[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
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
______
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COMMITTEE ON SMALL BUSINESS
DONALD A. MANZULLO, Illinois, Chairman
ROSCOE BARTLETT, Maryland, Vice NYDIA VELAZQUEZ, New York
Chairman JUANITA MILLENDER-McDONALD,
SUE KELLY, New York California
STEVE CHABOT, Ohio TOM UDALL, New Mexico
SAM GRAVES, Missouri DANIEL LIPINSKI, Illinois
TODD AKIN, Missouri ENI FALEOMAVAEGA, American Samoa
BILL SHUSTER, Pennsylvania DONNA CHRISTENSEN, Virgin Islands
MARILYN MUSGRAVE, Colorado DANNY DAVIS, Illinois
JEB BRADLEY, New Hampshire ED CASE, Hawaii
STEVE KING, Iowa MADELEINE BORDALLO, Guam
THADDEUS McCOTTER, Michigan RAUL GRIJALVA, Arizona
RIC KELLER, Florida MICHAEL MICHAUD, Maine
TED POE, Texas LINDA SANCHEZ, California
MICHAEL SODREL, Indiana JOHN BARROW, Georgia
JEFF FORTENBERRY, Nebraska MELISSA BEAN, Illinois
MICHAEL FITZPATRICK, Pennsylvania GWEN MOORE, Wisconsin
LYNN WESTMORELAND, Georgia
LOUIE GOHMERT, Texas
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 JOHN BARROW, Georgia
STEVE KING, Iowa TOM UDALL, New Mexico
ROSCOE BARTLETT, Maryland MICHAEL MICHAUD, Maine
MICHAEL SODREL, Indiana ED CASE, Hawaii
JEFF FORTENBERRY, Nebraska RAUL GRIJALVA, Arizona
MARILYN MUSGRAVE, Colorado
Piper Largent, Professional Staff
(ii)
?
C O N T E N T S
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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)
DIFFERENT APPLICATIONS FOR GENETICALLY MODIFIED CROPS
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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 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 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 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 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 effect of dramatically reducing costs to consumers
and allowing life-saving 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 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 developing 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 Agr-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.
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 identified 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
third-generation 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.
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 non-targeted 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 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.
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 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 self-pollinating 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 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.
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.
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.
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 non-deregulated, 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.
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 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.
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 plant-
made 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?
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.
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 self-perception 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 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 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.
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 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
large-scale 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.
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.
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 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.
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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