, much like I would be able
to second that, what is that we\'re observing in terms of coexistence
here and this is. Now, I wasn\'t the one who presented the numbers that
we are the largest export for non-GMO\'s and actually the largest
producer but the largest producers of GMO\'s and the largest producers
of organics, and it\'s not by accident, you know, because of the way
that the market operates. The opportunity is there. We had the way to do
so.

And there\'s value to describe a system of coexistence which is driven
by the market as opposed to driven by policy. And that is really what we
are talking about. So, to the extent that we are going to make policy
accommodations against the background of that kind of coexistence in the
U.S. I think there is value to pointing to some of these issues in a
brief report.

So, anyway, just a couple of observances from my side. Your point about
biofuels, Steve. My sense is that if oil stays at \$60 per barrel we\'ll
probably have, I don\'t know, a good 35 percent of the corn acres could
very easily go into ethanol in the next six years. So, is that going to
commoditize the market more? Absolutely it would. I mean to be able to
return it \-- any time that you have large uniform segments of the
market, you know, but, where\'s it going to take it, it\'s going to take
it from food and feed so you\'re going to shift one commodity market to
another.

Is that going to take the possibility of smaller niche markets out of
the way? No, I don\'t think so. So, it\'s going to shift certain \-- to
me, the biggest problem is not in corn \-- I mean the soybean producers
had a problem because you\'ll see some of soybean acres being
transformed into corn and wheat producers have a problem although feed
might be an opportunity for the wheat producers. But, the biggest
problem is going to be for chickens and pork.

It\'s not going to be in grain because these guys are going to be \-- I
want to see their feed market go up and I see a lot of them going to
Brazil.

So, I mean, it\'s more complex than saying, okay, so we bring in that
many acres.

MR. PUEPPKE: My question is more the sense that does that add another
category, a completely different category?

MR. KALAITZANDONAKES: For biofuels? No, I wouldn\'t think so because
it\'s going to be treated a lot more like a commodity than anything
else.

MR. CORZINE: Just remember, Nick, when you\'re using those figures
though you\'re not taking that if it is 32 percent away completely from
the food and feed market because you still are just taking it \--
you\'re taking the starch and besides distillers there\'s a lot of new
technology that is going to pull out vegetable oils. You\'re going to
pull out things for corn plastics, these bio-refineries who are going to
produce. So we aren\'t going to lose in that \-- the perception is
we\'re going to lose all that for food or feed product and that isn\'t
true.

MR. KALAITZANDONAKES: Okay. So, there\'s a longer discussion probably
not for under coexistence and maybe you and I can have it over coffee.
How\'s that.

MS. DILLEY: Nancy and Adrian.

MS. BRYSON: Okay, quickly. Just a lot of people got in the Secretary\'s
head and tried to read it. I think that I hope he sees it the way I see
it. I see it that he doesn\'t want to miss opportunities through
barriers to coexistence. In other words, you know, throw out a lot of
data here. There is a lot of accurate data here and I\'m speaking on
behalf of not just the farmer but the marketer of speciality crops on a
local, inter-local, and global type of situation.

I guess what I\'m getting at is we hear, for instance, that 63 percent
of consumers will basically want to put a face with their food or what
to know where it was produced, how it was produced, and who produced it
and basically want one of the source items that they think is safer.

And for instance, you know, a lot of non-GMO crops, a lot of natural
organic, etc., yet, you know, you\'re not going to get it. A far as
organic, you heard the organic person talk about that we actually are
\-- you know \-- we\'re a net inputter of organic foods back in the
areas of meat production. We import 65 percent of our organic and
natural type products from overseas as well as most of our vegetables.

At the same time we talk about income opportunities for farmers. You
know, I think the Secretary, I think realizes that 80 percent of the
farmers can\'t be involved in big time commodity type production that
they need to look into specialty places and net income continues to
deterioriate. So I think it\'s a matter of missed opportunity. What are
the barriers? What\'s holding us back? Same thing about consumers
actually having choices, you know.

The two areas that I dwell on that I think things can be combined with
that I\'m concerned with is infrastructure, as we pointed out, and I
blame \-- I blame small and moderate suppliers, I blame them as much as
anybody as far as failing to get together, organize, and come up with a
way to actually get their products more directly to the consumer because
there\'s a demand for it.

But, I also blame \-- you know, I think the market is far from perfect
and I don\'t whether some of you may believe that or not and those
barriers need to be torn down. I\'ll give you an example. The only thing
I throw out here as examples are true life things.

I\'m not speculating. In some of our products like for instance, you
know, GMO-free fed swine that are more naturally organic type products,
the brokering system in the United States as far as brokering meats, for
instance, is probably more consolidated and concentrated than anything
and we try to get into regional markets.

For instance, lately a 300-store grocery store chain. You know, because
they handle more conventional products they actually have made us take
the word natural and all those things off our label so we don\'t make
their other meats look bad. I\'m using that as an example that there are
barriers that we have to overcome in the marketplace in regards to
imperfect competition and market power and as well as improving the
infrastructure.

In summary, I think it\'s not missing opportunities whether you call it
assurance of allowing for opportunities to happen on a equitable basis,
I don\'t know. I think that\'s what\'s that\'s all about.

MS. DILLEY: Adrian.

DR. POLANSKY: I would concur that our system here, a relatively market
driven system has certainly got imperfections as Russell mentioned and
has been talked about off and on during the day. However, my view of
what we\'re about here is the almost opposite of what Europe has done in
terms of why we\'ve been successful and why are we producing large
quantities of biotechs and large quantities of conventional and large
quantities of organic because the government hasn\'t got in the way with
regulation that don\'t allow it.

Most of those regulations in Europe, I mean, you can talk about
coexistence and so on, but, if you look at it what it does is it
presents it to a large degree. And we can study it. I\'m all for that
because that, in my opinion, it provides barriers that causes
coexistence to occur.

And I think what the Secretary wants, at least if I was sitting his
chair, is to how do we eliminate the various barriers that we have,
improve the market opportunities so that we can have more of a market
driven scenario here so that we can allow the class to move forward with
coexistence. That\'s the basic difference. As imperfect as we are at
least we haven\'t stepped on government, stepped in the middle to say,
to be very punitive in terms of new technology and it\'s not just new
technology in agriculture. You can get up on my soap box and go talk
about a lot of other sectors than agriculture that explains in some
significant ways why there\'s differences in success in this country
versus Europe.

So, you know, I think it\'s a really good to adopt it to compare the two
because I have some perspective obviously or view as to why this is the
case that I think it would be a useful exercise.

MS. DILLEY: All right. It\'s 5;00. It\'s been a useful discussion
because I think we\'ve gone around it a couple of different topics or
come around a topic a couple of different angles. We have Mr.
Stitzlein\'s presentation tomorrow as the first piece on the
transportation infrastructure and then you need to come back to this
topic and I think you could be framing it in the debate we had today
different than where it is other places and why is it that and why are
things moving the way they are, you know, potential market or missed
opportunities or problems and some things that are working well and
trying to approach those a little differently and how we move those
discussions forward I think would be helpful if we could get our arms
around that to help develop a work plan.

So take the opportunity and sit down overnight and come back and revisit
how we want to frame it and move forward.

DR. SCHECHTMAN: Actually, just one little caveat I wanted to throw in
and that was just to ask everyone to think \-- I mean I think the
positive tone of why things are working versus why the policies are so
much more difficult to implement elsewhere is one thing but I think you
all shouldn\'t lose track of what Mardi said about the fact that there
are problems at the federal level but that may nonetheless percolate
down and I think you can\'t lose sight of that in thinking of what the
future is going to hold. So, I would just leave that as something to \--
and it may be different in different places in the country but, I think
Secretaries of Agriculture have to wrestle with those things around in
various states and I want to leave people with thinking about how to
include that in the discussion as well and I want to after that just
turn to the question again of I guess we can be done and be off the
record and we\'ll just talk about dinner.

DR. LAYTON: We\'re officially adjourning as of this moment. Now we\'re
off the record.

(Whereupon, at 5:00 p.m., the meeting was adjourned)