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REVIEW OF AGRICULTURAL

BIOTECHNOLOGY

HEARING

BEFORE THE

SUBCOMMITTEE ON CONSERVATION, CREDIT,

RURAL DEVELOPMENT, AND RESEARCH

OF THE

COMMITTEE ON AGRICULTURE

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

JUNE 23, 2004

Serial No. 108–34

(

Printed for the use of the Committee on Agriculture

agriculture.house.gov

COMMITTEE ON AGRICULTURE

BOB GOODLATTE, Virginia, Chairman

JOHN A. BOEHNER, Ohio

Vice Chairman

RICHARD W. POMBO, California

NICK SMITH, Michigan

TERRY EVERETT, Alabama

FRANK D. LUCAS, Oklahoma

JERRY MORAN, Kansas

WILLIAM L. JENKINS, Tennessee

GIL GUTKNECHT, Minnesota

DOUG OSE, California

ROBIN HAYES, North Carolina

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

TIMOTHY V. JOHNSON, Illinois

TOM OSBORNE, Nebraska

MIKE PENCE, Indiana

DENNIS R. REHBERG, Montana

SAM GRAVES, Missouri

ADAM H. PUTNAM, Florida

MAX BURNS, Georgia

JO BONNER, Alabama

MIKE ROGERS, Alabama

STEVE KING, Iowa

CHRIS CHOCOLA, Indiana

MARILYN N. MUSGRAVE, Colorado

DEVIN NUNES, California

RANDY NEUGEBAUER, Texas

——— ———

CHARLES W. STENHOLM, Texas,

Ranking Minority Member

COLLIN C. PETERSON, Minnesota

CALVIN M. DOOLEY, California

TIM HOLDEN, Pennsylvania

BENNIE G. THOMPSON, Mississippi

MIKE MCINTYRE, North Carolina

BOB ETHERIDGE, North Carolina

BARON P. HILL, Indiana

JOE BACA, California

RICK LARSEN, Washington

MIKE ROSS, Arkansas

ANI ́BAL ACEVEDO-VILA ́ , Puerto Rico

ED CASE, Hawaii

RODNEY ALEXANDER, Louisiana

DENNIS A. CARDOZA, California

DAVID SCOTT, Georgia

JIM MARSHALL, Georgia

BEN CHANDLER, Kentucky

STEPHANIE HERSETH, South Dakota

EARL POMEROY, North Dakota

LEONARD L. BOSWELL, Iowa

MARK UDALL, Colorado

RICK LARSEN, Washington

LINCOLN DAVIS, Tennessee

——— ———

PROFESSIONAL STAFF

WILLIAM E. O’CONNER, JR., Staff Director

KEVIN KRAMP, Chief Counsel

STEPHEN HATERIUS, Minority Staff Director

ELYSE BAUER, Communications Director

SUBCOMMITTEE ON CONSERVATION, CREDIT, RURAL DEVELOPMENT, AND RESEARCH

FRANK D. LUCAS, Oklahoma, Chairman

JERRY MORAN, Kansas

TOM OSBORNE, Nebraska

Vice Chairman

SAM GRAVES, Missouri

ADAM K. PUTNAM, Florida

MAX BURNS, Georgia

JO BONNER, Alabama

MIKE ROGERS, Alabama

STEVE KING, Iowa

——— ———

TIM HOLDEN, Pennsylvania

Ranking Minority Member

ED CASE, Hawaii

COLLIN C. PETERSON, Minnesota

CALVIN M. DOOLEY, California

BOB ETHERIDGE, North Carolina

ANI ́BAL ACEVEDO-VILA ́ , Puerto Rico

JIM MARSHALL, Georgia

MIKE MCINTYRE, North Carolina

——— ———

RYAN E. WESTON, Subcommittee Staff Director

(II)

(III)

C O N T E N T S

Page

Holden, Hon. Tim, a Representative in Congress from the Commonwealth

of Pennsylvania, opening statement ................................................................... 2

Lucas, Hon. Frank, a Representative in Congress from the State of Oklahoma, opening statement .................................................................................... 1

WITNESSES

Billingsley, Mel, chief executive officer, Life Sciences Greenhouse of Central

Pennsylvania, Harrisburg, PA ............................................................................ 29

Prepared statement .......................................................................................... 49

Bouton, Joseph H., director, forage improvement division, the Samuel Roberts

Noble Foundation, Ardmore, OK ........................................................................ 27

Prepared statement .......................................................................................... 48

Dykes, Michael D., vice president, Federal Government affairs, Monsanto ....... 8

Prepared statement .......................................................................................... 40

Klevorn, Thomas B., head, corn and soybean business units, plant Science,

Golden Valley, MN on behalf of Syngenta ......................................................... 5

Prepared statement .......................................................................................... 37

Siggelko, W. Pete, vice president, plant genetics and biotechnology, Dow

AgroSciences LLC, Indianapolis, IN ................................................................... 3

Prepared statement .......................................................................................... 34

Winkles, David, president, South Carolina Farm Bureau, Sumter, SC, on

behalf of the American Farm Bureau Federation ............................................. 24

Prepared statement .......................................................................................... 42

Yoder, Frank, chairman, National Corn Growers Association, Plains City,

OH ......................................................................................................................... 25

Prepared statement .......................................................................................... 44

SUBMITTED MATERIAL

Austin, Michael, Hawaii Crop Improvement Association, statement .................. 51

Daugherty, Steve, Pioneer Hi-Bred International, Inc., statement ..................... 52

Elworth, Lawrence, Center for Agricultural Partnerships, statement ................ 53

(1)

REVIEW OF AGRICULTURAL BIOTECHNOLOGY

WEDNESDAY, JUNE 23, 2004

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON CONSERVATION, CREDIT, RURAL DEVELOPMENT AND RESEARCH, COMMITTEE ON AGRICULTURE, Washington, DC.

The subcommittee met, pursuant to call, at 10:14 a.m., in room

1300 of the Longworth House Office Building, Hon. Frank D. Lucas

(chairman of the subcommittee) presiding.

Present: Representatives Moran, Osborne, Burns, Holden, Case,

Peterson, Dooley, and Etheridge.

Staff present: Ryan Weston, subcommitte staff director; John

Goldberg, Elizabeth Parker, Claire Folbre, Callista Gingrich, clerk;

Matt O’Mara, Ryan Weston, Andy Johnson, and Russell Middleton.

OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OKLAHOMA

Mr. LUCAS. This hearing on the Subcommittee on Conservation,

Credit, Rural Development and Research to review agricultural biotechnology is called to order.

Welcome to today’s hearing regarding biotechnology. It has been

nearly a year since we last held a hearing on this subject. That

hearing focused on the regulatory aspects confronting biotechnology. One thing is for certain. When it comes to biotechnology, there will always be discussion regarding the most appropriate and effective form of regulation.

Today I would like to focus on something other than the regulatory aspect. I have asked our witnesses to describe quantitatively

how products of biotechnology are used in agriculture. Even as this

subcommittee has been tracking the growth of biotechnology the

last few years, we have sometimes forgotten how important this

technology has become to the rank and file producer in terms of

input costs and production techniques. We are always looking for

the next great innovation created by biotechnology, but the sheer

amount of acceptance judged by the acres planted in biotechnology

products is amazing, and while the U.S. accounts for the majority

of the total percentage of plantings of biotechnology products,

please note that 37 percent of biotech plantings occur outside the

United States. Other countries recognize the benefits of the technology and strive to capture its potential. Even as the European

Union set up road blocks to biotechnology trade, its member counVerDate 11-SEP-98 13:46 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00004 Fmt 6633 Sfmt 6633 F:\DOCS\10834 HAGRI PsN: HAGRI
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tries were spending millions on research and development for that

very technology.

Our witnesses aptly point out how certain events such as trade

restrictions have caused our domestic usage of biotechnology to ebb

and flow at times. However, as I noted earlier, techniques such as

no-till planting that can prevent soil erosion have to a great degree

only recently come into their own with the advent of biotech products, and the world population growths and producers need to feed

those extra mouths using environmentally-friendly productions

techniques with increased yields. Biotechnology may be one of our

only solutions.

I have also asked our witnesses to discuss current and future

products that are in their research pipelines. What is the next big

product for agricultural producers, or for that matter, consumers?

We all know about pesticide resistance, but what about foods that

produce or contain beneficial nutrients and those that may be used

to create products such as ethanol or plastics? Furthermore, what

biotechnology role may there be for lesser developed nations whose

entire populations may thrive on one breakthrough product? We

have heard about the novel possibilities of biotechnology for years

and we are so much closer to seeing many of these products reach

commercialization than ever before.

Finally, we will hear from researchers and capacity builders.

What does it really take to get the research done and to create jobs

out in rural America? Producers can use the technology in the

fields, but how do small communities turn this science into steady

and stable employment opportunities? Much of the projected

growth for products of biotechnology has become a reality, and I

am quite amazed at how important these products have become to

us. I look forward to today’s testimony, and I turn to the ranking

member from Pennsylvania, Mr. Holden, for any comments he may

offer.

OPENING STATEMENT OF HON. TIM HOLDEN, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

Mr. HOLDEN. Thank you, Mr. Chairman, for holding this important hearing to review the state of the biotechnology industry.

I would also like to thank Dr. Mel Billingsley of the Life Sciences

Greenhouse from Harrisburg, PA for being here today to testify before the subcommittee. Hopefully, this hearing will provide an opportunity for all of us to learn what the biotechnology sector has

been doing since the last time we met to discuss this issue.

Since the first genetically engineered crops became available in

the mid–1990’s, U.S. producers have been the world leaders in

adopting these crops and demonstrating the numerous benefits

that they can provide. Over the past few years, the biotechnology

sector has made great strides in addressing a wide variety of problems experienced throughout the world. They have worked on

projects that would benefit health and nutrition in undernourished

populations and in such enhancing crops with vitamins and disease-fighting agents. They have also shown their commitment to a

healthy environment by offering products that encourage farmers

to reduce tillage, thereby reducing soil erosion.

3

The role of the biotechnology sector in ensuring the economic viability of both farmers and non-farmers here at home can also not

be overstated. They have provided farmers with a whole new set

of products to assist in increasing crop yields, giving them another

means by which to keep their farms up and running, and companies such as Dr. Billingsley’s play a significant role in expanding

the industry in rural areas by creating well-paying jobs. Unfortunately, however, biotech firms as well as the producers who use

their products have experienced barriers that have hindered the

growth of the industry. One of the main barriers that they have

faced has been international resistance to the use of their products.

I am hopeful that the most recent complaint brought before the

World Trade Organization will ultimately open up new markets for

U.S. producers.

Another dilemma that industry faces is whether the current

biotech regulatory structure is still appropriate, considering that

many of the applications of genetically-engineered crops did not

exist when the regime was established.

I look forward to hearing the testimony of the panels today, and

again, Mr. Chairman, thank you for holding this hearing.

Mr. LUCAS. The Chair thanks the ranking member. The Chair

would also request that other members submit their opening statements for the record so the witnesses may begin their testimony

and to ensure that we have ample time for questions.

I would like to invite our first panel to the table, as they are

seated and ready to go. Mr. Pete Siggelko, vice president of plant

genetics and biotechnology, Dow AgroSciences of Indianapolis, IN,

Mr. Thomas B. Klevorn, head of the corn and soybean business

units, Plant Science, Golden Valley, MN on behalf of Syngenta, and

Dr. Michael D. Dykes, vice president, Federal Government affairs,

Monsanto here in Washington, DC.

You may begin, Pete, when you are ready.

STATEMENT OF W. PETE SIGGELKO, VICE PRESIDENT, PLANT

GENETICS AND BIOTECHNOLOGY, DOW AGROSCIENCES,

LLC, INDIANAPOLIS, IN

Mr. SIGGELKO. Well, thank you, Mr. Chairman, and good morning to you and the other members of the subcommittee.

I am Pete Siggelko, as you said, vice president of Dow

AgroSciences in our Plant Genetics and Biotech business. Dow

Agro is a wholly-owned subsidiary of Dow Chemical, a company

that employs 40,000 people around the world, and we sure thank

you for this opportunity to testify before this subcommittee this

morning.

I would first like to thank you for holding the hearing because

as you are going to hear my comments and those of my colleagues,

we have got a lot of positive things to share with you in the field

of biotechnology. I would also like to thank the committee for its

long-term support of agriculture biotechnology in ensuring that we

have the most productive and efficient farmers in the world for

helping us produce the least expensive, safest and most abundant

food supply in the world, and Mr. Chairman, my written comments

have been entered into the record in their entirety.

4

Over the last 8 years, biotech, as you said, has made some really,

really significant strides. A leadership position by one of my colleagues here at the table and substantial contributions in corn, soybeans, cotton and canola in terms of enhanced productivity. Today

these crops are planted on more than 145,000 million acres worldwide, with the U.S., as you said, representing two-thirds of the

crops, with good adoption elsewhere as well. Biotech also makes it

possible to improve the quality, safety and nutritional contents of

various foods, and we see markets opening, and Dow Chemical

would be very interested in this area as well for the engineering

of plants to be used as renewable fuels and lubricants derived from

biomass that could help produce dependency on petroleum products.

The manufacturer of antibodies, vaccines, industrial products

and pharmaceuticals is no longer a pipe dream. It is a reality, and

Dow is glad to be a part of this revolution that is taking place. A

number of our platforms touch agriculture, whether it is Dow

AgroSciences or in Dow’s industrial or biomaterials platform, and

we believe that agriculture in plant-based systems are key to sustainability and the key to the future of our business in Dow. Specifically to our efforts, recently we have introduced our second Bt

product in corn, insect-protected corn called Herculex through our

micogen seed business. We have got several other important corn

Bt products in the pipeline. In addition, we have got a Bt product

that we hope to be registering later this year, and then introducing

into the cotton market next year. And additionally, we continue to

work on agronomic traits in the corn area around nutritionally enhanced corn, reduced phytase, as well as improved yield traits for

corn.

We are also developing quite a few different second-generation

products. One of the ones using the tools of biotechnology is a product called Nexera canola seed. It has got a unique oil profile, contains nutrients, fats, low saps. It has high stability for cooking applications, and as an example, this oil could, in a typical snack

cracker, reduce the content of trans and saturated fats by about 85

percent, and this is a product that is available today. It is not a

GMO product. We did use the tools of biotech to create it, but it

is a product that is available today. We grew it primarily in Canada, though we are expanding the production to Europe, and we

are looking for areas of adaptation in the United States to ramp

up the availability of this oil. But we are selling it today.

We also use plants and plant-cell systems to manufacture novel

biologics and therapeutics for human and animal health. The benefits of plant-based manufacturing systems are great, and the resulting vaccines and antibodies are going to change the way that

diseases are treated in the future. At the present time, we are

building a facility in Lincoln, NE for the production of vaccines in

the animal health industry, and we will launch the first plantmade vaccine for the poultry industry in 2006, and we have got

several important follow-on vaccines and work oriented towards

one very important one that is affecting the U.S. poultry industry

and exports, and that is avian influenza.

In addition, we are working in the area of food safety and in reducing the load the pathogens such as e. coli in cattle and salVerDate 11-SEP-98 13:46 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 F:\DOCS\10834 HAGRI PsN: HAGRI
5

monella in poultry. In this area of plant-produced pharmaceuticals

and in proteins, the USDA has done a remarkable job here in stepping up their activities to regulate this field and help the field develop over the last couple of years. Biotechnology and renewable resources, Dow is I think contributing to the transformation of the

industry from just pure agricultural commodities to differentiated

products. We are currently using corn, soybean, wheat, castor, sunflowers and other oil crops for the development of new high-performance polyurethane carpet backing for plastics, for fiberboard,

epoxy coatings just to name a few, and most notably in Nebraska

is Cargill Dow Polymers that is using corn byproducts or corn as

raw materials for the production of plastics.

And in closing, just a few comments for your consideration. We

hope the Government continues to be a staunch and aggressive advocate of these technologies, at the national as well as the international level. To date, a lot of our success is attributed to your

support and the support of the administration. When we look to the

future, it is also going to be important that the Government facilitate and incentivize the continued development of the technology in

the area of private and public research agreements, procurement

programs, grants and funding of collaborations. We continue, and

my colleagues, to work to bring technological innovations to the

market because we have enjoyed a certain amount of freedom to

operate while being covered by a pragmatic science-based regulatory system.

Sites like Hawaii and Puerto Rico served as really a lifeline for

us for research and development efforts through their favorable climates, fertile environments, rich academic and public resources,

and although we are making a lot of progress in communicating

with these stakeholders, we still face real threats in these geographies, and we need continued support from you to maintain these

geographies.

Lastly, we have made significant progress since the initial debut

of biotechnology less than a decade ago, and we are clearly in the

midst of a biotechnology boom. Yes, there are challenges, but not

only are products being introduced and adopted by the American

farmer that are steadily improving our productivity, but Dow and

our colleagues are bringing on a suite of new and exciting products

with greater, more tangible consumer and grower benefits.

Thank you, Chairman.

[The prepared statement of Mr. Siggelko appears at the conclusion of the hearing.]

Mr. LUCAS. Thank you.

Mr. Klevorn.

STATEMENT OF THOMAS B. KLEVORN, HEAD, CORN AND SOYBEAN BUSINESS UNITS, PLANT SCIENCE, GOLDEN VALLEY,

MN, ON BEHALF OF SYNGENTA

Mr. KLEVORN. Good morning, Chairman Lucas, Ranking Member

Holden and members of the subcommittee.

My name is Tom Klevorn. I am with Syngenta. I would like to

thank you for the opportunity to be here today to discuss

Syngenta’s role in biotechnology. As the first company to commerVerDate 11-SEP-98 13:46 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 F:\DOCS\10834 HAGRI PsN: HAGRI
6

cialize a plant biotechnology product, we have a long history with

biotechnology, as well as a deep commitment to its future.

Syngenta is a world-leading agribusiness company committed to

sustainable agriculture through innovative research and technology. We believe in delivering better food for a better world

through outstanding crop solutions, and we take pride in meeting

our commitments to our stakeholders. Our total sales in 2003 were

approximately $6.6 billion across all products. In North America,

specifically in the United States, Syngenta’s biotechnology research

is conducted primarily at Syngenta Biotechnology, Incorporated,

which is located in Research Triangle Park, NC. Our corn and oilseed business in North America, which includes the NK brand, is

headquartered in Golden Valley, MN. Rogers, our vegetable seed

business for North America, is headquartered in Boise, ID. These

brands market all of our biotechnology traits and products.

I agree with my colleague that the use of plant biotechnology has

increased substantially since the introduction of the first biotechnology plant products in 1996, and there were two; Syngenta

Event 176 and Bt–11, both for protection against corn bore in corn.

We have also found that one-third of the global biotech crops were

planted in developing countries in 2003. Syngenta invests heavily

in research and technology to add value to our existing business,

and to create opportunities for future growth. Of our 19,000 employees across the globe, approximately 5,000 and about 1,000 in

the United States work in research, technology and development,

and we invest about $2 million each day, or about $730 million a

year, in research and development.

While we conduct a lot of private research, we have also donated

the results of some important discoveries to the public domain. In

May of this year, we announced our donation of a substantial portion of our Arabidopsis functional genomics seed collection to the

Arabidopsis Biological Resource Center hosted at the Ohio State

University in Columbus, OH. Syngenta is also making the sequence information universally available by placing it into the

international gene database GenBank. In 2002, Syngenta shared

its rice genome sequence research with the International Rice Genome Sequencing Project, which is a 10-nation public effort, with

the goal of promoting improvements in rice production globally.

Syngenta’s data was used to accelerate the completion of a highquality draft sequence that is available to the global research community through international databases.

In 2000, Syngenta began working with the inventor of Golden

Rice to form a Humanitarian Board to oversee the development of

a vitamin-A enhanced rice product that could be distributed free to

farmers in developing countries. Collaborative research underway

between Syngenta and the Humanitarian Board is aimed at increasing vitamin-A expression in rice. Large-scale research trials in

the U.S. this year will move Golden Rice one stop closer to becoming a real option in the fight against malnutrition and related diseases.

Commercially, Syngenta, primarily through the NK brand, sells

several corn and oilseed biotechnology products today. In field corn,

these traits include insect resistance and herbicide tolerance. Our

7

soybean business includes herbicide tolerance products. We also

market an insect-resistant sweet corn under the Rogers brand.

In addition to insect resistance and herbicide tolerance products,

Syngenta’s biotech research and product development pipeline includes several exciting products. Within the next 3 to 5 years,

Syngenta will bring forward amylase corn, phytase enzyme feed

supplement, longer-shelf-life bananas, fusarium-resistant wheat,

vegetative insecticidal protein corn and second-generation products

for insect resistance in corn and cotton. Further down the road, we

are managing projects in the areas of drought tolerance, biopharma

and disease resistance. Today, I would like to focus our testimony

on some of our products that are close to commercialization and go

beyond traditional input traits.

An exciting product coming through our development pipeline is

amylase corn. This is a corn plant genetically modified to express

high levels of a novel alpha amylase enzyme, which is a critical ingredient in the production of ethanol. Amylase in general is an enzyme that has been used in ethanol production and other processes

for quite some time, and is currently used in the dry grind ethanol

industry to accelerate the conversion of the starch in corn to sugar.

Without enzyme being located in the corn seed, in the grain, our

amylase corn has the potential to significantly improve this process

and thus the overall efficiency of ethanol plants, and this would include yield increases, process improvements and possibly reduced

ethanol production costs.

Syngenta’s amylase enzyme is thermostable, which allows more

efficient utilization of the enzyme during the ethanol production

process. Although it would be grown on a relatively few number of

acres, Syngenta is seeking full feed and food and export approvals

for this product. We are currently conducting field trials in the

United States, primarily in Nebraska, and a pilot study for this

product for possible launch in 2006 or 2007.

Quantum phytase is the brand name of a new novel enzyme feed

supplement that can help livestock producers lower feed costs and

deliver greater nutritional benefits to monogastric animals, such as

swine and poultry, in an easy to use and more consistent and efficient format. The product has received registration in Mexico and

Brazil and has been introduced commercially in both countries.

U.S. and Canadian approvals are anticipated in 2004. One advantage of Quantum phytase versus existing products is its inherent

thermo-stability versus competitors which gives feed producers

more flexibility because it can tolerate heat-treating used in ration

production without any loss of efficiency. Our research also indicates that Quantum phytase can improve an animal’s nutrient utilization, potentially allowing animal producers to reduce overall

feed costs. Quantum phytase also allows producers to reduce the

amount of supplemental phosphorus added to feed resulting in reduced phosphorus in the manure, a potentially significant benefit

from an animal management as well as an environmental perspective.

Finally, a product with a more direct benefit to consumer is our

extended-shelf-life bananas. This banana ripens slowly and remains ripe for an average of 3 to 5 days longer than conventional

bananas, which is an important feature for consumers as well as

8

retailers of the product. The banana also delivers 10 to 12 days of

extra green life, which is a value to banana growers and shippers.

As I believe this shows, Syngenta is fully committed to biotechnology and the promise that it holds for agriculture, including

producers, growers, processors, retailers and consumers, as well as

others involved in the production of agricultural products on a global basis.

I would like to thank you for the opportunity to share with you

the many things that Syngenta is doing in plant biotechnology

today and will continue to do in the future, and at the appropriate

time, I would be happy to answer questions.

[The prepared statement of Mr. Klevorn appears at the conclusion of the hearing.]

Mr. LUCAS. Thank you. Now we will see if I can mangle the third

name in a row. Mr. Dykes.

STATEMENT OF MICHAEL D. DYKES, VICE PRESIDENT, FEDERAL GOVERNMENT AFFAIRS, MONSANTO, WASHINGTON,

DC

Mr. DYKES. Thank you, Mr. Chairman, members of the committee.

My name is Michael Dykes. I am vice president for government

affairs for Monsanto Company. I have been involved in agriculture

all my life. I come from a farm family in Kentucky, and I have

firsthand knowledge of how important new innovations are for

farmers. I would like to thank you for holding this hearing today

and giving us an opportunity to share with you some of the Ag

biotech developments now and for the future.

Monsanto Company, headquartered in St. Louis, MO, is an

American company with nearly 14,000 people. We are working to

deliver products and solutions to help meet the world’s growing

food needs while conserving natural resources and protecting the

environment. One of our first biotech products was Roundup Ready

soybeans that were genetically enhanced to provide herbicide tolerance. This allows Roundup herbicide to be applied directly over the

top of the crop and provides outstanding weed control without damaging the crop. We also developed Bollgard cotton and YeildGard

corn, which helps control the major insect pests in those crops and

reduces the use of chemical insecticides.

Because of the success of our first biotech crops, we are able to reinvest approximately $1.4 million a day in biotechnology and

plant breeding research to improve agriculture and food quality.

Farmers, the environment, society in general have and will continue to benefit from these new products through dramatic reductions in pesticide use, significant increases in yield, better soil and

water quality, enhanced food/feed quality and improve grower profitability.

I am going to walk through a couple of charts with you that I

have that illustrate some of the dramatic growth we have seen in

biotechnology over the last 10 years, as my colleagues have pointed

out.

[Chart]

This first chart shows the growth in biotech from 1996 through

2003. The cumulative is 167.2 million acres in 18 countries that

9

were planted with biotech crops last year, and you can see the

green. There is the soybeans and the corn, the cotton and the

canola. By far, the largest biotech acreage is in the United States,

and U.S. farmers reap most of the benefits. Just to highlight one

particular aspect of the benefits, in 2002, the National Center for

Food and Agriculture Policy found that 8 biotech crops in use by

U.S. farmers were developing major annual benefits. $1.2 billion in

reduced cost, 4 billion pounds of increased yield, and a 46-million

pound reduction in pesticide use.

Now that I have discussed the current products that are already

in the marketplace, I would like to highlight a number of products

in our development pipeline. We are currently testing both corn

and soybeans in various parts of the U.S. to screen for the effectiveness of stress-tolerant genes in different environments. Drought

stress causes enormous loss of food and fiber virtually everywhere

on earth, including here in the U.S. While these results are promising, commercialization is several years off. I have a couple of charts

on this.

[Chart]

The first one is showing you soybeans that have been undergoing

tests in our research labs in Chesterfield, MO with drought tolerance. As you can see, those on the left were the control without the

gene. Those on the right is with the drought-tolerance gene. One

of the early signs of drought stress in soybeans is drop of leaves,

and you can see that—a lot more vibrant, vegetative growth with

those with the gene.

[Chart]

The second chart will show you some field trials that we have

done with drought tolerance in corn. I think the results in the

years here with the yields are quite dramatic, and you can see

those on the left, corn without the gene, and those with the corn

with the gene. This was a field trial done in 2003 in Kansas. For

all us who are familiar with growing corn on the farm, you can tell

that those on the left—that the leaves are all twisted, which is a

normal reaction to corn when it is under drought stress. And one

of the advantages of the drought-tolerant genes is you prevent the

twisting and rolling of the leaves. I don’t know if you can see that

from where you are sitting, but with that on the right, you can see

that the leaves are open and wide. Again, early results, but quite

promising in terms of drought stress as a part of the overall stress

pipeline of genes we are working on, which would include cold

stress, nitrogen and drought.

We are also working on several food quality traits that we believe will benefit consumers. We are developing soybean and canola

oils that will enable food companies to offer consumers economical

food products with reduced or in some cases zero trans-fats while

maintaining the taste. The second generation of soybean oils will

enable food products to have the same low trans-fat benefits plus

improved flavor and extended shelf-life. Long-term research involves ways to produce crops enriched with Omega 3, a fatty acid

which is the component that makes a seafood diet heart healthy.

We are looking at ways to use plants to produce Omega 3, giving

consumers the ability to consume more Omega 3s in their foods

that they eat every day.

10

We are also using biotechnology conventional breeding to develop

corn that is ideal for production of ethanol. This corn, high in fermentable starch, could make ethanol production more cost-efficient.

In fact, last March, Congressman Osborne, appreciate your participation in the ribbon-cutting ceremony of an E–85 pumping station

in Grand Island, NE in your district when we worked with the OR

cooperative.

In conclusion, Mr. Chairman, we are looking for new solutions to

problems that have challenged farmers and societies for thousands

of years, and we are finding those solutions in nature through biology and biotechnology. We believe very strongly at Monsanto that

agriculture innovation and creativity is the pathway for U.S. agriculture to continue to compete successfully in the global marketplace and for the benefits of technology to multiply for farmers,

consumers and the environment. We believe as society begins to

fully understand the untapped potential of this technology that

there will be an exciting future for biotechnology, one that Monsanto is very proud to be a part of.

Thank you very much, and as my colleague said, I would be

happy to entertain any questions.

[The prepared statement of Mr. Dykes appears at the conclusion

of the hearing.]

Mr. LUCAS. Yes indeed. Thank you. Certainly the panel’s testimony indicates just how exciting the prospects are for what lies

ahead of us.

First question addressed to the whole panel and whoever might

care to answer or all, what would you say is the biggest single

threat, or the biggest threat perhaps is a better way to describe it,

to the biotechnology advancement that we have and we are continuing to work on? What is our greatest threat?

Mr. SIGGELKO. I think there might be some consensus around

this, but we have created and registered products in the United

States, and one of the challenges is the acceptance overseas in a

regulatory program that actually is very difficult to work through.

As an example, Herculex had a registration for food and feed in the

United States in 2001, but because of lack of import approvals on

receiving countries—I mean, it is quite different than pesticide registrations, it was an additional workload stewardship, of course, to

get to the point of having those important approvals where we

could begin the process of business and not affect the trade of our

customers.

So I’d see if my colleagues here have a comment, but I’d say that

that is one or two of the major issues.

Mr. KLEVORN. I agree that acceptance globally is a key issue for

the products. I would also say that in terms of taking the technology forward, unless we can convince ourselves that in the short

term, there is return for everybody involved, it will have a dampening effect on future investments for this technology going forward.

So I think that the acceptance piece is the critical issue around the

globe.

Mr. DYKES. I would concur with those. I think the science-based

predictable regulatory processes around the world are critical to facilitate in trade and to continue to bolster consumer confidence in

the foods that they eat are safe and wholesome. I think our adminVerDate 11-SEP-98 13:46 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 F:\DOCS\10834 HAGRI PsN: HAGRI
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istration and our three regulatory agencies are doing a tremendous

job in trying to work toward ensuring that we have the freedom to

operate around the world. I think the other thing that is important

to us as technology providers is protection for intellectual property

rights around the world, because in order to be able invest the

amount of money we are investing in research every day to bring

new technologies to market, we have got to be able to capture value

from that around the world.

Mr. LUCAS. And along that line, in the last hearing that we had,

clearly it came through that if the rest of the world had the kind

of regulatory regime that we have in the United States that the

level of confidence around the world would be greater. That is a

challenge they are going to have to work on improving. But unless

we make progress in that acceptance issue around the world, knowing of course that the American market is so tremendous, how long

can you companies continue to make what have to be rather substantial sums investment-wise in the short-term sense working towards these long-term profit targets?

You have obviously committed huge amounts of resources in the

last decade on things that will not immediately bear financial fruit.

Describe for us a little bit of the logic that goes into how you make

those decisions too in the environment we are in.

Mr. SIGGELKO. Well, I will take a stab, and I am sure that the

other guys will have have a twist as well. I guess there is, Mr.

Chairman, two different approaches. The one is individual companies, and then one as an industry. There is a group in the United

States—I am talking about the—a little bit on the industry first in

the U.S. called the Council for Biotechnology Information, which

has been an organization sponsored by a number of different

groups to talk about the benefits of biotechnology and to do outreach and education.

Similar kind of activities are taking place in other parts of the

world that are being funded by industry to a fairly substantial degree to try and help and work on acceptance, and I would also get

to the individual company pieces. All of us are working very close

together to if you want to say hold the burlap together on how we

take products to market. We are trying to be lock-step in how we

develop products, how we take them so we don’t cause our customers here in the U.S. trade issues, and I think that we are doing

some pretty good things together to self-police.

But at the end of the day, in these large-commodity crops where

there are incorporating traits, and there is a potential for an impact on trade, and we don’t see a lot of relief in the near term, it

does have a damper on the amount of investment that we are willing to make, and it redirects us to use other forms of the technology.

Mr. KLEVORN. One of the things that Syngenta does is focus on

crops where we think we can make money in the short term, so we

will tend to focus on crops where the value that we create can be

realized by everybody that is involved. Corn as opposed to something like a vegetable crop, so that handles not only the capture

of the money—of the value that is created, but it also helps us

avoid some of the acceptance issues that might be associated with

a vegetable crop, as opposed to a grain crop. What that means is

12

that some of the benefits we could put into a whole variety of crops

is not going to be realized in the short term.

So our main method of doing it is to focus on crops and the focusing markets where the money is available. The U.S. and corn, for

instance, would be a top priority for I think everybody at the table.

Mr. DYKES. We take a similar approach. We are focused on core

crops, corn and cotton, soybeans and canola. We look at introducing

new traits where we can work closely with our grower customers

and where we are satisfying a need and delivering a value to both

our shareholders and to our grower customers, and that is kind of

what guides and directs our investment decisions in this biotech

world.

Mr. LUCAS. Thank you. The Chair now turns to the ranking

member from Pennsylvania, Mr. Holden.

Mr. HOLDEN. Thank you, Mr. Chairman.

All of you talk about the problems with acceptance in foreign

markets. Currently, what percentage of biotech products are exported?

Mr. SIGGELKO. And Michael probably has got some statistics closer to his fingers.

Mr. SIGGELKO. Yes. Sixty-five percent of the corn I guess in the

U.S. is used for animal feed, and then I don’t know what the next

fraction is for food consumption. Then the balance is exported. Michael, I don’t know if you want to—and a good percentage of the

corn is treated with biotechnology products.

Mr. DYKES. I would just add on soybeans, we are probably looking at about 50 percent of the U.S. soybean production is exported.

Mr. HOLDEN. And what is the primary market it goes to?

Mr. DYKES. Of the soybean exports, I think China is now the single largest importer of U.S. soybeans. Europe collectively as a collection, a country, is probably still the largest, and I think it used

to be—I don’t know if the figures have changed recently, but about

half of our experts go to Europe. China has imported an excess of

a billion dollars of U.S. soybeans.

Mr. HOLDEN. Mr. Siggelko, in your testimony, you talk about

how Dow is helping with the transformation of U.S. agriculture by

using corn, soybeans and a number of other commodities to develop

biomaterials for industrial use. Could you elaborate on what some

of these products are and how they could be used?

Mr. SIGGELKO. Yes. I guess there are two different twists. One

is using natural products. The one, we mentioned wheat, is using

wheat straw in combination with the epoxy systems to manufacture construction panels. It is a venture we have in Canada, but

another one is a group that is between Dow scientist and land

grant university scientists concentrating in the area of oils to develop new edible oils, but also to take and modify various oil crops

to use as industrial feed stocks. One example is the use of hyolaic

vegetable oils where the sunflower, soybean or canola for use in the

manufacture of polyurethanes and flexible foams.

Those are the areas that we are looking, and one of the biggest

investments that have been made is in Nebraska between Dow and

Cargill Dow Polymers in the production of pyolactic acid and PLA

polymers.

13

Mr. HOLDEN. Thank you. Dr. Dykes, Monsanto recently withdrew

its regulatory submissions for Roundup Ready wheat. Would you

please explain to the subcommittee why you decided to defer to

commercial——

Mr. DYKES. I think this goes back to the previous question we

had about making decisions on research and development monies

and bringing new products to the market. We remain committed to

Roundup Ready wheat. We made a business decision, working

closely with the North American Wheat Growers and the U.S.

Wheat Associates with the decision on wheat and decided to delay

the introduction of Roundup Ready wheat until such time as there

is another biotech trait in the wheat industry.

I think there are a couple reasons for that. Roundup Ready

wheat was focused this—as Monsanto’s effort was focused on Hard

Red Spring wheat, a market, the number of acres for Hard Red

Spring have been declining over the past few years and such a narrow segment of the overall wheat industry that we think for the

introduction of a biotech trait in wheat, some of the things that my

colleagues are working on, such as fusarium-resistant wheat, which

will have a wider application across more sectors of the wheat industry, may be the first products to come through, and we may follow with our Roundup Ready technology, once there has been some

other technology traits introduced into the wheat market.

Mr. HOLDEN. Thank you, Dr. Dykes. I think in your opening

statement, you said you are investing $1.4 million a day in research?

Mr. DYKES. Yes, sir.

Mr. HOLDEN. How about our other two panelists? How much

money are your companies spending on research?

Mr. KLEVORN. We are spending about $2 million a day across all

of our research and development efforts.

Mr. SIGGELKO. And in the case of Dow, it would probably be

about, for agricultural research, probably about—I am not going to

get that right—$750 to $800,000 a day, if you want to call it.

Mr. HOLDEN. Thank you, Mr. Chairman.

Mr. LUCAS. The Chair now turns to the gentleman from Nebraska, Mr. Osborne.

Mr. OSBORNE. Thank you, Mr. Chairman, and thank you for

being here today and I appreciate the role that some of you take

in Nebraska, and I just had a couple of questions. You know, we

are interested in pharmaceutical crops because of the drought and

when you don’t have a lot of water, we assume that there have to

be some setbacks, and as a result, you don’t farm as much land

when it is pharmaceutical, and therefore, you can use what water

you do have to concentrate.

I just wondered if you had a comment on what you look for in

terms of finding where you are going to grow pharmaceutical crops.

Are you looking for something really isolated or whether the setback is required, so anyway, that is I guess my first question.

Mr. KLEVORN. I will take that. I think the first thing since we

want to make sure that we comply with all of the regulations that

would be involved with a pharmaceutical product is that we try to

keep that as separate and far away from other crops as possible.

It really depends though on what crop is selected as the vehicle to

14

develop the pharmaceutical product, and it is easier to use a product that a crop that we know a lot about. So corn would be easier

to use, soybeans would be easier to use than something that is relatively new. We just haven’t worked with those crops that much.

But our first item is to see what the regulatory situation looks

like, make sure that we comply with those, and initially, it looks

like that is going to require some segregation from the rest of the

population.

Mr. OSBORNE. Well, the reason I asked the question is that we

have a very large part of Nebraska that is called Sand Hills. Once

in a while, you run across a center pivot out in the middle of the

Sand Hills, 20 miles from the nearest cornfield, so you know that

is pretty safe. But on the other hand, you have some people who

are trying to or are at least thinking about pharmaceuticals right

next to other crops. And so I understand we will have to look at

the regulations and I understand that.

Mr. SIGGELKO. Mr. Osborne, if I could make a comment?

Mr. OSBORNE. Yes.

Mr. SIGGELKO. I think it goes back to the question the chairman

asked as well. Necessity is the mother of invention. There have

been some issues and complications with open-field production.

Dow is doing research in both areas, so I would say on the crop

side, we would definitely work towards the side of isolation, good

security, very tight stewardship control. On the other hand, from

the necessity is the mother of invention, we are also using—in the

facility that we are building in Lincoln, NE, is a bio-contained system using plants, but it is not open-field production that we think

is going to be—for the types of products that we are building is

going to be a more effective way to go, but it is agriculturally

based.

Mr. OSBORNE. All right. Well, thank you. The last question I

have is with the ongoing drought out there, even 5 years, and you

were talking about drought-tolerant soybeans and corn. Where are

you on that? How far along are you where something like that can

actually be used?

Mr. DYKES. The pictures I showed you were from a field trial in

Kansas on the corn, and the soybeans I showed you were from our

research labs in St. Louis. We are in the early stages. We are probably looking at sometime within a decade of actually introducing

commercial products. We are doing field trials of several different

gene concepts in both corn and soybeans across the corn and soybean belt, and again, things look very promising now, but we are

probably looking at another decade, sometime within the next 10

years before we see commercialized products.

Mr. OSBORNE. And what type of water saving would you assume

that would be? Can you get by with one-half, two-thirds, threequarters the water that a normal crop would use, or do you have

any data on that?

Mr. DYKES. Well, we have looked at different levels of water, and

we have looked at different levels of water at different times during

the growth stages, and we don’t have a firm number on that just

yet with the different gene constructs. Water has a different value

to the crop, depending on the stage of the growth that the water

15

occurs. So we haven’t quantified any of that, but it does look promising, from what we have seen.

Mr. OSBORNE. Well, most of the corn savings we grow is irrigated, so we can control when it gets there, but we are just running out of water. You know, our reservoirs are practically dry, and

so, I wish it was next year that you had it available, but——

Mr. DYKES. We do too, sir.

Mr. OSBORNE. All right. I yield back, Mr. Chairman.

Mr. LUCAS. The Chair now turns to the gentleman from Hawaii,

Mr. Case.

Mr. CASE. Thank you, Mr. Chairman, and Mr. Chairman, I did

ask for comments from members of my agriculture community and

would ask leave to insert these comments into the record. Thank

you, Mr. Chairman.

To all three of you, what you say is incredibly promising. I think

we all realize here, at least in this room and in DC and elsewhere

in the agriculture community, incredible promise. I think the

Chair’s question was a very good one, and I will tell you that what

I think the biggest challenge at least for you, or at least it is my

biggest challenge as a Member from the district that hosts a lot of

your research—I think all three of you are active in my district. My

biggest challenge is not ensuring foreign confidence but domestic

confidence in what you are doing. There are certainly some parts

of our society that will simply have a fairly knee-jerk reaction to

any research along these lines, but that is not what I am talking

about.

What I am talking about is more reasons, more trained, more

highly-educated people that have thought this through on a scientific basis, and some of the testimony that I asked of the Chair’s

leaves to insert in the record comes from people like Dr. Vansuela

who is an extension specialist at the University of Hawaii, or from

a farmer by the name of Te Datenkona, highly-trained, highly-educated, who has taken some concerns from the scientific perspective,

question that are worth asking. And I ask each of you I guess for

some elucidation on what you are doing not only to broaden the

base of support that you have for what you are doing, because I

think most people may not be familiar with what we are taking

about here, the tremendous potential, actuality and advances that

are possible from this research, but also to answer their concerns.

Because I think it is very important for us to have that level of

confidence in our system and from where I sit, dealing with my

constituency in Hawaii, those concerns are real and oftentimes are

unanswered, and it is not just up to us in Government to answer

them, it is your huliana, as we say in Hawaii. It is your vested interested to do that, so what are you doing to ensure that you continue to have a base of public confidence in what you are doing, not

just in Hawaii but throughout our country? I think you have got

to maintain that base here before we worry about the rest of the

world. We need to worry about the rest of the world, but we need

to worry about the home front too.

Mr. SIGGELKO. Council for Biotechnology that I referred to, one

of the primary efforts there is outreach and education about what

is agricultural biotechnology and how it is used. So I think we have

to continue and we are planning to continue that effort. And you

16

are right. All three of us do have locations in Hawaii. As I mentioned, we are in Puerto Rico as well, because of the growing environment, the number of cycles that you can work through in a

year, so they are very important.

One of the things we have got to make sure just as the locales

where we have got chemical plants in the United States, we have

got to be good local citizens and I think be pretty transparent about

the work that we do and the kind of work that is taking place.

There is nothing to hide and just as we are the council for biotechnology information in the continental United States, we need

to be taking a similar approach in Hawaii, and you are suggesting

there is need for education, and well, we will take that feedback

and try to step up that activity because we certainly have nothing

to hide.

But as you say, I think there is going to be a certain percentage

of the population we won’t be able to sway, but a good percentage

that we can help educate.

Mr. DYKES. I agree with your comments about the need to educate, especially in Hawaii. I was in Hawaii about a month ago to

visit with several people, the Director of Agriculture and the Director of Health, the Mayor of Maui and members of the Farm Bureau, the Sugarcane Producers, Enterprise Honolulu and several

others. Hawaii is critical to all of us. All of us have operations

there. We are doing some basic plant breeding research in Hawaii.

I think the issue in Hawaii has been that we have been there for

several years. We have been going about our efforts doing our research. It is one of the 50 States. It has a great climate, as Pete

alluded to in his testimony. It is the ideal place for us to do our

work.

But we have not taken the time to go and educate people about

what we are doing, and we have got to do a better job of that, and

we are setting about trying to do that. We have an organization in

Hawaii that all of us participate in called the Hawaii Crop Improvement Association. We are looking to hiring an executive director there, a local Hawaiian who can be there on point to help answer questions and address the concerns on the different islands.

We are working with the director of health to maybe do a physicians’ educational program so physicians can get continued medical

education credits, working with the University of Hawaii on that.

We worked with the American Farm Bureau and the Hawaii

Farm Bureau chapter down there. We are giving tours of our facilities as my other colleagues are giving tours of theirs, which is

something we just haven’t done because people haven’t asked and

our researchers haven’t thought about that. While I was there, we

gave a tour for one of the members of the Hawaii State Legislature.

We are doing some public education programs. We are doing the

outreach. We trying to do the education, and our strategy has been

that we have got to educate the educators so that we can get a

multiplier effect because we won’t be able to get around to talk to

each and every individual.

I think another issue there that we face in Hawaii that we

haven’t had in the other States, in the other States, we have growers like the National Corn Growers and the National Cotton Council, the American Soybean Association that are there to talk firstVerDate 11-SEP-98 13:46 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 F:\DOCS\10834 HAGRI PsN: HAGRI
17

hand about what they see is the benefits of these products, which

has been tremendous for us. In Hawaii, since this is research, we

don’t have the local growers there to speak out either. So those are

several steps, Mr. Case, we are doing to try to address the issue.

We are aware of it. Any suggestions you have for ways we can better do that, we are open to it because Hawaii is critical to what

we are trying to do.

Mr. CASE. I would just comment I don’t think this is just a Hawaii issue, although you have both spoken to it, and I am certainly

sensitive to it from my district’s perspective. I think it is a broader

issue than simply my jurisdiction. I think you are going to—if you

don’t have it in other places, you will probably have some of the

same concerns soon enough.

Thank you for your efforts though.

Mr. LUCAS. The Chair now turns to the gentleman from Kansas,

Mr. Moran.

Mr. MORAN. Mr. Chairman, thank you very much.

Just for a snapshot, you all mentioned the amount of research

dollars that you are spending privately. What is the relationship

between business and the university community, private and academia? How do those dollars compare to what is going on in the

university setting in biotechnology research?

Mr. SIGGELKO. An estimate that we have developed is that the

tech provider’s larger companies are probably about one-third of

the global spending in the field. You know, and compare and contrast it to the agricultural chemical side, it would be almost exclusively within the chemical industry and not outside, and I think it

is quite the opposite in the agricultural biotechnology area.

Mr. DYKES. We try to do collaborative research with the land

grant institutions, private institutions, public institutions. Work

collaboratively with them around the 50 States, and with the institutions internationally, as well.

Mr. MORAN. So the research dollars that you described earlier,

they may contracting with the universities to conduct that research? This is not necessarily scientists or research scientists

within your individual companies?

Mr. KLEVORN. That is correct. In fact, for example, with some of

the insect-resistance products, we do a lot of work with universities

to help us design insect-resistance management programs that

work from a regulatory perspective and work in terms of good

stewardship for their products. So it is a collaboration. I don’t have

a number for you to say it is 30 percent of 10 percent today. We

can look into that and get back to you with that information. But

it is not just private money that doesn’t work with other areas outside of the companies.

Mr. MORAN. What Federal dollars are available for research in

biotechnology? Are there dollars that either you compete for or that

are available to universities from USDA?

Mr. KLEVORN. I don’t know the answer to that question. I will

say that depending on how you look at biotechnology, if you are

looking at it as a way to enhance energy utilization or enhance nitrogen utilization, things like that, there are probably a lot of

places that frankly we haven’t explored as deeply as we should

18

have to work with different Government and State agencies to help

develop some of the technology.

Mr. MORAN. I assume it is true that there may be some public

policy benefits that accrued to this kind of research that may not

result in an economic benefit to a private business, and therefore,

incentives for that kind of research may be important. Is that accurate?

Mr. SIGGELKO. Yes. That would be the way we would look at it.

I agree with Tom. When you talk about petroleum alternatives and

developing alternative feed stocks, energy sources, using biomass,

longer term, higher risk, and I think we will shy away from it. On

the other side, I mentioned some of the animal health and human

work we are doing with plants. Here is a place we are investing

the money with other groups in the U.S. and other places to let the

build capability leverage their expertise because it is risky. You

know, and we are not developing the internal staff and internal

fixed cost, but we are leveraging world-class expertise outside.

So as Michael said, there is a tremendous amount of our funding

that is what we call outside contract research funds that supports

outside institutes in doing our targets work.

Mr. MORAN. The research that you are doing now, are you seeing

financial returns for that research, or are the benefits much more

long term than that?

Mr. SIGGELKO. Well, the one particular product that I mentioned,

the first plant-made vaccine that we will register that will be a relatively small one because we are blazing new trails. We register in

2006, launch in 2007. So it should begin to generate. But the seeds

and input traits, insect traits, herbicide tolerance traits, those are

out in the marketplace and making money today. A number of the

other ones—and our oils business is out in the market today.

The pharmaceuticals, the animal health products in plants

longer term, it is a portfolio that we have got to look at of near,

medium and long term in evaluating how much we want to spend

and the risk we want to take.

Mr. MORAN. Currently, what percentage of your market for the

benefits that arise from biotechnology are—United States are domestic as compared to your opportunity to receive a return for your

investment from farmers abroad?

Mr. DYKES. Well, I think as the chart I showed you earlier about

the acres, the vast majority of those acres are grown in the U.S.

We talked about growing in 18 countries, but the vast majority of

them are U.S. acres and benefits that occur in the U.S. farmers.

I wanted to respond too to some of your research questions, as well.

We are doing collaborative research with University of Illinois and

USDA ARS on—soybean rust as one example of a collaborative research project.

Sources of funding for biotech research, the USDA certainly

worked closely with the universities to fund public research. The

Danforth Institute Plant Sciences Center in St. Louis I know is

working under competitive grants. I think they work exclusively

with competitive grants, and some of their funding comes from

NIH, National Science Foundation. So that is just another example,

and perhaps some of the gentlemen on one of the next panels can

19

give you a better handle on some of the sources of funding, but

those are a couple of examples.

The other comment you made about local universities, it is always advantageous for us when we are thinking about new products to have the land grant institution’s expertise and the agronomic management practices of that crop. So we introduce it. We

also have the benefit of all of the agronomic practices associated

with that in that particular State, so that is another benefit to us

as well working with the universities.

Mr. MORAN. Thank you for your response. Thank you, Mr. Chairman.

Mr. LUCAS. The Chair turns to the gentleman from California,

Mr. Dooley.

Mr. DOOLEY. Thank you, Mr. Chairman, and thank all of you for

taking the time to testify today. I think when we look at consumer

acceptance and market access, obviously a lot of us are continuing

to be concerned about the reluctance of EU to approve a number

of products there, and also are very concerned about the proposed

traceability and labeling standards that they have put in place.

What I would be interested in hearing from you is there a consensus within the industry that the United States should be setting

a precedent in terms of a standard for adventitious presence? You

know, we have set somewhat of a precedent in terms of our regulatory structure, which gives us I think a foundation to challenge

some of the impediments to market access internationally. Do we

need to be doing the same type of approach with the adventitious

presence?

Mr. DYKES. Mr. Dooley, I would say that adventitious presence

policy is extremely important to us. I think we are all in total

agreement that it is extremely important. A U.S. position on that

will be extremely important internationally. I think at this time,

other countries have come forward with a policy on adventitious

presence. They have done it in different manners. They have set

numerical levels. I think the approach that the U.S. is working on

is a science-based approach, and I think it is the appropriate way

to address the problem. But we do need a U.S. policy, which would

allow the U.S. to take a leadership role internationally in bringing

about some standards to the whole area of adventitious presence.

We are heartened by what we hear from USDA and FDA that

they are currently working on that, and we eagerly await the policy

coming forward. But yes, we think it would be extremely beneficial

and we would like to see the U.S. do that.

Mr. SIGGELKO. I just reiterate that in order for the U.S. to take

a leadership position and try and establish some standardization

and coordination around the world, we need to establish that position. You know, recent conversations as Michael said, indicate

there is good progress with FDA and some contacts with administration representatives that there is good progress along that front,

and I think our leadership there in establishing a policy will help

us internationally.

Mr. DOOLEY. I agree that we need to maintain our consistency

with a science-based approach. But do you envision then that

USDA and FDA is going to be able to come up with an actual numerical number, or do you think that that will have to be one that

20

will be maybe commodity or product-specific? I mean, right now, if

we look at the EU is proposing on a, what is it, 0.9 percent or

something of that nature, I would be interested if you can elaborate

just a little bit in terms of what would you envision would be the

best approach in the U.S.? Is it a blanket number?

Mr. DYKES. I would take the first stab on that. I think the approach that the U.S. is considering as we have worked with them

and as we have discussed and we don’t know what that will be

until it comes out, but it is my understanding that they are looking

at a scientific early food safety assessment to make a scientific

judgment that if small quantities of this trait were to be in the food

or feed supply that there would be no food or feed safety issues.

And it doesn’t set a numerical level because that may vary with the

various proteins produced with the trait.

I know from the trade, the commercial aspects, a numerical level

is what is important to facilitate trade, especially against contracts.

I would envision that if the U.S. had a policy such that there was

a scientific basis that if some small amounts were to show up in

food or feed that it would be safe that perhaps the trade then, depending on the particular transactions, could establish the level

that would facilitate trades for the various commodities in the various export destinations.

Mr. DOOLEY. I guess on another issue, as we see the expansion

of some of the genetically-enhanced products beyond the pesticide

resistance or herbicide resistance into some of the pharmaceutical

based and animal biological products, is the present structure

under the coordinated framework which has an APHIS, FDA,

EPA—are we moving to the point where we need to revisit on

whether or not we need to rationalize the approval process, or do

you think that the present structure that we have in place is adequate to give the confidence that consumers presently have with

our approval process, as well as providing the confidence in the

international marketplace?

Mr. SIGGELKO. I think it really depends on the nature of the

product. I mentioned two different aspects of the production. You

can go open field or you can bio-contained. If it is bio-contained you

are using plants as factors, a manufacturing system. So for instance, for an animal health vaccine, I am going to go through

USDA and CBB and go that route. It is not an issue. At least the

regulatory path seems clear. It is less clear with the other three,

but I know that they are working through that one. We have had

conversations with through bio with FDA recently, and I think that

there is good progress being made in improving that structure between the three.

Mr. DYKES. I would add that on the plant side, I think there are

a couple of hallmark differences of the U.S. system that has afforded us the freedom to operate we have seen and the adoption

by U.S. farmers of biotech crops to date. And I think it starts with

a coordinated framework and starts with the assumption that just

because soybeans are biotech, it doesn’t mean that they are inherently different, that there is anything unique about them, which is

different than, per say, the European Union because if they are

biotech, they automatically have to go through some regulatory

process.

21

I think the other hallmark about the U.S. system that we haven’t

seen in other systems is the U.S. system has what we call learning

in it. As they learn as they become more familiar with these traits,

they modify the rules and stipulations around them, and I am

thinking about the research plots, field trials where we have modifications and whether it is permitted or notification. I think the

other area is the USDA is currently looking at revising and updating their approach to biotech regulations at APHIS, and I would

like to compliment the folks at APHIS for what they have done. I

think they have done a great job, as have the people at FAS, and

we have commented on that.

We totally support what they are trying to do. We think it is a

move in the right direction. So I think the U.S. system has functioned, the coordinated framework has functioned quite well, and

I think it is the reason we are seeing and are able to show the

charts we have been able to show about the crop acres production

adoption.

Mr. KLEVORN. I think there are two parts to your question. One

was about does the system as we have it today provide safety and

does it give us the security in our food supply that we want, and

I think it does. It does a great job. But the second part of it is what

if we did it a different way? Could we benefit in some way? And

from at least from Syngenta’s perspective, one of the key issues is

what can we do to get products to market faster? So if we could

redesign or refocus efforts such that we could get products to market more quickly yet maintain the security that we are accustomed

to and need that would be a good thing.

I don’t know the answer to that, exactly how that would be done,

but speed is critical.

Mr. LUCAS. The gentleman’s time has expired. The Chair now

turns to the gentleman from Georgia.

Mr. BURNS. Thank you, Mr. Chairman, and I appreciate the panel’s input and expertise. I want to come back to a couple things.

Consumer confidence and acceptance, and Mr. Case pointed this

out. We may need to continue to work on the education side of that.

Oftentimes, I think consumers look at the GMOs and the biotech

crops as being a one-sided benefit, benefits perhaps the producers

or benefits perhaps the companies that you represent. You know,

have there been any though or effort or expenditure of resources

determining the benefits other than production and yield and how

can we market this not only to the U.S. but also to our foreign markets, as far as saying hey, this is better?

We have always used technology. We have always used technology to prove productivity in agriculture, whether it is equipment

or process or bioengineered products or chemicals or fertilizers or

what have you. But I think the disconnect is that the consumer

certainly in other areas of the world is less receptive than perhaps

they should be, given good information. They are comparing GMOs

to non-GMOs. They comparing GMOs to organics, and now the

question is how do you respond to those effectively and not look

self-serving?

Mr. DYKES. My response to that would be I think with nearly 10

years in the marketplace, 167 million acres of biotech crops, and

22

we have not seen one episode of food safety issues relating to

biotech——

Mr. BURNS. Have there been any studies that would show the

long-term impact of GMOs on human consumption?

Mr. DYKES. It is always a question we get is what about the longterm impacts. We do the regular safety, standard reviews of the

traits and the proteins before we introduce them into the marketplace based on the parameters we know to assess human safety,

and we are constantly monitoring those, reporting anything we see,

and if we see any impacts, we obviously would take those off the

market and make changes to them.

But again, I come back to based on the safety studies we do

when we launch products and we gain regulatory approval, we

have seen nothing, and with a 10-year history of safe use and with

167 million acres we have seen nothing. I think those are the most

compelling reasons that consumers should have confidence that the

biotechnology traits are safe. In terms of consumer benefits, the

yields and profitabilities, I agree with you that they see those as

benefits accruing to farmers. But I do think the environmental benefits, the pesticide reduction is a consumer benefit because it benefits all consumers, farmers and consumers and the general public

as well.

The reduced sediment in local water treatment facilities due to

the increased adoption and no till and reduce pillage practice I

think is another consumer benefit for small, local communities that

have an improved water quality perspective. I think those are some

of the examples that benefits that do accrue, and as this panel has

said, I think we are on the cusp of modified oils, the trans fat issue

that food companies are going to have to comply with by 2006, potentially some of the Omega 3. I think also some of the traits that

we have today in the BT crops reduce the amount of micotoxins in

corn, for example, which is another human health concern, and

clearly, we have seen the reduction in micotoxins as a result of BT

corn products.

Mr. BURNS. Perhaps that is a message that needs to be more effectively communicated. Let us talk about canola for a second.

Canola has a lot of opportunity, and certainly in the Southeast

where I am and I have planted Roundup Ready beans and I have

dealt with Bt cotton and that is just what we do. But canola is an

opportunity crop for the Southeast. Given me your perspective of

how effectively canola will become a crop choice, perhaps in the oil

market.

Mr. SIGGELKO. Yes. I mentioned that in my testimony. We are

growing a Nexera seed, which produces an oil we call Natreon oil,

and I have said it is trans fat free, low sat and high stabilities. It

is a hyolaic canola oil, well adapted to Canada. We are growing

springs in Europe. We are looking to adapt it into the United

States, and we understand in Georgia there has been a substantial

breeding program and an effort, and we are working actually with

folks in the State, as well as Kansas and Oklahoma, to produce

more of the product, as well as in Argentina to ramp up the availability of the oil.

So we are quite excited about it, and I think it has got a great

potential fit.

23

Mr. BURNS. One more question. On WTO, the EU is using, the

biotech excuse to provide a moratorium on certain crops and the

U.S. has a case filed against them. And going back to Mr. Dooley’s

question about traceability and labeling, should the U.S. maybe

take an aggressive stance with WTO on the EU’s traceability and

labeling regulation?

Mr. DYKES. We have worked closely with the American Soybean

Association, American Farm Bureau and the other food and Ag producing groups, and we share the concern about the EU traceability

and labeling, and I guess one way to characterize that that I think

brings it home is one of the hallmark problems we see with

traceability and labeling. Labeling of soybean oil where there is no

detectable differences would be required while processing aids produced in Europe would not be required to be labeled under the labeling traceability regime. We think that is somewhat discriminatory against U.S. produced soybean oil, and we think it will have

a damaging impact on soybean oil usage.

So we totally support what our customer groups are working on

and bringing us to the attention of Mr. Zok at USTR and in asking

for the USTR to take action on this against the Europeans.

Mr. BURNS. Do your colleagues share your views?

Mr. KLEVORN. Syngenta’s perspective on this is we would like to

see exactly what the costs involved are and what impact it might

have, and once we have the information, we will make a decision

as to how we think things ought to go. But right now, I don’t think

we have enough of the facts at hand to take a decision one way or

the other.

Mr. BURNS. OK.

Mr. SIGGELKO. I concur with Michael that our intent is to support our customer groups, and I guess I will sneak back to one relative to the benefits question that you were asking and a comment

that Michael made. You know, our companies have different strategies. Some of us are more in the crop protection chemical side, as

well as the biotech side, and just to put forth probably the view of

Syngenta as well, that crop protection chemicals go through a very

rigorous evaluation and safety testing protocols, and we hold the

position that they are every bit as safe as our biotechnology products.

Mr. BURNS. Thank you, Mr. Chairman. I yield back.

Mr. LUCAS. The gentleman’s time expired and time for questions

expired. The subcommittee wishes to thank the panel for their insights provided with their testimony and by their answers in this

issue, gentlemen, and I ask the next panel to come to the table.

David Winkles, president of the South Carolina Farm Bureau,

Sumter, SC, on behalf of the American Farm Bureau Federation,

Mr. Fred Yoder, chairman of the National Corn Growers Association, Plains City, OH, Dr. Joseph H. Bouton, director, Forage Improvement Division, the Samuel Roberts Noble Foundation, Ardmore, OK, Dr. Mel Billingsley, CEO, Life Sciences Greenhouse of

Central Pennsylvania, Harrisburg, PA.

And Mr. Winkles, whenever you are ready to begin, you may

please.

24

STATEMENT OF DAVID WINKLES, PRESIDENT, SOUTH CAROLINA FARM BUREAU, SUMTER, SC, ON BEHALF OF THE

AMERICAN FARM BUREAU FEDERATION

Mr. WINKLES. Good morning, Mr. Chairman, and thank you for

the opportunity to represent the South Carolina Farm Bureau and

the American Farm Bureau here today.

Along with being president, I am also a corn, cotton and soybean

producer in Sumter County, SC. American agriculture continues to

be the world leader in the adoption of agriculture biotechnology, accounting for 63 percent of the world total plantings. In the U.S.,

plantings of biotech soybeans, cotton and corn continue to expand.

For example, in 2004, it is projected that 86 percent of the total

soybean crop will be biotech varieties. That is up from 81 percent

just in 2003. American farmers have seized the opportunity offered

by biotechnology to improve their production efficiency. They have

recognized that the adoption of new technology is essential to

maintaining a competitive advantage for U.S. agricultural exports.

American production of crops utilizing biotechnology is expected

to continue to rise. New varieties of biotech corn, cotton and soybeans are being developed, and in the future, biotech wheat, rice,

sugarbeets, alfalfa, apples, bananas and lettuce and strawberries

will also be available. In 2003, other countries planting biotech

crops increased 15 percent to a total of 167.2 million acres. U.S.

productivity has increased the importance of developing and maintaining markets, both domestically and internationally, for products derived through biotechnology. Market development, both domestically and internationally, is dependent on public policy that

delivers three outcomes.

First, we need to maintain an unbiased, science-based regulatory

system that inspires consumer confidence and avoids unnecessary

traceability and labeling requirements. In the United States, Government agencies play an important role in providing unbiased,

science-based evaluations concerning the safety of biotech commodities. Requiring mandatory labeling and traceability of foods containing commodities enhanced through biotechnology in effect nullifies the regulatory system in place. If the science concludes that

a product is safe for human consumption, it becomes unnecessary

to label this product as genetically engineered or genetically modified.

Second, we need to defend against current threats to market access for biotech crops and expand access where current restrictions

exist. In the last 1990’s, the European Union instituted a moratorium on approvals of any new products enhanced through biotechnology. This year, the European Commission approved its first

biotech commodity since the moratorium was instituted. However,

it is too early to judge whether the EU will begin to undertake approvals within a reasonable period of time. The EU’s introduction

of new regulations governing the approval, marketing, labeling,

traceability and importation of food and feed produced using modern technology last September is a problem for many American

farmers.

Farm Bureau opposed the imposition of any import restrictions

labeling or segregation requirements for products derived through

biotech enhancement once they have been approved according to

25

internationally accepted scientific principles as safe for animals,

humans and the environment. Convincing arguments exist that the

new EU regulations to be in breech of the WTO rules. Farm Bureau supports the U.S. Government filing a complaint with the

WTO on this issue. If new regulations are left unopposed, there is

nothing to prevent other nations from adopting the EU protectionist template.

The Biosafety Protocol has created some disruptions in trade.

The United States currently is not a party to the Biosafety Protocol. Farm Bureau does not believe that the U.S. ratification of the

convention on biodiversity, a precursor to becoming a party of the

Biosafety Protocol, is in the interest of American agriculture. AFBF

supports addressing the documentation requirements of the Biosafety Protocol through the trilateral arrangement signed by the

United States, Mexico and Canada.

Third, we need to create an environment conducive to the development of new biotechnologies if U.S agriculture is to maintain its

place on the technology frontier.

In conclusion, American agriculture has enthusiastically embraced the benefits that biotechnology provides to production efficiency, and in turn to the agricultural competitiveness of the

United States. We look forward to continuing our work with Congress on this important issue. AFBC is committed to ensuring

broader acceptance of these products internationally, and continued

domestic consumer confidence. We will work with Congress and the

administration to address unnecessary trade barriers implemented

by other countries for commodities enhanced through biotechnology.

Thank you for this opportunity to testify on this important issue.

I would be happy to answer any questions.

[The prepared statement of Mr. Winkles appears at the conclusion of the hearing.]

Mr. LUCAS. Mr. Yoder.

STATEMENT OF FRED YODER, CHAIRMAN, NATIONAL CORN

GROWERS ASSOCIATION, PLAINS CITY, OH

Mr. YODER. Good morning, Chairman Lucas, Ranking Member

Holden, and members of the subcommittee.

My name is Fred Yoder and I am Chairman of the Board for the

National Corn Growers Association, and I am also past Chairman

of the NCGA’s biotechnology working group, and I would like to

thank the subcommittee for giving me the opportunity to testify

and speak today regarding biotechnology in agriculture.

Biotech offers corn growers improved efficiencies and potential

profits when managed wisely, and with regulatory oversight based

on sound science. The introduction of new varieties of corn and

their proliferation across the Corn Belt is redefining current systems of price discovery, consumer information, health regulation

and trade management. Currently, 13 biotech corn varieties are approved in the United States for commercial use, three of which are

herbicide-resistant, three are insect-resistant, and the other seven

are stacked varieties. Stacked trait crops combine two or more

traits in the same crop.

26

As you know, corn is the largest crop in the United States, with

over 79 million acres planted last year, producing 10 billion bushels

of grain. Corn acreage is likely to increase this year, with nearly

half devoted to varieties derived from biotechnology. Corn producers across the country are already learning about the benefits of

biotechnology, and we expect acceptance rates to continue to climb

in the foreseeable future.

Acceptance rates for agricultural biotech in corn and other crops

rests primarily on the economic and environmental benefits. As a

small businessman, farmers like myself understand the importance

of minimizing risk and increasing returns on investment. Agricultural biotech helps maximize benefits unlike any innovation since

the introduction of the tractor. Biotechnology contributes to profitability by allowing corn growers to reduce chemical applications,

energy use and devote fewer man hours to produce the same bushel of grain.

In addition, agricultural biotech has led to a significant increase

in the adoption of environmentally-friendly, no-till farming practices. No-till farming conserves topsoil, preserves foil moisture, reduces energy requirements and lessens runoff while the crop residue from the previous year is left standing. Overall, farmers planting biotech corn varieties increase production by 3.5 million pounds

of corn in 2001. The increased efficiency resulted primarily by saving crops that otherwise would have been destroyed by European

and Southwestern corn borers. This ultimately generated an additional $183.4 million in revenue for farmers while also reducing

pesticide use by 8.4 million pounds.

Innovations in the first wave of agricultural biotech relied on single agronomic traits focused on crop production and pest management. However, farmers like me will demand greater efficiencies

and yields before increasing biotech corn acres in production. The

future of agriculture biotech is exciting and it is rich with promise.

The second wave of innovations will increase trait stacking and

focus on plant performance. Let me highlight two examples.

Perhaps the most notable trait recently introduced in corn hybrids prevents the damage from the corn rootworm. The USDA estimates the pest causes $1 billion in lost revenue every single year

to the U.S. corn crop. The EPA estimates corn rootworm are responsible for the single largest use of conventional insecticides in

the United States. Adoption of new rootworm-resistant varieties in

threatened areas could reduce chemical spraying by an additional

14 million pounds while boosting yields and saving additional dollars in inputs.

Input traits are best characterized as low hanging fruit, and

technology providers are nearing introduction of varieties that are

more complex and easier to grasp by consumers. While input traits

continue to be of interest to corn farmers, maximizing value to the

consumer and processors will necessitate the commercialization of

output traits that have value in the marketplace well beyond the

farm gate.

There are corn varieties in the pipeline that will increase the efficiency and yield of ethanol production, while reducing energy

costs. They will also produce a higher quality output of DDGS.

Since many of the new ethanol dry plants operating today and in

27

construction are farmer-owned, this will mean opportunities for

growers to capitalize on value-added ventures in rural America.

Consumer acceptance and confidence in our regulatory agencies

is vital to the success of this technology. As producers, corn growers have to be mindful of our customers and ensure that there is

open communication with grain handlers, millers, processors and

food retailers across the country. Our association works closely

with our partners in the food chain, continuing an open dialogue

to head off problems before they occur.

Corn growers have the unique opportunity to take part in one of

most important changes in agriculture history. The development of

agricultural biotech offers a fantastic opportunity for increasing the

value of the corn crop, as well as significantly benefiting consumers. By working with private sector groups, such as AgBiotech

Planning Committee, agricultural associations can help facilitate

adoption while ensuring proper stewardship. At the same time,

Government needs to ensure regulatory agencies are properly funded and have the tools to do their job. Together, we can ensure U.S.

agriculture remains a leader in technological innovation and production of corn.

We look forward to working with the subcommittee on this and

other issues of importance in the future. I thank you again for the

opportunity to address you, and I would welcome your questions.

[The prepared statement of Mr. Yoder appears at the conclusion

of the hearing.]

Mr. LUCAS. Thank you. Mr. Bouton.

STATEMENT OF JOSEPH H. BOUTON, DIRECTOR, FORAGE IMPROVEMENT DIVISION, THE SAMUEL ROBERTS NOBLE

FOUNDATION, ARDMORE, OK

Mr. BOUTON. Thank you, Chairman Lucas, Congressman Holden

and other members of the subcommittee.

I am Joe Bouton, director of the Forage Improvement Division of

the Samuel Roberts Noble Foundation. The Noble foundation is a

private foundation located in Ardmore, Oklahoma. Since its founding 1945, the Noble Foundation has conducted educational programs to assist farmers and ranchers in the southern Oklahoma

and north Texas region as part of its charitable mission. The Noble

Foundation expanded its agricultural research operations through

the creation of two research groups: a basic plant biology group in

1998, and an applied group in 1997, the Forage Improvement Division.

Research in the Noble Foundation’s Forage Improvement Division has centered on development of improved forage grass and legume cultivars for use by farmers and ranchers in the southern

Great Plains. Cultivars, commonly called varieties, are a group of

plants that breed true for specific traits through generations of

seed increase, such traits being governed by genes. Thus, cultivar

development is the process of enhancing or adding genes and minimizing undesirable genes and their related traits.

Dependability is the critical characteristic needed in the region’s

harsh environment. Therefore, our main target species are

perennials, such as tell fescue, bermudagrass, hardinggrass, western wheatgrass, alfalfa, and red and white clover. Target traits inVerDate 11-SEP-98 13:46 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 F:\DOCS\10834 HAGRI PsN: HAGRI
28

clude drought and heat tolerance and pest resistance. Improving

nutritive quality if another important trait. We approach the incorporation of useful genes that govern these traits almost exclusively

with conventional selection and breeding techniques. In this approach, we collect as much of the known plant germplasm, often

from the USDA plant germplasm system, and screen it for the target traits. Sometimes the traits are very complex or difficult to manipulate, and biotechnology approaches become an option.

For example, in many forage species, lignin is deposited along

the cell walls, resulting in poor rate of digestion during rumen

breakdown of the forage. Basic research by our Plant Biology Division identified two genes in the lignin pathway that when down

regulated resulted in less in less lignin deposition. We have now

successfully down regulated these genes in alfalfa and tall fescue,

with a concurrent increase in the digestibility of the forage. This

same approach is now being investigated with bermudagrass.

In May 2003, we co-hosted with Texas A&M University the

Fourth International Symposium on Molecular Breeding of Forage

and Turf in Dallas, Texas. There were approximately 200 scientists

in attendance from 19 countries. Research talks were many and

varied on every aspect of basic biotechnology. This symposium and

many like it is direct proof that basic research in biotechnology is

intense and growing. Whether we will be able to deliver useful biotechnology traits for agricultural use is another matter. First, there

has not been a new crop de-regulated in several years. I am defining a new crop as one that has never been in commercial production while containing a biotech trait. Since all our target species

would represent new crops by that definition, then we are concerned that even doing all requisite safety trials may not be enough

to ensure de-regulation.

Second, two crops, creeping bentgrass and alfalfa, are currently

being assessed by USDA-APHIS for de-regulation for the Roundup

Ready gene, and 1980’s technology that is currently found in millions of acres of corn, soybeans and cotton. Since alfalfa is one of

our target species, and creeping bentgrass represents a perennial

grass similar to many of our target grass species, we are watching

very intently the final disposition of these two applications. The

fact that the creeping bentgrass application has now been in the

process longer than any crop to date is not encouraging.

So for these new crops, it is hoped that the regulatory agencies

will concentrate on assessing real versus perceived risk. At the end

of the day, these agencies will need to make decisions on what are

the real risks, establish a rigorous regulatory process to assess

these risks, oversee the regulatory process in a fair manner, and

make a decision. We can then all move forward based strictly on

the value of these traits to the environment, the farmer, American

agriculture and all the citizens of this country.

Thank you, Mr. Chairman.

[The prepared statement of Dr. Bouton appears at the conclusion

of the hearing.]

Mr. LUCAS. Thank you. Mr. Billingsley.

29

STATEMENT OF MEL BILLINGSLEY, CEO, LIFE SCIENCES

GREENHOUSE OF CENTRAL PENNSYLVANIA, HARRISBURG, PA

Mr. BILLINGSLEY. Thank you, Chairman Lucas, Ranking Member

Holden, and members of the committee for the opportunity for the

opportunity to address a few of the many important issues which

surround the development of life sciences in rural areas.

My name is Dr. Mel Billingsley, and I am the president and chief

executive officer of Life Sciences Greenhouse of Central Pennsylvania. The greenhouses were created in the Commonwealth via legislation in 2001, using the Master Tobacco Settlement Agreement,

and there are three greenhouses, ours being the one that serves

primarily a rural organization.

Many States have chosen to exploit biosciences for economic development for obvious reasons. First, the U.S. Department of Labor

has indicated that the job growth in life sciences is expected to be

13 percent greater than that in comparable areas. Secondly, these

are very high-paying jobs, often earning more than $18,000 more

than the average annual salary. And third, there are a broad range

of sectors that are involved in the biosciences industries, including

agricultural feed stock and chemicals, drugs, pharmaceuticals and

manufacturing, medical devices, research and testing. This gives

numerous opportunities, many of which can be manifest in a rural

setting. Recently, Pennsylvania produced a State-of-the-Industry

Report in 2004 and identified more than 2,000 establishments

across the State employing more than 84,000 people, indicating a

very important sector.

Not all of the sub-regions of Pennsylvania, however, can be developed into specific sub-sectors. Indeed, I think the specifics of the

regional strengths must be identified. Central Pennsylvania has

numerous assets to grow industry. In particular, Aventis Pasteur

is one particular example, located in their manufacturing plant in

Swiftwater in the Pocono Mountain regions, producing influenza.

This employment base creates jobs for 1,500 people in a primarily

rural area, and also relies on some of the agricultural products

from that rural area in the form of eggs.

Similarly, there are other opportunities that are created by small

pharmaceutical manufacturing entities in the region. Indeed, in

Pennsylvania, a significant portion of the economy is driven by

small manufacturing entities for pharmaceutical and Ag biotech,

with a combined output of over $575 million, indicating that this

is a strong driver industry, even in the rural parts of the State. I

would like to take the next few minutes to identify a couple of the

factors that account for the promising growth and assess some of

the needs that may be addressed by addressing policies that tend

to affect the rural areas.

I am referring to a recent Battelle report. There are a chain of

events that are needed to develop the life sciences. First and foremost, it is helpful to have institutions, primarily land grant institutions, that draw on National Institutes of Health, NSF, USDA and

related Federal funding for basic research, and Central Pennsylvania has the good fortune to being the home of a large land grant

university in the form of Penn States, numerous small universities

and a medical center. These institutions bring in over $580 million

30

in basic research funding and provide faculty and student talent,

as well as intellectual capital.

Beyond this talent, the biosciences development for new life

sciences industries requires an infusion of cash, and these are extremely cash-intensive and you have heard from several members

today of more mature bioscience companies that are large sector industries. The Life Sciences Greenhouses, in conjunction with public

and private partnerships, needs the Federal support in the form of

small business innovation research grants and technology transfer

grants and progressive State-friendly policies to help grow these

life sciences. Some of the policies include tradable task credits for

research and development and net operating last carried forward

policies.

My institution, Life Sciences Greenhouse, serves as a catalyst to

facilitate collaboration between regional research institutions, industry, the Federal Government, and also provides various forms

of much-needed seed capital in the form of risk leveraged investments in starting companies. I think that the demand for the earlystage seed capital greatly strips the supply, and this is particularly

true in rural areas, which are often less the beneficiary of angel investment and scheduled venture capital investments. Any Federal

incentive to provide this capital, in and above what is beyond,

should not be at the detriment of the existing SBIR and STTR programs, and in fact, these programs need to be modified so that they

can continue to back small venture backed companies to compete

for funding.

By coupling the effective use of Federal funds, such as they are

available now, along with some of the targeted Federal Capital Programs, such as the Small Business Administration, New Market

Venture Capital and Rural Development Program, I think we can

begin to address some of the needs of the capital available for rural

development.

In summary, growing life sciences-related industries in and rural

industries is really about the density of ideas, capital and talent,

and it is quite possible, as I have hopefully communicated to you

today, for a rural area like Central Pennsylvania to contain or attracts sufficient quantities of each. With appropriate Federal assistance it seems likely that a growing number of regions in the

country will be able to participate in the economic promise of the

life sciences industry.

Thanks for the opportunity to address some of these issues, and

I will be glad to answer any of your questions.

[The prepared statement of Mr. Billingsley appears at the conclusion of the hearing.]

Mr. LUCAS. Thank you.

Dr. Bouton, clearly the Noble Foundation has done a great deal

of research and work on forage, and as you pointed out, an extremely important issue to those producers who live on the eastern

side of the Rockies is mother nature is very inconsistent and the

climate is awfully challenging. But you are not a land grant university. You are not a research in a university. You are not a for-profit

enterprise. What do you do with the technology, the traits, the

things that are developed at the Noble Foundation? What becomes

of that information?

31

Mr. BOUTON. Well, for us we are hoping to deliver the traits from

our Plant Biology Division, like I mentioned in my testimony, for

the lignin genes into a cultivar. Now of course, we are not a seed

company like you pointed out, so we would have to license our material to a seed company that could take the production and marketing rights and bring them into the southern Great Plains in an

efficient manner. So that is what we would look to do, yes.

Mr. LUCAS. And in the resources, those licenses would generate

or be plowed back into research at your Foundation?

Mr. BOUTON. Right. Well, of course, we use our endowment to

fund most of our research. We would probably look for a small royalty string though to come back into our research program.

Mr. LUCAS. And is it fair to say that from the description of your

research, that you are doing both conventional and biotech models

at Noble?

Mr. BOUTON. I would say that we are taking a more exclusively

conventional approach right now. As I mentioned in my testimony,

we are a little worried about what the future is for crops like we

deal with, so we do have a pretty substantial biotech application.

We are investing about a million a year into that. But we do worry

about it and when would we back out or go strictly conventional.

Mr. LUCAS. Mr. Winkles, Mr. Yoder, I think we would all agree

that world grain stocks right now are at a fairly low point, and it

wouldn’t take much of a dramatic weather event to create some

real shortages. At the same time, in much of the developing world,

we see some significant economic improvement. By that I mean not

only are a substantial number of consumers on this planet finally

perhaps to afford what they need, but they can actually afford to

improve the quality of their diets, and that brings me to my next

question.

Do you think that producers around the world from the perspective of the groups that you are a part of that you represent here

today that we can meet those challenges, whether it is Mother Nature or a changing set of international consumer patterns, if we

don’t use every technology resource available to us? Can we keep

up?

Mr. WINKLES. Mr. Chairman, that is an excellent question, and

I firmly believe that biotechnology is one of the elements that we

have to have the access to in the U.S. agriculture to maintain competitive, as I mentioned earlier. I visited with our research arm at

the extension, our land grant university, and asked directly what

other technologies are being developed? And if you look back in

time, we had crop protection chemicals come along. We have had

hybridization. Now we have got biotechnology. According to him,

there was really nothing else on the horizon, except things like

nanotechnology, and I am not exactly sure how that would adapt

to agriculture.

But we firmly believe that the use of biotechnology would be critical in providing the protein and food needs worldwide. We fully realize that 95 percent of the world’s consumers are outside of the

borders of the United States, and we fully believe that we need to

have access on an unbiased basis to all of those consumers.

Mr. YODER. Mr. Chairman, I would just echo what Mr. Winkles

said, that clearly there are needs out there to feed the world, and

32

when you look at what biotechnology is compared to conventional

breeding when we develop new varieties to go to the field, I mean

you can literally cut your time in half. So the other thing too that—

well, I think once you get feeling good about what biotechnology is,

it is just another way, another methodology to improve and enhance what you are doing. I look at what happened when hybrid

corn first came out, and all the naysayers were saying it is going

to be a tough way to do it.

When you conventionally breed you also breed in a bunch of stuff

you don’t want. So you spend years getting rid of the stuff you

don’t. Biotechnology offers the opportunity to isolate exactly what

you want to put in it in a very efficient way and get things to market very quickly. I think biotech is win/win for whether we grow

it here in the United States or grow it in some other areas of the

world that have some real challenges. I know the Danforth Center

in St. Louis is working on some things on how they can grow crops

in dry, arid conditions, even with salty water.

And so there is all kinds of different things that developing cultures can do to enhance their profitability and their way of making

life better for them, as well as it is here in our own country.

Mr. LUCAS. Thank you, and the Chair turns to the ranking member, Mr. Holden.

Mr. HOLDEN. Thank you, Mr. Chairman. I had a question for

what the Federal Government could do as far as investment in research, but Dr. Billingsley I think answered it in his statement,

using the land grant institutions as well as other vehicles, and we

need to continue to work on that. Mr. Chairman, I know that is a

priority for you, as well.

Gentlemen, all morning we have been hearing about the major

obstacle is acceptance, and I am just curious what all of your companies and your industry has been doing to educate the public on

the safety of biotech products, and is there anything else that the

Federal Government should be doing that we are already not doing

in trying to increase our experts and trying to convince the world

that the biotech products are safe?

Mr. WINKLES. Let me take a crack at that first, Mr. Holden.

American Farm Bureau has instituted a program where we had

recruited individuals to go out into local community to speak before

civic groups; Rotary Club, Elks Club; all different types of individuals at the local level and try to inform about what was real in biotechnology versus what some of the perceptions were. So we have

actually taken the debate or taken factual information to the local

level. I think we can all continue to do that, but I think probably

one of the most important things that the U.S. Government can

continue to do is a strong process of regulation, of assessment and

approval, one that leaves no questions to doubt. And they also need

to be vocal about the safety of that system and how rigorous it is.

What I have found in dealing with biotechnology now since the

mid 1980’s is that the consumer is often quick to make judgments.

If you ask them what they want, they are quick to tell you. But

we find that buying patterns are very different than what they say

they want. So we need to be careful in being sure that we register

what we do based on what consumers do rather than what they say

they want. But we all need to be more active in the information

33

process. There is much too much misinformation out there about

what the effect of biotech products are. You know, it goes back to

what Mr. Dykes said. There has never been a case where you can

show any harm from any biotech product.

Mr. YODER. Along with that, I would like just to tell you a little

bit about what National Corn Growers is doing to do that. We have

a program called ‘‘Know Before You Grow’’, and that so that we can

demonstrate when these new products come out that we use them

properly. I mean, we think we have some great regulatory agencies

to give us some good science-based ways to grow this stuff, but we

have more responsibility on our plate now to make sure we do it

right, to make sure we keep the technology viable, and that we can

go ahead and continue to have the life science companies develop

new ones.

As far as other ways we try to make people understand the safety of what we are doing is I have been lucky enough to—the last

several years to be able to participate in a joint U.S. Grains Council NCGA biotech trip to European Union to talk to farmers, to consumer groups, to legislators and people like that, and it has been

very good to be able to explain to them because it has been talked

about earlier that there is really no consumer value to these current products we have on the market, and that is simply not true.

I know if you care for the environment, when we can save 40 million tons of topsoil every single year by using biotech, when we can

save water and when we can save the sediment and things like

that, if you care about the earth, it is a good thing to do, and save

pesticides. Even though we realize that as mentioned earlier, we

also have the safest pesticides in the world today, I am a consumer

too and if I can avoid putting some pesticides on there and have

a plant naturally have resistance, then I want to do that. And as

we talked to the European people, especially the farmers, they understand it. They get it. They would like to have access to this

technology. But the consumer groups are very strong over there

and we just have to keep——

Mr. HOLDEN. A real problem.

Mr. YODER. We just have to really keep working on them to

make them understand that there is benefits to them and the

promise of new output traits coming down the pike that are going

to benefiting them directly.

Mr. HOLDEN. OK. Dr. Bouton?

Mr. BOUTON. Well, the main thing I would say is to have a

strong regulatory process. You know, I was complaining a little bit

about it, but mainly it is because no decisions were being made. I

would like to see decisions made, but we want it rigorous and we

want it transparent. But I think in the process and possibly even

in the educational effort or getting the word out is we probably

need to separate the process from the product. We ask questions

about biotech as a process, like if you start with biotech, there is

something bad. But it is really the products that are coming out,

the traits that we should concentrate on both the regulatory and

the educational effort, I think.

Mr. HOLDEN. OK. Dr. Billingsley?

Mr. BILLINGSLEY. In Pennsylvania, I think we are blessed with

both a strong pharmaceutical industry, as well as strong agriVerDate 11-SEP-98 13:46 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 F:\DOCS\10834 HAGRI PsN: HAGRI
34

culture, and I think the general awareness pattern has been to use

trade organizations and regional groups to use a science-based education program for the populous at large that biotechnology holds

promise in a number of areas, and as a result, not just an economic

growth engine, but it is making life better for people. So I think

people need to be educated at the very fundamental level that

there is nothing intrinsically wrong with the process, that it is a

legitimate process for modifying foods, drugs, biologics that has

great promise.

Mr. HOLDEN. Thank you. Thank you, Mr. Chairman.

Mr. LUCAS. The gentleman’s time has expired.

The subcommittee wishes to thank the panel for your time today,

and with that, without objection, the record of today’s hearing will

remain open for 10 days to receive additional material and supplemental written responses from witnesses to any question posed by

a member to a panel. This hearing of the subcommittee on Conservation, Credit, Rural Development and Research is adjourned.

[Whereupon, at 12:09 p.m., the subcommittee was adjourned.]

[Material submitted for inclusion in the record follows:]

STATEMENT OF W. PETE SIGGELKO

Good morning Mr. Chairman and members of the subcommittee. I am Pete

Siggelko, vice president of Plant Genetics and Biotechnology at Dow AgroSciences.

Thank you for this opportunity to testify before this subcommittee of the US House

Committee on Agriculture. I would first like to thank you for holding this hearing

because, as you’ll hear, we have a lot of positive things to share with you today.

I’d also like to thank this committee for its long-term support of agricultural biotechnology and for ensuring that we have the most productive growers and the

world’s cheapest, safest, and most abundant food supply.

With an increase in consumer confidence and the development of a science based

regulatory system that has served as a model for the rest of the world, Dow

AgroSciences and my fellow colleagues within the life sciences and technology sector

have been able to bring innovative products to market and to invest in novel, exciting breakthrough products for the future. Moreover, through open communication

and collaboration with the value chain, we have enjoyed unprecedented support by

U.S. growers and food chain customers. On behalf of Dow AgroSciences and The

Dow Chemical Company, it is my privilege to discuss with this esteemed committee

the current status of agricultural biotechnology and our current and future product

development efforts. My written comments have been submitted to the record in

their entirety.

Dow AgroSciences LLC based in Indianapolis, Indiana, USA, is a global leader in

providing pest management and biotechnology products that improve the quality

and quantity of the earth’s food supply and contribute to the health and quality of

life of the world’s growing population. Dow AgroSciences has approximately 5,700

people in more than 50 countries dedicated to its business, and has worldwide sales

of US $3 billion. Dow AgroSciences is a wholly owned indirect subsidiary of The

Dow Chemical Company. With annual sales of $33 billion, The Dow Chemical Company has over 40,000 employees globally and serves customers in more than 180

countries and a wide range of markets that are vital to human progress, including

food, transportation, health and medicine, personal and home care, and building and

construction, among others.

The initial phase of agricultural biotechnology brought us products for disease and

insect protection. These products filled a very important niche for modern farmers

by bolstering their Integrated Pest Management, or IPM, programs. To both large

and small farming operations, biotechnology has resulted in increased yields and reduced costs. This technology will also continue to deliver traits, such as drought tolerance, that can revitalize agricultural economies in areas where the land has been

non-productive for years. As global populations increase exponentially over the coming decade, it will be imperative that agriculture keep up with the resulting burgeoning demand. As recently noted by Mr. Diouf, Director General of the UN Food

and Agriculture Organization, food production will need to increase 60 percent by

2050 and will require intensified cultivation, higher yields and greater productivity.

35

We will have to use the scientific tools of molecular biology, in particular the identification of molecular markers, genetic mapping and gene transfer for more effective

plant enhancement, going beyond phenotype-based methods.

In a relatively short period of time, biotechnology has made significant contributions to the enhanced production of key commodities such as corn, soybeans, cotton

and canola. Today, these crops are planted on more than 145 million acres worldwide with the United States representing more than two-thirds of all biotechnology

crops planted globally. The adoption of bioengineered plants has been the most

rapid in the United States where there has been a 20-fold increase in the area of

biotechnology crops over the last seven years. We expect this adoption trend to continue globally over the coming years.

Biotechnology also offers the ability to improve the quality and enhance the nutritional content of various foods. New varieties of soybeans and canola, for example,

that have healthier fat content profiles are now practical and, in some cases, already

available to the consumer. In the non-foods area, we see markets opening for genetically engineered renewable fuels and lubricants derived from biomass that could

slash the dependency on petroleum products. Manufacturing antibodies, industrial

products and pharmaceuticals in plants is no longer a pipe dream; it is a reality.

Through the continuing support of the U.S. Congress and the members of this committee and subcommittee, the industry has been able to realize some of the real benefits of biotechnology with more innovative products and solutions to come. As industry has said all along, biotechnology is a tool that will enable innovation and the

introduction of products with transparent consumer benefits if we can maintain consumer confidence and nurture an environment that allows for our freedom to operate. Largely, the United States has successfully achieved both objectives.

The Dow Chemical Company (Dow) is part of this agricultural biotechnology revolution. A number of Dow’s biotech platforms touch agriculture Dow AgroSciences

Plant Genetics and Biotechnology platform and Dow’s Industrial and Bio-based Materials platforms. I would now like to turn my attention to some of the specific and

exciting biotechnology innovations we are working on within Dow.

Dow AgroSciences has recently introduced its second Bt product, Herculex’ I insect resistant corn, in the United States. We also have two exciting insect traits for

corn in the pipeline, including a novel rootworm product that is nearing final regulatory approval, and a Bt cotton product, Widestrike, that will be introduced

through Phytogen, our cotton seed joint venture, in 2005.

It had been said that the next wave of biotechnology would involve the genetic

modification of crops tailored to specific consumers, whether for food, feed, fiber,

fuel, lubricants, soap and other characteristics, perhaps even pharmaceutical and

plastic components. Today, many of these products are here. We are developing second generation products that truly offer unique benefits to the consumer and endusers. Using the tools of biotechnology and improved agricultural practices, Dow

AgroSciences has been able to develop and commercialize a novel product called

NatreonTM canola oil that can reduce the amount of saturated and trans fat in food

products today. Recent research shows that trans fats can be even more harmful

to health than saturated fats. It is estimated that trans fat could be causing more

than 20,000 deaths in the United States each year. Research shows a strong link

between diet choices and obesity, and chronic diseases such as cardiovascular disease and Type 2 diabetes. By replacing partially hydrogenated oils with Natreon

canola oil, the amount of saturated and trans fat could be reduced by as much as

85 percent in a typical cracker, directly benefiting American consumers. Natreon is

a readily available and practical alternative to partially hydrogenated oil for food

service and manufacturers who are looking to simultaneously decrease trans and

saturated fats in their products today. This product can provide consumer benefits

now by being part of the solution to the complex problem of obesity and the resulting chronic diseases.

The canola industry is rapidly expanding production of canola and Natreon. In

order to meet consumer demand Dow AgroSciences hopes to expand this opportunity

to canola producers in many of the states represented by members of this committee

such as Oklahoma, Kansas, Georgia, Minnesota and many more.

Dow is also using plant and plant cell systems to manufacture novel therapeutics

and biologics for both animal and human health. The benefits of a plant-based manufacturing system are great, and the resulting products have the potential to alter

how diseases are treated in the future. Plant-made biologics contain no materials

of animal origin, mitigating the chance of contamination with extraneous disease

agents during use; work without risks of adverse effects associated with most current vaccines; and are very stable requiring no refrigeration and offering needle-free

delivery. This is truly revolutionalizing how we administer animal vaccines.

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Dow AgroSciences is rapidly carving a space in the Animal Health market segment, a well-established, regulated global industry with current sales of approximately $12B. Today, biologics (vaccines and antibodies) account for $2.8B and are

the fastest growing segment of this industry. Currently, Dow AgroSciences is building a biosecurity facility in Nebraska to develop animal therapeutics and is on track

to launch the world’s first biocontained, plant-made animal health vaccine by 2006.

Several other plant-made vaccines, including an Avian Influenza vaccine, are in

varying stages of research, with projected launches beginning in 2007. Dow

AgroSciences also has scientific collaborations with a number of world-class institutions and governmental entities including USDA.

Closely related in terms of benefits to industry and consumers are our company’s

activities in the area of food safety. Food safety is a high profile, high consumer concern with a significant impact on the US and global economy. The Centers for Disease Control estimates there are 76 million cases of food-borne illness and 5,000

deaths per year. The top six food safety pathogens cost the U.S. economy between

$6B and $34B per year (USDA-ERS estimate). One of the targets Dow is currently

developing is an antibody for E. Coli 0157:H7 to be administered orally to cattle

prior to slaughter. These efforts will complement the existing Hazard Analysis and

Critical Control Point (HACCP) food safety program adopted by the Food and Drug

Administration (FDA) and the USDA, further enhancing the security and safety of

the food supply.

Similarly, we are exploring the use of plant systems to develop human therapeutics. For example, Dow’s Plant Biopharmaceuticals platform comprises a full

spectrum of approaches, including not only whole plants for open field production,

but also other plant-based and viral vector technologies, with production in greenhouses and growth chambers. Open field acreage devoted to pharmaceutical host

plants is extremely small— approximately 100 acres in the United States in 2003—

and likely to remain so. Industry experts estimate that, even if the technology

reaches a high level of success, acreage for all types of plant hosts will amount to

no more than 8,000-12,000 acres annually at maturity. Dow recognizes that rigorous

corporate stewardship and strong government regulations are necessary for the

long-term success of this platform.

Industrial Biotechnology: Use of renewable agricultural resources in biotechnology

processes

Three years ago, the Organization for Economic Cooperation and Development

(OECD) published a report examining 21 biotechnology case studies. The report

painted a compelling picture of the possibilities inherent in biotechnology to lead to

improved consumer products, more efficient industrial processes leading to reduced

costs and improved productivity, and a significantly reduced environmental footprint. Just weeks ago, Biotechnology Industry Organization (BIO), the industry organization representing more than 1,000 biotechnology companies, academic institutions, state biotechnology centers and related organizations from around the world,

released a new report, building upon those 21 case studies and asked the question,

‘‘What if the benefits of these 21 case studies were extrapolated to broad industrial

sectors?’’ The answer? A vibrant picture of economic revitalization and environmental renewal.

Today, renewable agricultural resources are increasingly being employed as a

feedstock for the subsequent development of industrial materials. Dow is helping

with this transformation of U.S. agriculture. Currently, Dow’s biotechnology and

bio-materials platforms are utilizing corn, soybean, wheat, castor sunflower, and a

variety of oilseeds to develop novel biomaterials such as plastics, high performance

polyurethane carpet backing, fiberboard, and epoxy coatings to name a few. Some

are still ‘‘lab bench’’ projects, several years from the market while others are actually commercialized today.

Substituting raw materials based on plant-derived oils for those based on fossil

fuels can lead to important benefits including a significant reduction in greenhouse

gas emissions while providing alternative opportunities for commodity agriculture.

For example, NatureWorksTM PLA currently being produced by Cargill Dow at its

Blair, Nebraska, site significantly reduces fossil fuel consumption by up to 50 percent, and generates 15 to 60 percent less greenhouse gases (GHG) than the material

it replaces.

Public private partnerships also remain an important part of the equation and are

essential to fueling many of these new opportunities. The Oilseed Engineering Alliance represents such an effort. This initiative joins scientists from Dow and the public sector, under a U.S. Department of Energy grant, to develop options for using

agricultural crops as raw materials to produce plastics, chemicals, and other industrial products. Also, the consortia is working to improve traits of specific oils and

37

fatty acids in soybeans, canola, sunflower and other crops to help deliver new solutions in nutrition, health care and material science.

Concluding Remarks: The future of agricultural biotechnology and allied opportunities

In closing, we have a few final thoughts and recommendations for the Committee’s consideration. We hope the U.S. Government continues to be a staunch and

aggressive advocate of these new technologies on a national and international front.

Through our government agencies and the U.S. Congress, we need to continue to

dismantle any non-scientifically-based trade barriers that would seek to restrict

trade of commodities produced through biotechnology and promote trade agreements

that guarantee the free and open trade of our agricultural products, whether produced through traditional or newer methods. To date, much of our success is attributed to your unwavering support and the administration’s efforts to bolster the regulatory framework governing biotechnology.

The government has an important, continuing role in assuring the development,

commercialization and adoption of biotechnology and renewable resource-based materials. Government agency research agreements, contracts, grants, and funding for

collaborations are enabling and encouraging development of key technologies

throughout industry. There is still much scientific discovery to be done to fully benefit from a bio-based economy grounded in agriculture. Basic research must continue

to be funded by the federal government. It is equally important the government help

remove the barriers and obstacles to commercialization that exist in the nascent industrial biotech industry through efforts such as the USDA’s Bio-Based Purchasing

Rules. Government procurement can help give fledgling products a chance to overcome the significant conversion hurdles often encountered in the market. What is

critical is that these efforts allow bio-based products to compete fairly and equitably

with incumbent materials.

As is the case with industrial biotechnology, the government has an important

role to play in nurturing research in plant made pharmaceuticals. Support, in the

form of programs such as a cooperative research agreement Dow has entered into

with the National Institutes of Health (NIH) to seek rapid vaccine production systems, will help not only nurture an evolving industry but also play a critical role

in important matters of national policy, ranging from affordable and accessible

health care to Homeland Security. This benefits us all. The government must also

play a role in ensuring a fair and balanced regulatory system that allows for a viable plant biopharmaceuticals industry and ensures the continued safety of our food

supply.

Lastly, Dow and the biotechnology industry have been able to bring technological

innovations to the market because we have enjoyed a certain freedom to operate

while being governed by a pragmatic science based regulatory system. Sites such as

Hawaii and Puerto Rico serve as the ‘‘lifeline’’ for our research and development efforts due to their favorable year-round climates, fertile environment, and rich academic and public resources. It is incumbent upon all of us to continue to reach out

to these geographies to ensure full understanding amongst all stakeholders and to

facilitate cooperative relationships between constituents, the local community, local

institutions, industry and government. Today we are facing real threats to our freedom to operate in these areas and we need continued support from this body.

In closing, we have made significant progress since the initial debut of biotechnology less than one decade ago and are clearly in the midst of a biotechnology

boon within agriculture. Not only are products being introduced and adopted by the

American farmer at a steadily increasing rate, but Dow has been able to use tools

of biotechnology to start bringing forward a suite of new and exciting products with

greater tangible consumer benefits. Thanks to this body for its continued support

and oversight of this technology. This has greatly contributed to our success as an

industry, enabled us to expedite introduction of new tools for U.S. farmers, and is

now helping us realize some of the cutting edge technological breakthroughs we

have long been discussing,

Thank you. Mr. Chairman. I’d be glad to take any questions that you or your colleagues have at this time.

STATEMENT OF THOMAS B. KLEVORN

Good morning Chairman Lucas, Ranking Member Holden and Members of the

Subcommittee. I would like to thank you for the opportunity to be here today to discuss Syngenta’s role in plant biotechnology. As the first company to commercialize

a plant biotechnology product, we have a long history with biotechnology and a deep

commitment to its future.

38

Syngenta is a world-leading agribusiness company committed to sustainable agriculture through innovative research and technology. We believe in delivering better

food for a better world through outstanding crop solutions, and we take pride in

meeting our commitments to our stakeholders. The company is a leader in crop protection, and ranks third in the high-value commercial seeds market. Total sales in

2003 were approximately US$ 6.6 billion. Syngenta employs some 19,000 people in

over 90 countries.

In North America, Syngenta’s biotechnology research is conducted primarily at

Syngenta Biotechnology Inc., which is located in Research Triangle Park, North

Carolina. Our corn and oilseed business in North America, which includes the NK

Brand(, is headquartered in Golden Valley, Minnesota. Rogers(, our vegetable seed

business for North America is headquartered in Boise, Idaho. These brands market

our biotechnology traits.

ADOPTION OF BIOTECHNOLOGY

According to the United States Department of Agriculture’s Economic Research

Service (ERS), the adoption of biotech insect resistant corn has grown from its introduction in 1996 to roughly 30 percent of all corn grown in the United States in 2003.

The ERS also shows that in the United States in 2003 use of herbicide tolerant corn

increased to roughly 15 percent of total corn acres, herbicide tolerant soybeans were

a little over 80 percent, herbicide tolerant cotton was at 60 percent and insect resistant cotton was utilized on 40 percent of those acres planted to cotton. These statistics show that farmers in the United States are continuing to adopt this technology

at an increasing rate since the introduction of the first biotech plant product in

1996, Syngenta’s Event 176 corn.

On a global scale, the International Service for the Acquisition of Agri-biotech Applications (ISAAA) states that total global acres of biotechnology crops were up 15

percent to 167.2 million acres in 2003. These acres are planted in 18 countries with

more than 85 percent of resource-poor farmers in the developing world planting biotechnology crops. ISAAA also found that one-third of the global biotech crops were

planted in developing countries in 2003.

SYNGENTA’S RESEARCH AND TECHNOLOGY

Syngenta invests heavily in research and technology to add value to our existing

business and to create many more opportunities for future growth. Of our 19,000

employees across the globe, approximately 5,000 work in research, technology and

development. We invest $2 million dollars each day totaling $727 million dollars per

year in research and development. Of the $727 million, $146 million is spent annually on biotechnology.

Why such a big investment in research and technology? We believe there is a

huge global demand for new agricultural products, including biotechnology, and a

business case for investing in technologies to deliver them. We need to develop new

products to meet this demand which is being driven by population growth, scarcity

of arable land and a consumer need for broader choice and higher quality. Consumers globally also need more affordable food with the opportunity for improved health

and nutrition. New research leads us to develop products that meet this need and

combat new strains of diseases and pests to help enhance food safety and the security of the food supply.

While we conduct our own private research, we have also donated the results of

some important discoveries. In May of this year, we announced our donation of a

substantial portion of our arabidopsis functional genomics seed collection

(arabidopsis is considered the ‘‘lab rat’’ of plant research) to the Arabidopsis Biological Resource Center (ABRC) hosted at The Ohio State University, USA. The ABRC

will distribute the collection of approximately 48,000 seed lines in collaboration with

the Nottingham Arabidopsis Stock Centre in Nottingham, UK. Syngenta is also

making the sequence information universally available by placing it into the international gene database GenBank. The collection will be available in late-May 2004.

This knowledge will support the development of innovative new agricultural technologies that can help improve food production.

In 2002, Syngenta shared its rice genome sequence research with the International Rice Genome Sequencing Project, a ten-nation public effort with a goal of

promoting improvements in rice production. Syngenta’s data was used by the IRGSP

to accelerate completion of a high quality draft sequence that is available to the

global research community through international databases. Genome sequencing, a

tool of biotechnology, is being used to create crop improvements that utilize both

conventional breeding and transgenic technology.

39

In 2000, Syngenta began working with the inventor of Golden Rice, Dr. Ingo

Potrykus, to form a Humanitarian Board to oversee the development of a vitaminA enhanced rice product that could be distributed free to farmers in developing

countries. Collaborative research underway between Syngenta and the Humanitarian Board is aimed at increasing vitamin-A expression in rice. Large-scale research trials in the United States this year will move Golden Rice one step closer

toward becoming a real option in the fight against malnutrition and related diseases.

SYNGENTA’S PRODUCT PIPELINE

Syngenta, primarily through the NK brand, currently sells several corn and oilseed biotechnology products. In field corn, these traits include insect resistance and

herbicide tolerance. Our Soybean business includes herbicide tolerance products. We

also market an insect resistant sweet corn under the Rogers brand.

In addition to insect resistance and herbicide tolerance, Syngenta’s biotech research and product pipeline includes several exciting projects. Within the next 3–

5 years, Syngenta will bring forward amylase corn, Quantum phytase enzyme feed

supplement, longer-shelf life bananas, fusarium resistant wheat, vegetative insecticidal protein cotton, and second-generation products for insect resistance in corn

and cotton. Further down the road, we are managing projects for drought tolerance,

biopharma and disease resistance. Today, I would like to focus our testimony on

some of our products that are close to commercialization and go beyond traditional

input traits.

An exciting product coming through our development pipeline is amylase corn.

This is a corn plant genetically modified to express high levels of a novel alpha amylase enzyme which is a critical ingredient in the production of ethanol. Amylase, in

general, is an enzyme that has been utilized in ethanol production and other processes for quite some time, is ubiquitous in nature, and is generally recognized as

safe (GRAS) by the Food and Drug Administration. In fact, it is even present in

human saliva to aid in the process of digestion. This enzyme additive is currently

used in the dry grind ethanol industry to accelerate the conversion of the starch in

corn to sugar. With our enzyme being located in the corn grain, our amylase corn

has the potential to significantly improve this process and thus the overall efficiency

of ethanol plants, including yield increases, process improvements and possibly reduced ethanol production costs. Syngenta’s amylase enzyme is thermostable which

allows more efficient utilization of the enzyme during the ethanol production process. Although it will be grown on a relatively small number of acres, Syngenta is

seeking full food and feed and export approvals for its amylase corn. We are currently conducting field trials and a pilot study on this product for a possible launch

in 2006–07.

Quantum phytase is the brand name of a new, novel enzyme feed supplement that

can help livestock producers lower feed costs and deliver greater nutritional benefits

to monogastric animals (swine and poultry) in an easy-to-use, more consistent format. This product has received registration in Mexico and Brazil and has been introduced commercially in both countries. US and Canadian approval are anticipated

in 2004. One advantage of Quantum versus existing products is its inherent

thermostability which gives feed producers more flexibility because it can better tolerate heat-treating used in ration production without loss of efficacy. Our research

also indicates that Quantum phytase can improve an animal’s nutrient utilization,

potentially allowing animal producers to reduce overall feed costs. Quantum phytase

also allows producers to reduce the amount of supplemental phosphorous added to

feed resulting in reduced phosphorous in the manure, a potentially significant benefit from an animal management and environmental perspective.

Finally, a product with a more direct benefit to consumers is our extended shelflife banana. This banana ripens slowly and remains ripe for an average of three to

five days longer than conventional bananas, which is an important feature for consumers, and retailers of bananas. This banana also delivers 10-12 days of extra

green life which is of value to banana growers and shippers.

As I believe this shows, Syngenta is fully committed to biotechnology and the

promise it holds for agriculture including producers, growers, processors, retailers,

consumers and others involved in the production of agricultural products.

I would like to thank you again for the opportunity to share with you the many

things that Syngenta is doing in plant biotechnology. I would be happy to answer

any questions you have at this time.

40

STATEMENT OF MICHAEL D. DYKES

Mr. Chairman, members of the committee, my name is Michael Dykes, and I am

vice president of government affairs for Monsanto Company. I appreciate this opportunity to meet with you today. Thank you for holding this hearing and your continued support of biotechnology. I am also grateful to the Department of Agriculture,

the Environmental Protection Agency and the Food and Drug Administration for

their oversight and commitment to the products of biotechnology.

I would like to begin by giving you some background about Monsanto and our

business. Monsanto, based in St. Louis, Missouri, is an American company of nearly

14,000 people dedicated to making a positive difference in agriculture in the United

States and around the world.

Our vision is ‘‘abundant food and a healthy environment.’’ We are working to deliver products and solutions that help to meet the world’s growing food needs, while

conserving natural resources and protecting the environment.

Monsanto has a long history of turning innovative science into successful, highvalue products that improve the efficiency of crop and animal agriculture. Biotechnology is an example of our commitment to agricultural innovation. We developed Roundup Ready seeds that have been genetically enhanced to provide herbicide

tolerance thereby allowing Roundup herbicide to be applied directly over the top of

the crop in the field. This provides outstanding weed control without damaging the

crop.

We have also developed Bollgard cotton and YieldGard corn, which helps control

the major insect pests in those crops and reduces the use of chemical insecticides.

Our biotechnology products have enjoyed outstanding acceptance by growers in the

United States and other countries. Because of the success of our first biotech crops,

we are able to reinvest in biotechnology and conventional plant breeding research.

We spend approximately $1.4 million a day on research and development of new

technologies to improve agriculture and food quality. Farmers, the environment and

society in general have and will continue to benefit from these new products

through dramatic reductions in pesticide use, significant increases in yield, better

soil and water quality, enhanced food/feed quality and improved grower profitability.

Demand for biotechnology products

As I mentioned, our products have been widely adopted by U.S. farmers and other

producers around the world and grower adoption continues to expand. Our first

biotech crop, Roundup Ready soybeans, was introduced in 1996 and planted on less

than 2 percent of U.S. soybean acres that year. In 2004, USDA estimates that

biotech soybeans were planted on 85 percent of all soybean acres in the United

States.

For cotton growers, we developed Roundup Ready cotton, Bollgard insect-protected

cotton and the combination of these traits. The first cotton products were introduced

in 1996 and were planted on approximately 13 percent of U.S. cotton acres. This

year, biotech cotton traits were used on 76 percent of all U.S. cotton acres.

There is a similar success story for biotech traits in corn. This year, biotech corn

was planted on 46 percent of U.S. corn acres, up from the 3 percent adoption rate

in 1997, the introductory year. U.S. corn growers are planting a number of corn varieties containing Monsanto traits including Roundup Ready corn, YieldGard corn

(which is protected against European corn borer), YieldGard Rootworm corn (which

is protected against corn rootworm, the major pest in corn) as well as corn varieties

containing combinations of these traits. Next year, we anticipate the availability of

Yieldgard Plus, a corn variety that ‘‘stacks’’ the traits to protect against both the

corn borer and rootworm. This will be especially helpful to farmers in parts of the

country that have significant populations of both pests. In addition, we expect a corn

product that will not only protect against both pests, but also be tolerant of Roundup.

In the last 5 years, the amount of biotech acreage for each crop—corn, cotton and

soybeans—has more than doubled. We currently license our technology to 219 corn

and 259 soybean seed businesses.

International adoption. Internationally, the acreage planted with biotech crops increased by at least 15 percent in 2003—the seventh straight year that global farmers have adopted biotech crops at a double-digit pace. Around the world, 167.2 million acres in 18 countries were planted with biotech crops last year. Since the introduction of biotechnology in 1996, there has been a 40-fold increase in planted acreage. Almost one-third of the global biotech crop acreage was in developing countries—up from 25 percent in 2002. An estimated 7 million farmers grew biotech

crops in 2003, of which an estimated 6 million were in developing countries. An estimated 55 percent of the soybeans grown worldwide were biotech soybeans, with 21

41

percent of the cotton, 16 percent of canola and 11 percent of the corn grown globally

with biotech traits.

Benefits for U.S. farmers. Although biotechnology conveys benefits around the

world, by far, the largest biotech acreage is in the United States and U.S. farmers

reap most of the benefits.

Consider these facts:

• In 2002, the National Center for Food and Agricultural Policy found that eight

biotech crops in use by U.S. farmers were delivering major annual benefits: $1.2 billion dollars in reduced costs, 4 billion pounds of increased yield and a 46 million

pound reduction in pesticide use.

• Biotech soybeans and corn have contributed much of that benefit, not only in

cost savings and reduction in herbicide applications, but also in soil conservation

and stream protection. Biotech crops facilitate the practice of conservation tillage,

allowing farmers to control weeds without plowing their fields. This keeps sediment

out of streams and reduces fuel consumption as growers make fewer trips across

their fields. An American Soybean Association grower survey found that the introduction of biotech soybeans was the single largest factor in growers’ decision to

switch to conservation tillage.

These biotech cotton and corn products have contributed to major reductions in

insecticide use. The National Center study calculated that biotech cotton reduced 1.8

million pounds of chemical insecticides each year. This study predicted that

rootworm resistant corn, which we introduced in 2003, could replace 14 million

pounds of pesticides each year.

Future benefits beyond the farm. By protecting soil, reducing pesticide use and

saving fuel, biotechnology is benefiting farmers and the environment. A number of

products in our development pipeline can bring benefits to consumers and society

at large.

Working in collaboration with several smaller companies, we have identified and

begun testing genes that control stress responses in plants, with the hope of improving the tolerance of crops to drought. Water is the most limiting resource for agriculture in many parts of the world. Drought stress during critical parts of the

growth season cause enormous losses of food and fiber virtually everywhere on

Earth, including here in the U.S. In some global regions, the problem is critical.

Early results have been exciting. These photographs show a comparison of un-improved plants next to plants containing an experimental drought stress tolerance

gene. We have seen results like this in soybeans, rice and corn. This last chart

shows corn that was field-tested last year with drought stress during growing season. Plants improved with the experimental drought stress tolerance gene show observably better protection from wilting during the drought and a bigger harvest at

the end of the season.

These positive results are early indicators that genes can be discovered and developed to protect crops from drought stress, delivering a bigger harvest. Much work

remains before useable products can be ready, but we are working to bring these

benefits to farmers.

For the consumers, we are developing oil seeds that provide health benefits by

providing improving flavor while reducing or eliminating trans fats. By 2006, we expect to have these oil products commercially available. By 2008, the next generation

of oil products will be providing oils that are more stable and stay fresher longer

on our pantry shelves.

For instance, Omega 3, a fatty acid, is the component that makes a seafood diet

so heart healthy. We are looking at ways to use plants to produce Omega 3, giving

consumers the ability to consume more Omega 3’s in the foods they eat every day.

We also are developing a soybean that will produce heart-healthier oils.

On another front, we are using biotechnology and conventional breeding to develop corn that is ideal for production of ethanol. This corn, high in fermentable

starch, could make ethanol production more cost-efficient and help address the everincreasing concern about oil production and gasoline prices.

These are not just concepts anymore, they are real corn and soybean plants that

we can expect to see in farmers’ fields near the end of this decade.

Humanitarian benefits. Micronutrient deficiencies, especially those of vitamin A,

iron and zinc, remain a large problem for several populations, particularly women

of childbearing age and young children. Monsanto has worked with an international

consortium of partners including The Bill and Melinda Gates Foundation, USAID,

and the Asian Development Bank, to help address malnutrition issues in a new program called, ‘‘Harvest Plus’’. Monsanto donated critical corn genomic information to

aid in the development of a nutritionally enhanced African variety of maize with

increased levels of vitamin A. We are hopeful this information will help researchers

42

successfully develop vitamin A maize that would be another tool to help alleviate

vitamin A deficiency.

In 2003, Monsanto and the other technology providers worked with the African

Agricultural Technology Foundation (AATF) whose mission is food security and poverty reduction. This Foundation in partnership with the Rockefeller Foundation and

USAID provides resource-poor farmers with the potential technological solutions for

sustaining agricultural production. One of the goals of AATF is to find solutions to

the complex intellectual property arrangements that often hamper plant biotech research and development in Africa.

In addition, Monsanto is working throughout the international community to donate technology to benefit developing countries. We have donated our database of

the rice genome so that researchers around the world can improve this food staple

for billions of people. We also have trained scientists from developing countries and

shared technology that might someday help to protect cassava or sweet potato

against devastating viruses or increase vitamin A content of staple foods to help

fight childhood blindness that is rampant in developing countries.

In conclusion, we are looking for new solutions to problems that have challenged

farmers and society for thousands of years. We’re finding those solutions in nature

through biology and biotechnology.

And, the potential is great. Biotechnology today is where the computer industry

was in the 1950’s. The coming decades are poised to bring us biotech products as

revolutionary and important to us as computers are today. As scientists continue to

make technological breakthroughs, we will see the truly revolutionary products that

have captivated scientific discussions for decades.

Innovation has been a priority for U.S. farmers for centuries. The result is American growers are at the leading edge of important new breakthroughs things like

biotechnology, precision farming and modern planting and harvesting equipment

that are reshaping the global agricultural environment.

We believe very strongly that agricultural innovation and creativity is the pathway for U.S. agriculture to continue to compete successfully in the global marketplace and for the benefits of technology to multiply for farmers, consumers and the

environment. We believe, as society begins to fully understand the untapped potential of this technology, that there will be an exciting future for biotechnology one

that Monsanto is very proud to be a part of that future.

STATEMENT OF DAVID WINKLES

Good morning Mr. Chairman and members of the subcommittee, I am David

Winkles, president of the South Carolina Farm Bureau Federation and a corn, cotton and soybean farmer in Sumter County, South Carolina. I have a special interest

in agricultural biotechnology; I served on the secretary of agriculture’s first agricultural biotechnology advisory committee and I was chairman of the United Soybean

Board when biotech soybeans were first exported to France. I am pleased to be here

today to present the views of the American Farm Bureau Federation (AFBF) on the

important role that biotechnology plays in American agriculture. AFBF represents

member families in all 50 states and Puerto Rico.

American agriculture continues to be the world leader in the adoption of agricultural biotechnology. In 2003, plantings of biotech crops in the United States accounted for 63 percent of the world’s total plantings. U.S. plantings of the three

major biotech crops continue to expand. For example in 2004: • 86 percent of total soybean plantings will be modified to be herbicide-resistant,

up from 81 percent in 2003, • 76 percent of upland cotton plantings will be biotech cotton, up from 73 percent

in 2003, and • 46 percent of corn plantings will be biotech corn, up from 40 percent in 2003

(ASCII prospective planting report March 2004).

American farmers have seized the opportunity offered by biotechnology to improve

their production efficiency. They have recognized that the adoption of new technology, like biotechnology, is an essential in maintaining a competitive advantage

for U.S. agricultural exports on the world market. The advantages of biotechnology

crops include the environmental benefits of lower pesticide requirements and decreased soil erosion, increased yields, disease-resistance and fuel savings. The future

for this technology is bright—new biotech plant varieties are currently being developed that produce crops which are high in essential vitamins and minerals and

drought, salt and cold-tolerant.

American production of crops utilizing biotechnology is expected to continue to

rise. The approval of new varieties of biotech crops will play a part in this increase.

43

New varieties of biotech corn, cotton and soybeans are being developed that address

a wider range of production limiting factors and in the future wheat, rice, sugar

beets alfalfa, apples, bananas, lettuce and strawberries will move into the biotech

era. Currently, approximately 25 agricultural biotech products are on the market

and it is expected that an additional 24 varieties of biotech crops will be available

within six years.

While the United States is the world leader in the production of agricultural crops

enhanced through biotechnology, other countries are also expanding biotech crop

production. In 2003, global biotech crop acreage experienced the seventh consecutive

year of double-digit growth when the global area of biotech crops increased 15 percent, to a total of 167.2 million acres. In 2003 a total of 18 countries planted biotech

crops, up from 16 in 2002.

The increase in production of biotech crops in the United States and abroad has

increased the importance of developing and maintaining markets, both domestically

and internationally for products derived from biotechnology.

Market development, both domestically and internationally, is dependent on public policy that: Maintains an unbiased, science-based regulatory system that inspires

consumer confidence and avoids unnecessary traceability and labeling requirements

for biotech commodities; Defends against current threats to market access for

biotech crops and expands access where current restrictions exist; and Creates an

environment conducive to the development of new crop varieties enhanced through

biotechnology.

I would like to elaborate on these points.

Maintaining an unbiased, science-based regulatory system that inspires consumer

confidence and avoids unnecessary traceability and labeling requirements

Biotechnology in the United States is monitored by several Federal agencies, including the Food and Drug Administration (FDA), the Department of Agriculture

(USDA) and the Environmental Protection Agency (EPA). These government agencies play an important role in providing unbiased, science-based evaluations concerning human and animal safety of biotech commodities.

Requiring mandatory labeling and traceability of foods containing commodities enhanced through biotechnology in effect nullifies the regulatory system in place. If

the unbiased, science-based regulatory system concludes that a product is safe for

human consumption, it becomes unnecessary to label this product as ‘‘genetically engineered’’ or ‘‘genetically modified.’’

If consumers, either domestically or internationally, demand products free from

biotech ingredients, the market will function to develop brands that meet the choice

of these consumers through a voluntary labeling system. Why should all consumers

be forced to pay the cost of a mandatory traceability and labeling system when the

biotech-enhanced product in question has been approved as safe for human consumption?

Defending current threats to market access for biotech-crops and expanding access

where current restrictions exist

Science-based approval for biotech commodities is critical. The approval process

in the European Union (EU) has caused disruptions in the trade of biotech-enhanced products. Resolving these issues quickly is necessary to prevent further disruptions.

The EU’s current approach to biotechnology is inconsistent with scientific outcomes obtained from exhaustive risk assessments undertaken on products of agricultural biotechnology. In 1999, the EU instituted a moratorium on approvals of any

new products enhanced through biotechnology. Prior to the moratorium, the EU approved eight agricultural biotech commodities. In 2004 the European Commission

approved its first commodity enhanced through biotechnology since the moratorium

was instituted. Reportedly, two further biotech commodities are currently awaiting

approval. It is too early to judge whether the EU will begin to undertake approvals

for products enhanced through biotechnology within a reasonable period of time.

The EU’s introduction of new regulations governing the approval, marketing, labeling, traceability, and importation of food and feed produced using modern technology last September is a problem for American farmers. Farm Bureau opposes the

imposition of any import restrictions, labeling or segregation requirements for products derived through biotech enhancement once they have been approved according

to internationally accepted, scientific principles as safe for humans, animals and the

environment. The Farm Bureau position is consistent with the World Trade Organization (WTO) that recognizes Codex Alimentarius as the organization responsible

for establishing internationally recognized food safety and trade guidelines. The

Codex Alimentarius Commission has adopted a policy that directs its working committees to recommend adoption of only those guidelines that are based on sound sciVerDate 11-SEP-98 13:46 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00046 Fmt 6633 Sfmt 6633 F:\DOCS\10834 HAGRI PsN: HAGRI
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entific principles. There is no scientific basis for treating approved food products enhanced through biotechnology differently than other foods.

Convincing arguments exist that the new EU regulations could be in breach of

the WTO Technical Barriers to Trade Agreement and the Sanitary and

Phytosanitary Agreement. Farm Bureau supports the U.S. government filing a complaint with the WTO on the issue of the new EU regulations. If the new regulations

are left unopposed there is nothing to prevent other nations from adopting the EU

template. The proliferation of the EU template could create trade zones where the

costs of meeting the supply requirements for commodities derived from biotechnology are prohibitive.

It is imperative that we work together to secure foreign regulatory acceptance for

products enhanced through biotechnology. Farm Bureau supports increased efforts

to educate the public worldwide regarding the safety and benefits of products developed through biotechnology. Recently Farm Bureau leaders visited China and Japan

as part of the AFBF International Biotechnology Promotion and Education Program

initiative. The objective of the mission was to inform Chinese and Japanese farmers,

policymakers and agricultural experts about the benefits of agricultural biotechnology and to promote confidence in the safety and benefits of such technology.

Some disruptions to international trade have occurred since the Biosafety Protocol

came into force on September 11, 2003. There have been cases where non-government organizations (NGOs) have picketed ships claiming that the shipments did not

have the documentation required under the protocol. The United States currently

is not a party to the Biosafety Protocol. The appropriateness of the United States

ratifying the Convention of Biodiversity, a precursor to becoming a party of the Biosafety Protocol, is again being discussed. Farm Bureau does not believe that U.S.

ratification of the Convention on Biodiversity is in the interest of American agriculture.

AFBF supports addressing the documentation requirements of the Biosafety Protocol through arrangements such as the trilateral arrangement signed by the United

States / Mexico / Canada on the ‘‘Documentation Requirements for Living Modified

Organisms for Food or Feed, or for Processing (LMO/FFP’s)’’. AFBF believes that

this is the best mechanism for ensuring that future shipments transition smoothly

through the import process. We believe that the trilateral arrangement is the most

suitable mechanism for ensuring certainty in the trading environment between parties and non-parties of the Biosafety Protocol, therefore, AFBF supports extending

this agreement to other countries that are parties to the Biosafety Protocol.

Creating an environment conducive to the development of new biotechnologies.

If U.S. agriculture is to maintain its place on the technology frontier, it is imperative that an environment conducive to innovation and adoption of new technologies

is fostered. Government and private-sector research and development centers should

be reassured that the United States is working to ensure that there will be a market both domestically and internationally for approved products derived from biotechnology.

In conclusion, American agriculture has enthusiastically embraced the benefits

that biotechnology provides to production efficiency and in turn the competitiveness

of U.S. agricultural commodities on world markets. We look forward to continuing

our work with Congress on this important issue. AFBF is committed to ensuring

broader acceptance of these products internationally and continued domestic consumer confidence. We will work with Congress and the administration to address

unnecessary trade barriers implemented by other counties for commodities enhanced through biotechnology. Thank you for this opportunity to testify on this important issue. I would be happy to answer any questions.

STATEMENT OF FRED YODER

Good morning. Chairman Lucas, Ranking Member Holden and members of the

Subcommittee, my name is Fred Yoder. I am Chairman of the Board for the National Corn Growers Association (NCGA) and past Chairman of the NCGA’s Biotechnology Working Group. I would like to thank the Subcommittee for giving me

the opportunity to testify and speak today regarding agriculture biotechnology.

The National Corn Growers Association is an organization founded in 1957 and

represents more than 33,000 dues-paying corn growers from 48 states. The Association also represents the interests of more than 300,000 farmers who contribute to

corn checkoff programs in 19 states.

The National Corn Growers Association’s mission is to create and increase opportunities for corn growers in a changing world and to enhance corn’s profitability and

usage across this country. Biotechnology remains vital to the future of corn growers

45

as we search for new markets and provide grain that is more abundant and of better quality.

Biotechnology offers corn growers improved efficiencies and potential profits when

managed wisely and with regulatory oversight based on sound science. The introduction of new varieties of corn and their proliferation across the Corn Belt is redefining current systems of price discovery, consumer information, health regulation

and trade management.

BIOTECHNOLOGY VARIETIES IN CORN

Existing biotech corn has two main traits, herbicide tolerance and insect resistance. Herbicide tolerant crops can withstand broad-spectrum herbicides that are effective against harmful weeds. This allows farmers to spray less often with just one

herbicide and often reduces the need for tillage, which reduces soil runoff. The vast

majority of the biotech crops planted are herbicide tolerant. Pest resistant crops

have been enhanced with naturally occurring pesticides. The most common protein

is bacillus thuringiensis, or Bt. This protein wards off crop-eating insects like

rootworm, bollworm and the European corn borer.

Currently, thirteen biotech corn varieties are approved in the United States for

commercial use, three of which are herbicide-resistant, three are insect resistant

and the other seven are stacked varieties. Stacked trait crops combine two ore more

traits in the same crop.

PRODUCER ACCEPTANCE

As you know, corn is the largest crop in the United States, with over 79 million

acres planted last year, producing 10 billion bushels of grain. Corn acreage is likely

to increase this year with nearly half devoted to varieties derived from biotechnology. Corn producers across the country are already learning about the benefits of biotechnology and we expect acceptance rates to continue to climb in the foreseeable future.

Acceptance rates for agriculture biotech in corn and other crops rests primarily

on the economic and environmental benefits. As small businessmen, farmers like me

understand the importance of minimizing risk and increasing returns on investment. Agriculture biotech helps maximize benefits unlike any innovation since the

introduction of the tractor. In fact, according to the Council on Biotechnology Information (CBI), average profits in corn range between five dollars to as much as sixty

dollars per acre. As cited earlier, biotechnology has contributed to this rise by allowing corn growers to reduce chemical applications energy use and devote fewer man

hours to produce the same bushel of grain.

It is important to point out that acceptance rates for biotech corn varieties are

not linear from year to year. As the attached chart illustrates, biotech plantings

dipped between 1999 and 2001. Several factors explain this pattern. First, in 1998,

the European Union (EU) imposed a moratorium on approvals of new products derived from biotechnology. This effectively halted bulk commodity shipments of corn

to the EU. Farmers decided to delay additional plantings in future years until a stable marketplace re-emerged. Second, the discovery of StarLink corn in the food

chain had an impact on plantings in the next crop year. Lastly, pest pressures during this period were not significant so farmers chose to plant other hybrid varieties.

However, emergence of corn borer and rootworm infestation damaged the corn crop

and accelerated plantings after 2001.

Furthermore, asynchronous approvals in the international market and geographic

differences are dominant factors for different adoption rates for biotech varieties in

the Corn Belt. For example, when evaluated state-by-state, Iowa, Illinois, Minnesota

and Nebraska account for 60 percent of the value of biotech corn production (see

attached chart).

ENVIRONMENTAL BENEFITS

While the environmental benefits of agriculture biotech are well known, it is helpful to highlight them nonetheless. As you know, agriculture biotech has led to a significant increase in the adoption of environmentally friendly no-till farming practices. No-till farming conserves top soil, preserves soil moisture , reduces energy requirements and lessens runoff while the crop residue from the previous year is left

standing. In addition, biotech varieties help enable farmers to use more benign herbicides that rapidly dissipate in soil and water.

From a global perspective, the adoption of no-till farming practices significantly

reduces the release of greenhouse gas emissions, which may help slow global warmVerDate 11-SEP-98 13:46 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 F:\DOCS\10834 HAGRI PsN: HAGRI
46

ing. (In contrast, when cultivated soil is exposed to air, organic matter is oxidized,

releasing carbon dioxide—an ozone-depleting gas—into the atmosphere).

Overall, agriculture biotech has reduced the amount of pesticides used in U.S.

production by 46 million pounds. As additional biotech varieties are introduced,

more than 163 million pounds of pesticides could be eliminated from current cropping practices. Specifically, farmers planting biotech corn varieties increased production by 3.5 million pounds of corn in 2001. The increased efficiency resulted primarily by saving crops that would otherwise have been destroyed by European and

Southwestern corn borers. This ultimately generated an additional $183.4 million in

revenue for farmers while reducing pesticide use by 8.4 million pounds.

It is important to note that not all U.S.-grown biotech hybrids are approved in

major export markets and therefore should not be placed into export channels.

NCGA advises its members to avoid potential trade disruption with our export customers and to take the necessary steps to keep biotech grain in the domestic distribution chain where necessary. As you know, this is primarily an issue with the

European Union. However, with the proliferation of multilateral environmental

agreements (MEAs) like the Biosafety Protocol, it is likely agricultural producers in

the United States will be faced with even greater requirements to channel products

for export customers.

Farmer acceptance of additional biotech varieties will largely rest in a simple cost/

benefit analysis. Innovations in the first wave of agriculture biotech relied on single

agronomic traits focused on crop production and pest management. However, farmers like me will demand greater efficiencies and yields before increasing biotech corn

acres in production.

FUTURE INNOVATIONS

The future of agriculture biotech is exciting and rich with promise. The second

wave of innovations will increase trait stacking and focus on plant performance.

A major factor affecting the reduction in corn grain yields in the United States

and the rest of the world is water stress. Every corn field is impacted by water

stress to some degree. Not only are some acres not available for growing corn because of insufficient water, yields may be reduced or inconsistent on the remainder

of acres. Corn is the second largest user of agricultural irrigation which increases

potential conflict for available water, especially in the drought prone western United

States.

To remain profitable and competitive, U.S. farmers need access to technologies

that help them consistently grow a high yielding and high quality corn crop. NCGA

is supportive of the application of biotechnology to create corn crops that maintain

high yields under water stress. Drought tolerant corn plants produced by biotechnology are currently being tested for their tolerance to water stress and it will

be several years before they are approved and commercialized.

Perhaps the most notable trait recently introduced in corn hybrids prevents damage from the rootworm. The United States Department of Agriculture (USDA) estimates the pest causes one billion dollars in lost revenue annually to the U.S. corn

crop. The Environmental Protection Agency (EPA), estimates corn rootworm is responsible for the single largest use of conventional insecticides in the United States.

According to the National Center for Food and Agriculture, adoption of new

rootworm-resistant varieties in threatened areas could reduce chemical spraying by

an additional 14 million pounds. Furthermore, experts believe rootworm corn could

eventually be grown on 15 to 25 percent of corn acres in the United States, boosting

yields and saving additional dollars on agricultural inputs.

Looking forward, the National Corn Growers Association is working with a technology provider to develop nematode resistance in corn. Nematodes currently reduce

corn yield by three to seven percent. Many chemical nematode control options are

under review and are likely to be removed from the market due to their environmental and health hazards. This could lead to a situation in which growers have

very limited nematode control options. Our research is working to allow growers to

protect their crops while they protect their health and the health of their communities.

These input traits are best characterized as ‘‘low hanging fruit’’ and technology

providers are nearing introduction of varieties that are more complex and easier to

grasp by consumers. While input traits will continue to be of interest to corn farmers, maximizing value for the consumer and processors will necessitate the commercialization of output traits that have value in the marketplace beyond the farm gate.

A clear path for commercializing output traits is to develop those that have the

shortest path to the consumer. The corn industry currently has a number of established markets. Two of which are the ethanol dry mill and livestock industries.

47

There are corn varieties in the pipeline that will increase the efficiency and yield

of ethanol production while reducing energy costs. They will also produce a higher

quality output of distillers dried grains with solubles (DDGS). Since many of the

new ethanol dry mills operating and in construction are grower owned, this will

mean more opportunities for growers to capitalize on value added ventures in rural

America.

Research is also focused on livestock nutrition. The livestock industry consumes

more corn than any other market segment (57 percent) and will likely use a greater

share of the nation’s corn crop in the future. Biotechnology can facilitate delivery

of essential nutrients, and increase bone health while reducing pollution. Research

is ongoing, increasing the presence of phytase, improving amino acid content, increasing Vitamin B3 and Omega–3 fatty acids while controlling the presence of

parasitic worms.

Lastly, corn can help deliver essential nutrients through food enhancement. These

innovations are best separated into two categories, those that benefit all consumers

and those that benefit consumers in developing nations.

Obviously, developed nations have different health profiles than developing countries. For example, although Vitamin A deficiency does occur in the United States,

it is rare compared to deficiencies in developing nations. The key health concerns

in developed countries are cardiovascular disease and cancer. Consumers are very

interested in having access to foods that can facilitate therapies like antioxidants

and lycopene.

Research cites lycopene as being important in protection from prostrate cancer.

While the biosynthetic pathway is well understood in tomatoes and other organisms,

it appears that there is increased bioavailability when lycopene is consumed with

oils from corn. This would seem to indicate lycopene would be a good candidate for

expression in corn plants. In addition, one of the technology providers is working

to develop plant derived oils that have a much better composition for cardiovascular

health. These oils may be able to reduce this risk of heart disease by as much as

forty to fifty percent.

CONSUMER ACCEPTANCE

If there is one challenge that looms on the horizon that is of greatest concern to

corn growers is consumer acceptance. Consumer acceptance and confidence in our

regulatory agencies is vital to the success of this technology. As producers, corn

growers have to be mindful of our customers and ensure there is open communication with grain handlers, millers, processors and food retailers across the country.

Our association works closely with our partners in the food chain continuing an

open dialogue to head off any problem before it occurs.

We also believe consumer acceptance of biotechnology will increase with the dissemination of science-based information. Responsible and accountable management

by biotechnology providers, producers, suppliers and grain merchandisers is imperative. While consumers see advantages in food developed with biotechnology, we cannot squander the good will and confidence built up over the past decade. We need

to reach out both domestically and internationally to enhance consumer attitudes.

We need only look to the European Union to see the results of neglecting this critical constituency.

Corn growers have a unique opportunity to take part in one of the most important

changes in agriculture in history. The development of agriculture biotech offers a

fantastic opportunity for increasing the value of the corn crop, as well as significantly benefiting consumers. By working with private sector groups like the

AgBiotech Planning Committee, agriculture associations can help facilitate adoption

while ensuring proper stewardship. Government needs to ensure regulatory agencies

like the Animal and Plant Health Inspection Service (APHIS), EPA and the Food

and Drug Administration (FDA) are properly funded and have the tools to do their

job.

Together, we can ensure U.S. agriculture remains a leader in technological innovation and production of corn. To be sure, the future of agriculture biotechnology

is filled with uncertainty, but we stand ready to confront the challenges that await

us. We have so much to lose if we do not move ahead.

We look forward working with the Subcommittee on this and other issues of importance in the future. I thank you again for the opportunity to address the Subcommittee and welcome your questions.

48

STATEMENT OF JOSEPH H. BOUTON

The Samuel Roberts Noble Foundation is a private foundation located in Ardmore,

Oklahoma. Since its founding in 1945, the Noble Foundation has conducted educational programs to assist farmers and ranchers in the southern Oklahoma and

north Texas region as part of charitable mission. The Noble Foundation expanded

its agricultural research operations through the creation of two research groups: a

basic plant biology group, in 1988, and an applied group in 1997, the Forage Improvement Division.

Research in the Noble Foundation’s Forage Improvement Division has centered on

development of improved forage grass and legume cultivars for use by farmers and

ranchers in the southern Great Plains. ‘‘Cultivars’’ are a group of plants that breed

true for specific traits through generations of seed increase, such traits being governed by genes. Thus, cultivar development is the process of enhancing (or adding)

genes and minimizing undesirable genes (and their related traits).

Dependability is the critical characteristic needed in the region’s harsh environment. Therefore, our main target species are perennials such as tall fescue,

bermudagrass, hardinggrass, western wheatgrass, alfalfa, and red and white clover.

Target traits include drought and heat tolerance and pest resistance. Improving nutritive quality is another important trait.

We approach the incorporation of useful genes that govern these traits almost exclusively with conventional selection and breeding techniques. In this approach, we

collect as much of the known plant germplasm, often from the USDA plant

germplasm system, and screen it for the target traits. Sometimes, the traits are very

complex or difficult to manipulate and biotechnology approaches become an option.

For example, in many forage species, lignin is deposited along their cell walls resulting in a poor rate of digestion during rumen breakdown of the forage. Basic research

by our Plant Biology Division identified two genes in the lignin pathway that when

down regulated resulted in less lignin deposition. We have now successfully down

regulated these genes in alfalfa and tall fescue with a concurrent increase in digestibility of the forage. This same approach is now being investigated with

bermudagrass.

In May 2003, we co-hosted with Texas A&M University the Fourth International

Symposium on Molecular Breeding of Forage and Turf in Dallas, Texas. There were

approximately 200 scientists in attendance from 19 countries. Research talks were

many and varied on every aspect of basic biotechnology. This symposium, and many

others like it, is direct proof that basic research in biotechnology is intense and

growing. Whether we will be able to deliver useful biotech traits for agricultural use

is another matter. First, there has not been a new crop de-regulated in several

years. I am defining a ‘‘new crop’’ as one that has never been in commercial production while containing a biotech trait. Since all our target species would represent

‘‘new crops’’ by that definition, then we are concerned that even doing all requisite

safety trials may not be enough to insure de-regulation. Second, two crops, creeping

bentgrass and alfalfa, are currently being assessed by USDA-APHIS for de-regulation for the Roundup Ready gene, a 1980’s technology that is currently found in millions of acres of corn, soybean, and cotton. Since alfalfa is one of our target species,

and creeping bentgrass represents a perennial grass similar to many of our target

grass species, we are watching very intently the final disposition of these two applications. The fact that the creeping bentgrass application has now been in the process longer than any crop to date is not encouraging.

It is hoped that the regulatory agencies will concentrate on assessing real versus

perceived risks. At the end of the day, these agencies will need to make decisions

on what are the real risks, establish a rigorous regulatory process to assess these

risks, oversee the regulatory process in a fair manner, and make a decision. We can

all then move forward based strictly on the value of the traits to the environment,

the farmer, American agriculture, and all citizens of this country.

About The Samuel Roberts Noble Foundation

The Samuel Roberts Noble Foundation, Inc., a not-for-profit Oklahoma corporation and private foundation, operates in part to enhance agricultural resource management and plant productivity through consultation, demonstration, applied biotechnology, and basic research. Consistent with its founder’s original vision, Noble

is one of the nation’s largest endowments whose charitable mission includes the conduct of research for agriculture enhancement. Noble was founded in 1945.

Noble’s research operations are based on its headquarters campus in Ardmore,

Oklahoma and on more than 15,000 acres located in southern Oklahoma. Noble conducts its agricultural and research operations through three operating divisions: Agricultural, Plant Biology, and Forage Improvement.

49

The Agricultural Division assists farmers and ranchers through a variety of services, including consultation, education, research and demonstration. The primary

goal of this division is to serve farmers and ranchers within a 100-mile radius of

Ardmore.

The Plant Biology Division, occupying more than 100,000 square-feet of laboratory

and administrative space, performs basic research in plant metabolism and responses to pathogens and pests. Its focus in recent years has been on the understanding and improvement of legumes. With more than 18,000 species, legumes are

second only to grasses in terms of economic importance worldwide. Moreover, legumes are an excellent source of protein and dietary fiber, which are usually deficient in the diets of people in developing nations. Using the model legume system

Medicago truncatula, the division conducts research to enable the improvement of

legumes, such as alfalfa, clovers, peanuts, soybeans, lentils, and chickpeas. Researchers believe their work in M. truncatula has the potential to significantly impact hunger and farming practices on a global scale.

The research of the Forage Improvement Division centers on the development of

improved legume and grass forages for use by farmers and ranchers in the southern

Great Plains. The challenges faced by southern Great Plains agriculture can be

broadly classified into concerns with cost, ease of use, dependability and environmental desirability of production. Improved forages can address each of these concerns. As part of a recent $85 million campus improvement project, a new 85,000-

square-foot laboratory building, set for completion in October 2004, will provide

state-of-the-art facilities in which the division can conduct its research. A recently

completed 45,000 square-feet research greenhouse complex serves the Forage Improvement Division as well as the Agricultural and Plant Biology divisions.

Noble organizationally forms a ‘‘technology pipeline’’ uniquely capable—through a

single entity—of taking discoveries from the bench of Plant Biology through trials

and cultivar development in Forage Improvement to the hands of farmers and

ranchers for evaluation through the Agricultural Division. From gene discovery to

the farm or ranch, the Noble uses a focused, multidisciplinary organization to improve agriculture and its use, locally, regionally, and worldwide in accordance with

its overall philosophy regarding the betterment of agriculture: science and biotechnology alone cannot improve agricultural productivity but must complement improvements and advancements in production or management techniques.

Noble employs more than 285 people from 16 countries, 70 of whom are PhDs.

Noble scientists serve on the editorial boards of nine international journals, and the

fourteen principal investigators of the Plant Biology and Forage Improvement divisions collectively hold more than ten adjunct professor positions at United States

universities, including Oklahoma State University, Rice University, University of

Georgia, University of Oklahoma, University of Texas, Texas A&M University, and

Washington State University, as well as the University of York, York, UK.

In 2003, Noble scientists published more than 100 articles in peer-reviewed journals, including Nature, Science, Proceedings of the National Academy of Sciences

USA, Plant Cell, Plant Journal, Crop Science, Theoretical and Applied Genetics and

Agronomy Journal.

STATEMENT OF MEL BILLINGSLEY

Thank you, Chairman Lucas, Chairman Holden, and Members of the Committee

for the opportunity to address this morning a few of the many important issues surrounding the development of life sciences industries in rural areas. My name is Dr.

Melvin Billingsley and I am the President and Chief Executive Officer of the Life

Sciences Greenhouse of Central Pennsylvania. The Life Sciences Greenhouse—created by the Commonwealth of Pennsylvania in 2001 with funds from the Master Tobacco Settlement—is working to accelerate economic growth and job creation in central Pennsylvania by advancing commercialization of discoveries in the life sciences.

There are, in fact, three regional greenhouses in Pennsylvania, but the Central

Greenhouse is the only one of the three that serves a largely rural geography. As

I will explain, this presents several unique challenges.

Pennsylvania is far from the only state seeking to stimulate economic development via biotechnology. Laboratories of Innovation: State Bioscience Initiatives

2004, a report prepared for the Biotechnology Industry Organization by Battelle Memorial Institute and SSTI, indicates that as recently as 2001, just 14 states had

identified the biosciences as an economic development opportunity; today, 40 states

are targeting the biosciences for development.

Perhaps the most obvious reason for the interest in the biosciences is the expected

growth rate—an analysis of U.S. Department of Labor projections suggests that beVerDate 11-SEP-98 13:46 Jul 13, 2004 Jkt 000000 PO 00000 Frm 00052 Fmt 6633 Sfmt 6633 F:\DOCS\10834 HAGRI PsN: HAGRI
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tween now and 2012 the biosciences will grow at a rate that is 13 percent greater

than overall employment. In addition, the biosciences tend to generate a wide array

of high-quality jobs. According to the aforementioned Battelle study, the average annual salary of workers in the biosciences was $18,600 more than the national average. Finally, the biosciences encompass a broad range of specialized subsectors. The

most significant of these are agricultural feedstock and chemicals; drugs and pharmaceuticals; medical devices and equipment; and research and testing. This assemblage translates into a wide breadth of opportunities. By way of example, the recently released Pennsylvania Bioscience State-of-the-Industry Report (June 2004)

identifies more than 2,000 establishments employing nearly 84,000 people across

subsectors within the state.

It’s important to note that not every subsector can be found in every corner of

the Commonwealth. One of the keys to growing biotech in rural areas—indeed, to

growing biotech anywhere—is accurate identification of regional strengths.

Among central Pennsylvania’s strengths is the manufacturing of pharmaceuticals

and medical devices. Aventis Pasteur, located within the Pocono Mountains in the

town of Swiftwater, employs over 1,500 people in the production of influenza and

other vaccines. When Aventis (formerly Rhone-Poulenc Rorer) purchased this facility

from Connaught Laboratories in 1994, it employed only 400 people. Naturally, the

nearly four-fold increase in employment has had a tremendous positive impact on

the local economy. The converse situation can be found in the Lancaster County

town of Marietta. This town is the site of a Wyeth facility that historically produced

influenza vaccine and other biologic agents. At its peak, this facility employed

roughly 1,200. Unfortunately, that number has been reduced to about 400 and the

plant will likely shut down completely by December 31st. A challenge peculiar to

rural areas is that redeployment of such a facility is typically more difficult than

might be expected in an urban area.

The examples I’ve cited thus far, Aventis Pasteur and Wyeth, are large companies—defined as those employing more than 500 people. But according to Manufacturing Pennsylvania’s Future, a January 2004 report authored by Deloitte Consulting, LLP, only 7 of Pennsylvania’s 74 pharmaceutical companies can be classified

as large; the remaining 91 percent employ fewer than 500 each and are classified

as small- to mid-sized enterprises (SMEs). These SMEs are significant economic

drivers for central Pennsylvania: in the southcentral part of the state, pharmaceutical manufacture accounted for output of $575 million last year; in the

northcentral part of the state, pharmaceutical manufacturing has emerged within

the last ten years as the region’s largest economic driver, with double-digit growth

and output more than 21⁄2 times the next largest driver.

Similarly, medical device and equipment manufacturing can also be found in rural

areas of southcentral Pennsylvania. Again, these entities are generally smaller enterprises, are diverse in focus, and contribute significantly to local economies.

I would like to take the next few minutes to identify the factors that seem to account for the promising growth I’ve described, and conclude with an assessment of

what’s needed to capitalize on the momentum.

Referring again to the Battelle Report, there is a chain of events that begins with

sufficient and modern research facilities. Such facilities tend to attract talented researchers. These researchers, in turn, attract federal dollars in the form of grants

from the National Institutes of Health, the National Science Foundation the Department of Agriculture, et cetera, and industry investment in the form of grants, contracts and partnerships. Central Pennsylvania has the good fortune of being home

to the main campus of a major land grant university, Penn State, as well as the

Penn State Milton S. Hershey College of Medicine and a third large research institution, Lehigh University. These institutions house outstanding facilities and equipment, draw more than $580 million in basic research funding annually, and attract

talented researchers and students who provide the intellectual capital that serves

as the foundation of any biotech enterprise. Some number of faculty and students

can be expected to become entrepreneurs; others will feed the biotech workforce

pipeline. In my capacity as Director of the Section of Technology Development and

Research Resources at Penn State College of Medicine, I saw firsthand this evolutionary process.

Beyond a wealth of research and talent, development of the biosciences requires

significant investments of time and money. This industry is extremely cash-intensive, spending, on average, three times more in development costs than other technology-based sectors. It typically takes five to ten years before investments begin

to show returns, and the investments tend to be relatively risky. Given these conditions, the pool of willing private investors is fairly small, necessitating public/private

partnerships like the Life Sciences Greenhouse, an assured flow of federal funding

in the form of SBIR and STTR grants, and progressive, start-up friendly policies like

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tradable tax credits for research and development and net operating losses carry forward policies.

My organization, the Life Sciences Greenhouse of Central Pennsylvania, serves as

a catalyst facilitating collaboration among regional research institutions, existing

life sciences companies, emerging bioscience start-ups, government agencies, economic development organizations, and private investors. We are a source of the

scarce yet crucial seed- and early-stage capital required by developing companies.

I should point out that our role is to not only fund, but assist in all aspects of company development and prepare them for the next round of risk-based capital. The

funding is typically delivered in laddered, milestone-driven increments and leveraged with in-house business and scientific expertise and the resources of the above

mentioned partners. Demand for this early-stage capital greatly exceeds our capacity and clearly points to the need for additional sources of such funding. Federal incentives to provide capital are sorely needed, particularly in rural areas outside our

nation’s largest urban centers, since angel investors and venture capitalists tend to

cluster and invest in more developed areas.

Any federal incentives to provide capital to early stage companies must not come

at the expense of the funding for basic research via NIH, NSF, etc., or from the critical Small Business Innovation Research (SBIR) and Small Business Technology

Transfer (STTR) programs. These funding streams are an essential part of the business development continuum and must be continued or expanded. One change to the

SBIR and STTR programs is warranted: the eligibility criteria needs to be modified

to allow small venture-backed companies to compete for funding. The exclusion effectively serves as a punitive measure against promising early-stage companies, robbing them of one of their most valuable tools—capital for growth. By coupling effective federal funds with targeted programs such as the Small Business Administration’s New Markets Venture Capital Program, we can begin to address the relative

lack of seed capital available for rural development.

In summary, growing life sciences-related industries in rural areas is really about

the density of ideas, capital and talent. It is quite possible, as I’ve hopefully communicated to you today, for a rural area like central Pennsylvania to contain or attract

sufficient quantities of each. With appropriate federal assistance, it seems likely

that a growing number of regions within our nation will be able to participate in

the economic promise of the life sciences industry. Thank you for the opportunity

to address this hearing. I’ll be glad to answer any questions.

STATEMENT OF MICHAEL AUSTIN

I am writing on behalf of the Hawaii Crop Improvement Association as its current

president in favor of agricultural biotechnology. Agriculture biotechnology is an important part of Hawaii’s agriculture. The seed industry in Hawaii has shown rapid

growth, a recent survey conducted by the Hawaii Agriculture Statistics Service

(HASS, 2004) reported expenditures exceeding $50 million dollars per annum. Over

the last 10 years, the value of Hawaii’s seed industry has grown annually at 20 percent, while employing approximately 1000 people in the industry (HASS, 2004). The

industry continues to grow with projected expenditures of $65 million dollars by the

year 2006.

Biotechnology is allowing farmers the opportunity to increase yields while decreasing the use of pesticides. Biotech products such as Bt corn and roundup ready

soybeans, that offer enhanced and environmentally friendly weed and insect control,

are examples of successful biotechnical breakthroughs that were developed in part

in Hawaii. New technologies such as these are helping increase yields while allowing farmers to use fewer inputs.

With the Earth’s population exceeding 6 billion people (to put this in perspective

there were 3 billion people in 1959, the year I was born) the need to increase grain

and other important crop yields is paramount. Biotechnology not only holds the

promise for higher yields but can also be leveraged to restrict expansion onto marginal and unsuitable agricultural lands. Hawaii offers the ability to efficiently grow

three crop generations per year while greatly hastening the development of new varieties for commercial introduction. These favorable attributes provide the greatest

flexibility for developing new products in the shortest time possible.

The negative press that agricultural biotechnology receives is due to a small minority of people who happen to roar the loudest. Surveys taken in Hawaii indicate

that the majority of people are in favor of agriculture biotechnology. It is up to the

agricultural industry to continually increase educational awareness of the benefits

of biotech crops.

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STATEMENT OF STEVE DAUGHERTY

Thank you, Chairman Lucas for convening this hearing of the Subcommittee on

Conservation, Credit, Rural Development and Research on the state of the agriculture biotechnology industry. We at Pioneer Hi-Bred International, Inc. and our

parent company, DuPont, appreciate the efforts you and the members of this subcommittee, as well as your staffs, have taken to support biotechnology, a science

that we believe has shown tremendous benefits, as well as great potential for farmers and consumers worldwide. It is our pleasure to provide you with our perspective

on biotechnology as it stands today.

First, although you may be familiar with our business, let me provide you with

a brief background on Pioneer. Pioneer was founded over 75 years ago, by noted agriculture innovator Henry Wallace, who served as Secretary of Agriculture under

President Franklin Roosevelt and was a former Vice President of the United States.

Pioneer is headquartered in Des Moines, Iowa and employs more than 6,000 people

in more than 70 countries. Building on an earlier partnership, in 1999, Pioneer became a wholly-owned subsidiary of DuPont, while continuing to focus on our mission

of helping America’s farmers get the most value from each unit of land and helping

them meet the nutritional needs of consumers around the globe. Pioneer has been

a leader throughout our history in improving the characteristics of crops such as

corn, soybeans, alfalfa, sorghum, sunflowers, canola and wheat.

Throughout much of the last century, the world has seen a continual improvement

in the productivity of crops through four main factors: tillage, weed and insect control, fertilizers and genetic improvement. As we look toward the future, and the rapidly increasing global population we must feed, it is apparent that genetic improvement will be increasingly important in keeping the trend of increased production on

track.

New technologies to modify and enhance seeds are now being used to develop

products that have extraordinary potential for increasing productivity and enhancing the abilities of farmers to feed the world. These technologies have the added

benefit of offering options and value opportunities to farmers regardless of the size

of operations. Some of the opportunities to sustain or enhance profitability include

increased productivity and production of grain with specialty or value-added traits.

These new technologies, because they are associated with food production, should

be and are, coming under close scrutiny by scientists, governmental bodies, consumers and journalists. Pioneer agrees with and wants to ensure that all those interested in genetic technologies such as biotechnology, understand the value of plants

that are now being called genetically modified. Pioneer supports the right of everyone to examine and debate the relative merits of any new technology.

Pioneer has been involved in the study and development of seed products utilizing

the tools of biotechnology for more than 15 years. During that time it has become

apparent that biotechnology offers the potential for enhancing a wider range of

traits and methods in crops than was previously available. Biotech crops contribute

to increases in crop productivity, the conservation of biodiversity, a reduced impact

on the environment and increased economic stability. The enthusiasm for this potential is borne out by the increasing amount of land planted to biotech crops each

year. We are witnessing the most rapid adoption of a technology in the history of

agriculture. As our counterparts in the industry have also noted, approximately 150

million acres globally have been planted in biotech crops in the last year, the majority of those acres in the United States. However, adoption rates of biotech crops in

the developing world continue to increase as well; over much of the last decade, the

global acreage of biotech crops has increased by double digits annually. The planting

of biotech crops in the developing world is 40 times greater than it was since the

introduction of biotechnology crops in 1996 and as a result, one-third of all hectares

planted with biotechnology crops are in developing countries.

Why is this a good thing? We believe the answer to that question is evident now

and will become even more evident in the future. For the benefit of farmers, biotechnology has already contributed to increased production through the use of insecticide-resistant varieties that ward off highly damaging pests. These products significantly reduce the need for fall tillage and for spray applications of insecticides

and pesticides.

Currently, Pioneer is offering biotech corn and soybean products that are resistant

to prolific, damaging pests such as European Corn Borer, and products that are herbicide tolerant. In addition, within five to 10 years, Pioneer will be offering corn and

soybean varieties that will have improved traits for drought tolerance (a universal

environmental stress causing more than $8 billion in losses for farmers globally.

Other traits that Pioneer hopes to address using biotechnology include, disease resistance, nitrogen utilization and improved yields. Of perhaps greater interest to

53

consumers, we will be offering varieties with improved traits for processing, energy

availability, flavor and protein functionality.

As the benefits of biotechnology become more clear and widespread, we believe its

acceptance will broaden. However, we realize that working as a company and in

partnership with our industry counterparts, we must continue to work with legislative and regulatory bodies around the world and with consumers to be open and informative about the work we are doing. Toward that end, we appreciate very much

the efforts of the House and Senate Biotechnology Caucuses to provide information

to Members of Congress and their staffs regarding the technology and the regulatory structure that monitors its progress into the marketplace. We pledge to continue to provide the Caucuses and individual Member offices with the information

they need to address biotech issues as they emerge in constituent contacts and in

a legislative context. Furthermore, Pioneer and DuPont have been full partners and

will continue to be, in the Council for Biotechnology Information (CBI), which was

formed for the purpose of providing consumers with the information they need about

biotech products.

Pioneer will continue to enhance the genetic performance of crops, utilizing a wide

array of technologies, including biotechnology. We will, as we have for more than

75 years, thoroughly test these products to ensure their safety before they are offered to our customers.

No technology should be employed simply because it is possible. Science-based

regulation of these new products is supported by Pioneer and DuPont, and we strive

to meet or exceed all the regulatory requirements placed on the introduction of

these products worldwide.

As the first company in the world to develop, produce and market hybrid corn,

we have a seven-decade old commitment to preserving the environment and increasing the productivity of farmers everywhere. Crops genetically enhanced through new

technology are a natural extension of that commitment as we move into the next

century. Again, thank you Mr. Chairman and other Members of the subcommittee

for the opportunity to provide input on the ag biotech industry. We at Pioneer and

DuPont look forward to continuing our work with you in the future.

STATEMENT OF LAWRENCE ELWORTH

Mr. Chairman and members of the Subcommittee, thank you for the opportunity

to provide this written statement on the implementation of the conservation provisions in Farm Security and Rural Investment Act of 2002 (farm bill). My statement

focuses on the Environmental Quality Incentives Program (EQIP) and the unique

challenges facing specialty crop producer participation in the program.

The Center for Agricultural Partnerships (CAP) is a 501(c)(3) nonprofit organization whose mission i.S,CAP has worked with more than 70 organizations and companies in seven states to help farmers use more effective farming practices on more

than 150,000 acres. Since 2002, CAP has worked with partners in Michigan, California, and North Carolina to increase growers’ knowledge and ability to use EQIP and

overcome challenges that limit their participation.

Specialty crop producers have unique capabilities, significant opportunities and

strong incentives to adopt sound conservation practices. Since specialty crops require intensive management growers are particularly able to apply sophisticated

conservation practices in their operations. Practices that protect water quality, conserve water, prevent soil erosion, and conserve wildlife habitat are available for use

on a wide scale in specialty crop production. In addition, unique opportunities exist

for growers to apply a wide range of pest management practices through the conservation programs that protect air resources, prevent non-target impacts and create healthy ecosystems. Finally specialty crop growers must deal with a formidable

array of state and Federal regulations such as the Clean Air Act, Endangered Species Act, Clean Water Act, state and Federal pesticide laws.

The opportunities for conserving natural resources in specialty crops are as significant as those offered in other sectors of agriculture. However, those opportunities

have not materialized for the vast majority of specialty crop growers in the first two

years of farm bill implementation.

The use of the terms ‘‘specialty crops’’ or ‘‘minor crops’’ is solely intended to distinguish these crops from traditional program crops, i.e., wheat, corn, soybean, rice,

cotton and field grains. It is not intended to imply that these crops are not important—in fact, they account for more than 40 percent of all crop value in the U.S.

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8ENVIRONMENTAL QUALITY INCENTIVES PROGRAM

Congressional IntentBenefits from the 2002 farm bill to specialty crop producers

were an important part of the debate in Congress. One way in which the concerns

of members were addressed was the promise that the conservation programs would

provide increased opportunities for specialty crop participation. It was assumed that

the larger amounts of money that were authorized would allow specialty crop producers to participate in the conservation programs along with other producers. Congress went so far as to add report language to the farm bill to spell out its intent

for EQIP:

‘‘The Managers are aware of the unique conservation and production practices utilized by specialty crop growers throughout the United States. The Managers expect

the USDA to ensure that adequate resources are made available for specialty crop

conservation practices under the EQIP. The Managers also expect that, in carrying

out the financial assistance provisions of the various conservation programs, the

unique production practices involved in fruit and vegetable production are taken

into account when drafting and implementing regulations to carry out those programs. In particular, the Managers would direct the Secretary when enrolling a producer who is already undertaking activities related to integrated pest management,

make those ongoing activities eligible for financial assistance after the date of enrollment.’’ (p. 74, Conference Report).

Even with significant interest from Congress and significant opportunities for resource conservation, there is still enormous untapped potential for specialty crop

producers to participate in EQIP. The lack of participation stems from the lack of

knowledge and working relationships between the Natural Resources Conservation

Service (NRCS) and the specialty crop community, the immense demands on NRCS

to implement the new farm bill programs and the way in which NRCS has implemented EQIP.

ISSUES

Lack of knowledge and working relationships. The vast majority of specialty crop

growers have had virtually no contact with NRCS or the conservation programs. As

a result they have little knowledge of how NRCS operates, few working relationships at the local state or national levels, and thus limited ability to take advantage

of the programs. Given that lack of familiarity, the transaction costs seem overwhelming for a grower to initiate the process of applying to the conservation programs.

Specialty crop producers are unlikely to have had any contact with NRCS programs in the past and have very little knowledge about EQIP, opportunities to participate or what they must do to become acquainted, much less apply to the program. If they are aware of the program they typically find the application process

daunting and the benefits remote. Thus applications from specialty crop growers

overall have been very limited. • NRCS and specialty crop producers have had very little interaction over the

years. While there are notable exceptions in parts of several states, such as Michigan, California, and North Carolina, NRCS has had limited acquaintance with specialty crop producers, their crops, or production methods. • NRCS, as a whole, does not have extensive expertise in key technical areas such

as pesticides and pest management that are critical to specialty crops or knowledge

about the regulatory and environmental issues that have such a large impact on

producers • Most grower groups for specialty crops and the advisors who work with them,

e.g., Cooperative Extension and private consultants, also have minimal knowledge

about NRCS, EQIP or other conservation programs. Thus the normal routes by

which growers would become aware of new opportunities and receive support in

using them, are not currently effective in helping them participate in EQIP. • Specialty crop producers are not widely represented on state and local committees that provide guidance on priorities and program implementation. As a result,

issues of importance to specialty crop participation are fully considered.

The net effect of these factors is that using EQIP has been daunting to growers

and their organizations. Due to the lack of working relationships and communication between NRCS and the specialty crop community, outreach and knowledge

have lagged, while problems have gone undetected and unresolved.

NRCS and farm bill implementation. NRCS has faced the daunting task in implementing the farm bill provisions. Since passage in May 2002, NRCS has had to promulgate new regulations, roll out new programs, and handle significantly increased

dollars for the programs. It has had to accomplish these tasks under tight time

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frames created by the mid year passage of legislation in 2002 and the late passage

of appropriations bills in fiscal year 2003. These pressures have limited NRCS in

key areas.

Outreach Increasing the participation of specialty crop growers in EQIP requires

extensive outreach to familiarize growers with the program and NRCS procedures,

enable them to understand the application process and fully comprehend the range

of practices that they can use in resource conservation. Outreach is also needed to

effectively involve specialty crop producers in state and local committees and to create working relationships with grower groups and others in the grower community.

Program responsiveness In order to increase specialty crop participation it is important to account for unique conservation and production challenges in the implementation of EQIP. Many of the problems that growers encounter, such as low incentive payment rates, have been created inadvertently or without complete information. Increasing grower access to EQIP will require the resources and attention

to accurately identify problems and work with NRCS to resolve them.

Implementation of EQIP. While there are numerous variations among states in

the precise ways that they administer EQIP—for example, some states rank applications at the county level, whereas others rank them at the state level—these basic

issues are of important to specialty crop producers in all states.

Eligibility. On a number of occasions growers have been discouraged by NRCS

staff from applying to EQIP for incentive payments to carry out integrated pest

management (IPM) if they have done IPM in the past. This stems from a lack of

knowledge among NRCS staff at multiple levels about the number of specific and

distinct pest management practices that are available to growers. It has proved to

be a major stumbling block for specialty crop participation.

Application process. The application process is particularly daunting for specialty

crop producers who are unfamiliar with the programs and procedures. The forms

and procedures can be confusing for growers who, since they have not previously

participated in farm programs, are not even in the USDA system. Growers are also

often unaware of the range of conservation practices available for them to use and

may not realize what they need to do in order for their applications to be successful.

The time and effort in making an application coupled with unsure prospects for

being selected has tended to discourage a sizeable percentage of the relatively few

growers who are sufficiently aware of EQIP to consider applying.

Ranking of applications. The ranking of proposals is an important part of the

EQIP application process. NRCS has significantly more applications than it has

money to spend. Under the new farm bill, applications are to be ranked by the level

of environmental benefits they provide in meeting national priorities and resource

concerns. This has proved problematic for specialty crop producers in several ways:

• The ranking process essentially requires that, in order to successfully apply,

growers must address multiple resource concerns. However, as noted, growers are

often unfamiliar with the range of practices available, conversely NRCS is often unfamiliar with the unique conservation and production practices for specialty crops.

This makes the application process complicated for growers unfamiliar with the program and leads to their applications not being funded if they are not aware of the

wider range of practices they might use.

• To the extent that states have gone to a standard statewide ranking sheet and/

or ranked all applications at the state rather than the county level, specialty crop

producers find it difficult to rank high enough to get their applications approved.

• Geographic priority areas—the key to enrolling specialty crop producers in EQIP

under the last farm bill, for example in Michigan, was having a geographic priority

area. Under the previous farm bill geographic priority areas were established that

allowed conservationists to focus on unique problems in areas where specialty crops

predominated. Under the new legislation the mandate for priority areas was eliminated, leaving specialty crop producers to compete against livestock and major crop

producers.

Conservation Planning. In many states a conservation plan is required for growers to apply. Most specialty crop producers, having never been involved with NRCS

programs, do not have a conservation plan. Writing plans for those growers, who

have never been involved with NRCS and who have diverse cropping systems is particularly complicated and time consuming. NRCS staff rarely have sufficient time

or resources to work with a significant number of new growers.

• Growers or their consultants must absorb the entire cost of the conservation

planning process since TSP funds are not available until after the producer’s contract is signed. This is a big hole in the program in many states that dramatically

limits the ability of specialty crop producers to participate in EQIP.

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TECHNIQUES AND PAYMENT RATES

• Incentive payments in many states are inappropriately low or non-existent for

key land management practices such as pest management.

• In many states incentive and cost share are available only for scouting under

the 595 pest management standard. Other techniques, such as the use of biological

controls, mating disruption, and/or reduced risk pesticides, would create significant

environmental benefits. Only a handful of states provide incentive payments rates

for those mitigation techniques that would provide significant resource improvements in specialty crop production.

Summary. Although the farm bill increased the amount of the program dollars

that must go to livestock operation from fifty to sixty per cent nationally, the increased funding still provides greater opportunity for specialty crop producers to

participate. EQIP has been used in specialty crops for pest management practices

under the 1996 farm bill for the construction of pesticide storage, mixing and loading facilities (cost-share payments) and to support the use of integrated pest management practices (incentive payments).

It is also important to recognize, that there are parts of the country where NRCS

and the grower community work well together. In some regions, NRCS staff are well

acquainted with the grower community and there are good connections at the state

and local levels. Good examples of how the program can work to support IPM in

specialty crops exist in specific counties in Michigan (vegetables, cherries), North

Carolina (apples), and California. In other regions, there is a willingness at the

state or county level to improve working relationships with specialty crops.

NRCS deserves a great deal of credit for its effort in those important examples.

However, it is the fact that those examples have been so successful while their diffusion has been so limited that makes it critical to increase specialty crop participation.

Overall, despite these good examples, specialty crop producers largely are not participating in or benefiting from the conservation programs in any considerable measure. Many of the reasons for this lack of participation are interrelated. For example,

the fact that difficulty in applying to EQIP is very much connected to the historic

lack of interaction between NRCS and specialty crop producers. Dealing with these

complex issues will require a concerted effort at the state, national and local levels.

Recommendations: There are several things that NRCS can do to help overcome

the hurdles for specialty crop producer participation in EQIP. Taking these steps

would have immense value to resource conservation and growers and would help

create a strong foundation for their participation in other conservation programs

such as the Conservation Security Program (CSP).

• Establish a national commitment to working with the specialty crop community

through EQIP and other conservation programs.

• Convene a meeting between the Chief and specialty crop producer groups to create better working relationships

• Establish a committee of state conservationists and producer groups to identify

problems and opportunities for specialty crop participation

• Create a specific staff responsibility in the Chief’s office to oversee interaction

with specialty crop producers

• Communicate to state offices the importance of working effectively with specialty crops

• Provide additional outreach support for states that work with specialty crop producers

• Establish pilot projects in key specialty crop states to create high profile examples for increasing participation that can be duplicated in other states and regions.

• Include participation by specialty crop producers as one of the criteria in performance incentives for states

Conclusion. Although challenges exist for increasing specialty crop use of EQIP,

the potential for conservation benefits more than justifies the effort. The experiences

of CAP and its partners have shown that these challenges can be overcome through

targeted efforts that increase knowledge, create strong working relationships, provide support in the grower community, and make critical changes in program implementation. That experience can be duplicated for growers nationwide, through diligence, strategic use of resources, and the development of strong partnerships with

NRCS. The benefits to growers, NRCS and resource conservation from such an effort would be considerable.

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