**Opportunities and Challenges in Agricultural Biotechnology:**

**The Decade Ahead**

A report prepared by the USDA Advisory Committee

on Biotechnology and 21^st^ Century Agriculture

July 13, 2006

**Introduction**

This paper was prepared by the Advisory Committee on Biotechnology and
21st Century Agriculture (AC21) in partial fulfillment of one of the
charges under its Charter: "The Committee is charged with examining the
long-term impacts of biotechnology on the U.S. food and agriculture
system and USDA, and providing guidance to USDA on pressing individual
issues, identified by the Office of the Secretary, related to the
application of biotechnology in agriculture." The Committee has defined
"long-term" impacts to be those that may occur over the period of the
next 5 to 10 years. Two other reports related to this overall charge
were provided to the Secretary of Agriculture on May 9, 2005. One was
entitled "Preparing for the Future" and another "Global Traceability and
Labeling Requirements for Agricultural Biotechnology-Derived Products:
Impacts and Implications for the United States."

The AC21 consists of 20 members (See Appendix A) representing the
biotechnology industry; the seed industry; international plant genetics
researchers; farmers; food manufacturers: commodity processors,
handlers, and exporters; environmental and consumer organizations; and
academics. Prior Committee members have contributed to the deliberations
that helped shape this report. However, they did not participate in the
finalization of this document and are not signatories to the report.
Representatives from the Departments of Commerce, Health and Human
Services, and State, and the Environmental Protection Agency, the
Council on Environmental Quality, and the Office of the United States
Trade Representative serve as ex officio members. The AC21 has met 12
times in public plenary sessions since its establishment in 2003.

In preparing this paper, the Committee worked in both plenary sessions
and work groups. AC21 members drew on their own experiences, expertise,
perspectives and their constituents' perspectives while discussing
potential products of modern biotechnology in the next five to ten years
and the agricultural, political, social, and economic context in which
these products will be introduced. The Committee also gathered
information provided by outside experts, *ex officio* members of the
AC21, and employees of USDA with relevant expertise.

AC21 members share a vision of a safe and abundant food supply and a
diversified agricultural marketplace that can meet the needs and
preferences of customers and consumers in the United States and the
world for a variety of products, including those derived from modern
biotechnology. AC21 members have diverse views about the appropriate
role of plants and animals produced using modern biotechnology in the
food and agricultural marketplace, as well as how USDA should assess and
address the many factors shaping the context within which these products
will be introduced. This paper provides a brief summary of the extensive
deliberations by the Committee in exploring the potential products that
technically could enter the marketplace in the next five to ten years,
the many factors shaping the future context in which these products will
be introduced, and a broad range of topics Committee members think
relevant for USDA to consider. The series of topics discussed reflects
the range of perspectives of the AC21 membership. Each topic was
initially identified by one or more members of the Committee as likely
to be of significance to the Secretary and USDA over the next decade.
The topics included are not of equal importance to all members of the
Committee and they are not prioritized. The paper as a whole is a
consensus product of the full committee; however, for topics 8, 14, 15,
16, and 24 in this report, a range of views of different members is
presented.

Biotechnology is the application of technology to living organisms. This
paper focuses primarily on organisms produced through genetic
engineering and their products. The terms "genetically engineered,"
"derived through modern biotechnology," and "transgenic" are used
interchangeably to refer to these organisms.

**The Past Decade and the Next Decade**

**The first ten years**

Over the past decade, traits developed using modern biotechnology have
been introduced into U.S. agricultural commodities including corn,
soybeans, cotton, and canola. They have been adopted rapidly by American
farmers, and also are being grown by farmers in other countries. The new
varieties were intended to provide increased productivity,
profitability, and improved environmental management (e.g., reduced
pesticide use and expanded conservation tillage). Most of the new
varieties were developed to be incorporated into existing
undifferentiated commodities. Genetically engineered traits have been
part of a multifaceted biotechnology research milieu in which enhanced
breeding, a greater focus on germplasm improvement, and advances in
understanding the molecular basis of growth, productivity and disease
resistance jointly have led to substantial increases in agricultural
productivity.

In the United States, these transgenic varieties are largely
undifferentiated and fully integrated into commodity markets. In 2005,
52% of corn, 87% of soybeans, and 79% of cotton planted in the United
States was genetically engineered, according to the National
Agricultural Statistics Service. In addition, in 2005 transgenic crops
were planted globally on about 222 million acres,[^1] roughly 5.8% of
the estimated 3.8 billion acres devoted to crops.[^2] Transgenic
varieties thus far in the marketplace have been beneficial to farmers
and the environment, but have not provided marketing advantages to food
retailers or improved nutrition or taste to attract consumers. In some
countries, there have been increased risk management requirements as
well as opposition to introduction of the transgenic seed varieties and
the foods produced from those crops. Food processors and retailers have
been reluctant to introduce food products developed from transgenic
crops in markets where there is a requirement for mandatory labeling of
food products and/or perceived consumer resistance to genetic
engineering technology. The resistance stems in part from some
governments' and consumers' perception that there are unknown risks
associated with genetically engineered foods and an absence of obvious
consumer benefits. The development of new transgenic products,
controversies related to such products, varying national requirements,
and different consumer preferences have driven numerous market
responses, including the development of segregated markets and
differentiated product streams (genetically engineered and
non-engineered). Other market responses have included regionalized
production and ingredient sourcing, new testing methods, new systems for
identity preservation and certification, and the development of
marketing and risk management tools. AC21's earlier report, entitled,
"Global Traceability and Labeling Requirements for Agricultural
Biotechnology-Derived Products: Impacts and Implications for the United
States," describes in greater detail strategies developed to meet
various traceability and labeling requirements. The report, presented to
the Secretary of Agriculture on May 9, 2005, [may](http://may/) be
accessed under the topic "Biotechnology" from the Agriculture subject
page on the USDA website (www.usda.gov).

**The next ten years**

It is impossible to predict exactly which new modern
biotechnology-derived plants or animals will be ready for the
marketplace over the next decade. Some possibilities include:

• Genetically engineered plant varieties that provide improved human
nutrition (e.g., soybeans enriched in omega-3 fatty acids);

• Products designed for use in improved animal feeds (providing better
nutritional balance by increasing the concentration of essential amino
acids often deficient in some feed components, increased nutrient
density, or more efficient utilization of nutrients such as phosphate
that could provide environmental benefits);

• Crops resistant to drought and other environmental stresses such as
salinity;

• Crops resistant to pests and diseases (e.g., fusarium-resistant wheat;
chestnut-blight resistant chestnut; plum pox resistance in stone fruit;
various insect resistant crops);

• Additional crops containing a number of transgenic traits incorporated
in the same plant (stacked traits);

• Crops engineered to produce pharmaceuticals, such as vaccines and
antibodies;

• Crops engineered for particular industrial uses (e.g., crops having
improved processing attributes such as increased starch content,
producing useful enzymes that can be extracted for downstream industrial
processes, or modified to have higher content of an energy-rich starting
material such as oil for improved utilization as biofuel); and

• Transgenic animals for food, or for production of pharmaceuticals or
industrial products (e.g., transgenic salmon engineered for increased
growth rate to maturity, transgenic goats producing human serum factors
in their milk, and pigs producing the enzyme phytase in their saliva for
improved nutrient utilization and manure with reduced phosphorus
content).

There are several factors beyond whether a genetically engineered crop
or animal can be developed and found efficacious which will help
determine whether it is successful as a marketable product. For each
such possibility, before any product reaches the marketplace, the
federal government must ensure it is safe for human consumption, safe
for the environment, and will not adversely affect the food supply. To
appropriately manage risk, the government might impose additional
measures on developers, farmers, or others throughout the food and feed
chain that may affect the economic or technical viability of the product
and the realization of potential benefits.

AC21 members have diverse views about the appropriate role of plant and
animal products derived from modern biotechnology in the food and
agricultural marketplace. Members recognize that new products will be
entering a world that is very different from the one that existed a
decade ago when the first agricultural products of modern biotechnology
were introduced:

• Many of the "first-generation" transgenic organisms developed in the
United States have now been adopted by farmers in other nations,
including developing nations;

• Some of the transgenic plant varieties intended for food use developed
over the next few years will likely emerge from the developing world.
For example, if transgenic rice varieties (probably insect-resistant
varieties) that have been developed in the developing world (e.g., in
China or India) are commercialized, this could have a significant impact
on the global genetic engineering debate because large populations of
humans will be consuming a staple transgenic whole food;

• Some of the "next generation" of transgenic varieties and products may
need to be produced under identity preservation conditions or require
strict segregation from food or feed product streams;

• Media coverage and public debate have made consumers more aware of
genetically engineered products than when the first crops were adopted.
Increased awareness along the food and feed chain will continue to
influence the acceptance of new products derived from modern
biotechnology;

• Genomic information is being used to enable the development of
improved crops and animals through both transgenic and non-transgenic
approaches;

• National regulatory systems for evaluating the safety of new
transgenic products are being developed and implemented in many
countries around the world, eliminating some uncertainties but, in some
cases, complicating the path to market;

• Many countries now require mandatory labeling for food products
derived from modern biotechnology, and some require traceability of
those products throughout the food and feed chain. Food manufacturers
who do not want to label their products as containing transgenics are
sourcing non-transgenic crops, further segmenting the marketplace;

• U.S. regulations are evolving slowly and many governing statutes were
written before modern agricultural biotechnology was developed. That
system may not be optimal to meet the needs of producers and consumers.

• The commercialization of a transgenic plant or animal product is
affected by considerations beyond the safety of the product. Technical
challenges may arise when turning a beneficial trait into a marketable
food. New products must gain acceptance by consumers and trading
partners;

• Sometimes social and ethical concerns may influence decisions about
commercialization. For example, the development of transgenic animals
may generate, for some people, higher levels of concern than those for
plant breeding;

• Some international agreements specific to modern biotechnology, e.g.,
the Cartagena Protocol on Biosafety, and standards related to modern
biotechnology under Codex Alimentarius, now exist. Additional efforts
under these bodies are continuing, but their future outcomes are
uncertain;

• There is an ongoing trade dispute over modern biotechnology-derived
products between the EU and a number of complainants, including the
United States, nearing a final report from the World Trade Organization;

• Technology producers, food producers and processors increasingly
recognize the global interdependence of markets and the importance of
resolving genetic engineering- related issues;

• With the increased use of genetically engineered organisms, other
issues such as testing, liability, coexistence, and intellectual
property rights, have emerged.

Achieving AC21's shared vision of a safe and abundant food supply and a
diversified agricultural marketplace that can meet the needs and
preferences of customers and consumers will require national and
international regulatory systems with several characteristics. These
characteristics include assurance that the food and feed supply is safe
for humans and animals, that the environment is protected, and that the
regulatory processes maintain commercial viability of products and
engender public trust. An effective international marketplace also
requires agreement to and enforcement of fair, clearly defined trading
rules. All recognize that achieving the vision will be a worthwhile but
not an easy endeavor.

AC21 has discussed a number of topics that some or all members believe
are relevant to USDA's efforts to adapt to this changing world and
ensure that American agricultural products, including current and future
transgenic products, remain competitive in the global marketplace. The
following are brief descriptions of those topics, some of which were
discussed at considerable length by the AC21. While none of these
descriptions completely captures the extent and richness of committee
discussions on the topics, the Committee is willing to provide further
information to the Secretary on any that are of particular interest.

**TOPICS OF DISCUSSION**

**1. The extent of domestic and global adoption of transgenic crops has
influenced, and may increasingly influence, U.S. producers and
agricultural production patterns.**

The adoption of genetically engineered corn, soybeans, cotton and canola
has influenced cropping patterns in the United States. The availability
of genetically engineered crops is one of the major factors affecting
production of other crops for which transgenic varieties are not
currently commercially available. For example, a recent North Dakota
State University study[^3] suggests that availability of genetically
engineered corn and soybeans, along with other variables, has
corresponded with an increase in acres planted to those crops in the
Dakotas and Minnesota, replacing acres planted to wheat. Adoption of
transgenic crops in other countries, including Argentina and Brazil,
also has contributed to changes in cropping patterns in the United
States. Such changes could have important implications on market access,
food security, research programs, biodiversity and competitiveness.

**2. Farmer demand has become a driver for the continued development of
new agricultural traits derived from modern biotechnology because
benefits have been delivered to the production segment of the food and
feed chain.**

Since the first commercial transgenic crop traits were introduced in the
United States, herbicide tolerant crops and insect protected (Bt) crops
have generated substantial production benefits including: improved soil
conservation through enhanced use of no-till or minimal tillage systems;
lowered pesticide use; improved flexibility and ease in pest management,
which has been documented in at least one instance to result in greater
net returns for farmers; and improved crop quality of Bt corn in those
cases where decreased insect damage leads to decreased fungal damage and
reduced levels of natural mycotoxins. Most farmers who have grown
transgenic crops anticipate growing varieties containing new traits.
This demand will help drive the development of new traits. However, some
farmers believe that there are downsides to modern biotechnology and
that similar benefits can be attained through other methods.

**3. Crops with energy specific traits may be developed to help meet the
growing demand for renewable alternative fuels.**

Currently, commodity crops (e.g., corn and soybeans), a substantial
portion of which are genetically engineered for agronomic purposes, are
being increasingly used for energy. In the future, genetic engineering
could be employed to engineer traits in both food and non-food crops
(e.g., grasses and trees) that specifically relate to energy production.
The large scale production of such energy crops could have tremendous
implications for U.S. agricultural systems. As with other genetically
engineered crops, all regulatory and safety issues must be addressed
before commercialization. Bioenergy uses will be visible to consumers
and their scale alone could raise concerns for them, although meeting
bioenergy needs using genetically engineered crops could be seen by
consumers as a benefit as well.

**4. The private sector provides most of the funding for research and
development of new genetically engineered crops, and this funding is
largely directed toward major crops that offer a substantial return on
the research investment.**

Privately funded research and private sector development of genetically
engineered crops are driven by potential profitability. Publicly funded
research aimed at development of new varieties has remained static over
the past several years. As a result, crops that do not appear to offer
substantial market returns are deprived of adequate research funding and
are not able to attract research personnel. Advances through
biotechnology could provide improvements in some specialty crops,
including forest trees, vegetables and fruits, yielding public benefits,
if adequate research funding were available.

**5. The application of modern biotechnology to specialty crops
continues to be limited by the cost of product development and the
unique characteristics of specialty crops.**

Nearly all of the genetically engineered crops currently on the market
are major commodity crops such as corn, soybean, and cotton as opposed
to "specialty crops" (a term defined by Congress[^4] to mean "fruits,
vegetables, tree nuts, dried fruits, and nursery crops \[including
floriculture\]"). The public could potentially benefit from modern
biotechnology-derived innovation of specialty crops, but the extent of
commercialization of transgenic specialty crop is currently limited by
multiple characteristics. Those characteristics include, but are not
limited to, the small market size of specialty crops, access to
intellectual property, acceptable return on investment, unique or
individual biological characteristics of specialty crops, the dynamics
of the marketplace, and other commercial challenges.

**6. There is a need for more publicly sponsored data collection and
peer-reviewed analyses on the use and broad impacts of transgenic
organisms. Such data and analyses should be publicly available.**

USDA has a unique role in collecting primary data and providing
information to the public in a fair, understandable, and factual way.
Relevant topics include not only environmental impacts (e.g., on
pesticide use patterns, pest resistance management, soil loss, etc.),
but also social and economic impacts (e.g., on net farm income,
distribution of benefits, economic opportunities, etc.). USDA also has
an important role in encouraging external, independent peer-reviewed
analyses of the data it gathers.

**7. Some of the gene manipulation technologies that are being employed
or are under development may produce organisms that are not regulated by
the U.S. government under the current biotechnology regulatory framework
or may require development of new assessment methodologies.**

Some technologies to remove, mutate or silence the expression of
particular genes arguably do not produce "transgenic" organisms. In
addition, new transgenic organisms may result in substantially different
types of products than have thus far been reviewed by U.S. regulatory
agencies. In either case, some of these organisms may not be regulated
under the current regulatory system, while others may require new or
modified regulatory assessment methodologies or may pose challenges for
the traditional boundaries of agency responsibility. As a result, this
new generation of biotechnologies may influence the debate on genetic
engineering.

**8. There are concerns that food crops genetically engineered to
produce medical or industrial products never intended for food or feed
use could inadvertently end up in a food or feed product.**

New genetically engineered organisms designed for medical and industrial
markets could offer substantial health and economic benefits. There are
a number of new products under active development in these categories,
and some of those being produced in plants have been engineered for
production using important food crops. Consumers generally do not want
such substances in their food.

One group of committee members believes that the federal government
should not approve the use of food crops for the production of medical
and industrial substances, even if the substances are deemed safe,
because no regulatory process or containment system can assure that
these products will never enter the food supply.

Other committee members believe that adequate regulatory oversight of
crops producing medical or industrial products utilizing a tiered
risk-based approach can ensure the safety and integrity of the food and
feed supply. These members believe that at small scale, complete
segregation from food products can be ensured by a combination of
physical and biological containment strategies. As scale or potential
risk increases, food safety assessment may be required in addition to
stringent containment procedures.

Still another group prefers the use of non-food crops for such products.
They believe that, if food crops are to be used, it is impossible to
guarantee the absolute absence of such substances in the food supply.
Therefore, in their view, no food crop should be used without thorough
regulatory review of food safety and the establishment of stringent
safeguards to prevent intermingling with the food supply.

For the last two groups, the Federal government's ability to
successfully address the issues of containment and public confidence in
that containment system remains critical for the development of these
products.

**9. There is no clear, comprehensive federal regulatory system to
assess the environmental and food safety of transgenic animals before
they are commercialized.**

The next generation of genetically engineered products will include
transgenic animals developed for food and non-food purposes. The federal
government has not clearly indicated how and under which laws and
regulations transgenic animals will be regulated. The Office of Science
and Technology Policy (OSTP) published a package of regulatory case
studies in 2001, one of which described a prospective pathway for the
regulation of transgenic salmon using FDA's "new animal drug"
authorities under the Federal Food Drug and Cosmetic Act. FDA indicated
in that case study that it "...intends to publish draft guidance on how
the new animal drug provisions of the FFDCA pertain to transgenic
animals, and on procedures by which companies developing transgenic
animals can comply with those provisions." However, the government has
issued no further guidance on the scope or implementation of such a
policy. If FDA's new animal drug regulatory process is used to regulate
transgenic animals, there are concerns about the lack of transparency
and public participation in the process. There are also concerns about
whether FDA has adequate legal authority to assess and address the full
range of environmental risks that could arise. In 2003, USDA indicated
that it was reviewing whether it might have the legal authority to
regulate certain transgenic animals. As research involving transgenic
animals moves toward commercialization, a credible, appropriate and
transparent federal regulatory framework applicable to genetically
engineered food and non-food animals is increasingly important.

**10. There is no comprehensive domestic policy regarding adventitious
presence of transgenic events in seed, grain, or food.**

In the context of modern plant biotechnology, adventitious presence (AP)
refers to unintentional, low levels of transgenic material (or a
specific transgenic event) in seed, grain, or food and feed products. AP
can arise from transgenic organisms that have satisfactorily completed
all regulatory procedures or those that have not. Such adventitious
presence can result in regulatory, contractual, and/or consumer issues.
Although federal policies address some aspects of AP, the federal
government has not set forth comprehensive policies, guidelines, or
standards regarding the adventitious presence of transgenic events.

*This topic is discussed at greater length in the above-cited report
previously submitted to the Secretary of Agriculture by the AC21.*

**11. The concerns of some people about genetically engineered products
are not addressed by a regulatory system designed to assess and manage
health and safety risks.**

In addition to safety, some people consider other factors in their food
purchasing decisions. They also may be concerned with a product's
origins and whether the foods are "wholesome," "pure" or "natural." Some
consumers may raise moral or ethical issues about certain products. As
one example, some find the genetic engineering of animals to be
ethically problematic and may object to the presence of meat and milk
from these animals if they enter the food supply. These concerns may
continue to impact the marketplace and, if so, may influence the
development and acceptance of aspects of modern agricultural
biotechnology.

**12.** **Transparency in the regulatory system is important for
stakeholders including the consuming public, in the United States and
around the world, to have confidence in the safety of genetically
engineered organisms.**

Transparency enables the public to learn about, and gain access to key
information on the regulatory requirements established to ensure food,
feed, and environmental safety of new products. In a transparent system,
organizations and individuals would have the ability to gain timely
access to information about the regulatory process and to the safety
information submitted in support of new products. In addition, the
public would have information about the basis for federal regulatory
actions and the regulatory systems and structures from which they
derive, and would be able to comment on proposed actions. Although
aspects of the federal regulatory system have been very transparent,
other portions could improve in this area.

**13. The success of some future food products derived from transgenic
plants or animals will be influenced by whether food processors and
retailers embrace these products. Their purchasing decisions will, in
turn, be influenced by whether customers and consumers perceive that the
resulting genetically engineered food products provide value to them.**

Most transgenic crops currently on the market were developed primarily
for advantages they confer on productivity and agricultural management.
They have produced some environmental benefits. However, there are no
foods now on the market that use genetically engineered traits to
provide retail consumers with improved quality, nutrition or particular
safety benefits, such as reduced pathogens or allergenicity. There are
some such products under development, although the appeal of these
products for consumers is difficult to assess and anticipate. Polling
data indicate a wide variety of responses to questions regarding
genetically engineered food, complicating assessment of consumer
response to future transgenic products. Typically, consumers' choices on
product purchases involve a diverse array of considerations including
not only price, convenience, safety, and nutrition, but taste,
familiarity, appearance, wholesomeness and in some cases, considerations
of morality and ethics. Many future transgenic products may be major
components of foods or may in themselves constitute a whole food.
Products designed to offer consumer-specific improvements, such as
improved nutrition or health benefits, may also be more visible and
therefore potentially more controversial. Food processors and retailers
are responsive to consumer preferences and are likely to play an
increasing role in determining whether, when and how such new products
reach the marketplace.

**14. While all AC21 members agree that ensuring the food and feed
safety of transgenic crops is important, members differ in their views
about whether the current FDA regulatory system for transgenic crops is
adequate to ensure safety and public acceptance.**

For foods and feeds derived from transgenic crops, FDA employs a
voluntary consultative process to review safety data. While FDA does not
require pre-market approval of these products, FDA does require
pre-market approval of food additives regardless of method of
production.

In considering this system, some AC21 members have noted that all foods
from biotechnology-derived plants that are on the market today have
successfully completed the FDA\'s pre-market consultation process and
that the same safety standards apply to all foods regardless of their
source, so that the consultation process mirrors the voluntary process
widely used by the food industry to notify FDA prior to marketing new
conventionally-produced substances that are \"generally recognized as
safe.\" The submissions reviewed by FDA scientists under the
consultation process provide the basis for the developer\'s conclusion
that the food is as safe as conventionally-produced counterpart foods
and may lawfully proceed to market. The biotechnology and food
industries understand that, although the FDA consultation process is
technically voluntary, marketing a food from a biotechnology-derived
plant without completing a consultation with FDA is simply not a viable
commercial option, making the FDA process effectively mandatory. These
members support making this consultation process mandatory.

Other AC21 members believe the Federal government needs to establish a
mandatory pre-market approval process for transgenic crops eaten by
humans and animals. They note that those crops receive such treatment in
virtually every developed country where such crops are marketed. With
the next generation of transgenic crops poised to include more
scientifically complex products as well as crops developed in other
countries and imported into the United States, a regulatory system that
provides mandatory pre-market assessment for environmental and
agricultural concerns related to those crops but not a similar food
safety assessment is not protective of the public that will consume
those crops. These members further note that, when informed that there
is no mandatory pre-market safety approval for foods regulated by FDA,
most Americans respond that they are unaware and that they would be more
inclined to accept the foods if there were such a process.

**15. AC21 members have different points of view regarding how strongly
consumers feel about having information about whether their food is
genetically engineered and whether the food should be labeled as such.**

AC21 members agree that consumers are interested in having access to
more information about their food and that, food issues are more visible
and discussed more frequently.

The first group thinks that American consumers have a fundamental right
to know about the origin and makeup of ingredients in their food. Having
information about whether foods are, or are derived from, genetically
engineered organisms included on the label would allow consumers to
choose to purchase or avoid those products without being restricted to
limited or higher priced options. The EU and other governments require
such information on labels and members of this group do not understand
why US consumers should not also get that information.

In addition, these members believe that consumers are more likely to be
uncomfortable with or opposed to some future genetically engineered
products, especially milk and meat derived from transgenic animals.
Unlike the first generation of products that have been largely invisible
because virtually all are used as animal feed or ingredients in
processed foods, future modifications may be more controversial. For
example, even if consumers accept that genetically engineered animals
are safe, they may want to avoid them because they have moral or
religious objections to altering sentient animals. These members believe
mandatory labeling of products of modern biotechnology is the middle
ground: allowing such products to come to market but making it possible
for consumers to avoid products they oppose.

Other AC21 members believe consumer interest is not focused on whether
food products are derived through agricultural biotechnology or contain
genetically engineered ingredients. They assert that those consumers who
do have an interest in whether products are developed from genetic
engineering, have multiple means of finding this information, including
the Internet, calling the company and other avenues. Some specialty or
niche markets have been developed for those consumers who want to avoid
these products. Consumer preference can be addressed by market driven
voluntary labeling that provides truthful, non-misleading and verifiable
information to consumers and allow market forces to operate. These
members also believe that the majority of American consumers are
primarily interested in food quality, safety and cost. To mandate
labeling of products generally has led to avoidance of such ingredients,
reformulation of food products and limited choice in the marketplace.
They also believe that mandatory labeling would send the wrong message
regarding safety of these products -- potentially and erroneously
confusing consumers.

**16. Public ballot or legislative initiatives at the state and/or local
level in the United States to establish moratoria on certain uses of
transgenic organisms or to regulate them will lead to regulatory
differences across the country and will impact the use of these
products.**

Regulation of genetically engineered agricultural products is a role
that has been filled primarily by the federal government. Recent
initiatives have been launched in certain states and counties seeking to
regulate locally the commercial use of transgenic plants or animals.

Some members believe that local regulation is not necessary in light of
federal regulation and think that a potential patchwork of additional
regulations will significantly increase costs throughout the system,
impede commerce, deny choice, and slow the development of new products.
Other members think that state and local involvement with the regulation
of transgenic organisms is a reaction to inadequate federal regulation
and may lead to greater safety, increased information to the public, a
more transparent and participatory regulatory process and a regulatory
system that is more responsive to the public's concern.

**17. As transgenic organisms developed in other countries and products
made from them are imported into the United States, it is important to
have adequate U.S. regulatory systems in place to address their
safety.**

U.S. regulations and procedures for evaluation of an increasing number
of imported transgenic crops and their products into the United States
must ensure their food, feed, and environmental safety and be
implemented and enforced in a manner that maintains confidence in the
U.S. food and feed system. In addition, when imports of agricultural
products are allowed from countries developing and approving new
transgenic events, a new potential consideration is raised: the adequacy
of the U.S. regulatory system to address adventitious presence (AP) of
events that have not completed all applicable regulatory procedures in
the United States.

**18. Managing the coexistence of different agricultural products and
production methods intended to meet different market specifications has
become more complex with the emergence of genetically engineered
crops.**

Commingling of different classes of conventional crops (e.g., yellow
corn in a white corn shipment) has been addressed for many years in the
marketplace through tolerances, title transfers, and testing. Currently,
rules and procedures appropriate to address commingling of genetically
engineered crops with other crops are evolving in the marketplace. The
use of Identity Preservation (IdP) systems, including those for organic
production methods and genetically engineered plant varieties, is
expanding. These systems enable producers to participate in new
value-added markets, some of which depend on the ability of producers to
achieve high standards of purity. This has resulted in questions as to
which party should bear responsibility for managing production
practices, defining the specifications for different products, and
assuring the level of crop purity in different systems.

**19. Commercial differentiation between conventional and transgenic
agricultural products is creating opportunities and challenges for the
U.S. marketing system.**

The current U.S. commodity handling system is extremely efficient at
managing commodity streams segregated by distinct functional
characteristics as long as there are commercially-viable tolerances for
off-types and AP. Segregation of transgenic products that do not have
distinct functional characteristics may be difficult. The cost,
complexity, and time involved in differentiating between transgenic and
non-transgenic products increase when contractual specifications detail
stringent segregation requirements.

*This topic is discussed at greater length in the above-cited report
previously submitted to the Secretary of Agriculture by the AC21.*

**20**. **To reduce the commercial risks associated with supplying grain
and grain products based on transgenic testing results, improved
standards for testing and common sampling methods are required to
address issues associated with such tests.**

Many of the currently available testing methods to detect transgenic
traits in numerous crops, plants and foods, are not accepted
internationally and have not been validated based on international
standards. The commercial risk associated with providing grain and grain
products based on transgenic testing results could be reduced if
international organizations would foster the development of mutually
recognized reference materials, validated method performance criteria,
and common sampling protocols that reflect the test method being
applied, the material being tested, and any specified detection levels.

*This topic is discussed in greater detail in the above-cited report,
"Global Traceability and Labeling Requirements for Agricultural
Biotechnology-Derived Products: Impacts and Implications for the United
States."*

**21. Adventitious presence remains a significant trading issue
internationally for the food and feed supply chain.**

Adventitious presence of transgenic varieties in commodities for food or
feed use can occur with transgenic events not yet approved in export
markets, events unapproved in all markets, or events present in
conventionally sourced specialty programs. The development of
country-specific AP policies that do not encompass considerations of
international trade is unlikely to satisfactorily resolve trade issues.
Development of global, commercially viable AP policies that also ensure
food, feed and environmental safety might minimize trade disruptions in
the food and feed supply chain. The adoption of different approaches to
AP by different countries hinders the flow of food and feed products and
exposes trade to shipment rejections and substantial costs. Situations
in which no AP of a particular transgenic event is allowed carry the
risk that even after multiple tests at origin have tested negative, a
subsequent positive test at destination may place a shipment out of
compliance. This is an important and complicated issue requiring input
from a broad range of interested stakeholders.

*This topic is discussed at greater length in the above-cited report
previously submitted to the Secretary of Agriculture by the AC21.*

**22. The emergence of markets that seek only non-transgenic products
has introduced a new level of commercial risk, creating additional
liability and insurance implications for some participants in the
food/feed chain.**

Certain insurance companies have exclusions in their policies for claims
arising from the presence of transgenic material. This creates
uncertainty as to which agents in the food and feed chain will bear the
liability for a transgenic-related claim. Additionally, the rules for
apportioning liability along the food/feed chain are still evolving in
certain situations: (1) when shipments tested at origin meet transgenic
specifications but then test outside transgenic specifications at
destination; and (2) when transgenic trait testing is imposed under
commercial contracts for products produced under an identity-preserved
process providing a verification "paper trail."

**23. As more transgenic events become commercially available and enter
the global marketplace, the issue of asynchronous approvals will become
increasingly important.**

Trade of modern biotechnology derived crops commercialized in the U.S.
and other countries has encountered obstacles stemming from asynchronous
regulatory approvals. Asynchrony of regulatory approvals will continue
in some cases to affect market access and the acceptance and adoption of
crops and products derived from modern biotechnology. Resolving how the
marketplace addresses events that have satisfactorily completed
regulatory procedures in some countries but not others and are present
in commodity food and feed or present in conventionally-sourced
specialty products is important. The market impact of asynchronous
approvals may be reduced through the development of commercially viable
thresholds for AP in food and feed markets.

**24. Other governments' moratoria on allowing the entry of new
transgenic crops or *de facto* moratoria on reaching decisions on such
crops are limiting the ability of the United States to sell those
transgenic crops and other commingled varieties.**

Market access for transgenic varieties and derived products that have
completed U.S. regulatory review is required for those goods to reach a
broad cross-section of users, including consumers. However, some
governments, such as those in the European Union, have effectively
prevented trade in some products through *de facto* moratoria on
approvals of particular transgenic varieties. Such moratoria can affect
not only the import or growing of transgenic varieties, but also the
import and use of the wider range of derived food and feed ingredients.
The existence of such moratoria is a disincentive for the
commercialization of new transgenic varieties and even for trade with
some other nations without moratoria.

Some members believe that the incorporation of political or
socioeconomic criteria into some nations' regulatory evaluation
processes, as has been done in Argentina and South Africa, are factors
that could also inhibit the development and deployment of potentially
useful new crops. Other members believe that conditioning regulatory
decisions based on social and economic considerations is a legitimate
exercise of sovereign authority. These members see no evidence that
socioeconomic considerations within the regulatory process have
prevented a transgenic crop from being commercialized and believe there
are ways that those issues can be addressed by those governments without
impacting trade from the United States.

Addressing these barriers for transgenic crops and derived products will
directly impact trade, technology advancement, and diffusion.

**25. As new transgenic organisms are developed in the United States and
enter the international marketplace, US embassy staff will be approached
with questions about the safety of those organisms and how they are
regulated in the United States.**

Increasingly, the questions that arise regarding new transgenic
organisms require detailed knowledge, but U.S. officials with the
appropriate expertise are not always available at embassies to answer
questions about the safety of those organisms and the U.S. regulatory
system. Science officers and agricultural attaches who serve as primary
conduits for information between foreign interests and domestic experts
are typically generalists who may have neither the time nor the
specialized training to adequately answer questions about transgenic
organisms. Continued prominence of modern biotechnology in agricultural
developments in the United States will lead to further questions to
embassy staff regarding biotechnology and products of biotechnology,
placing increasing claims on embassy priorities, knowledge and
expertise.

**26. The least developed countries often lack capacity to address
scientific and regulatory issues related to modern biotechnology.**

The least developed countries are formulating national biosafety
regulatory systems to address organisms developed through modern
biotechnology, but they often lack sufficient capacity to address many
of the relevant scientific and regulatory issues. There is an ongoing
need to provide them with assistance to develop their regulatory
systems. If countries have their own trained scientists, technical
experts, and policymakers, they will be able to make informed decisions,
about both policy options and the safety of individual organisms and
products. The United States participates in capacity-building efforts in
these areas, but there are also vital roles for international
organizations. USDA has a role to play in encouraging effective and
appropriate efforts.

**27. Protection of intellectual property (IP), in key international
markets and elsewhere, is essential for the capture of sufficient
product value to justify and recoup costs of developing and marketing
transgenic organisms.**

The cost of developing and marketing new transgenic varieties is
substantial. Other costs are likely to mount as new varieties
increasingly require the assembly of IP from multiple sources and as
gaining access to such IP becomes increasingly complex. Recouping costs
for new product development depends on effective IP protection,
nationally and internationally. The ability and/or willingness of
foreign governments to protect IP associated with transgenic varieties
have been highly variable. For some markets and uses, IP protection is
likely to be ineffective or non-existent in the foreseeable future.
Nonetheless, the overall level of IP protection internationally and the
effectiveness of U.S. efforts to promote adherence to IP standards by
other nations will influence technology transfer and investments in
developing and in some cases marketing new transgenic crop and animal
varieties.

**28. Humanitarian use licenses are important for the transfer of
transgenic technologies and transgenic plant and animal varieties to the
poorest, most food-insecure nations. It is sometimes difficult to secure
all the necessary licenses for these transfers.**

Future transgenic crop and animal varieties, especially those intended
for humanitarian uses, are likely to involve an increasingly complex
mixture of intellectual property from many sources, both public and
private. The priorities and attitudes of IP holders towards contributing
to humanitarian use licenses vary.

**Appendix A**

**The following is the list of individuals involved in the preparation
of this paper who were committee members at the time of its completion
and therefore joined in consensus:**

Patricia Layton (Chair) Clemson University

Daryl Buss, University of Wisconsin at Madison

Leon Corzine, Farmer

Carole Cramer, Arkansas State University

Michael Dykes, Monsanto Company

Carol Tucker Foreman, Consumer Federation of America

Randal Giroux, Cargill

Duane Grant, Farmer

Robert Herdt, Cornell University

Josephine Hunt, Kraft Foods

Gregory Jaffe, Center for Science in the Public Interest

Russell Kremer, Missouri Farmers Union

Margaret Mellon, Union of Concerned Scientists

Ronald Olson, General Mills

Bradley Shurdut, Dow Agrisciences

Jerome Slocum, Farmer

Alison Van Eenennaam, University of California at Davis

Lisa Zannoni, Syngenta Corporation.

**The following individuals participated in some preparatory discussions
for this paper but were no longer members of the AC21 at the time of the
paper's completion and therefore were not asked to join in consensus:**

Juan Enriquez-Cabot, Biotechonomy

Richard Crowder, American Seed Trade Association (now at the Office of
the United States Trade Representative)

David Hoisington, CIMMYT (now at ICRISAT)

David Magnus, Stanford University

Terry Medley, DuPont Company

Keith Triebwasser, Procter and Gamble.

**The following individuals were members of the AC21 at the time of
completion of this report but joined the committee too late to
participate in the preparation of this paper and therefore were not
asked to join in consensus:**

Nicholas Kalaitzandonakes, University of Missouri at Columbia

Steven Pueppke, Michigan State University.

[^1]: James, C., 2005. Global Status of Commercialized Biotech/GM Crops:
    2005. ISAAA Brief 34.

[^2]: FAOSTAT data, 2006, last accessed April 12, 2006.

[^3]: Wilson, W. W., Janzen, E. L., Dahl, B. L., and Wachenheim, C. J.
    2003. Issues in Development and Adoption of Genetically Modified
    (GM) Wheats. Agribusiness and Applied Economics Report No. 509.
    North Dakota State University.

[^4]: DB: In the Specialty Crops Competitiveness Act of 2004