**Advisory Committee on Biotechnology and 21^st^ Century Agriculture
(AC21)**

**Fourteenth Plenary Meeting**

# December 14-15, 2006

Room 107A, USDA Jamie L. Whitten Building

**Washington, D.C.**

# Draft Meeting Summary

On December 14-15, 2006, the United States Department of Agriculture
(USDA) convened the fourteenth plenary meeting of the Advisory Committee
on Biotechnology and 21^st^ Century Agriculture (AC21). The meeting
objectives were:

-   To further work on the coexistence topic framed around the following
    draft statement of work developed during the last session:

    -   "In an increasingly complex marketplace, what issues should USDA
        consider regarding coexistence among increasingly diverse
        agricultural systems?"

-   Consider outside presentations on topics suggested during the
    previous meeting, including transportation, legal issues, and seed
    supply and availability.

-   Develop a statement of work and a work plan to address current and
    future relevant factors.

The AC21 includes representatives of industry, state and federal
government, nongovernmental organizations, and academia. The following
AC21 members were in attendance: Dr. Patricia Layton, Mr. Leon Corzine,
Dr. Carole Cramer, Dr. Michael Dykes, Ms. Carol Tucker Foreman, Ms.
Sarah Geisert, Mr. Duane Grant, Dr. Gregory Jaffe, Dr. Nicholas
Kalaitzandonakes, Mr. Russell Kremer, Dr. Margaret Mellon, Dr. Steven
Pueppke, Dr. Bradley Shurdut, Mr. Jerome Slocum, Dr. Alison Van
Eenennaam, Ms. Lisa Zannoni, and a new member, Ms. Nancy Bryson. Dr.
Patricia Layton chaired the meeting. *Ex officio* members Marcia Holden,
a research biologist at the National Institute for Standards and
Technology, Dr. Kathleen Jones, U.S. Food and Drug Administration, Dr.
Elizabeth Milewski, U.S. Environmental Protection Agency, Adrian
Polansky, Secretary of Agriculture for the State of Kansas, and Sharon
Wiener, Senior Advisor for Agricultural Biotechnology at the Department
of State, also attended. Dr. Michael Schechtman attended as Executive
Secretary and Designated Federal Official for the AC21. Ms. Cynthia
Sulton of HW&W and Ms. Abby Dilley and Ms. Kathy Grant of RESOLVE
facilitated the meeting.

A full transcript of the proceedings was prepared and will be available
on the USDA website [www.usda.gov](http://www.usda.gov/) by clicking
"Agriculture" on the option bar at the left, then "Biotechnology" on the
option bar at the right, then on the committee name and this particular
meeting.

Below is a summary of the proceedings.

**I. Welcome and Introduction of New Committee Members**

Dr. Michael Schechtman opened the proceedings at 8:30 a.m. by welcoming
all the members, including one new member of the Committee, Ms. Nancy
Bryson, and the public in attendance at the fourteenth meeting of the
AC21. He briefly introduced facilitators Ms. Cynthia Sulton of the
consulting firm HW&W, and Ms. Abby Dilley and Ms. Kathy Grant of the
consulting firm Resolve.

Dr. Schechtman noted that the Committee had completed a significant
piece of work entitled, "Opportunities and Challenges for Agricultural
Biotechnology: The Decade Ahead." He noted that the Committee would
continue work on its next project, addressing the impact of coexistence
considerations for agriculture, after hearing presentations on relevant
topics from a series of outside presenters. Dr. Schechtman pointed out
that several background documents, previously distributed to AC21
members and subject to discussion or reference during the course of the
Committee's deliberations, were available to the public, including:

-   The official AC21 Committee Charter

-   The AC21 Bylaws and Operating Procedures

-   A package of biographical sketches of all of the current AC21
    members, including new members

-   The draft meeting summary prepared from the thirteenth AC21 meeting,
    held on August 29-30, 2006

-   Three Committee reports that were adopted by consensus in 2005 and
    2006.

-   Two press releases issued November 25, 2006 concerning USDA actions
    relative to the detection of unapproved transgenic rice in
    commercial long grain rice supplies.

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-   The provisional agenda for this meeting

-   A preliminary outline of potential topics for inclusion in the
    report on coexistence

-   A preliminary concept paper for the report prepared by Nick
    Kalaitzandonakes

Dr. Schechtman announced that the Committee charter is currently being
renewed, as it has to be every two years. He noted that USDA put out the
annual request for nominations for the Committee in November, was now
sorting through all the applications received, and is likely to make two
sets of appointments over the next few months.

Upon Dr. Schechtman's invitation, new AC21 member Nancy Bryson
introduced herself as an attorney for the Venable law firm, where she
has a number of clients interested in a variety of agricultural issues.
Before that, Ms. Bryson served as General Counsel at USDA from
2002-2005. She also participated in the Pew dialogue on peaceful
coexistence.

Dr. Layton welcomed the Committee and reminded them of their work at the
last plenary to develop an outline for discussions on coexistence. She
pointed out that the Committee would have a total of three meetings to
complete its report on this topic.

Dr. Schechtman introduced Bruce Knight, USDA Under Secretary for
Marketing and Regulatory Programs, and Jeremy Stump, Senior Advisor to
the Secretary for International and Homeland Security Affairs, and
invited them to provide a follow-up on the issue of the detection of
unauthorized transgenic rice in commercial long grain rice supplies.

Under Secretary Knight began by telling the Committee that federal
advisory committees play an extraordinarily valuable role in discerning
the right policy, because they bring together people with very divergent
opinions and provide them with a forum in which everyone grows to value
one another's perspective.

With regard to the detection of unauthorized transgenic rice, Under
Secretary Knight stated that the investigation was proceeding and would
come to a conclusion in the near future. He noted that USDA has
indicated to the public that 2003 Cheniere was the only foundation seed
testing positive for genetically engineered LLRICE601. He also stated
that, although LLRICE601 has been cleared for deregulation, there is a
lot of work to be done in order for its presence to be accepted on the
world market.

In answer to questions from the Committee, Under Secretary Knight stated
that the USDA has a team working to keep the European market open and
has had an excellent dialogue about protocols with the European
Community. He noted that there has been good understanding and
acceptance of underlying testing, but that there were still some
differences about sample size and how far to go with testing. Under
Secretary Knight also stated that he was personally committed to
transparency and would look at which parts of the investigation could be
made public. He invited one Committee member who expressed some concern
to talk with him about proactive steps USDA could take to prevent and
respond to similar events in the future. The Under Secretary also stated
that work on adventitious presence policies was an ongoing priority for
the EPA, FDA, and USDA.

**II. Review of August Meeting Minutes and Agenda Outline**

Ms. Sulton reviewed the draft meeting summary of the thirteenth AC21
meeting held on August 29-30, 2006. Committee members suggested several
changes to the summary. She asked that any additional comments be
provided within one week, so that the meeting summary could be finalized
and posted on the USDA AC21 website.

Ms. Dilley reviewed the agenda and reminded the Committee of its work at
the last plenary both to define what it means by coexistence and to
determine the scope of the report. She reiterated that the Committee
seemed most comfortable with the concept of coexistence as fostering
choice for producers, customers, and consumers. She also noted the
Committee's decision to focus its report on pressures or market
imperfections, both current and future, that have the potential to
affect these choices. Ms. Dilley further noted that the Committee had
developed a list of topics for consideration in its analysis of market
pressures.

**III. Discussion of Committee Charge**

(Note: The AC21 members discussed their charge on coexistence during
sessions on both the first and second days of their deliberations. All
of those discussions are presented in this portion of the summary.)

Dr. Schechtman reminded the Committee that the Secretary asked the
Committee to consider coexistence issues among different types of
agricultural production and how they might be minimized in the future.
Since the USDA would like to receive the report in late spring or early
summer, he emphasized the need for a short, succinct report that lays
out relevant considerations. He noted that the Committee might have to
make some hard choices to focus on what can be accomplished in that
time. He also stated once again that the Department is not specifically
requesting to receive consensus recommendations.

Dr. Schechtman made several points about the work before the Committee.
He noted that at least one member had expressed concerns about specific
language in the draft statement of the charge. He suggested the
Committee decide how it wants to use the draft concept paper created by
Nick Kalaitzandonakes and determine whether the paper includes all the
themes the Committee thinks important. He also reminded the Committee
that it had agreed to review coexistence-related topics already
discussed in previous reports to determine if there is an additional
dimension to any of them that should be addressed in the new report.

Dr. Schechtman further noted that the Committee had three issues to
consider regarding the scope of issues for the report: 1) whether and
how to include or refer to potential products in food crops intended for
non-food uses; 2) how to frame the discussions in a format that the USDA
will find useful; and 3) how to address an uncertain future that is very
likely to include an increasing range of new crops for bioenergy uses.

The Committee discussed several issues related to the charge on
coexistence. With regard to the specific language in the charge, the
Committee generally agreed to remove "increasingly" from in front of
"complex marketplace," and will consider adding the concept of a
dynamic, evolving, or rapidly changing marketplace. The Committee also
will try to further define what is meant by "diverse agricultural
systems."

The Committee reaffirmed that the scope of the charge will include
coexistence from the perspective of producers, customers, and consumers,
and that the main focus will be on domestic markets. They agreed to
clearly define what they mean by coexistence and to ensure that issues
discussed are clearly related to the topic. Some Committee members noted
that earlier reports spoke to coexistence solely from the supply chain
perspective. They suggested more discussion about coexistence in terms
of consumer preferences and the farmers' point of view. One member
suggested that the Committee determine whether the focus should be on
protecting the ability of markets to emerge or on the ability of
producers to respond to whatever emerges in the marketplace.

The Committee recognized that adventitious presence (AP) is critical to
coexistence and presents a challenge along the whole food supply chain.
However, they also acknowledged that AP was addressed in previous
reports and, therefore, agreed that it will be important to analyze
whether or not there is anything further that should be addressed in the
new report. One member expressed concern that although the Committee has
discussed AP in other reports, it has not really confronted the issue
nor made any recommendations to USDA on the topic.

Some Committee members requested that the Committee focus on
data-supported as opposed to theoretical risk. Another member pointed
out that the Committee, whose members bring different perspectives to
the table and who represent constituencies, had not worked in the past
as a data-gathering committee. Dr. Schectmann offered that they are a
Committee of experts.

The Committee also discussed possible approaches to fulfilling their
charge. One member suggested developing a bulleted list of issues under
each of the "diverse agricultural systems." Several others discussed
framing the discussion in terms of how and why coexistence is working in
the United States in contrast to other parts of the world and how that
could change in the future. In this context, the Committee noted that in
order for the United States to be the largest producer of biotech crops,
the largest producer of organic crops, and the largest exporter of
non-biotech crops, there has to be considerable flexibility in the
system. To date, the system has been able to figure out how to deal with
specialty crops in different markets in a cost-effective way that meets
farmer, producer, and consumer interests. Committee members further
noted that the U.S. system may now be reaching the point where it will
lose some of that flexibility. With this as the backdrop, the Committee
suggested several potential questions to address in the report,
including:

-   What is happening with coexistence today? What are the drivers?

-   What things are working?

-   Why are they working? What gives the U.S. system its flexibility?

-   What is going to change in the next 5-10 years?

-   Where are the potential "pinch points" or barriers?

-   What are the issues that may need policy intervention because
    neither the market nor the legal system is addressing them?

-   What are possible solutions, opportunities, and/or potential policy
    options?

**IV. Presentations on Coexistence**

(Note: The AC21 members heard and discussed presentations on coexistence
during sessions on the first day and second day of their deliberations.
All of those discussions are presented in this portion of the summary.)

In preparation for further discussion of coexistence, the Committee
heard three presentations. All of the PowerPoint presentations are
available on the USDA website [www.usda.gov](http://www.usda.gov/) by
clicking on "Agriculture" on the option bar at the left, then
"Biotechnology" on the option bar at the right, then on the Committee
name and this particular meeting.

**A.** [Drew Kershen, Earl Sneed Centennial Professor of Law, University
of Oklahoma College of Law: "Legal Mechanisms Relevant to Coexistence
Issues]{.underline}

Mr. Kershen began by noting that coexistence and adventitious presence
have been well-known in agriculture for a long time and that the issues
are not unique to biotechnology. He stated that he sees three themes in
coexistence: good husbandry, neighborly cooperation, and farmer choice
to grow conventional, organic and/or transgenic crops. .

Mr. Kershen then provided a summary of non-biotech coexistence
complaints and lawsuits. He gave as an example a study by the American
Association of Pesticide Control Officials, which deals with pesticides
from all sources including agricultural. Over a three year period, the
study found an average of 2800 complaints about pesticide spray drift
per year, 800 of which led to some type of administrative action. He
also noted that since 1946, his own research had found a total of 71
neighbor-to-neighbor lawsuits (1.18 per year) filed seeking some sort of
damages due to spray drift. Mr. Kershen stated that, currently, there
are two active non-transgenic coexistence disputes; one involves seeded
and seedless mandarin groves in California and the other is between
brassica seed and canola oilseed growers in Oregon. He also pointed to a
current legal case in Minnesota involving foraging bees and timberland.

With regard to transgenic crops and pollen drift, Mr. Kershen offered
the view that there has been high farmer compliance with the
requirements of management programs. He said he knew of only one
farmer-to-farmer lawsuit. In that case, an organic farmer lost a lawsuit
challenging a neighboring farmer's right to participate in transgenic
field tests. Mr. Kershen also noted three cases against seed developers:
a successful lawsuit involving StarLink corn (a product that entered the
food supply but was never registered by EPA as a plant-incorporated
protectant for food use), an unsuccessful StarLink case (Sample v.
Monsanto), and a case involving a class action by organic farmers which
is on appeal in Canada (Hoffman v. Monsanto). He drew the following
conclusions with regard to coexistence: 1) zero tolerance is not
achievable without a ban on chemical or transgenic agriculture; 2)
coexistence is possible if reasonable agronomic practices are followed;
and 3) if there are stricter standards, they should be part of voluntary
contractual obligations.

Mr. Kershen then discussed legal liability, particularly in connection
with market and export issues arising out of the presence in commercial
long grain rice supplies of Bayer Crop Science's transgenic LLRice601 .
He referred to two class actions, the Gerridge Farm and the Kenneth Bell
cases, which were brought because of loss due to market fluctuation and
loss of the export market. According to Mr. Kershen, the law sees such
instances as pure economic loss as opposed to compensable loss, such as
that resulting from physical damage. He also stated that these cases
differ significantly from the StarLink case because LLRice601 was not
approved at the time of the incident.

Mr. Kershen went on to discuss legal issues connected to organic
certification, involving spray drift, pollen drift, and biotech crops.
With regard to spray drift, he noted that it is the responsibility of
the certifying agent to pay the costs of tests if there is a concern
about contact with pesticides. The current maximum level for pesticide
residue is 5% of EPA tolerance. With regard to pollen drift,
adventitious presence does not affect organic certification for either
farm or product as long as the farm has not used excluded methods and
has taken reasonable steps to avoid contact with excluded methods. For
biotech crops, a recent survey by the Organic Farming Research
Foundation showed that 92% of organic farmers had no direct costs
related to transgenics; 4% had costs for testing; and 4% claimed some
kind of market loss.

Mr. Kershen reviewed legal theories and the likelihood of recovery in
cases involving biotech crops. His analysis made the following points
with respect to particular issues and the application of legal
approaches potentially relevant to future lawsuits:

-   [Adventitious presence]{.underline}: most likely not a compensable
    claim on its own since there must be some kind of significant damage
    and an identifiable responsible party

-   [Strict liability]{.underline}: courts are highly unlikely to use
    since there must be an ultra-hazardous activity

-   [Negligence]{.underline}: since most states use this standard for
    spray drift cases, it is possible it could also be used for cases
    involving transgenic plants

-   [Trespass]{.underline}: while it may be possible to establish
    trespass, the damages would be small and not worth a lawsuit

-   [Nuisance]{.underline}: an unlikely legal vehicle for suits since
    courts will require reasonable accommodation and will not protect
    "unique sensitivities"

Mr. Kershen concluded with a discussion of legal obligations under
contract specifications. He stated that, since farmers voluntarily enter
into contracts, they have to bear the costs of failure to meet contract
specifications. He noted the International Federation of Organic
Agricultural Movements' statement that "\[o\]rganic certification shall
not imply it is a 'GE-free' certification." He also noted that
traditional legal rules put the burden of cost on the party seeking the
higher premium. He acknowledged that in the European debate on
coexistence, they are tending to put the burden on transgenic farmers.

In response to the Committee's questions, Mr. Kershen made the following
additional points:

-   Although there is established precedent for handling spray drift
    cases, as the use of new types of transgenic crops (e.g., bio-fuels
    and pharmaceuticals) expands, it is likely that courts will treat at
    least some of them differently. Pharmaceutical crops could be
    classified as ultra-hazardous and, therefore, considered as a strict
    liability situation.

-   With regard to the Bayer LLRice601 situation, there are additional
    allegations, such as negligence, which if proven would likely
    involve issues related to liability and damages .

-   Legal and liability issues will not change as a result of local
    ordinances setting up growing districts that prevent the planting of
    transgenic crops.

-   Although the Organic Farming survey showed only 8% had direct costs
    related to transgenic crops, there is significant discomfort and
    concern among organic farmers about transgenics. There are non-legal
    avenues, such as mediation or the establishment and use ofvoluntary
    guidelines, for addressing these concerns.

-   The losses a food company suffers as a result of people no longer
    buying a brand of food they thought was contaminated is an economic,
    not a compensable, loss.

-   Since the statutes federal agencies use to regulate biotechnology do
    not let private parties sue to enforce regulatory requirements (as
    is the case for other environmental statutes), it is possible that
    state courts could put more emphasis on negligence (building off of
    the federal regulation), creating an avenue for a private cause of
    action.

-   The successful StarLink case referenced in the presentation differs
    from the Bayer LLRice601 cases in that the court focused in on the
    fact that StarLink was not approved for food use, making it an
    adulterated product per FDA. On the other hand, LLRice601 has been
    approved by FDA as safe to eat.

A Committee member clarified and corrected the last point by noting that
EPA is responsible for approving food additives and as such sets a
tolerance for pesticides. StarLink was a pesticide, but since a
tolerance was not set for foods, it was not allowed for human
consumption. Liberty Link is not a pesticide, so it was not approved as
safe to eat by the EPA. The USDA deregulation of LLRice601 means only
that it can be legally planted without getting a permit.

Dr. Jones from FDA noted that FDA did issue a statement that it did not
see a safety issue associated with the consumption of LLRice601.

**B.** Dr. Bernice Slutsky, Vice President, American Seed Trade
Association (ASTA): "Ensuring a Diverse Seed Supply; plus Committee
discussion"

Dr. Slutsky began by explaining that there are \$34 billion in seed
sales worldwide, 21 percent of which are by the U.S. seed industry.
Currently the highest percent of seeds sold are grain and horticultural,
followed by oil and vegetable seeds. Vegetable and maize seed have the
highest export value. The forecast is for a significant increase in
worldwide seed sales by 2010, with the U.S. percentage remaining fairly
steady. Most of the projected growth is for horticultural seeds.

Dr. Slutsky then gave an overview of preliminary data about where the
seed industry is putting its research dollars. Most of the investment in
new technology is going into two areas: 1) basic germplasm research
(into maintaining diversity, using molecular markers, forward breeding,
and trait delivery methods) and 2) trait research (agronomic, quality,
and pharmaceutical). With regard to particular crops, most of the
investment dollars are going to corn and feed grains, vegetables, and
forage and turf grasses. She also noted that the industry sees a lot of
opportunity in the area of biofuels.

Dr. Slutsky concluded by mentioning some of the challenges and
opportunities facing the seed industry, including niche markets,
geographically specialized seed, biofuels, biotechnology, organics, an
array of distribution channels, and the need for diverse packaging.

In response to the Committee's questions, Dr. Slutsky made the following
points:

-   ASTA members provide the type of seed their customers want. They
    have not received complaints from producers that they cannot find
    the hybrids that they want. The Association has no position on the
    consolidation of the seed industry.

-   The seed industry is addressing adventitious presence through two
    avenues: 1) The International Seed Federation has formed a working
    group to look at low-level presence of biotech events approved in
    the country of production or export but not in the country of
    import. They are looking at taking a safety assessment, not a
    threshold, approach. 2) ASTA has a stewardship committee focusing on
    the handling of seed. In following up on the last point, a Committee
    member mentioned other efforts with regard to adventitious presence,
    including looking at how to sample for unapproved events in seed
    stock, foundation stock, and breeder stock.

-   Some sectors of the seed industry, such as corn, are moving faster
    than others towards ISO 9000 standards. ASTA is likely in the future
    to have a set of best practices for handling different types of
    seed.

-   There is a role for the public sector to fill the gaps in terms of
    seed availability when there is not enough of a return for the
    private sector.

-   There are a number of associations, such as the American Association
    of Seed Certifying Agents and the Seed Certification and Testing
    Institute, that have developed performance standards for seed
    testing.

-   The seed industry has not seen any shift in its ability to sell to
    foreign markets in the eleven years since transgenic crops were
    first commercialized. Phytosanitary and intellectual property issues
    have had far more impact.

-   To foster coexistence and, in particular, the ability to supply
    diverse clients in every market, the best recommendation the
    Committee could make to the USDA would be to put more resources
    towards maintaining the most diverse germplasm, for the whole range
    of seeds.

**C.** Mr. James Stitzlein, Manager, Market Development, Consolidated
Grain and Barge (CGB): "Transportation and Infrastructure for Addressing
Coexistence Needs"

Mr. Stitzlein began by explaining that CGB is a Japanese-owned
river-based enterprise and that much of the grain they originate feeds
to the export market out of the Gulf of Mexico. They buy a large portion
of their grain directly from individual growers and are therefore able
to be involved in identity preserved (IdP) grains from an early stage.
Once they know what their customer wants, they see if their growers are
both capable and willing to manage their operation to comply with these
parameters. The driver for all of their IdP and other program activity
is having non-GMO product.

Mr. Stitzlein went on to compare a commodity-based system of trade to an
identity preserved system. In the commodity-based system, grain is
produced, handled, and shipped as if every lot is the same, so it is
easy to replace or substitute shipments. The downside to this type of
system is that it seldom sends any signals to improve, since average
quality is good enough.

In the IdP system, Mr. Stitzlein explained, grain is produced,
collected, merchandized, and shipped based on the end user definition.
This two-way conversation sends signals about improving, so producers
can be rewarded for doing a superior job. The system depends on
certification and verification. The downside to this system is that
there is less total supply, less ability to substitute, and the storage
logistics are increasingly complex to manage. All of this requires more
communication and coordination than in a commodity-based system.

Mr. Stitzlein described CGB's validation testing and certification
methods. Their validation methods include on-site testing (physical
tests, near infrared instruments, lateral flow strips), retaining grower
samples, and barge testing (using Polymerase Chain Reaction or PCR
tests, tests for chemical residues, and other methods). CGB has adopted
an ISO certification program, which it has completed at the 19 major
river terminals that handle its premium grain.

Mr. Stitzlein continued with a description of infrastructure and storage
challenges, including timing shipments to meet user needs, demurrage
costs of up to \$55,000 per day for keeping a barge or vessel from being
loaded or moving on, risk of product deterioration, and more expensive
shipping, rail, trucking, and barge rates.

Mr. Stitzlein then discussed the effects on his business of the
unintended releases of LLRice601, Bt 10 corn, and Liberty Link corn. In
these instances, he explained, buyers look to other markets, where there
are always substitute ingredients or a substitute supplier, and there is
deterioration in the relationship of trust with your client. He showed a
number of charts reflecting the fluctuations in the market connected to
these releases. Mr. Stitzlein also raised a concern about the cost to
growers of asynchronous approvals using the release of Herculex RW corn
as an example. He then offered possible solutions to these issues,
including:

-   Do a full review of an event in a food crop before any field trials
    and require a food safety evaluation to determine risk.

-   Provide executive branch leadership and coordination among the three
    agencies involved in these events in the regulatory process.

-   Address weaknesses in the ASTA grain handler database.

-   Share information about events that are unapproved or yet to be
    approved in foreign countries.

-   De-emphasize testing; use confirming samples or another test.

Looking to the future, Mr. Stitzlein noted several issues that could
affect the market structure and drive up costs for IdP systems,
including:

-   Changes in non-biotech supplies and seed availability as growers
    experience greater yield with biotech seed, particularly when
    growing conditions are bad.

-   Increased competition from rail shippers and ethanol plants.

-   The challenge of getting non-biotech end users to communicate today
    about what they will need three years from now, so there will
    continue to be the five to ten percent of seed produced and crops
    grown to satisfy these export markets.

In response to the Committee's questions, Mr. Stitzlein made the
following points:

-   "Low levels" of particular biotech events detected in testing are
    beginning to trend upward due in part to the increase in stacked
    traits.

-   PCR tests are developed by testing companies; there is not a USDA
    certified protocol.

-   Currently there are enough storage bins, barges, trucks, farmers
    (although all will become increasing more expensive). However,
    without knowing if the demand will remain for non-biotech crops, it
    is hard to know if there will be enough in years to come.

-   It is important to invest in infrastructure (such as locks and
    dams), because U.S. competitiveness as a supplier is driven by an
    infrastructure that allows us to deliver on time and compete in
    volumes and cost.

-   Having uniform standards is good for efficiency of bulk and
    multi-participant supply chains. It would be best if standards were
    wide and reasonable, so companies could still differentiate
    themselves. The problem with regulatory standards is that they may
    not be based on what is really achievable.

-   The U.S. should provide leadership to help other countries
    understand our regulatory review process and why we do it the way we
    do. This would be particularly helpful for those developing
    countries that do not have the resources to do a lot of evaluations
    on their own.

-   The market has been responsive to end user demands for different
    standards of performance. Information is being communicated
    effectively from both growers and end users.

-   Rescinding the statement issued by USDA's Grain Inspection Packers
    and Stockyards Administration (GIPSA), which stated that there are
    no transgenic rice varieties for sale or in commercial production in
    the United States at this time, after the detection of transgenic
    events in shipments of U.S. long grain rice, caused problems because
    it made the issue with LLRice601 seem bigger than it really was. It
    is possible that GIPSA statements are perceived by the end user to
    mean the U.S. has a zero tolerance policy.

-   The export market for non-biotech corn is in the neighborhood of 160
    million bushels.

-   The market, from farmers to customers, has worked quite well up to
    this point. Looking forward, it will be important to have accurate,
    realistic, and reasonable tests, and the ability to share
    information about these tests with end users.

**V. Review of Draft Concept Paper on Potential Topics for Inclusion in
the Report on Coexistence**

(Note: The AC21 members discussed the concept paper during sessions on
the first and second days of their deliberations. All of those
discussions are presented in this portion of the summary.)

The Committee discussed several topics relevant to coexistence that were
identified at the August 2006 plenary and expanded on in the concept
paper drafted by Committee member Nick Kalaitzandonakes. Under each
topic, the Committee focused on potential "pinch points" or market
failures that are not being addressed by either the market or the legal
system and could lend themselves to policy intervention.

[Market Infrastructure]{.underline}: The Committee discussed the impact
on infrastructure from growth at the national, global, and local level.
One member pointed out that it is possible that the U.S. will be
producing 15 billion bushels of corn per year - three and a half billion
more than today - in just a few years. With much of the infrastructure
filled up with commodity corn, the prices for specialty products will
have to be incredibly high in order to compete in the marketplace.
Members also noted that the transportation and infrastructure system was
built up in anticipation of a one percent per year increase in yield.
However, a better understanding of genetics has led to a more rapid
acceleration of yield per acre. (One member has seen a five percent per
year increase in yield for sugar beets over the last ten years.)

At the local level, some Committee members thought it was possible that
an increasing interest in sustainable agriculture and a concern about
rising energy prices could result in the organic and other specialty
markets moving to local rather than national sourcing. Some members
foresaw local production going direct to restaurants and retailers, not
through a collection processing center for inspection and oversight, and
a possible rebirth in the cooperative movement.

The Committee also acknowledged that the export market, which is mostly
supplied in the United States through river transport, is not going to
go away. Some members described the U.S. river system, which was built
in the 1930s, as old and losing reliability -- particularly barges,
locks, and dams. They noted that it is unlikely that new dams and locks
will be built because of the cost to taxpayers and environmental
concerns.

The Committee discussed the impact of growth on a domestic
transportation system that is already operating at capacity. Some
members noted that it is unlikely that the United States will create a
dual transportation system just for specialty crops. The Committee
pointed in particular to the tremendous burden ethanol plants will place
on the system. At this point in time, nobody in the transportation
business is building more trucks, rail cars, tanker cars, or open top
cars to haul ethanol in response to the economic gains from the current
demand. The barge industry, which had not been very prosperous the last
few years, is only building barges to replace old ones they want to get
out of the system. There also is no incentive for grain companies to
build their own rail cars, because it costs them the same to use rail
company cars.

The Committee also discussed the impact on storage from anticipated
growth at the national and local level. They noted that the grain
handling structure is set up for handling, not storing, grain. Some
members stated that private industry is responding to the need for more
storage, because they know the ethanol industry is going to demand it.
Bin builders have been building more bins in the last two years than
they ever have before. Other members suggested that growth at the local
level will require more small containers to accommodate smaller lots of
products.

The Committee then discussed the policy implications for transport and
storage infrastructure. They emphasized the importance of ensuring a
strong transportation system\--including waterways, rail, and
highways---that is accessible, flexible, and predictable. Some members
pointed out that USDA does not have authority over many of the
environmental issues that would need to be taken into consideration in
order to update infrastructure. They noted, however, that USDA could
play a role in streamlining the processes that would allow building,
repair, or expansion of necessary infrastructure.

Some Committee members suggested that if there is an increase in local
sourcing, the USDA might need to consider the following: changes in
GIPSA activities, changes in farm cooperatives, rural development loans
for refrigeration units, providing incentives for smaller entities (for
example through government agency purchases), overcoming barriers such
as access to credit, and supporting the development of new technologies
that, through testing and measuring, add value to specialty crops.

[Uniform Standards, Compliance, and Stewardship]{.underline}: The
Committee discussed the importance of quality testing for traits in
order to ensure the development of a segmented market. Members
emphasized the need for predictable and reproducible testing. Some noted
that the lower the levels of a trait, the harder it is to reproduce
results. Some members focused on the need for a standardized test;
others preferred a focus on standardized techniques, test materials
(with both a uniform positive and a uniform negative), and protocols for
interpretation of the results.

Some Committee members also noted the importance of the involvement of
an independent third-party to validate and, if there are no standardized
testing and interpretation protocols, spot-check results. The Committee
also discussed the need for harmonization in testing when moving into
markets with different specifications.

Ms. Holden explained why it is very difficult to get good
reproducibility when measuring low levels of materials. She stated that
the PCR test is not a direct analytical measurement of the amount of a
trait. It is instead a measurement that relies on amplification or a
copying of DNA in order to detect the trait. The copying is done with an
enzyme, which can be inhibited by other components of the reaction.
Another member pointed out that one of the largest contributors to the
variability in testing results is the sample itself: testing for very
low levels requires a larger sampling size, resulting in the need to
sacrifice more product.

The Committee also discussed policy implications of uniform standards.
Some members suggested that policies that would reduce testing
uncertainty would enable both people with little power (farmers) and
people with a lot of power (large retailers) to participate effectively
in the marketplace. Others offered the view that policy should only set
minimum standards and allow individual companies to set higher
standards. Some members suggested that the USDA do an inventory of
tests. They also suggested that USDA could work with trading partners to
ensure harmonization of both the testing methodology (reference
material, performance) and the interpretation of the tests.

[Market Information and Transparency]{.underline}: Some Committee
members suggested that there is a need for more information and data,
because segmented markets are not as transparent, visible, or
well-reported as larger commodity markets. With improvements in this
area, producers would have a better understanding of the structures in
place that make a segmented market work. They would also have the data
and analysis they need to make planting decisions and respond
effectively to the market. Other members did not see improvements in
market information and transparency as a coexistence issue for consumers
or farmers. They questioned whether more information would really help
farmers coexist with their neighbors, or help consumers better
understand the different products in the segmented market.

[Market Structure and Access]{.underline}: Some Committee members
suggested that forward contracting may become increasingly important to
ensure there will continue to be enough seed to meet the demand of the
non-biotech market. They noted that USDA could take steps to preserve
the availability of non-biotech seed, particularly as the demand for
energy and export crops increases. One member reiterated that access to
credit is a barrier for community-based and farmer-owned operations.

**VI. Public Comment**

There were no comments from members of the public.

**VII. Discussion of Work Plan and Next Steps**

The AC21 discussed and agreed to the following next steps:

1)  The Committee will develop some of the components of a preliminary
    draft on coexistence.  The following is a list of drafting groups
    and assignments:

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a)  [Overall Framing]{.underline}: Sarah Geisert (leader), Mardi Mellon,
    Nick Kalaitzandonakes, Greg Jaffe

-   The United States as the largest biotech and organic crop producer
    AND largest non-biotech exporter in the world

-   Some things are working (and maybe why they're working)

-   What may not be working?

-   Looking to the future:  describing the idea of potential "pinch
    points" that may arise

b)  [Infrastructure \"Pinch Points\"]{.underline}: Pat Layton (leader),
    Jerry Slocum, Leon Corzine

> Transportation: flexibility, accessibility and predictability

c)  [Market Structure & Access Pinch points]{.underline}: Brad Shurdut
    (leader), Russ Kremer, Nick Kalaitzandonakes

    -   Access to capital

    -   Seed availability

    -   Global competition

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c)  [Regulatory Standards, Compliance & Stewardship Pinch
    Points]{.underline}:

> Randy Giroux (leader), Duane Grant, Nancy Bryson

-   Reference previous reports for the provision of industry/supply
    chain perspectives as much as possible

-   Provide any needed additional information, particularly new (grower
    and consumer) perspectives on these coexistence-related issues (some
    of this material may be added to upon provision of additional
    consumer information at or before the next plenary session)

> Each drafting group will be responsible for finding an appropriate
> procedure for developing texts provided to Michael Schechtman and
> facilitators [by January 30, 2007]{.underline}.  Dr. Schechtman will
> try to be available to participate in any conference calls if the
> drafting groups would find it to be useful.

3)  Facilitators and Michael Schechtman will assemble and do basic
    editing of the submitted components and get a compiled draft back to
    Committee for review by February 6, 2007.

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3)  Facilitators and Michael Schechtman will try to assemble a round of
    comments before the next plenary, depending on how quickly the
    Committee comments on the draft sent to them and whether all other
    deadlines are met.

4)  Michael Schechtman will work with facilitators and AC21 members to
    determine how best to provide information in the following areas to
    the Committee:

    a.  Consumer expectations

    b.  EU perspective on coexistence

    c.  Organic perspective (one for whom coexistence is not working).

**VIII. Conclusion**

Dr. Layton thanked Committee members for their work during the meeting
and adjourned the meeting at 3:30 p.m.