WEDNESDAY 1 JULY 1998

DR KENNETH BAKER, MISS ANN FOSTER and DR STEPHEN WATERS

  324.  Good morning, Dr Baker. Can I welcome you and your colleagues to Sub-Committee D and thank you very much for having agreed to come and give evidence to us to help us in our enquiry into genetic modification in agriculture. Could I start by asking you to introduce yourself and your colleagues and perhaps say which parts of Monsanto you come from? Perhaps at the same time you could say what is the extent of Monsanto's activities in this country and Europe at the present time.
  (Dr Baker)  Thank you, my Lord, and members of the Committee. We are happy to be here answering your questions this morning and providing what information we can. My responsibility is for Government Affairs for Monsanto in Europe and I am based in Brussels. To my left I have Ann Foster, who is UK-based for Monsanto and she looks after our Government and Public Affairs operations in this country and I will ask her to respond about our operations here. To my right I have Dr Stephen Waters who heads up our Regulatory Affairs operation for Europe. Perhaps Ann Foster would like to speak to the operations here.
  (Miss Foster)  In the United Kingdom Monsanto trades under the name "Monsanto plc". We have three divisions: pharmaceutical, agriculture, food and nutrition. You obviously are most interested in our agricultural division which in the United Kingdom is primarily devoted to sales of our range of agricultural crop protection products. As you know, we do not undertake any commercial sales of genetically modified seeds in the United Kingdom, although we are undertaking trials for GM seeds on the basis of the licences which have been granted by the relevant authorities.

Chairman]  Thank you very much for that background information. Perhaps we can move to our substantive questions. Lord Gallacher?

  325.  Dr Baker, what crops are now being worked on? Is the focus still on herbicide and pest resistance or has it moved to development of more direct benefit to the consumer? Is your technology assisting developing countries?
  (Dr Baker)  If I may, my Lord, I think I would ask Stephen Waters to provide the answer to that question.
  (Dr Waters)  Currently we are working on somewhere around 20 different crops. The main focus is on those crops which are widely grown throughout the world and form the basis of our diet. These include crops such as wheat, maize, soybean and rice.

  326.  What are called "commodity crops".
  (Dr Waters)  Commodity crops, yes. Also in the European context crops like sugar beet and oil seed rape. We are also working on a number of fruit and vegetable crops, including tomato, lettuce, apples, to give some examples, and a number of tropical crops such as sugar cane and oil palms. The sorts of traits that we are developing could be broadly classified into three different areas. The area which is the most advanced and which most people here are familiar with are the so-called agronomic traits. These would encompass such things as resistance to Roundup herbicides. This is being applied in a range of crops, including soybeans, maize, sugar beet, to cite a few examples, and traits such as insect protection, protection of crops like potato, cotton and maize against caterpillar pests. Further agronomic traits would be in the area of protection against fungal diseases, which is particularly important in the European context. Fungal pathogens cause significant losses in crops such as wheat and potatoes. We are looking at protecting potatoes against leaf blight disease (Phythopther), and also wheat against a whole range of fungal infections such as head scab which causes about two billion dollars' worth of damage worldwide every year. That is a review of the agronomic traits. What you would perhaps describe as traits with consumer benefits would fall into a second wave of developments. In a number of the major crops that I have mentioned we do have programmes targeted at trying to improve the quality or safety characteristics of these crops. Some examples would be that in corn we are looking at the development of modifications in the oil content and oil composition in order to produce oils which result in reduced cholesterol levels. In the area of soybean we are again looking at oil content as well as oil composition. Some examples of products which are in development are oils with an increased stearate content, a fatty acid present in oils which is important in the production of margarines, so we are developing a product which has high stearate levels which could avoid the need for chemical hydrogenation during the production of margarines. Another example is cotton; we are working on modifications to fibre strength and fibre length, also the possibility of producing coloured cotton to avoid the need for chemical treatments to change colour. Another example would be rice. We are looking at increasing the vitamin content, also decreasing the content of allergenic proteins. This is a series of products which are still at the development stage, probably two to three years away from the market as far as the earliest products are concerned. A third area is using plants as providers of raw materials, using renewable energy resources for the production of such things as pharmaceuticals, food and feed additives, also the production of biodegradable polymers in plants. Of the three waves, products are currently on the market from the first wave and the second and third waves are in development and these will lead to future products.

  327.  The question was asking about developing countries. There seems to be a great deal of concern about the use of patent protection on products such as the ones you have mentioned, even if they have great value. Is there a concern amongst developing countries which are going to use these products that they will not be able to afford your products or that they are going to suffer from the development you are making?
  (Dr Waters)  Some of the things that I have mentioned do have an immediate fit in a number of developing countries. As an example, the insect protected cotton product which was commercialised in the United States about three years ago: we are looking now towards introducing that product in both India and China. Both of those countries have significant areas of cotton, so that this product could bring immediate benefits to those countries. On the question of future products, again some of the products that I cited, such as rice, with increased vitamin content or decreased levels of allergenic proteins, clearly have a good technical fit in south-east Asia covering the whole range of developing countries. Intellectual property protection is certainly an issue as far as we are concerned, in terms of recuperating the investment in those products, but in most cases that will not stop us moving forward with the introduction of new products. We also have a number of projects under the umbrella of an organisation called ISAAA, which is a non-profit organisation whose function is to transfer technology from developed countries to the developing countries. One specific example where Monsanto is involved is in the transfer of virus resistance into sweet potatoes in Kenya. This is a project which has been ongoing since 1990, in which a number of Kenyan scientists have come to Monsanto's facilities in St Louis for training in the basic techniques of genetic transformation. We have made available to the Kenyan research institutes certain technologies and patents including the virus protection technology. We have made this available free of charge for use in Kenya in order to develop local varieties which are protected against local virus strains.
  (Dr Baker)  Just to add to that, some of the developing countries which Dr Waters has mentioned, such as India for cotton, if they can move to using this technology to produce cotton themselves, they will also want patent protection within that country because if they purchase the product and want to promote it as, for example, Indian cotton, they will want protection for that particular market themselves. There is a commercial interest in the country of origin of the product that is going into international trade and it will be important for them to protect those markets through a patent. I think we will see as one of the developments sources of many of these new biotechnology products under development as the developing countries.
  (Miss Foster)  In terms of assistance to developing countries part of the problem is access to the technology, and particularly in terms of being able to afford it. We have just begun a project under the generic name of Micro-Credit where we are investigating opportunities of working with partners to provide no interest or low interest loans requiring no collateral so that communities can themselves use this technology. We have just announced a partnership with the Grameen Bank in Bangladesh to offer these facilities to local communities and local farmers. I could let you have more information about that. The Micro-Credit project is at its very early stage but it does involve Monsanto employees working with NGOs in developing countries to try and identify areas where this particular initiative could enable people in local communities to have greater access to these technologies for their own benefit.

  328.  Could I come in and ask you about the no-tillage system? Is that a direction that you are moving in? What is involved and what sort of scale would apply?
  (Dr Waters)  Conservation tillage is a relatively recent innovation. What it is in essence is an agricultural system which avoids the need for ploughing prior to sowing. One of the great difficulties, particularly in dry climates, is ploughing results in a significant amount of topsoil erosion. As a means of avoiding erosion, systems have been developed whereby the seeds can be sown directly into the stubble of the previous crop. However, this requires chemical control of the stubble in order to avoid having the crop being suffocated by the weeds which emerge amongst the stubble. It involves a treatment with a non-selective herbicide followed by direct drilling of the seeds into the stubble. As the crop emerges, it does not face competition from the weeds in the stubble; it maintains coverage of the topsoil which protects against erosion and it also creates a favourable climate for insects and other organisms, so it is a more environmentally friendly approach to the production of arable crops such as corn and soybean. This technique, I should say, has been developed independently of biotechnology and has been in operation for probably the last five to 10 years in the United States, Argentina, Brazil and to a certain extent in southern Europe. Some of the crops developed through biotechnology do have a good fit with conservation or no-till in that it provides more flexibility for farmers to be able to sow a crop which is tolerant to the specific herbicide which is used to kill off the weeds in the stubble from the previous crop, and so the introduction of herbicide tolerant crops such a Roundup Ready soybeans is encouraging a shift towards the use of conservation tillage in order to derive all of the benefits that I mentioned from conservation tillage.

  329.  Is your company worldwide doing any work on animal genetics? My second question is to ask you to speculate and imagine yourself being in front of this Committee in 20 or 30 years' time. Could you just speculate as to what you think might be coming in the realm of practical agriculture in that space of time as knowledge about genetics becomes much better? For instance, many of the things you have told us you are doing this morning are very closely focused on dealing with insects or with other pests. I give you one example which has been delayed, and that is the possibility of a nitrogen fixing wheat which I can remember being told 15 years ago would be in existence now, but it is not. I know there are difficulties. If you could create a nitrogen fixing wheat that would hugely change the face of the earth in many ways. Wheat could be grown where it is not now. Yields would be hugely increased. The effect on other wheat growing areas would be immense. You know all the arguments. Please speculate as to where you think we might get to with all this in 20 or 30 years' time.
  (Dr Baker)  My Lord, that is a difficult question because there is no precise answer. In terms of work we were doing on animal genetics, I am not sure what you are referring to in particular there, but to my knowledge we do not have any extensive work going on in the area of transforming animals of the nature of Dolly the sheep. I assume that is what you are referring to. In terms of where we might be in 20 years' time in terms of practical agriculture, the fact that nitrogen fixing wheat is not available does not mean that it is not a good idea. It is simply a very difficult technical problem to achieve that. Stephen, maybe you might want to talk a little about that. In my terms it is a bit like asking the electronics industry 30 years ago where would they be now. I think if you look back predictions have been all wrong, so that is why I say it is a difficult question to answer.
  (Dr Waters)  I would be happy to speculate a little bit. The vision that we have perhaps even extends beyond 20 to 30 years from now. Our vision is that we need to be working towards more sustainable production systems given that the amount of area which is available today is essentially the amount of area that we are going to have available in 20 or 30 years' time to produce all of the food that we need. In that time-frame the demand for food is expected to triple and therefore we are faced with the challenge of producing three times as much food on the same area of land. That poses all sorts of challenges in terms of increasing the amount of productivity per unit of land but at the same time decreasing the environmental impact of those production systems, and so my vision is that we will be dramatically increasing the yields of crops, either directly through the introduction of genes which can increase the levels of harvests, or indirectly through introducing genes with tolerance to stresses such as drought or salinity, probably a whole host of mechanisms that one can imagine to try to increase the amount of production per unit of land. At the same time the example you mentioned of nitrogen fixing genes would allow crops to fix their own nitrogen and avoid the need to apply nitrogen fertilisers, which is a much more sustainable approach to production. I see us working on the balance between increasing productivity and decreasing inputs.

  330.  What do you mean by increasing yields directly?
  (Dr Waters)  Yield is essentially the production of carbohydrates. For instance, in wheat a large part of the wheat grain is starch and so if one could modify the starch metabolism pathway in plants, one could envisage increasing production of starch from wheat.

  331.  You see, you continually as a company come back to this business of increasing world population and diminishing resources to feed that population. If I may say so, that is a card which has been played ever since Malthus started playing it all those centuries ago. It is a situation which has never really occurred because the capacity of mankind to produce food—and I am talking about the developed world, I am not talking about the undeveloped world—has outstripped the growth in population, contrary to what Malthus and you are saying. Do you not feel slightly embarrassed by just tagging on to a somewhat discredited argument?
  (Dr Baker)  If I may answer that, you have to look at the whole picture. To some extent your question was regarding where would we be 30 years from now, and which must include the total picture. There is an issue of a growing population for whom food needs to be provided, not only in the developed world. At the same time, as in past years, we need to be conscious of the fact that in many ways we cannot continue to provide ever increasing amounts of food with the techniques that we use now. Coming back to your question about what will the picture be in 30 years' time, I would say to you that one thing that will be different will be what we now consider to be the chemical industry. There will be a lot of those products which are produced by the chemical industry which will be produced by farmers in crops much more efficiently. One other effect, if we follow what Dr Waters was saying, will be a coming together of the pharmaceutical and nutrition and health business to somewhere in the middle where much of the health care of the population will be provided through the food supply. That health care will be available to everybody, not just to the developed world, simply because you can produce crops anywhere there is fertile land. One would not have to put up a big factory; it would simply be replaced with a crop that is suitable to plant. We do need to provide food for that growing population and this is one of the technologies that can help. It is not necessarily the only one.

  332.  It is said that one of the problems of public acceptance of GMs is that most of your GM development has been in commodity crops. As far as I know, in this country the only wholly GM products the consumer can buy are tomato paste and vegetarian cheese. I am not sure whether Monsanto itself is involved in a whole GM product yet. Evidence seems to suggest that if you want to get more consumer acceptance of GM products the consumer will have to see the benefits. You mentioned lettuces and apples earlier in your comments. When do you see a Monsanto whole GM product being on the market here in Europe?
  (Miss Foster)  I will respond briefly although I will refer to Dr Waters about the actual timescale. You are right in that the first imported crops in Europe have been genetically modified soya and maize. It is absolutely true to say that it is quite difficult to emphasise the consumer benefits as these particular agronomic traits (herbicide resistance) are so far back in the chain. As we work on other agronomic traits it will be possible for the consumer to see more benefits, particularly in the reduction in chemical applications. We have already seen this with potatoes which have been marketed in Canada, the insect protected potatoes which require much less application of chemicals in their production and because consumers can identify with this they have been very favourably received.

  333.  The farmer can identify with that, not the consumer.
  (Miss Foster)  No, the consumer as well.

  334.  How can the consumer identify with that?
  (Miss Foster)  Because I think consumers are quite well aware that conventionally grown potatoes do require chemical applications both pre and post harvest, and if it can be explained to them by company information that this form of producing potatoes enables a reduction in the use of chemicals they will be well received. In Canada and the US they are called New Leaf potatoes and these have been sold direct to consumers through the supermarkets with supporting information telling them about the reduction in chemical use. They have been very well received on the market. In terms of future products, which I think links to a previous question, I can see the development of products with an improved nutritional profile, particularly in the alteration of fatty acid content and also vitamin and mineral content. I can envisage products with increased antioxidant content and antioxidants are believed to have protective factors against the incidence of certain diet related cancers. In terms of the timescale I will ask Dr Waters to answer that.

  335.  Before we come on to the timescale, would you expect those to have great consumer attraction, those products?
  (Miss Foster)  Yes, I would think so, because I think there has been considerable evidence that consumers are very much conscious of the relationship between diet and disease. The popularity of low and low saturated fat products have shown that consumers would find these benefits attractive.
  (Dr Waters)  In terms of the timescales, the most advanced product is the high stearate oil which I believe is targeted to be commercialised in the United States around 2001. We could expect that in Europe it will be available several years after that.

  336.  Sorry, I did not catch what you said.
  (Dr Waters)  High stearate: stearic acid is a fatty acid which changes the chemical properties of the oil which is used in margarine production.

  337.  If you were to go into a supermarket and ask people, "Would you prefer to buy X product with antioxidants?", do you think they would understand what you were talking about?
  (Miss Foster)  It would have to be explained to them but if it was explained in terms that people do identify with quite readily, there is in the United Kingdom enormous interest in the link between diet and disease. Yes, it would be very popular.
  (Dr Baker)  Certainly in relation to your question, Lord Reay, about whether consumers understand, in the case of the potatoes that Miss Foster was talking about, the label on the potato stated that these were genetically modified and produced without the use of herbicides, which was a sufficient message for the consumers to understand and to want this product.

  338.  Was it a more expensive product like an organic product or a cheaper one like the tomato paste?
  (Dr Waters)  A premium was asked but the farmers were also paid a premium because not only could they avoid insecticide applications but the quality of the potato was improved. The farmers are paid a premium based on the size and shape of the potato so farmers benefited, and also the consumers because of the improved quality of the potato, and they were prepared to pay a premium in recognition of the improved quality but also the fact that they had been produced using less insecticide. The customers put a value on that and they were prepared to pay for it.

  339.  May I just follow on from the point that Lord Jopling was making? In fact we have a billion people in the world today who are undernourished by our standards and frequently we see harrowing scenes of people starving to death throughout the world, so we are not completely dealing with the demands as they stand at present. We have increased our production to meet extra demand by the use of fertilisers and insecticides. That has been one of the main developments that has made it possible. Would you argue that using your kinds of products we would be able to reduce the use of fertilisers and insecticides and such other aids to production?
  (Dr Baker)  The simple answer to that is yes, and in fact we have provided you I think with some further evidence laying that out exactly. To give you some examples, if one takes cotton, which is produced in both the developing and developed world, in the on-farm use of that, studies by various academic groups have shown that farmers, when they plant this product, use somewhere between 85 and 90 per cent less chemicals to control that crop. When you think about cotton, in particular as the crop with the highest use of chemical insecticides, that I think illustrates the point that you are making. If you are talking about the developing world, of course what is happening is that the plant is growing its own protection in the soil and so there is no necessity to import it or develop it or to ship it around to those particular communities.