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23–179 PDF 2005

DIFFERENT APPLICATIONS FOR GENETICALLY

MODIFIED CROPS

HEARING

BEFORE THE

SUBCOMMITTEE ON RURAL ENTERPRISES, 

AGRICULTURE & TECHNOLOGY

OF THE

COMMITTEE ON SMALL BUSINESS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

WASHINGTON, DC, June 29, 2005

Serial No. 109–24

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

COMMITTEE ON SMALL BUSINESS 

DONALD A. MANZULLO, Illinois, Chairman 

ROSCOE BARTLETT, Maryland, Vice 

Chairman 

SUE KELLY, New York 

STEVE CHABOT, Ohio 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

JEB BRADLEY, New Hampshire 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

RIC KELLER, Florida 

TED POE, Texas 

MICHAEL SODREL, Indiana 

JEFF FORTENBERRY, Nebraska 

MICHAEL FITZPATRICK, Pennsylvania 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

NYDIA VELA ́ ZQUEZ, New York 

JUANITA MILLENDER-MCDONALD, 

California 

TOM UDALL, New Mexico 

DANIEL LIPINSKI, Illinois 

ENI FALEOMAVAEGA, American Samoa 

DONNA CHRISTENSEN, Virgin Islands 

DANNY DAVIS, Illinois 

ED CASE, Hawaii 

MADELEINE BORDALLO, Guam 

RAU ́ L GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

LINDA SA ́ NCHEZ, California 

JOHN BARROW, Georgia 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin 

J. MATTHEW SZYMANSKI, Chief of Staff 

PHIL ESKELAND, Deputy Chief of Staff/Policy Director 

MICHAEL DAY, Minority Staff Director

SUBCOMMITTEE ON RURAL ENTERPRISES, AGRICULTURE AND 

TECHNOLOGY 

SAM GRAVES, Missouri, Chairman 

STEVE KING, Iowa 

ROSCOE BARTLETT, Maryland 

MICHAEL SODREL, Indiana 

JEFF FORTENBERRY, Nebraska 

MARILYN MUSGRAVE, Colorado 

JOHN BARROW, Georgia 

TOM UDALL, New Mexico 

MICHAEL MICHAUD, Maine 

ED CASE, Hawaii 

RAU ́ L GRIJALVA, Arizona

PIPER LARGENT, Professional Staff

(II) 

C O N T E N T S 

WITNESSES

Page 

Huttenbauer, Mr. Sam, CEO, Agragen .................................................................. 4

Parks, Ms. Dawn W., Public, Industry & Government Affairs Manager, 

Arborgen ............................................................................................................... 8

Dollar, Mr. Thomas H., II, Dollar Farm Products Company, Decatur Gin 

Company ............................................................................................................... 11

Deeter, Mr. Scott, President and CEO, Ventria Bioscience ................................. 14

Perry, Mr. Delan, President, Hawaii Papaya Industry Association .................... 18

APPENDIX

Opening statements: 

Graves, Hon. Sam ............................................................................................. 33

Prepared statements: 

Huttenbauer, Mr. Sam, CEO, Agragen .......................................................... 34

Parks, Ms. Dawn W., Public, Industry & Government Affairs Manager, 

Arborgen ........................................................................................................ 41

Dollar, Mr. Thomas H., II, Dollar Farm Products Company, Decatur 

Gin Company ................................................................................................. 48

Deeter, Mr. Scott, President and CEO, Ventria Bioscience .......................... 53

Perry, Mr. Delan, President, Hawaii Papaya Industry Association ............. 56

(III) 

(1)

DIFFERENT APPLICATIONS FOR 

GENETICALLY MODIFIED CROPS 

WEDNESDAY, JUNE 29, 2005

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON RURAL ENTERPRISES, AGRICULTURE

AND TECHNOLOGY

COMMITTEE ON SMALL BUSINESS

Washington, DC 

The Subcommittee met, pursuant to call, at 2:04 p.m. in Room 

311, Cannon House Office Building, Hon. Sam Graves presiding. 

Present: Representatives Graves, Sodrel, Barrow, Udall, Case

Mr. GRAVES. We will go ahead and call this hearing to order. We 

have kind of got a little dilemma here. We have got to vote at any 

second now. It was supposed to be about 10 minutes ago, and obviously it has been delayed, for whatever reason, but I think we are 

going to go ahead and proceed forward. We can get some of the 

opening statements taken care of by some of the Members and 

move forward from there. 

But I would like to welcome everybody to the Rural Enterprises, 

Agriculture and Technology Subcommittee, part of the overall 

Small Business Committee, and today we are going to be looking 

at different applications for genetically modified crops. Again, I 

want to thank everybody here today, our audience, and those who 

are participating in the hearing. Some of you have come from a 

long ways, and I appreciate you coming out to testify today. 

As a farmer by trade myself, I truly believe genetically modified 

crops are the future of American agriculture. As agriculture markets become more competitive worldwide, it is imperative that the 

United States keep an edge by offering continued superior quality 

product. Genetically modified crops allow agribusiness to increase 

profits and continue to uphold the United States’ representation for 

excellence in agriculture. 

For centuries, farmers have been modifying crops to improve 

their growth rates and yields. We have seen technology, not only 

improve these yields, but also to create varieties resistant to pests 

and diseases. Such modifications have previously been made 

through cross-breeding plants with desirable traits and through hybridization. Thomas Jefferson himself was renowned for his work 

in cross-pollination and hybridization at Monticello. 

Already in this country, 85 percent of all of the soybeans we grow 

have been modified, followed closely by 75 percent of all of the cotton and half of the corn. Thirteen different plants in the U.S. today 

have been approved to be genetically modified, and, in fact, some 

2

60 percent of all of the food that we grow and consume is genetically modified. Continued developments and research hold great 

promise for traditional agriculture not only when it comes to feeding the world but also to produce crops for medical purposes. 

Through advanced technology, scientists can modify specific 

genes for desired qualities and grow them within the plants. Commonly referred to as ‘‘biofarming,’’ this method of retrieving certain 

enzymes holds limitless potential and will allow the United States 

to retain its leadership role within the medical research community. 

Worldwide, genetically modified crops offer hope, incredible hope, 

as a matter of fact, for overpopulated countries when it comes to 

feeding and treating the people in a much more efficient and a 

much more effective way. I am greatly concerned that current regulations and a lack of knowledge for this science will not only hamper growth in this industry but will also allow other countries to 

surpass the United States’ position as a world leader within the agriculture business industry. 

We have to continue to make policy decisions based on sound, 

scientific facts and help businesses to expand in this industry. I 

think we have a great potential to not only revitalize rural business communities but also offer an incredible product to consumers 

throughout the United States and throughout the world. 

Again, I am looking forward to hearing what all of the witnesses 

have to say—this is going to be a great hearing to talk about the 

great things when it comes to genetically modified crops—and 

learning more about this expanding industry. I am pleased to recognize now Ranking Member Barrow for his opening statement, 

and good to have you. 

[Chairman Graves’ opening statement may be found in the appendix.] 

Mr. BARROW. Thank you, Mr. Chairman. Mr. Chairman, the agricultural sector has always played a central role in the success of 

the United States economy, and as the representative for Georgia’s 

12th District, I know how important agricultural interests are not 

only to my area of the country but to the entire country, and it is 

important for us to remember that farming and rural communities 

are a critical component of the history and landscape of our nation. 

Generations of Americans have relied on the strength of our agriculture through the hard work, dedication, and innovation of our 

farmers. 

The importance of the agriculture and farming industries has 

continued to evolve with the growth of our nation. From early 

farming techniques, such as crop rotation and irrigation systems, 

to 19th century inventions, such as the steel plow and the cotton 

gin, farmers have always looked for ways to increase productivity 

and maximize crop yields. 

Today, small family farms and other agriculture-related businesses help to meet our needs and contribute to local and national 

economies. With farmers having such a strong presence in my district, I know how important their success is to economic development. In Georgia, agriculture is our largest industry, contributing 

over $57 billion, or 16 percent of the state’s $350 billion annual 

3

economic output. In fact, in many parts of my district, the farm 

economy is the economy. 

As we make our way through the early years of this century, biotechnology and genetic engineering our some of the advances leading the way in agriculture innovation. These methods may hold the 

promise to ensure the continued success of the farming industry, 

even as we face increased demands and especially as fewer people 

in each generation turn to farming as a profession. High-technology 

applications and improved crop yields are extremely important to 

the U.S. agricultural economy and the rural economy because they 

will help us meet the challenges facing the small farmer and reduce the risk to crops and the land itself. 

Today’s hearing will give us an opportunity to learn more about 

genetically engineered crops and the scientific gains that are leading us in this direction. It will also provide an overview to the barriers that we face in bringing this science on line in the face of resistance around the world. This is an instance, Mr. Chairman, 

where scientists, businesses, and farmers need to work together to 

grow their own future. 

Genetically engineered crops were first introduced in 1996 for 

commercial production. They are now planted on 167 million acres 

of farm land around the world. Of this, the U.S. accounts for nearly 

two-thirds of all biotechnology crops planted worldwide, including 

soybeans, cotton, corn, canola, tomatoes, potatoes, papaya, and 

squash. According to the Biotechnology Industry Organization 

group, 70 percent of all processed foods on our shelves today contain products enhanced by biotechnology. By selecting specific 

genes from one organism and transferring these desired traits to 

another, scientists have been able to produce new varieties that are 

stronger, more resistant, and better equipped to handle harsh 

weather conditions and withstand insects and other pests. American farmers, large and small, have been able to take advantage of 

our technology agriculture, and that is what is keeping the U.S. the 

world’s leader in the field. 

This is an important hearing for the folks you represent, Mr. 

Chairman, and for mine. For farmers in Georgia and across the nation, it is important to hear what to expect in the future in terms 

of research and production of genetically engineered crops. 

I look forward to hearing all of the testimony of today’s witnesses, particularly Tommy Dollar, a Georgia farmer who is the 

president and owner of Dollar Farm Products and the Decatur Gin 

Company. Thank you, Mr. Chairman. 

Mr. GRAVES. Thank you, Mr. Barrow. 

Mr. Udall? 

Mr. UDALL. I do not have anything, Mr. Chairman. I look forward to hearing from the witnesses. Thank you very much. 

Mr. GRAVES. Mr. Case? 

All right. We will move forward, then, and it looks like we had 

a vote through voice vote. It is not going to be recorded, so that is 

good news. We can continue forward. I do want to make it clear 

that all of the statements made by the witnesses and the members 

will be placed in the record in their entirety. Also in front of you, 

you will notice that you have a little box. It is green. I think everybody has five minutes, and then it goes to yellow with one minute 

4

left, and it is red after that. Do not worry about it. If you have got 

something to say, I want to hear it, and do not pay too much attention to it. It is just, for the most part, to keep us on track and moving forward, so if it turns red, do not be too alarmed. 

We are going to start, and what I am going to do is I will introduce you as we move through. I will let everybody give an opening 

statement, and then we will come back through with the questions. 

First off, we have got Sam Huttenbauer, who is the CEO of 

Agragen in Cincinnati, Ohio. We have actually got both Sams here, 

senior and junior, I assume. I am a junior, so I understand how 

that is. We are looking forward to hearing your testimony, and 

please go ahead. 

STATEMENT OF SAM HUTTENBAUER, AGRAGEN 

Mr. HUTTENBAUER. Good afternoon, Mr. Chairman and members 

of the Committee. Thank you for giving me the opportunity to participate in this panel. 

My name is Sam Huttenbauer, and I am the president of 

Agragen, Inc., a biotech company working on the development of 

plant-made pharmaceuticals, otherwise known as ‘‘PMPs.’’ We are 

located in Cincinnati, Ohio, and are opening up a laboratory facility 

in Grand Forks, North Dakota, where we plan to grow and process 

our pharmaceuticals. 

I am pleased to testify today at this hearing regarding the future 

potential of PMPs and their tacit economic impact towards bolstering America’s agricultural economy. 

Agragen was started three year ago with the express purpose of 

manufacturing pharmaceuticals utilizing the natural protein-manufacturing capability of plants. The company has also concentrated 

since its inception on selecting molecular targets that require substantial agricultural acreage. Agragen is one of the new breed of 

agribusiness companies combining conventional agriculture with 

high-tech science. As such, it will work with farmers, employing 

their agronomic expertise and existent land. With America’s agriculture undergoing change in the competitive world arena, Agragen 

and companies like it present one opportunity to move our country’s great food-and-fiber skills into a more profitable and stable 

system. 

Plant-made pharmaceuticals are the new, ultra-high-value farming for the 21s century. What are ‘‘plant-made pharmaceuticals?’’ 

PMPs are the result of the breakthrough application of biotechnology to plants to enable them to produce therapeutic proteins 

that will be used by the medical community to combat life-threatening illnesses. In this process, plants themselves become factories 

that manufacture therapeutic proteins. These proteins are then extracted, refined, and used in pharmaceutical production. These 

plants are grown under highly regulated conditions in defined 

growing environments and are strictly regulated by the U.S. Department of Agricultural, its animal and plant health inspection 

service, and by the Food and Drug Administration. 

Why do we want to use PMPs? Well, as the world’s scientific 

technology increases, more and more drug therapies rely on recombinant proteins and less on traditional combinatorial chemistry. 

While this represents monumental breakthroughs in healing, it 

5

also presents significant problems of economics, efficiency, and 

safety. Consider this: Over 14 percent of treatments in clinical 

trials today require recombinant proteins. It takes five to seven 

years to build a biotech plant capable of producing recombinant 

proteins versus one to three years for a conventional pharmaceutical plant. And just four molecules currently consume 75 percent of the existing capacity to make recombinant proteins. Over 

100 new, protein-based medicines are now in late-stage clinical 

trials. 

There are also many challenges to current recombinant production methodologies. From an economic standpoint, current biotech 

plants require five to seven years to construct, cost 250 to $450 

million, and must be individually approved and certified by the 

FDA prior to full-scale operation. From a supply standpoint, despite increased therapeutic use of recombinant proteins, there is a 

global shortage of production facilities, less than 12 worldwide for 

these new proteins. This greatly limits the movement of these proteins into therapeutic use, and from a safety standpoint, there is 

the possibility of cross-contamination with human or mammalian 

contaminants utilizing the current production methodologies. 

Plants provide a number of advantages over other production 

methods of biomedical materials. Cost, for instance. Plant vaccines 

and proteins are inexpensive to produce relative to the cost of traditional vaccines and proteins. 

From a safety standpoint, the use of plants for the production of 

biomedical materials eliminates the possibility of cross-contamination with human and animal pathogens. 

From an economic standpoint, farming is already an important 

and established part of our global economy, and from a practicality 

and flexibility standpoint, because one plant can express several 

antigens simultaneously, vaccines against a variety of pathogens 

can be produced in a single plant. In addition, plants producing 

therapeutics can be rapidly scaled up as demand increases simply 

by planting more acres. 

The industry needs a cheaper, more effective way to manufacture 

today’s and tomorrow’s pharmaceuticals. PMPs offer this alternative. Plants approved for the use of biotechnology can produce 

the essential building blocks or therapeutic proteins for innovative 

treatments for diseases such as Alzheimer’s; cancer; chronic, obstructive pulmonary disease; Crohn’s disease; cystic fibrosis; diabetes, and many others at a fraction of the cost of current manufacturing methods. 

Agragen is not currently what might be classified as a drug-discovery company, having chosen to focus on established therapeutics 

that are market limited, either due to extreme production costs or 

limited production capacity. Once we have established our production platform, this will lead to additional pharmaceuticals that will 

also require large acreage. The overall thrust of our technology is 

to insert genes into the plant, thereby permitting the plant to make 

and store the protein of interest in the seed where it can be stored 

indefinitely until it is purified. 

From a business standpoint, plant-made pharmaceuticals represent a means to reduce the production costs and to increase the 

availability of many new drug therapies with the downstream efVerDate 0ct 09 2002 13:37 Nov 15, 2005 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 G:\HEARINGS\23179.TXT MIKE
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fect of dramatically reducing costs to consumers and allowing lifesaving therapies to find their way into the hands of many patients 

who would not have access, either due to cost or availability. 

Agragen has selected two products for the initial stages of production and several additional candidate proteins. These initial 

products are in line with the company’s goals, which are the utilization of a large amount of acreage and the passing of value-added 

agricultural profits back to the farmers, for three reasons. First, both represent $1 billion-plus, underserved and growing 

markets; second, both targets will ultimately require large acreage, 

in the neighborhood of 100,000 acres-plus, and spawn meaningful 

infrastructure in the areas where they are developed; and, third, 

both molecules are currently being utilized in the marketplace, 

which will reduce both clinical test costs and time to market. As 

recombinant-protein science becomes an increasingly important 

technique for the formation of new therapeutics, manufacturing capabilities must keep pace. 

Agragen is one of a number of companies that understands the 

capabilities and cost efficiency of plants serving as pharmaceutical 

factories. In addition, plants offer genetic mechanisms that may 

allow discovery and creation of molecules that cannot be constructed from any other source. 

To be truly beneficial for small rural business, plant-made pharmaceuticals must be tied to open-field production. PMPs utilizing 

plants created in laboratories or in greenhouses have little or no 

connection to the agribusiness system. While these operations can 

utilize plants’ natural production mechanisms to produce life-saving therapeutics, they do not provide an opportunity for the American farmer. 

Large PMP farms, similar to what Agragen is creating, can be 

established around the country utilizing a large number of acres, 

either supplementing lost state farming acreage or establishing 

new growth. In many cases, there will be the opportunity for both. 

Farmers benefit from the production of PMP-producing crops via 

their provision of steady employment of their fields and by their 

greater cash-to-crop yield than is available via the current agricultural industry. 

In addition to supplying farmers with a new, high-value crop, 

Agragen envisions further rural economic involvement by potential 

farmer ownership of PMP processing and manufacturing facilities. 

Agragen’s business model offers farmers and rural economies the 

opportunity to participate firsthand in this new, value-added family 

of crops. The goal of this novel form of agribusiness is to bring the 

farmer into the process of partner, which specifically means allowing operators to share in the profitability of what they are manufacturing. 

Agragen believes that it can double or possibly triple the bottom 

line of its partners with a market price that is far more stable than 

typical focused commodities. Furthermore, Agragen’s impact will be 

felt in equipment sales, transportation and processing jobs, real estate values, et cetera. Facilities to handle the transformation of the 

large biomass from field crop to pharmaceutical will have to be located within proximity to actual growing areas. This means millions of dollars in construction and additional opportunities for 

7

skilled employees in rural locations. Our own initial projections 

allow—our first two output products show close to $80 million infused in the economy of the state that we will operate in. 

We see an instant opportunity to utilize American agronomic 

skills to help replace some farm products that might be rendered 

marginal by rapidly developing worldwide agricultural production. 

PMPs offer the possibility for the small farmer businessman to 

share in a potentially large profit market while providing tangential benefits to rural economies that would not be subject to new 

investment otherwise. 

However, being immersed in the standard farming arena is not 

without its problems. Typical agricultural challenges, such as 

weather and parasites, can be mitigated by the use of multiple 

growing regions and protein development in seeds which allow for 

long-term storage and thus the capability to stockpile. But the 

greatest immediate threat comes from public perception. Field production pits PMP companies against GM antagonists, organic farmers, particularly those who may have an interest in the crop species 

being transformed. 

There has been a call for all PMP crops to exclude any plants 

currently used for food or feed. Unfortunately, while many plants 

possess the potential for protein production, certain species are better matched with specific targeted proteins. Some plants may serve 

as excellent converters, i.e., tobacco, but require too high economic 

inputs or extraordinarily expensive processing procedures. The 

need to utilize the production capacity of food crops will be necessary, but these crops are solely used as a factor and will never 

enter the food chain. 

Unlike former GM plant transformations, including the now-notorious Starling corn, where crops basically enter a side-by-side 

handling and distribution system and one where the possibility of 

interchange with non-GM materials is always present, PMPs will 

never have the opportunity to mix with their commodity counterparts. PMPs must adhere to a close-loop system that will include 

dedicated equipment, transportation, storage, processing, and 

waste handling. 

Still, public perception issues exist. Chief among them is the fear 

that PMP crops will contaminate non-PMP fields vis-a-vis pollen 

drift. This is not an insurmountable issue. A major step forward occurred recently in Missouri where government officials played a 

large role in resolving a similar PMP-related controversy. In Missouri, the problem was untangled by diverse separation, essentially 

using large distances to keep PMP crops away from that being produced for the food system. 

Distance is an effective means to mitigate crop commingling; 

however, it might not always be enough. In addition to distance requirements, the USDA mandates that all PMPs must be grown 

using a tight, closed-loop system with dedicated equipment, shipping trucks, and plant material and pollen to prevent them from 

mixing. 

In Agragen’s case, because of the ultimate magnitude of the acres 

projected, the solution might only be temporary. Other methods are 

being developed to take a more proactive approach to containing 

the PMP agriculture. For example, Agragen is hard at work develVerDate 0ct 09 2002 13:37 Nov 15, 2005 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 G:\HEARINGS\23179.TXT MIKE
8

oping novel, gene-control mechanisms that will make mixing with 

other plants a statistical improbability. 

In conclusion, Mr. Chairman, I want to reiterate that by working 

with established control mechanisms under the guidance of the 

USDA and other organizations, by working with state and local officials, and by incorporating the knowledge of the farmers themselves, PMPs can be safely grown throughout the states. 

According to a report by a consultancy, Frost & Sullivan, released in December 2004, the U.S. market for plant-made pharmaceuticals could be worth $2.2 billion by 2011, with the first products reaching the market by 2005-2006. Agragen believes that from 

that point, its growth will be restrained only by discovery science 

not keeping pace. This can translate into direct economic growth 

for U.S. agriculture as companies utilize more and more acres for 

PMP production. 

PMPs offer not only the promise of cheaper, more abundant 

pharmaceuticals but the establishment of a new, ultra-high-agricultural venue for today and tomorrow’s farmer. Agragen, by bringing 

the farm community into its business system, feels that it will economically benefit rural areas and individuals who otherwise would 

have no connection to the biotech revolution. Thank you, Mr. 

Chairman. 

[Mr. Huttenbauer’s testimony may be found in the appendix.] 

Mr. GRAVES. Thank you. Next, we are going to hear from Dawn 

Parks. Dawn is public, industry, and government affairs manager 

for ArborGen in Summerville, South Carolina. Did I get that right? 

Ms. PARKS. Yes, you did. Thank you. 

Mr. GRAVES. I look forward to hearing what you have to say. 

STATEMENT OF DAWN W. PARKS, ARBORGEN 

Ms. PARKS. Thank you. Good afternoon, Mr. Chairman, members 

of the Committee, ladies and gentlemen. I am Dawn Parks. I am 

the director of public and government affairs for ArborGen. 

I am privileged to be here this afternoon on behalf of ArborGen, 

as well as on behalf of our trade organization, the Biotechnology 

Industry Organization. BIO represents more than 1,100 companies, 

academic institutions, state biotech centers, and related organizations across the United States and in 31 other nations. BIO members are actively involved in the research and development of new 

medicines, food, and industrial and environmental products to benefit the lives of people and the environment. 

I would like to thank Chairman Graves and members of the 

Committee for the opportunity to be with you today and for organizing this hearing. I would also like to thank you, Mr. Chairman, 

for your leadership on the Small Business Innovation Research program. Specifically, I want to take this opportunity to publicly express BIO’s and BIO’s member companies’ appreciation for your introduction of H.R. 2943, the Save Biotechnology Innovative Research Act of 2005. This important legislation preserves venture 

capital-backed biotechnology small businesses’ access to vital Small 

Business Administration grants. 

In this tenth year of growing crops enhanced through biotechnology, global acceptance continues to increase at a rapid pace. 

According to the International Service for the Acquisition of AgrVerDate 0ct 09 2002 13:37 Nov 15, 2005 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 G:\HEARINGS\23179.TXT MIKE
9

Biotech Applications, in 2004, global biotech crop plantings continued to grow at a sustained double-digit rate of 20 percent, compared with 15 percent in 2003. The estimated global area of approved crop plantings was more than 200 million acres in 2004. 

The United States is the world leader in the development and 

planting of these crops, and rural America is one of the chief beneficiaries. In 2004, American farmers chose to plant 85 percent of 

the soybeans, 76 percent of cotton, and 45 percent of corn with 

seeds improved through biotechnology that allow the plants to protect themselves from insects and disease and promote better weed 

management. The United States has also approved for commercial 

planting biotech varieties of canola, chicory, flax and linseed, 

melon, papaya, potatoes, rice, squash, sugar beets, tobacco, and tomato. The annual R&D investment of the six largest companies in 

this sector is $2.7 billion, or 10.8 percent of sales. 

The rapid adoption of this technology by U.S. farmers is a testament to the solutions it provides to problems on the farm. Biotechnology enables farmers to reduce input costs and improve 

yields. 

My company, ArborGen, is a small business, but the research 

and development we are doing at our headquarters in Summerville, 

South Carolina, holds potential to improve forestry on a national 

and international scale. Forestry, of course, is a rural business that 

supports millions of jobs across America. 

Our goal at ArborGen is to use breeding techniques, including 

biotechnology, to improve the sustainability of forestry. According 

to the Food and Agriculture Organization, about one-third of the 

harvested wood is supplied from industry-owned, highly managed 

tree plantations. The rest comes from landowners that utilize a 

wide variety of management techniques, including natural forest 

management. 

As the worldwide population increases, so does the demand for 

wood and paper products. Rather than expanding the forested acreage under management to meet these wood and paper requirements in the future, we are developing faster-growing trees that 

will improve the productivity of forest plantations, and by producing more wood on less land, people can build the homes and buy 

the products they desire without cutting down our natural forests, 

which will be conserved for wildlife, recreation, biodiversity, and 

beauty. 

ArborGen also is developing trees with modified lignin. Lignin is 

a component of wood fibers that is removed during the pulping 

process to obtain the cellulose needed to make paper. The process 

involves intensive use of chemicals and energies. Reducing lignin 

content in the trees intended for pulp, or by making it easier to remove the lignin during the manufacturing process, will provide important environmental benefits. 

The area of forestry biotechnology has potential to bring many 

other benefits, and several institutions around the world are developing really exciting products that have significant social, environmental, and economic benefits. One key potential benefit is the production of cleaner burning fuels. Wood produced for ethanol or used 

directly as fuel by power companies would be a clean, renewable, 

and cost-effective energy resource. 

10

Phyto-remediation of Superfund sites or other toxic lands is another very promising possibility. Instead of spending billions of dollars removing and sterilizing impaired soils, it may be feasible to 

plant modified trees that can absorb and neutralize hazard wastes 

and heavy metals. 

Biotechnology can also help restore endangered species, such as 

the American chestnut, American elm, flowering dogwood, and the 

California oaks. A single disease-resistance gene added to chestnut 

could allow for these beautiful species to withstand the blights that 

have nearly obliterated them from the landscape. Field trials with 

American elm are underway now, and chestnut trials should begin 

soon. 

Another possibility is trees that can grow in harsh conditions, 

such as arid climates or salty soils. In areas where trees are an important part of the landscape, this technology could halt further encroachment of the desert and allow trees to grow in areas where 

they are now unable to grow. And the ability to grow important 

hardwoods more quickly on managed lands could halt the black 

market harvesting of these species in natural forests. 

Forest biotechnology is in its infancy, but it holds unlimited possibilities that would take generations to produce through traditional cross-breeding. Instead of waiting for trees to grow to sexual 

maturity so they can be cross-bred with one another, forest biotechnology can identify a desirable gene and transfer it to a tree. 

The success of failure of the transfer can be seen almost immediately. Then through high-production, multiplication systems, we 

can mass produce plantlets and introduce large numbers of the improved trees to supply plantation foresters so they can begin to provide benefits to this generation of citizens and into the future. Perhaps adults living today will be able to stand beneath the shade 

of a spreading chestnut tree, just as their great-grandparents did. 

Mr. Chairman, I hope you can understand from my testimony 

how excited I am to be part of this emerging industry. There are, 

however, threats to the continued success of the research I have 

just described, the most daunting being the exclusion of companies 

such as ArborGen, with majority private funding from companies, 

from participating in SBIR programs. 

While BIO does represent companies in the industry, the vast 

majority of its members, over 85 percent, are small, emerging companies with less than 500 employees. In fact, more than 50 percent 

of the companies in our industry have fewer than 50 employees. In 

our case, a company with 70 employees, it strikes us as unthinkable that we would be considered ineligible for an SBIR grant because we receive private funding for our core projects. 

Under the current interpretation of the eligibility, we are concerned ineligible because, as a start-up company, we did what virtually all early stage start-up companies do to continue their research: We received funding for early research and development 

projects from corporate investors. Funding partners often support 

the development of the critical platforms, technologies, and protocols that will lead to products for a particular kind of industry. 

But, for example, as we develop products designed for improving 

forest management and manufacturing efficiencies, we have identiVerDate 0ct 09 2002 13:37 Nov 15, 2005 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 G:\HEARINGS\23179.TXT MIKE
11

fied genes that can provide significant values to industries outside 

of paper making and lumber. 

The SBIR program is ideally suited for this purpose because the 

company, our company, has already demonstrated that it can successfully raise follow-on financing, one of the key criteria in evaluating an SBIR Phase II grant proposal. 

To remove this barrier to participation in the SBIR program, BIO 

has urged SBA to revise the SBIR eligibility requirements and 

issue a proposed rule that reflects Congress’s original intent to encourage awards to small businesses that have successfully attracted outside investors. 

The approach proposed by SBA in its December 3, 2004, advanced notice of proposed rulemaking to disregard affiliation is a 

step in the right direction. However, it does not address the fundamental obstacle, which is SBA’s requirement that small businesses 

be majority owned and controlled, directly or indirectly, by individuals. The SABIR Act, however, clarifies that biotechnology small 

businesses receiving venture capital funding are, in fact, eligible for 

SBIR Phase II grants. We thank you so much, Mr. Chairman, for 

your leadership on this very important issue. 

Mr. Chairman, we appreciate your leadership on these issues 

and look forward to continuing to work towards a resolution. 

Thank you for giving me the opportunity to provide this information to you today. I look forward to answering any questions that 

you may have. 

[Ms. Parks’ testimony may be found in the appendix.] 

Mr. GRAVES. Thank you, Ms. Parks, and thank you for mentioning the venture capital issue that we have got up. I actually 

testified on that yesterday in another Committee, and we are going 

to have a hearing on it in this Committee in about a month. So we 

might ask you for your input on that, too. 

I will let Mr. Barrow introduce our next witness. 

Mr. BARROW. Thank you, Mr. Chairman. I am pleased to introduce to the Committee Mr. Thomas Dollar. Mr. Dollar is a thirdgeneration Georgia farmer. In addition to growing over 3,000 acres 

of cotton and peanuts, he is the president of both the Decatur Gin 

Company and the Miller County Gin Company. Both businesses gin 

about 56,000 acres of cotton each year. 

Mr. Dollar sells materials and supplies to farmers. He is a grower and crop producer, and he is a crop processor as well. He is here 

to talk about the impact that agricultural genetic engineering is 

having on agriculture in my part of the country. 

Mr. Dollar, thank you for being here today. 

STATEMENT OF THOMAS H. DOLLAR, II, DOLLAR FARM 

PRODUCTS COMPANY, DECATUR GIN COMPANY 

Mr. DOLLAR. Thank you very much. Thank you, Chairman 

Graves, Ranking Member Barrow, and members of the Subcommittee. I am very grateful to be asked to speak to you on different application benefits of genetically modified crops. You have 

described myself tremendously. I appreciate the accolades, and I 

will not go through that on my speech, but I will go ahead and proceed to the next paragraph. 

12

I come before you today speaking as a producer and to speak for 

my producer customers about the benefits of growing genetically 

modified crops, namely, cotton. The general practice of growing 

crops of cotton has dramatically changed in the last 15 years. Since 

I started ginning consulting for the gins in 1988, the customary 

practices of growing cotton have changed in three major ways. 

During the 1988 growing season, it normally took five or six applications of residual-type herbicide to control weeds in cotton during the growing season. We sprayed 10 to 14 applications of worm 

spray to control bollworms, budworms, and armyworms. Then we 

typically sprayed five to six applications of insects for boll weevils. 

The end result was 20 to 25 applications of chemical on a cotton 

field in any given year. Many trips to the field were required, costing me and my other growers time and money. 

Now we use genetically modified cotton with the Roundup Ready 

and BT genes. Roundup Ready cotton has been genetically enhanced to provide herbicide tolerance that allows Roundup herbicide to be applied directly over the top of cotton in the field. Weeds 

that can negatively infect the field are killed while the cotton 

plants live. Because of this technology, Roundup has replaced the 

multiple herbicides I used to use. I also use Bollgard cotton, which 

contains the BT gene to control bollworms and budworms that can 

devastate a cotton crop. 

This year, in contrast to what I did in 1988, I will only apply two 

to three applications of Roundup, a nonresidual herbicide, spray 

two to three times for armyworms, which are not currently controlled by genetically modified cotton varieties suited to my region. 

Because of the success of the boll weevil eradication program, I will 

not have to apply any organophosphates that can be deadly to nontargeted pests. The result is four to six applications of a pesticide 

on any given field versus the 20 to 25 applications required in 

1988. 

The benefits to me as a grower and to the community as a whole 

are significant. First, I have experienced cost reductions. I have reduced total sprays by approximately 15 applications since 1998. 

These chemicals cost approximately $7 per application, and the 

cost of applications covering things like fuel and labor and aerial 

application is $4.15, for a total of $11.15 per acre per application. 

Over the course of 15 applications, that is a savings of approximately $167 an acre. While growers such as myself have to pay a 

technology fee for biotechnology traits that we use, I calculate that 

my savings are still more than $100 an acre, not to mention reduced wear and tear on my equipment and the time I save. 

The biotech cotton varieties I use require a refuge area of 5 percent to ensure that pests do not become resistant to the technology, 

so 95 percent is biotech cotton. Over my 2,500 acres, that means 

I save a total of $237,500. 

This reduced cost is helping my bottom line in an ever-competitive cotton market. Globalization, a new farm bill, Brazil’s WTO 

case, the World Trade Organization case against U.S. cotton programs and broader World Trade Organization negotiations continue to bring enormous uncertainties to my future business planning. But given all of these uncertainties, at least I know that my 

13

ability to adopt the latest agricultural technology, such as new 

biotech traits, will help me compete in these changing times. 

Reduced pesticide applications are providing a positive environmental impact. As I mentioned, I have switched from a variety of 

herbicides to using primarily just Roundup on my crops. Unlike 

many other herbicides that I have used in the past, Roundup is 

nonresidual. I have also seen a resurgence in fire ants in my fields 

because I am using fewer broad-spectrum insecticides. While that 

might not seem like a positive impact from biotech crops, it is actually a good thing for me. You see, fire ants eat eggs from other 

pests in cotton, which means less damage to my crops and even 

fewer pesticide sprays. 

The results on my farm are not unusual. Many other farms in 

the United States and the world have experienced similar positive 

results. A study by the National Center for Food and Agricultural 

Policy found that six biotech crops—corn, canola, cotton, papaya, 

soybeans, and squash—lifted growers’ income by $1.9 billion and 

reduce agricultural chemical use by 46.4 million pounds of active 

ingredients. Additionally, this study found crop yields increased 5.3 

billion pounds. This is money in the pockets of U.S. farmers. 

Even more exciting for me is the prospect of new biotech crops 

yet to come. I traveled to Australia in January 2005 and saw growers there using Bollgard II on their cotton plants. This technology 

is on the market in the United States but is not currently in very 

many of the varieties that I use. Next season, this technology will 

be available to varieties suited to my region and will be stacked 

with the latest Roundup Ready technology. This new product will 

address the armyworm problem that currently requires two to 

three sprays per season in my area. 

I look forward to utilizing Bollgard II technology in varieties that 

are high yielding, specifically adopted for my growing area, and 

brought to me by U.S. seed companies such as Delta and Pineland 

Seed. This technology will reduce my pesticide sprays even more, 

making more a more efficient and cost-effective grower. 

In closing, I would like to note that we are experiencing extremely high fuel and fertilizer costs this year, and if it were not 

for genetically modified crops, many farms simply could not be 

profitable. In addition to agricultural biotechnology, I am using 

tools, such as strip till to weed cover crops on 100 percent of my 

acres, verberate soil sampling for fertilizer and lime application to 

most efficiently apply these inputs, aerial imagery to show extreme 

growth and lack of in crops which cannot be detected by the 

ground, and yield monitors to monitor yield variances in the field. 

While you can see that genetically modified crops are not the 

only strategy I use in my farming operation to reduce costs and improve my efficiency and bottom line, biotechnology is a key component of my operation. Without biotech cotton, I would have faced 

a tremendous shortfall in my operation. Therefore, continuing to 

encourage the development of new biotech traits for agriculture, 

continuing to seek global acceptance of these crops, and continuing 

to support the rigorous regulatory system that we currently have 

in place to ensure the safety of biotech crops that make their way 

to the market are critical to the success of my operation and of 

American agriculture. 

14

As you can see, I do not mind embracing new technologies or 

ideas. The day I do not adopt or try a new technology and ideas 

will be the day I retire. In fact, I think we have only seen the tip 

of the iceberg in agricultural biotechnology. I look forward to future 

products that can make me more efficient or help me address some 

of my most pressing problems, such as a aflatoxins in corn and peanuts and soybeans. I also understand that products that could help 

growers across the United States, such as drought-resistant corn 

and soybeans, are currently being researched. 

I encourage this Committee and Congress as a whole to promote 

new technology and to promote new ideas as we move forward in 

an ever-competitive, global, agricultural environment. Innovation is 

the key to the United States remaining competitive, and we need 

to be sure that we are aware of innovations so that new technologies continue to flow to farmers such as myself. The future of 

U.S. agriculture’s ability to feed and clothe the world depends on 

it. 

Chairman Graves, Ranking Member Barrows, and members of 

the Subcommittee, thank you again for this opportunity to speak 

on the benefits provided to growers by agricultural biotechnology. 

I look forward to answering any questions you and the Committee 

have. 

[Mr. Dollar’s testimony may be found in the appendix.] 

Mr. GRAVES. Thank you, Mr. Dollar. 

Next, we are going to hear from Mr. Scott Deeter, president and 

CEO of Ventria Bioscience in Sacramento, California. Scott, thanks 

for being here. 

STATEMENT OF SCOTT E. DEETER, VENTRIA BIOSCIENCE 

Mr. DEETER. Good afternoon, Chairman Graves, Mr. Barrow, 

members of the Committee, ladies and gentlemen. It is a pleasure 

to be here. 

My name is Scott Deeter. I am president and CEO of Ventria 

Bioscience, the company that I am representing today in this testimony. I appreciate the opportunity to address the Committee to describe some of the different applications of genetically modified 

crops. I will briefly describe the company, our technology, and our 

products in development, and I would be happy to answer any 

questions following the testimony. 

First, let me provide an introduction to Ventria Bioscience. 

Ventria was founded with the support and guidance of several leaders in biotechnology and agribusiness who formed the company’s 

board of directors. Our chairman is Tom Urban, who was former 

chairman and CEO of Pioneer Hi-Bred. Other board members include Bill Rutter and Pablo Valenzuela, who were co-founders of 

Chiron, one of the early biotechnology companies in the U.S.; and 

Hank Rutter, and entrepreneur and attorney by training. Also, Bill 

Crouse is a limited partner of Healthcare Ventures; Dean Hubbard, 

president of Northwest Missouri State; and Mel Booth, who was 

the previous president of Human Genome Sciences and 

MedImmune. 

These industry leaders have committed their resources, their 

time, their talents to realize the vision of improving health care on 

15

a global basis utilizing the tools of modern biotechnology combined 

with the industrial might of American agriculture. 

Ventria Bioscience is a plant-made pharmaceutical company. We 

utilize rice and barley as a factory to produce these biologic products. Ventria’s initial products provide human health benefits; however, the company’s technology has the potential to address many 

challenges faced by other sectors of the economy, including animal 

health, energy, food processing, and industrial processing. 

The company’s core technology is a highly efficient and unsurpassed method of producing biological products in the seed of selfpollinating rice and barley. The technology was discovered in collaboration with the University of California, as well as other leading research institutions in the United States. Ventria believes this 

technology will lead to more affordable medicines for a broader patient population than what is possible today with conventional 

technology. 

Our technological innovation results in a substantial improvement in the economics of biopharmaceutical production. For instance, the capital investment required for Ventria to produce 500 

kilograms of product per year is $4 million. To compare, to produce 

that same amount using conventional technology, such as mammalian cell culture, would cost $125 million, a more than thirtyfold increase. In addition, the operating costs of Ventria’s technology are 

less than one-tenth of conventional technology. 

Now, there are several reasons why this technological and economic advantage exists. First, we have been able to achieve extraordinarily high yields of the product in the seed of rice and barley. 

Second, barley and rice are self-pollinating. They can easily 

achieve the necessary geographic isolation from their food crop 

counterparts to eliminate any concerns of cross-contamination with 

the food supply. 

Third, since processing cost is the primary component of cost of 

goods for biologic products, Ventria’s technology has the advantage 

versus many other systems because it can achieve higher utilization rates for the processing facility. That makes the processing facility much more efficient. The reason for this improvement in efficiency is that these crops can be stored in ambient conditions for 

up to two years without degrading the protein or the biologic in the 

seed. By storing the grain and processing on a continuous basis, 

this allows for high processing capacity utilization and reduced cost 

of goods. 

And, fourth, because rice and barley are safe for human consumption, they are ideal for products that can be delivered orally, 

thereby eliminating the need for expensive separation technology 

that is required by conventional systems to remove infectious or 

toxic contaminants. 

These advantages paved the way for a paradigm shift in biopharmaceutical production for the benefit of patients worldwide. 

As an illustration of the strength of Ventria’s technology, I would 

like to describe some of the human health products in development. 

Ventria’s first two health products are proteins called Lactiva and 

Lysomin. These two proteins are found naturally in mother’s milk, 

saliva, tears, and they contribute to the improved health status 

16

that has widely been reported for breast-fed children when compared to their infant formula-fed counterparts. These proteins are 

part of the reason why breast feeding is the best form of nutrition 

for infants and is highly recommended by pediatricians. 

Now, using Ventria’s technology, we can produce these proteins 

cost effectively and incorporate them into a variety of products for 

improved human health. We currently produce Lactiva and 

Lysomin in the seed of rice through contract relationships with selected and well-trained growers. Ventria’s field production is regulated under permits issued by the USDA Animal and Plant Health 

Inspection Service. In fact, last year alone, Ventria’s field location 

was inspected eight times by APHIS inspectors with no compliance 

infractions. Once harvested, the seed is pulverized to a powder and 

transported to a dedicated facility where the final product is processed into either a concentrate or an isolate. 

The U.S. FDA has regulatory authority over Ventria’s products 

for human health. As part of our premarket activity, we reviewed 

the safety of Lactiva and Lysomin with a panel of scientific and 

medical experts who have unanimously concluded that these products are generally recognized as safe for use in functional and medical foods. The results of the panel review were summarized and 

submitted to FDA where they are currently awaiting clearance 

prior to commercial sale for human health. 

Ventria has several products under development that will incorporate Lactiva and Lysomin. One product has been developed for 

children suffering from acute diarrhea. The World Health Organization estimates 1.9 million children under the age of five die every 

year due to diarrhea. To address this crisis, Ventria added Lactiva 

and Lysomin to an oral rehydration solution, which is a common 

therapy given to children suffering from diarrhea. By adding 

Lactiva and Lysomin, Ventria believes it can improve the recovery 

rate, reduce the severity, as well as the duration of the disease in 

these children. 

This hypothesis is the basis of a recently completed study and 

Peru with 150 children suffering from this disease. Ventria expects 

the results of this study to be published shortly. 

Our production technology enables the cost-effective addition of 

Lactiva and Lysomin to oral-rehydration solution for the benefit of 

millions of children worldwide. 

Ventria is also exploring the use of Lactiva and Lysomin for the 

prevention of diarrhea in the military. During Operation Iraqi 

Freedom, 70 percent of the deployed troops suffered a diarrheal attack, and 43 percent reported decreased job performance as a result 

of this attack. During the Vietnam War, it has been reported that 

hospitalizations due to diarrhea were four times more prevalent 

than malaria. This is a silent enemy attacking American troops. 

Ventria has set its goal to reduce the attack rate by 50 percent 

with the preventive administration of Lactiva and Lysomin. If we 

achieve our objective, it would improve military morale, efficiency, 

and manpower. In terms of manpower productivity alone, this may 

pay for itself due to the cost effectiveness of Ventria’s technology. 

Incidentally, this is a similar problem to that experienced by the 

millions of Americans who travel overseas. 

17

Another use of Lactiva that is being developed is for the management of inflammatory bowel disease, or IBD. IBD afflicts over one 

million Americans and over four million people worldwide. IBD is 

an extremely debilitating disease that causes severe abdominal 

pain, weight loss, poor absorption of nutrients, and chronic gastrointestinal ulcers. Ventria is testing the potential of Lactiva to improve the quality of life for the millions with this disease. 

Ventria is also working with the University of Cincinnati to develop a treatment for chronic lung infections caused by 

Pseudomonas, which is the leading cause of death for patients suffering from cystic fibrosis. Ventria and our collaborators have already shown successful inhibition of this infection, and we are 

jointly planning a preclinical program to further develop this product. 

Recently, Ventria was the recipient of an SBIR grant from the 

National Institutes of Health, National Institute on Aging, related 

to the use of one of Ventria’s products to inhibit biofilms constructed by pathogenic bacteria. These types of infections affect 

more than 10 million Americans annually. Infections that are protected by biofilm are 100 to 1,000 times more resistant to antibiotics. So it is important to inhibit the formation of these biofilms 

before they can establish themselves in a wound site. 

Ventria has worked with scientists from the University of Iowa 

and Howard Hughes Medical Institute to develop a natural human 

protein that has been shown to inhibit the ability of pathogens to 

construct these biofilms. Using its plant-made pharmaceutical technology, Ventria produced and purified the protein and shown the 

effective inhibition. With the SBIR grant, Ventria will further develop this product, with the goal of improving patient recovery by 

reducing the establishment of biofilm infections. 

This concludes my testimony on behalf of Ventria Bioscience to 

describe some of the different applications of genetically modified 

crops. As you can see, combining the tools of biotechnologies with 

the capabilities of modern agriculture, we are able to make a significant difference to human health on a global basis. 

I would like to thank Chairman Graves, Mr. Barrow, and Committee members for your kind attention and the opportunity to testify. I would be happy to answer any questions following the testimony. 

[Mr. Deeter’s testimony may be found in the appendix.] 

Mr. GRAVES. Thank you, Mr. Deeter. I apologize for the interruption. Everybody should be happy to know that if we do have an attack in Washington, that our system is working well. 

Next, I am going to turn it over to Mr. Case to introduce our next 

witness. 

Mr. CASE. Thank you, Mr. Chair. Thank you for the courtesy, 

and also thank you for, first of all, highlighting through this forum 

something that is obvious to all of us but not so obvious sometimes 

outside of the Capitol, and that is that small business is agriculture, and agriculture is small business; in this country, most of 

agriculture is small business. Also, thank you for the subject matter of the hearing where I think legitimate concerns are often overshadowed by the wrong information and other concerns. 

18

I am really happy to introduce Delan ‘‘Rusty’’ Perry from my own 

home state, my constituent. Delan was born and raised on the island of Oahu and graduated from the University of California at 

Berkeley with a degree in political science. He immediately made 

two very good decisions. The first decision was to abandon the political track and go into agriculture. The second decision was to 

move to my home island, the island of Hawaii, where he went into 

agriculture 30 years ago now, focusing in the very rich, volcanic 

soil of east Hawaii on the island of Hawaii, which, if anybody 

knows that area, is literal a volcanic zone. In fact, where he grows 

papaya and other crops, I actually went down at eight years of age 

from the town of Hilo to watch the volcano erupt in 1960. 

He has owned Kapoho Grown, a diversified ag. farm, for 30 years 

now. He grows a number of different crops as part of the diversified 

agriculture industry of our Hawaii. Papaya is his specialty. Papaya 

is our eighth-largest crop at the moment. By the way, if you want 

to get into some of the history, the four largest crops in Hawaii are 

pine sugar; seed corn, which is clearly intensive in the genetic engineering area; macadamia nuts, all of which have a very heavy component. 

He is the past president of the Big Island Farm Bureau. He is 

the president of the Hawaii Papaya Industry Association. He is the 

president also of the Big Island Banana Growers Association. We 

do a little bit of everything there, and I think he has a real story 

to tell about the reality of genetic engineering, and I am looking 

forward to your sharing the story with us. Thank you for being 

here. 

Mr. GRAVES. Mr. Perry, I, too, want to thank you for being here 

and appreciate the fresh papayas that you brought with you. It is 

not something we get in Washington or Missouri very often, and 

I do appreciate that. Very good. 

STATEMENT OF DELAN PERRY, HAWAII PAPAYA INDUSTRY 

ASSOCIATION 

Mr. PERRY. Okay. Thank you very much, Mr. Chairman. Thank 

you, Representative Case, and thank you, members of the Committee. I am really honored to be here, although it is a little ways 

to come. Aloha and good afternoon. 

My name is Delan Perry. I have been a papaya grower on the 

Big Island since 1974, and I am here today representing the Hawaii Papaya Industry Association, which is a state-wide, voluntary 

association of growers, packers, shippers, of which I have been 

president for the last seven years. 

I am always happy to share our experience in commercializing 

virus-resistant papayas. We call it ‘‘The Papaya Story.’’ I am proud 

of the success that we have had using this new technology that was 

brought to our crop. We certainly did not choose to have papaya 

ringspot virus come into our farm and almost put us out of business, but we are happy that some visionary scientists recognized 

the potential for this technology in the late 1980’s and that by the 

time this fatal papaya virus came to our major growing area, a 

transformation had been proven to be highly resistant. I also believe our experience can be useful to other specialty crops, both in 

the United States and throughout the tropics and subtropics. 

19

In 1992, as chairman of the Papaya Administrative Committee’s 

Research and Development Subcommittee, it became my job to take 

a research project and find a way to put it into our growers’ hands 

before everyone went out of business. The need of literally several 

hundred pounds of seeds, not hundreds of thousands of pounds of 

seeds, meant that there was really, in reality, little economic incentive for anyone else to do the job. Being farmers, we figured, yeah, 

we can do this. 

The period between 1992, when the virus moved to Puna, which 

is a district on the Big Island, and 1998, when the United States 

deregulation as well as licensing of the relevant intellectual properties was completed, was a very hard time for my farm, as well 

as hundreds of others of affected papaya growers. Our employees 

went from 17 to one, and I took a job managing an agricultural 

supply co-op for 27 months. I counted the months. We did not plant 

papayas for two years. If the transgenic papaya had not been in the 

works, I would never have gone back to growing papayas. 

One of the things, I think, that differentiates our experience with 

genetically modified crops is that our grower association, at that 

time, the Papaya Administrative Committee, which was a federal 

marketing order, and its successor, Hawaii Papaya Industry Association, with the help of a dedicated group of researchers, took all 

of the steps to bring this elegant solution to a fatal virus to our 

growers through several things: licensing the appropriate intellectual properties; deregulation with USDA, EPA, and FDA; production of seed—we got in the seed business; very importantly, demonstrating to both the growers and the wider community the efficacy and the need for the technology; development of a distribution 

plan; development of a marketing plan that had to come; and later, 

deregulating our papayas with Health Canada, so we deregulated 

into Canada, and now we are finishing up the deregulation process 

in Japan, a very important export market. 

Today, almost 60 percent of Hawaii’s papayas have a resistant 

gene in several varieties chosen for their special micro-climates and 

markets. Over 200 growers have received a sublicense from our association to grow transgenic varieties. An important issue, segregation of varieties for the market, and the issue of pollen flow are related issues and an area that we continue to do research in. We 

believe an important future of our industry is to be able to market 

a variety for every taste. Papaya is also marketed as a whole food, 

which sort of sets it apart from other transgenic crops. It is not 

going to be blended. 

Thus, keeping varieties separate is an important key to market 

expansion. Also, Japan, for instance, has a zero tolerance for nonderegulated, transgenic products. For these reasons, segregation of 

varieties has become much more important. The Hawaii Papaya Industry Association, together with the Hawaii Department of Agriculture, developed and implemented an identity preservation protocol. Since implementation over two years ago, over 800 acres of 

nontransgenic papayas have been certified, and with careful handling requirements, no transgenic papayas have been shipped to 

Japan. Upon deregulation, we will expect the zero tolerance to be 

relaxed, but we have shown that it is achievable. 

20

We have also found that growers, especially inexperienced ones, 

have made mistakes in obtaining seeds or, in the case of organic 

growers, wanted tolerances less than five percent, which is the industry standard. Since our ongoing research shows that cross-pollination is very limited, I believe that, talking to your neighbor and 

using simple and reasonable practices, all papaya growers will be 

able to grow different varieties side by side without problems. 

We will have the scientific basis to make recommendations before 

long on optimal distances between varieties to ensure varietal integrity. In fact, most growers already successfully grow two or more 

varieties side by side to support new markets and hedge their virus 

risk. On our farm, we grow three different varieties. 

Papayas are a very important crop throughout the tropics and 

subtropics. Papaya ringspot virus is, likewise, a nasty problem 

most places. Many countries in South America, the Caribbean, Africa, and South and Southeast Asia are working on their own 

transgenic papayas using local scientists, local strains of papaya 

ringspot virus for protection of their local papaya varieties. 

The Hawaii papaya story is told in many places. Just in the last 

few months, we have had visitors from Thailand, the Philippines, 

and Vietnam wanting to see for themselves how well the technology has worked and what challenges we have overcome. 

Though consumer acceptance has been very good in Hawaii and 

the rest of the U.S. and in Canada, we will have a different challenge in Japan when deregulation is finished because of the labeling requirement. Even though transgenic and non-transgenic papayas are substantially equivalent, I want to acknowledge the 

great help of the Foreign Agricultural Service that has been providing market research, map and task funds, and much other support as we approached this challenge. 

Surprisingly, one of the most important consequences of our successful commercialization of transgenic papayas has been the attention of the scientific community on papaya research other than 

genetic engineering. It is particularly exciting that the Hawaii Papaya Genome Project will sequence the whole papaya DNA. Sometime next year, they will be completed. Not only has this sped up 

the answering of regulatory questions on molecular biology, but we 

will soon discover new neutriceuticals hidden in the genome that 

will be the basis for more papaya usage in the future. 

I want to leave you with two thoughts. As a commercial crop for 

domestic and export sales, Hawaii papayas would not have survived without this technology. And I hope you will agree that our 

papaya can be a model for other small specialty crops which need 

to overcome a similar challenge. I believe we have demonstrated 

this. Papayas are once more a growth industry seeking new premium markets. 

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

I will be happy to answer any of your questions. 

[Mr. Perry’s testimony may be found in the appendix.] 

Mr. GRAVES. Thank you, Mr. Perry. 

We will start with questions, and I actually have one for all of 

you, and just to give you a little bit of background on one of the 

reasons why I am so fascinated with this and one of the reasons 

I am so interested in this is this is actually my area. My degree 

21

was in plant physiology, and I had every intention after I got out 

of college—obviously, I went back to the farm, and I had every intention of getting a master’s and possibly a doctorate in this field, 

in plant chemistry. Unfortunately or fortunately, however you want 

to look at it, I got sidetracked into politics, and that is where I am 

today. That was not my original track, but it is where I am going, 

and now I have an opportunity to see and help foster some of the 

advancements that are coming at us. 

When I was in school, which was in the early eighties, we were 

just talking about—in fact, Mr. Deeter touched on protieomics and 

breaking it down at the protein level and some of the wonderful opportunities of marrying plant science and human science together. 

And, of course, a protein, it does not matter if it comes from a plant 

or a human; it is the same thing. 

But I would be interested in knowing from your respective areas, 

and you are all experts and very knowledgeable in your areas, and 

it does not matter whether it is production outcomes you are looking for or human health outcomes or whatever the case may be; I 

would like to know what you think out there as to what is going 

to knock the public’s socks off, what is one of the wonderful things 

that is going to happen? It may be production, it may be human 

health, but tell me what is fascinating on the horizon today, and, 

Mr. Huttenbauer, we will start with you. 

Mr. HUTTENBAUER. Thank you. From our standpoint, obviously, 

as a plant-made pharmaceutical company, the thing that we hope 

will ultimately knock the public’s socks off is the ability to really 

produce high-quality and low-cost health care. But in particular, 

some of the targeted proteins that we are looking into are proteins 

that cannot be created in the abundance that they are needed to 

be created to address certain health care needs. 

I have one example of approach that we are working on. It is a 

disease that afflicts about 50,000 people worldwide, and because of 

current production constraints, and this is a particular blood protein, only about 14,000 patients can be treated on a yearly basis. 

In addition to that, the actual costs of those treatments are in excess of $30,000 per patient. 

So one of the advantages plant-made pharmaceutical has is to 

not only allow for the entire 50,000 patients to be treated but also 

to dramatically lower the cost of the health care. For some people, 

they just simply could not afford it even if it was available, and I 

think that is one of the greatest advantages that we can bring to 

the future. 

Mr. GRAVES. Ms. Parks? 

Ms. PARKS. People, in general, have an extraordinarily personal 

relationship with forests, and they do not realize the number of 

products that actually derive from forests and all of the downstream products that come from the manufacturing processes. And 

I think one of the most exciting things that could be available for 

the public is if they could actually maintain that really strong personal relationship with the forest and have a mechanism to be able 

to produce a lot more wood on a lot less land so they could have 

the products that they want and be able to have the personal experience with the forest on a regular basis or whenever it is that they 

want that experience. 

22

Mr. GRAVES. Mr. Dollar? 

Mr. DOLLAR. One thing you say that would knock the socks off 

of biotech—I am in the rain belt, the southeast United States, but 

we do not get rain when we need it, so we have to have irrigation. 

I have 26 irrigation systems running most of the time when we 

need it. But water issues are becoming bigger and bigger, so if we 

could develop plants that are more water tolerant and do not have 

to have as much water, I think that would be one big item that 

would affect everybody. 

Mr. GRAVES. Mr. Deeter? 

Mr. DEETER. Well, my socks are already off. I am impressed with 

the papaya story. Actually, that, to me, is a major story that really 

is not out there, quite frankly. You do not hear about that in the 

press, that we would not be eating papayas today, but that knocks 

my socks off. 

But I would say that I think there is another item, and that is 

I am reminded when the human insulin gene was cloned, biotechnology—this was 20 years ago—biotechnology was a scary idea, 

and there was a lot of concern about biopharmaceuticals. But when 

we cloned the human insulin gene and were able to produce insulin 

for diabetics, all of a sudden we had a real product for real patients 

to solve a real, life-threatening problem. And I think that is the 

same for plant-based biotechnology, that as we have a story like 

the papaya industry, something that was saved by biotechnology, 

to me, that is important. But when we also have a mother that can 

stand up and say that my child is alive today because of plantmade pharmaceuticals, and that I could neither maybe afford that 

product before, or I did not have that product before, to me, that 

is when the public stands up and says that is amazing. 

Now, in order to get there, we have to have a science-based, regulatory process, and we have to have the research and development 

because, from the data that I am aware of, it takes 10 years to get 

to that point, from the time you start until you actually achieve it. 

So that is what I see as the knock-your-socks-off application in 

plant biotechnology. 

Mr. GRAVES. Mr. Perry? 

Mr. PERRY. Well, I think, from a papaya grower’s standpoint, 

having a papaya in every kitchen would be really great. But looking at the larger picture, I think, in our industry, the thing that 

is most exciting to me is the potential for not necessarily our industry but solving the papaya ringspot virus in places like Bangladesh 

where they really need an easy-to-grow crop full of Vitamin C to 

supplement their diet, and they cannot do it now because they have 

a virus, and this is something that they will be able to commercialize in the foreseeable future. 

And the same thing goes for Thailand where papaya is a very important fruit. They got ringspot in there, I think, 15 years ago, and 

now it is really hard to grow, and this is the same story you will 

find in a lot of places. In Brazil and Thailand, papaya farmers run 

into virgin forests, chop them down,—you have heard this before—

running away. This is not something that has to be happening in 

the future for papayas anyhow. 

Mr. GRAVES. Thank you. I have got a lot of questions, but I am 

going to let some of the members ask theirs. Mr. Case? 

23

Mr. CASE. Thank you very much Mr. Perry. Let me just ask you 

a couple of questions, going back to Hawaii ag., and I would like 

to have a few more questions after you, Mr. Chair, on some other 

aspects. 

You and I both know that in Hawaii we are doing some of the 

most advanced tropical and subtropical agricultural research in the 

world, whether it be the papaya story or other crops, through the 

USDA, which has major facilities in Hawaii, including the Pacific 

Agricultural Research Center right now in Hilo. Can you just outline perhaps some of the other applications of genetically engineered solutions in Hawaii, whether it be from a disease-resistance 

perspective or from a crop-yield perspective or, for that matter, the 

cotton water-tolerant analysis? What are the other things that we 

are doing in GE? 

Mr. PERRY. You may know the list better than I do. The ones I 

am familiar with are there is some work on sugar cane. I do not 

know exactly what they are looking for. In pineapple, they are looking for nemintode resistance, which is a serious problem that utilizes a whole lot of chemicals that is accomplishable using genetic 

engineering. Right now, there is some work on orchids, and in that 

area, they are looking at a nice, dark-blue orchid that has a gene 

that is not available in the regular population. The seed corn industry, as I think you mentioned, is a huge part of our agricultural 

sector now, and there are a number of companies doing a lot of developing new varieties using our multiseason growing conditions. 

Mr. CASE. And then to go back, just briefly, to the comments you 

were making about the ringspot virus situation, the solution to 

that, as well as these other GE applications, is done in conjunction 

with the federal research facilities, USDA. Could you just talk a little bit about the relationship between the private sector and the 

federal government’s agricultural research and scientific facilities? 

Mr. PERRY. Well, we have been working with various research, 

USDA research, in the past. I think the ground breaking just last 

week for the facility in Hilo is a great opportunity to house everybody together in potentially a large facility serving not only Hawaii 

but the whole Pacific Basin. The director, Dennis Gonsalves, is the 

person that actually made the cassette that was inserted into the 

papaya back in Cornell in the eighties. He is one of these visionary 

scientists that I was talking about. We maintain a continuing, really good relationship with them. They have helped us out enormously in coming up with the microbiological research to finish our 

deregulation process in Japan. 

Mr. CASE. Just so I can be clear on deregulation, ‘‘deregulation’’ 

refers to the fact that they are going to let the product in and allow 

it to be marketed. Right? Is that essentially what that is? 

Mr. PERRY. Well, you know, if you ask them, they say it is a safety review. We say it is deregulation, but that is what it is. Every 

country has their own set of rules that you have to go through, 

and, in some cases, they require extra research, things that we did 

not have to do for FDA, looking at different aspects, and that is 

what we think we have completed in Japan. So getting all of the 

safety information or data that they think is necessary to say, 

yeah, this something we want our people to eat. 

Mr. CASE. Thank you. 

24

Mr. GRAVES. Mr. Sodrel? 

Mr. SODREL. I heard a little bit earlier about the crop separation 

and making sure the genetically engineered crops did not get mixed 

in with other crops. What is the worst-case scenario, if they do get 

mixed together? 

Mr. HUTTENBAUER. To properly answer that question, I would 

have to say it would depend somewhat on what the actual output 

product is that is being engineered. The worst-case scenario in the 

two targeted outputs that we are going after would be that an organic flax farmer, for instance, would not be able to indicate that 

they actually had organic crops. The actual molecules themselves 

are completely harmless if ingested, so that would not be an issue 

in terms of contamination. 

I think it is interesting that even though there have been some 

instances of crop contamination that have been highly publicized, 

and I referred earlier to the Starlink corn, there has not been a single case of anyone being harmed from a genetically modified crop 

in the entire history that they have been developed. I think regulations are in existence that are doing a pretty good job of keeping 

that from happening. I think they are advancing. 

As technology advances, things such as gene containment can 

further advance that crop separation, but I cannot say that there 

is not something that is being devised right now in a plant that if 

it did get into a food system could not be harmful, but that is also 

why the systems for containment exist. 

Mr. SODREL. So it is fair to say it is more a perception problem 

than it is a reality problem. 

Mr. HUTTENBAUER. I would say greatly so. In my experience, the 

Starlink corn gets brought up time and time again, and, you know, 

it was an unfortunate incident, and one of the problems perhaps 

with corn, because of the pollen transfer, and also the folks from 

Ventria mentioned that the use of self-pollinating crops is one way 

to mitigate that containment issue, as we go forward there are lots 

of new ways to do this well. But I would say, largely, it is a selfperception issue versus the reality of the dangers there. 

Mr. SODREL. Thank you, Mr. Chairman. 

Mr. GRAVES. Thank you, Mr. Sodrel. 

My next question is probably for Mr. Deeter and Mr. 

Huttenbauer. Can you talk a little bit about how your technologies 

might be used in other areas of agriculture, animal agriculture, for 

instance? Go ahead, Mr. Deeter. 

Mr. DEETER. Sure. In fact, that is an interesting question because Ventria has been looking at the opportunity to replace antibiotics that are used in production agriculture today with a natural 

and a microbial protein that could be produced in the seed of barley, for instance. These could essentially eliminate the need for 

antibiotics in confined animal feeding operations. 

Now, today, antibiotics are used broadly, of course, because they 

not only promote growth, but they also keep at bay the pathogenic 

infections that can be devastating for a confined animal feeding 

program. But if we could deliver in the barley, ground, pulverized 

powder, say, of barley that contains an antimicrobial protein and 

eliminate the need for the antibiotic, that would be significant not 

only for animal health, but there is a significant impact to human 

25

health because these same antibiotics that are used in animal production agriculture can potentially cause resistance to develop in 

the human population and make the antibiotics that we use for 

human health less effective. 

So if we can eliminate pathogenic infections and do that without 

a loss of the benefits of antibiotics, that would be significant. 

Mr. HUTTENBAUER. Along with animal antibiotics, one of the 

things that we have been looking at in terms of the effects on animals is essentially enhancing animals’ health effects on humans 

consuming them. One of the things that we have undertaken is a 

study of cattle being fed using DHA-enhanced flax in a feed program which ultimately translates the health benefits of the Omega 

3’s into the cattle so that humans downstream consuming them 

could take advantage of those healthy benefits which currently are 

basically limited to fish or fish oil supplements. As well, we have 

looked at programs involving chicken feed and the healthy benefits 

being imparted on the eggs as well, again, really around Omega 3. 

So that is one avenue in terms of animal health that could be applied with this. 

Mr. GRAVES. I am curious, real quick, Mr. Perry. You mentioned 

possible markets,—Europe, China, Korea—and Europe has traditionally resisted GMOs considerably, and it has been a little bit of 

an education process, but we are still not there yet. I know you are 

look at those as potential markets. Do you have any ideas on how 

you are going to combat that or work through that or what you are 

going to do to try to get them to overcome their fears, you might 

say? 

Mr. PERRY. Well, to start with, one of the things that we have 

relied on is voluntary researchers, and that has slowed the process 

down a little bit, and for that reason, we are chewing these deregulation issues off country by country, one by one, and after we finish 

Japan, we do sell papayas to the EU. I think this is something that 

we believe we will have all of the basic research that they will ask 

for, and the same would be true of China and Korea. 

The future for us is looking at premium markets. We cannot 

compete with some of the South American countries for price because of our costs, but we can look at premium markets, and these, 

because it is so difficult to grow nonvirus-resistant papayas, these 

are things that the countries are going to have to look at, going 

through the same deregulatory process. 

Mr. GRAVES. Mr. Case, did you have a follow-up? If you have got 

a follow-up, go ahead, Mr. Sodrel. 

Mr. SODREL. I just have a question. Ms. Parks, in my district, 

about 20,000 people make their living out of forest products, so 

trees are of great interest. The ash borer in Central Park in New 

York; they have got smoke jumpers crawling up the trees trying to 

find the trees that are infected. 

You talked a lot about growing the trees faster and the makeup 

of the tree, the pulp content and so on. Can we also look for disease-resistant or insect-resistant trees as well? 

Ms. PARKS. Absolutely. ArborGen is currently not working on disease or pest resistance because we are working with more commercial species in the southern United States and in Brazil, but there 

are quite a few universities who are actually looking at different 

26

ways to manage pest and disease resistance, and, in fact, Syracuse 

University and the State University of New York are also looking 

at how can they expand their programs to try to address some of 

those issues as well. 

Mr. GRAVES. Mr. Case? 

Mr. CASE. Thank you. Since we are in the Small Business Committee, let me ask you some questions related to federal programs 

available to small business. I have a suspicion that I have never 

actually checked out—perhaps it is just more anecdotal—that agriculture small businesses may tend to access our federal government programs at a lower rate than perhaps other kinds of small 

businesses, technology or whatever else. 

I do not know if it is true or not; it just occurs to me that it 

might be true, and I am not talking about USDA scientific because 

I think agriculture has been able to access that just fine, at least 

from my perspective. But I am talking about things like the EDA 

and the SBA and USDA rural development. Have each one of your 

companies utilized those programs of the federal government in the 

small business area for venture capital, start-up loans, basic advice, and how is it going from that perspective? I will just go right 

down the list. If you could just briefly give me a quick picture. 

Mr. HUTTENBAUER. From our standpoint, we have not utilized 

them, and the reasons were twofold. One was, as I think you alluded to, the relatively small size of the potential contribution, and, 

secondly, because we are dealing in biotech, and there is a degree 

of secrecy in what we are doing, the initial thoughts were to maintain some of the secrets, if you will, of what we were developing, 

so we chose not to go that route for initial funding. 

Ms. PARKS. We have only just begun exploring some of those programs. In the first place, we started this with the SBIR and discovered that, at this point in time, those funds are not available to us. 

But forestry in general and forest biotechnology is very underfunded at this point in time, so we are trying to look at a lot of 

different options that we could approach the government for funding. 

Mr. DOLLAR. We currently do not use anything. We have looked 

at some SBA loans when we have had some hurricanes come 

through, and we were ineligible for those SBA loans. When we did 

start the first cotton gin in 1988, we used FHA business and industry loans, and other than about eight inches’ worth of paperwork, 

they were very helpful for our gin because there had not been a gin 

in our county since 1922. So our bankers were a little reluctant to 

put a gin in without a little back-up help, so we were able to secure 

a business and industry loan from FHA in ’88. 

Mr. DEETER. We have received recently an SBIR grant, Phase I, 

for $100,000, which is really our first foray into a collaborative program with the federal government, but that is something that we 

believe, especially with the case of the prevention of military diarrhea, that is obviously something for benefit for DARPA, so we will 

explore that opportunity. We will also explore other SBIRs. I think 

that is something that we have not done a lot of. We are only 15 

employees today, but it is something that we would really like to 

do going forward. 

27

I must say, it does take some time. It takes the time of some of 

your best people, and the process to receive that type of funding is 

fairly significant. I think the first phase is $100,000. Of course, it 

can be larger than that going down the road. To put that in perspective, to date, our investors, which are all individuals, have invested $35 million in Ventria to get us to where we are. So 

$100,000 out of $35 million is the share. 

Mr. PERRY. Well, I think I mentioned earlier that we have a very 

good relationship with the Foreign Agricultural Service, and we 

have utilized their programs for our papaya administrative Committee before and now the Hawaii Papaya Industry Association. 

Two years ago, we got a task grant to help us complete some of the 

research for our Japan deregulation 

Mr. CASE. Thank you. Very helpful. 

Mr. GRAVES. Dovetailing on talking about the small business aspects, and I do want to change gears just a little bit, and this may 

be more for Ventria and Agragen, but as far as developing your 

technology, growing your technology, you might talk a little bit 

about the aspects of utilizing farmers, contracting with farmers to 

do that. Are you planning on doing that yourself? You just might 

explain what is happening there. Mr. Dollar, you may have some 

experience with that, too, but go ahead. 

Mr. DEETER. Actually, our technology, we use today contract 

growers that grow, and these are growers that have been certified, 

trained growers. They are monitored. There is quite an auditing 

process and inspection process. We will expand that grower base as 

the company grows and as our products develop and commercialize. 

Our first two products, Lactiva and Lysomin, represent tens of 

thousands of acres, so it is not millions of acres initially, but it is 

a start. We seek growers that have the skills and capabilities, and 

most importantly, the desire to learn the skills and capabilities for 

our type of production because this is a very different type of production than commodity food production, a totally separated, totally dedicated type of production with new skills, new capabilities. 

What is the payoff? We expect these growers will make double 

what they could make with their best alternative commodity production, so they will make two times what they can make with 

their next best alternative. They will not only make more money, 

but they will be trained in new areas, and those skills and capabilities will also, we believe, have value down the road. 

To put this in perspective, once we are fully commercialized, we 

expect the first two products that we are developing to increase, 

and this is an increase over what they could make in their best alternative—it will increase their income by $10 million every year. 

Now, this is, again, tens of thousands acres; it is not millions of 

acres. It will be very significant for those growers who elect to participate, but, again, our first products will not be millions of acres. 

That is really not our plan. 

I want to also mention, the amount of federal crop subsidies that 

Ventria receives is zero. These crops are not subsidized at all, so 

it is a 100-percent benefit to the grower. 

Mr. GRAVES. That is a good point. 

Mr. HUTTENBAUER. I think a lot of what we are doing is mirrored 

with Scott’s commentary, and I should also point out that they are 

28

further down the road than we are. We are looking at also going 

with the contract grower system. We have commitments now for 

roughly the first 16,000 acres when we get to the stage when we 

are actually planting. Again, the importance of establishing a contract grower system, because of the closed-loop network of how this 

has to be contained and the regulatory environment, it is almost 

essential to have a preestablished network of farmers. 

As I pointed out in our testimony, we are truly looking at largescale agriculture. The first two components that we are going to be 

making are upwards in the neighborhood of 100,000 acres, so the 

potential for a rather large contract grower network exists. 

As PMPs advance, I can certainly see a lot of the learning that 

is derived from some of these initial companies being passed down 

and farmers forming actual PMP growing networks, if you will, 

going forward that are established exclusively for PMPs because 

there will be some isolation to that, and you could get to the stage 

where a certain portion of a state may be set aside for specific PMP 

farming. 

Mr. GRAVES. In agriculture, as profit margins get squeezed narrower all of the time, and that is happening all of the time, you 

know, we are obviously looking for more opportunities to make agriculture work. Unfortunately, we are price takers on both sides. 

We do it a little bit different than other industries. We buy everything retail and sell everything wholesale, so we are price takers 

at both ends, and we have to find opportunities, and I think these 

are wonderful opportunities to be looking at. Mr. Case, do you have 

any more? 

Mr. CASE. Just a quick question. The federal government obviously regulates genetically engineered crops through a tripartite 

regulation structure. Last year, the secretary of agriculture opened 

up a docket to take comments on the potential revision of those 

regulations. Did any of you participate or make submissions on 

that docket or, through your trade industries, make any recommendations, and what were they if you did it? 

Mr. DEETER. We have been involved through the Biotechnology 

Industry Organization. First of all, as, I think, the history of mankind shows, when technologies like plant biotechnology first enter 

the public domain, there is often a violent and very emotional reaction, and it has been true for biotechnology in general, not only 

plant biotechnology but biotechnology in general. I would say, 

thanks to a scientifically driven, regulatory process, we have allowed the differences of opinion to surface. We have been able to 

consider the scientific facts, and we are not swayed as much by the 

emotional arguments that are really meant to stymie the innovator 

and arrest progress in these important areas. 

I think that we have got to keep steadfast in the science-driven 

regulatory process, and with BIO’s help,—Ventria is a small company, and we do not have a team that can spend a lot of time working with new types of regulations, so we work mostly through 

BIO—we have been able to improve upon the base of regulatory 

structure. We have been working with new regulations related to 

advantageous presence so that it is more of a scientifically sound 

approach. 

29

The member asked the question, what would happen if there was 

a contamination? Well, I cannot speak for every product, but I can 

speak for Ventria’s products. You know, it is in mother’s milk. 

These proteins are in saliva. They are in our tears. What would 

happen? You might be healthier. 

So I think we need to remove the emotion, focus on the scientifically driven, regulatory process and do not put in regulations that 

serve no other purpose if there is really no scientifically valid reason for it. 

Ms. PARKS. ArborGen participated on behalf of ArborGen and as 

part of BIO and as part of a coalition that was developed for perennial and specialty crops, and our position had been, when we spoke 

with APHIS, is that the current regulations obviously demonstrate 

that there is a lot of safety in the way the regulations are currently 

enforced and that any new regulations should still continue to be 

developed so that decisions are made on a case-by-case basis based 

on the product, the trait, species of interest, and that APHIS 

should have the opportunity to streamline processes where the biology of the plant is well understood and where the application of the 

plant in the field is well understood. 

And so we have, in our conversations with APHIS, just strongly 

encouraged them not to create any kind of overburdensome regulations based on a particular type of plant or the nature of the plant 

as in a perennial crop simply because they are gaining experience 

with how that product or that crop works because the system to 

date has worked very well, and we would fully like to have our 

products go in under the current system or with modifications 

made for the specific trait or species of interest that we have. 

Mr. GRAVES. Mr. Barrow? 

Mr. BARROW. Thank you, Mr. Chairman. I apologize for my absence, but my other Committee is meeting and marking up a bill 

today, and so I had to be running back and forth, and I appreciate 

your indulgence and that of the witnesses. 

I would like to ask Mr. Dollar a couple of questions, if I can, that 

are matters that I do not think have been covered. First of all, I 

will preface this by saying, I am sure that the farmers here who 

farm for a living and some of the old hands on this Committee do 

not need an education in all of this stuff, but I am fascinated to 

learn the impact that biotechnology is having in such matters as 

fighting weeds in crop production. 

So, Mr. Dollar, for those of us who are not all that well versed, 

either by background or experience, could you help us have a better 

understanding of just exactly what biotechnology is helping you all 

do and making it easier for you all to manage crop production dealing with weeds? 

Mr. DOLLAR. Well, before Roundup Ready crops, we used several 

different methods, most of them called Blue Steel, which you had 

to have a good tractor operator and a good piece of equipment, and 

you would plow the fields, but you could not get all of the crops. 

Then with the advent of 24D’s and atrizenes, we had not hard 

chemicals, so to speak, but chemicals that left a residual, and they 

would show up a couple of weeks later or may interfere with a crop 

that is planted in a rotation behind the crop that you are planting 

at a certain time. 

30

So with the advent of Roundup Ready crops, we do not have any 

residual left over, so we can plant a vegetable crop. In south Georgia, we are 20 miles from the Florida line, so we will have sweet 

corn following cotton, or we will have snap beans following cotton, 

or we will have peanuts following cotton. So with the advent of 

those crops following the crops that we are growing, we do not 

want to put a harsh or long-residual chemical out there that may 

show up in a nontarget crop. 

So the Roundup has been efficient for that for us, and also sometimes you would have to spray a multitude of chemicals to kill a 

grass, to kill a broad leaf, certain types of monocot plants or dicot 

plants, you would have to use several different herbicides, and 

those would be very cost prohibitive on a low-input crop like soybeans or field corn, and Roundup has leveled the playing field, so 

to speak. 

Mr. BARROW. In some of the testimony we heard earlier today, 

folks were talking about trying to segregate or keep new, innovative crops and products of biotechnology away from the larger population for a variety of reasons. That brought to mind something 

I wanted to discuss with you, and that is how are you in the industry, how are farmers and the folks who are supplying you all with 

biotechnology, how are you all responding to the concerns that folks 

have about growing a generation, if you will, of pests that have increased tolerance for the things we are engineering into the plants 

to make them resistant to the pests? What are you all doing to deal 

with that because I know that is a concern on the part of folks generally? 

Mr. DOLLAR. Well, in cotton, the crops, what we will do is we will 

have a 20-percent rule or a 5-percent rule that when we are planting a non-BT or non-Roundup Ready crop that we will basically let 

that crop go to waste so that, say, on BT cotton, we will not spray 

it with any type of chemicals so it will host a generation of pests 

or insects that may be tolerant at one time or another to BT, but 

then it will decrease its vulnerability to be more tolerant over the 

long term. 

Monsanto, which developed a lot of this technology, along with 

the EPA, mandate what we do as farmers and how much land we 

leave out and plant to a host crop so we will not have a problem 

later on down the line. We are very keenly aware of how beneficial 

this crop has been to us from the advent, so we, as farmers, adhere 

to those rules, the 100 percent, and Monsanto is also developing 

some crops. Bollgard II, that was a new type of crop that will work 

better on armyworm complex, and then eventually they will phase 

out the Bollgard I altogether so we will not build up any resistance. 

Mr. BARROW. It sounds to me like what you are saying is you will 

sacrifice, you will, by design and by practice, by good management 

practice, sacrifice a percentage of your crop for the greater good of 

making sure that you do not evolve or grow a whole generation of 

pests that will be able to overcome that engineering. 

Mr. DOLLAR. Correct. 

Mr. BARROW. Two questions as a follow-up to that. One, are you 

still able to make more? Does the increase in productivity, despite 

that sacrifice, still make it a good deal for you all? And, secondly, 

is this something you all are just doing on the buddy system, on 

31

the honor system, or is this something that is mandated and actually policed to make sure that these best-management practices are 

actually followed? 

Mr. DOLLAR. It is mandated by EPA, and then Monsanto and— 

[Loudspeaker announcement.] 

Mr. BARROW. To return to my question, the concern I had was 

that while it is a good idea for everybody to do that in order to 

make sure that you do not grow up a generation of pests that have 

an increased tolerance of this, how are they making sure that everybody is doing that so that nobody is going to opt out of that system in order to get that extra 5 or 20 percent of capacity out of 

their crop ? 

Mr. DOLLAR. Monsanto and EPA; we have spot checks. They will 

come by and check fields randomly for the BT gene in the cotton 

plant. Probably the biggest policing person we have is your neighbor because your neighbor does not want you to get an edge up on 

him. So I think there has been more farmer-to-farmer tattle telling 

when there have been instances or occasions than the greater good 

that Monsanto or EPA can do because everybody wants to be treated the same, and everybody wants to make sure they get treated 

the same. 

Mr. BARROW. I understand. I appreciate that. And, finally, something you touched on in your testimony earlier, I want to return 

to, and that is the subject of what some folks refer to as the technology fees, the research and development costs, that are passed 

along for the products of biotechnology. Can you give us your assessment of whether or not they are reasonable in light of the benefits? 

Mr. DOLLAR. Well, in light of the testimony of the people to my 

right and the people to my left in talking about funding from other 

sources to try to develop this, developing technology is a very expensive way to make a living, and with that in mind, the technology that we pay as farmers is always too much. Anything we 

have got as farmers is too much fee, but with the farmers in mind 

and the amount of money that we spent prior to the 1988 or prior 

to 1995, when we started going to Roundup Ready and BT crops, 

it is a value. There is a lot of value. We are saving $167 an acre, 

and our technology fee is not even a third of that. 

It is grumbling when you look at your end of the year, your P&L, 

and you say, I paid X number of dollars to a technology fee, and 

that bothers you. It is like you look at the end of the year, and you 

see how much money you spent on groceries or anything else, and 

when you itemize it up, you say it is a lot of money, but if you 

turned around and itemized how many bills you would have had 

spraying all of these different chemicals and all of these application 

costs, you do not have that to look at now, so you tend to forget 

about it, and you tend to complain. 

Mr. BARROW. Thank you, Mr. Dollar. 

Mr. DOLLAR. Thank you. 

Mr. GRAVES. I apologize for the interruption again. Stay away 

from the Hart Building and welcome to post-9/11 Washington, 

D.C., unfortunately. Sometimes we have those a lot; sometimes we 

do not. Unfortunately, that is part of the process today. 

32

I want to thank all of the witnesses for being here again. All of 

the statements made by members and the witnesses will be included in the record in their entirety. I do appreciate some of you 

came a long ways to be here, and I do appreciate it. 

I want to introduce one individual who is here, State Senator 

David Clint from Missouri, who is a leader in biotechnology as both 

a producer and as a member of the state Senate in Missouri. I am 

very pleased that he came out here to hear this hearing. David, 

thank you for being here. 

I also want to make sure everybody knows we are having a reception in this hearing room at 5 o’clock for all of the witnesses 

who are here, if you can stick around, and for the audience to 

know, too, if you can stick around, please come back and attend 

that. It will be right here in this hearing room on the balcony, if 

you can make it. I hope you will be here. 

Thank you all for coming, and I appreciate it very much. Very 

enlightening. This is cutting-edge technology, and it fascinates me, 

and I am looking forward to moving forward with it. Thank you. 

[Whereupon, at 3:49 p.m., the Subcommittee was adjourned.]

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