C&EN Houston

Biotechnology in agriculture is a reality, not just a pipedream. Just look at the numbers.

This year, half of the 72 million acres of U.S. soybeans are to be sowed with seeds genetically engineered to be herbicide tolerant, according to industry estimates. Significant percentages of 80 million acres of corn and 13 million acres of cotton in the U.S. will use insect-resistant crops. More than half of the canola planted in Canada will be transgenic.

Although 1998 sales of genetically engineered seeds are estimated at around $1.5 billion and are mostly in the U.S., these products are causing seismic shifts in the $30 billion global agrochemical market. One herbicide--glyphosate or Roundup, as sold by Monsanto --is used on those 36 million acres of "Roundup Ready" soybeans. Other herbicide producers have been squeezed into sharing a market half the size of what it was just three years ago.

Views are mixed about the prospects for traditional agrochemicals. Market research firms and analysts suggest that sales will fall a few percent per year or stagnate under competitive pressures. Some chemical producers are a bit more optimistic, predicting sales growth of a few percent per year for the next five to seven years, depending on product mix. What is clear is that U.S. farmers--and a growing number of farmers elsewhere--are taking a liking to transgenic crops.

Transgenic versions of major crops were introduced in 1995. But today, farmers plant them on more than 70 million acres worldwide, and that number is expected to triple in about five years. Market researchers predict growth for transgenic seeds at about 30% per year, driven by further adoption, new genetic traits, and enhanced crop outputs. The International Service for the Acquisition of Agri-Biotech Applications (ISAAA) estimates that sales will reach $3 billion in 2000 and $25 billion in 2010.

The phenomenal adoption rate of transgenic crops in the first few years "had an immediate displacement in the soybean herbicide market and the cotton insecticide market that were big enough for business to say: 'Wow, this thing is real,' " says Michael Fromm, former Monsanto research director and now president and chief executive officer of Mendel Biotechnology, a Hayward, Calif.-based start-up company.

"Nobody had believed how quickly the market could shift, how much market share these [transgenic products] could have, nor how well the products could perform," says Fromm.

Awed by the shifting purchasing patterns and market potential, the industry took ag biotechnology to heart. In the past few years, most major agrochemical producers have moved all or part of their businesses to the life sciences (C&EN, Nov. 23, 1998, page 17). Technology and market access have been considered critical, prompting rampant buying of seed producers and almost all the small ag biotech companies created in the 1980s.

AgrEvo, a 60-40 joint agribusiness venture between Germany's Hoechst and Schering, is transitioning from a "plant protection to plant production" enterprise. The latter offers farmers products that increase productivity through innovations in chemistry, biotechnology, and crop science. AgrEvo will become part of Aventis Cropscience when Hoechst and Rhône-Poulenc merge to form Aventis.

Table: Major companies tap technologies through recent alliances

Like Monsanto's Roundup Ready crops, AgrEvo has created "Liberty Link" crops, engineered to tolerate its Liberty glufosinate herbicide. DuPont sells cotton tolerant to a sulfonylurea herbicide, one of a major product class for the company, and Rhône-Poulenc has developed bromoxynil herbicides for use on transgenic cotton and canola.

Herbicides are the largest global agrochemical market, accounting for about 50% of sales. Insecticides make up about 30% of sales, with the remaining 20% largely fungicides. The U.S. is the largest pesticide market based on dollar value, with corn, soybeans, and cotton being the largest segments.

New herbicides for field crops, whether in combination with transgenic plants or not, face intensive competition with well-established herbicides and herbicide-tolerant crop franchises. Last year, American Cyanamid, part of American Home Products, cut prices for six leading soybean herbicides by 6 to 40%. Even the herbicide and crop platforms themselves, like Roundup Ready or Liberty Link, are cutting down on herbicide use. In 1997, Roundup Ready soybeans cut chemical use on that crop 33%, reports ISAAA.

AgrEvo says that Liberty Link canola, planted on about 20% of Canadian canola acreage in 1997, decreased conventional herbicide use by two-thirds. New chemistries, like Rhône-Poulenc's isoxazoles, have dose rates 10 to 20 times lower than some current herbicides. Although herbicide volumes are expected to decrease, in large part due to more active ingredients, the overall dollar value of the market will continue to grow, predicts SRI Consulting, Menlo Park, Calif.

In the insecticide market, newer and more potent products, such as synthetic pyrethroids, are cutting down on volumes while insect-resistant crops are displacing products. Whereas genetic engineering allows farmers to use herbicides that have a broad spectrum of activity against weeds, insect-resistant crops generally are effective against only one or two target pests, explains John Sedivy, director of marketing and development for Elf Atochem North America's agrochemicals division.

"We're trying to take advantage of that," he adds. "When you reduce the number of pesticide sprays that are being applied, you see other things change." Spraying controls nontarget insect pests as well. Without spraying, these may begin to reemerge and cause damage. Biological control systems may also break down under high insect infestations, he adds. "We're trying to understand where those points are so that we can introduce products in complement with the transgenic crops."

Other opportunities exist as well, notes Carlos Estevez, vice president and business unit director for agricultural chemicals at Rohm and Haas. "Economics dictates that most of the biotech efforts are in the row crops like corn and soybeans, not specialty niche crops," he says. "So, in the short to medium term, there is still plenty of growth in specialty markets.

"The trick is finding the right combination of products that offer growers what they want and need--quality products, increased yield, and lower costs--regardless of whether it's biotech or not," Estevez concludes. Rohm and Haas is particularly proud of its new MAC, or molt-accelerating compound, technology that received a Presidential Challenge Green Chemistry Award last year (C&EN, July 6, 1998, page 25).

The MAC technology is based on a new class of diacylhydrazine insecticides, which, Estevez says, target only caterpillars and pose no risk to groundwater, farmers, or wildlife. As an offshoot of this technology, Rohm and Haas has developed a gene switching technology that can be activated to improve pest management, ripening, and other genetically expressed traits. The company is licensing its gene switching technology to others.

Dow AgroSciences, part of Dow Chemical, has significant products in niche markets, such as urban pest control. These and other new agrochemicals will contribute to sustained growth for the "conventional" side of the business, says Nick Hein, Dow AgroSciences' vice president for plant genetics and biotechnology, while the company builds the biotechnology side.

"We use whatever technologies will let us serve our customers in the safest and most environmentally acceptable and cost-effective manner," adds Ronald Meeusen, vice president for plant genetics and biotech R&D at Dow AgroSciences. "As new techniques become available we add these to our portfolio." Whether it's transgenic crops, new chemistry, or a combination of the two, he notes, "we see that simply as an expansion of our existing business."

Tremendous change in the market is pushing both the chemical and biotechnology sides of agribusiness to develop new, cost-effective products. Among the goals for these products are higher crop yields, productivity, and quality; increased safety; tailored and added-value features, such as nutrients; and positive environmental and health effects.

"Agrochemicals and production agriculture are so cost driven," explains Eric Ward, copresident of Novartis Agribusiness Biotechnology Research Inc., which serves as an internal contract research operation for Novartis' crop protection and seeds businesses. "There already are good solutions out there for a lot of the problems, and growers are not willing to pay any price to solve those problems."

Farmers do get net economic returns from usually higher priced transgenic crops that can arise from decreased pesticide use and increased yields. Although results vary with time, location, weather, and pest conditions, ISAAA conservatively estimates that U.S. and Canadian farmers saw a combined benefit of $419 million in 1997, or an average of about $18 per acre.

First-generation ag biotech products have what are called "input traits" that when inserted change a plant's agronomics. Although Monsanto's products have had the biggest market impact, Cyanamid was the first to produce herbicide-tolerant crops in 1992, although it did so by finding mutations using plant tissue culture rather than through genetic engineering.

Cyanamid continues to develop its technology and makes it widely available to seed producers. Its imidazolinone- or IMI-tolerant canola has been very successful in Canada, says Mark Atwood, president of Cyanamid's research effort, where it competes with Liberty Link and Roundup Ready versions. IMI herbicides, major products for Cyanamid, have low use rates and favorable environmental and toxicological profiles, he notes. Cyanamid recently signed marketing agreements with seed producers for new IMI-tolerant wheat and rice.

Most major agribusiness companies are developing transgenic wheat and rice, two major global agricultural commodities. In 1998, DuPont created the DuPont Wheat Enterprise with the French seed company Hybrinova to commercialize new wheat varieties and set up collaborative R agreements with U.K.-based research organizations to develop disease-resistant and improved-quality wheat.

Despite the huge amount of acreage devoted to wheat and rice, the market presents some challenges. These crops often require less insecticides and herbicides than other crops, are subject to a variety of growing conditions, and have economics that are not yet ripe for premium-priced seeds, explain developers. Transgenic wheat and rice have presented a few technical challenges as well.

Nearer term, insect-resistant and herbicide-tolerant product offerings will continue to expand with new versions of existing crops and extensions into different crops. By 2002 to 2004, AgrEvo anticipates it will have sales of more than $500 million from several Liberty Link crops. AgrEvo, Monsanto, and Cyanamid also have been increasing herbicide capacity as their market shares expand. Roundup sales volumes, for example, grew more than 25% in 1998.

With a major U.S. patent expiring in late 2000, Monsanto has been granting licenses to other herbicide producers allowing them to sell glyphosate for certain Roundup Ready crops (C&EN, Jan. 25, page 8). Although Monsanto will compete with the others, it gains licensing income and hopes to ensure continued product use and supply for its transgenic crops. Industry observers note that Monsanto has a leg up on the competition as the lowest cost, largest volume, and most technically adept glyphosate producer.

Nufarm of Australia, Cheminova of Denmark, BASF subsidiary Micro Flo, Novartis, and Dow AgroSciences are among those that have signed on. Dow intends to become a major player in the global glyphosate market and make it a key product for its business. It also gained production technology and expertise in its 1997 acquisition of Sentrachem of South Africa.

In March, Monsanto and Zeneca Agrochemicals agreed to dismiss lawsuits against one another that arose when Zeneca asked for EPA approval-but not Monsanto permission-to market its Touchdown herbicide for Roundup Ready soybeans. Under the agreement, Zeneca now can test, develop, and register Touchdown for use on certain Roundup Ready crops.

Touchdown is a trimethylsulfonium salt of the same organic acid as Roundup. Touchdown is "similar, yet different enough that it requires a separate regulatory registration," explains a Zeneca spokesman. He adds that Touchdown has some biological properties-such as being faster acting, a bit more rain fast, and a slightly different spectrum of activity-that Zeneca sees as competitive advantages.

Novartis has just announced a new gene technology it calls Acuron, which provides tolerance to a new class of broad-spectrum herbicides known as protoporphyrinogen oxidase inhibitors (PPO). The company is applying the technology to a range of crops-corn, wheat, soybeans, rice, canola, cotton, sorghum, and sugar beets-targeting corn for market entry. The first PPO herbicide is in the registration process, and Novartis anticipates EPA approval in 2003.

Chemistry can still be the driver in product development. "If you have a compound that has good biology, good weed control, and you can provide the crop tolerance transgenically, then you have a package that growers are going to be interested in," says Ward. "You can make it attractive based on price or on superior biology, and we think we're going to have those things going for us with this."

Table: Next generation crops to have agronomic and food quality traits

Yet chemistry is often, although not always, replaced by insect-resistant crops. Corn, cotton, and potatoes engineered to produce toxins from the bacterium Bacillus thuringiensis (Bt), are the largest products. Spray-on Bt pesticides, which have annual U.S. sales of about $75 million, also exist. However, whereas Bt-based insecticide-resistant cotton has displaced some insecticides, Bt corn is an example of "a really new value being created," says Ward.

Novartis, Monsanto, Dow (through its Mycogen ag biotech subsidiary) all sell transgenic corn that targets the European corn borer. Although the insect can cause about $1 billion in damage per year, corn borer control wasn't a very large market.

"Once it gets into the stalk of the plant, there's no way to apply an insecticide to control it," Ward adds. "Having the insecticide expressed in the stalk of the plant is really something new that chemistry couldn't achieve previously."

"There are many unmet needs in the insect-control market," Hein says. Dow is working with a new class of insect-control proteins produced by the Photorhabdus luminescens bacterium. Discovered by University of Wisconsin, Madison, researchers, Photorhabdus is very potent and has been found effective against an array of insect pests. Dow and the University of Wisconsin have jointly patented the toxins and related genes, and Dow is pursuing further product development.

Dow also has a new fermentation-derived active ingredient, spinosad. Meeusen sees great potential in fermentation for more flexible, faster, and cost-effective insecticide production. Two weeks ago, the company signed a research agreement with Integrated Genomics, Chicago, to determine the complete DNA sequence of the spinosad-producing bacterium in order to help improve the production process. In 1997, EPA approved spinosad for use on cotton.

Based on the success of crops containing individual traits, an obvious next step is to combine or "stack" traits, especially as markets for the older products mature. Dow, Monsanto, AgrEvo, Novartis, and Zeneca have introduced insect-resistant and herbicide-tolerant corn, and Monsanto has combined the traits in cotton. Disease resistance is another active area of development.

Sidebar: What happed to the Flavr Savr?

On the chemistry front, Novartis has Actigard. "This is the first example of a chemical that is able to activate an endogenous pest resistance pathway in plants," says Ward. "It's the result of about a decade in research to understand the mechanisms that allow plants to effectively immunize themselves against pathogen infections."

Actigard, acibenzolar-S-methyl, is from a new class of benzothiadiazole compounds that trigger a systemic resistance in plants against a range of bacterial and fungal pathogens. Novartis already sells it in Europe and anticipates U.S. registration late this year for use on fruiting and leafy vegetables, as well as tobacco.

Next-generation products, which developers hope will offer even bigger rewards, will focus on "output" or quality traits that improve crops as animal feed or human food. "We see a total market for crop protection and quality traits of about $75 billion by 2020," says Nigel Poole, manager for external regulatory affairs for Zeneca Plant Sciences, the international ag biotech operations of Zeneca Agrochemicals.

Among these future attributes are increased protein or starch content and modified oil or amino acid composition. Although several crops with quality traits--high oleic acid soybeans, high lauric acid canola, and high oil corn, including Dow's new Supercede feed corn--are on the market, most are not transgenic. Other new agronomic traits, such as drought, cold, or salt tolerance, should help expand farming in different regions of the world.

"We are in the infancy of biotech and its application to agriculture and there are huge technical challenges, none of which can't be overcome" says Jerry D. Caulder, former CEO of Mycogen and now head of Xyris, an ag biotech start-up with technologies licensed from Axys Pharmaceuticals. "When you look at the task before us, it is much greater than what's behind us. But the opportunities are infinite and that's why working on output traits, rather than input traits, is much more valuable."

Table: Agbiotech product sales to continue strong

Life sciences companies see quality traits and new chemistries as the means to increase agricultural productivity, reduce the need for added farm acreage, limit resource consumption, and decrease harmful environmental impacts, while supplying enough food for a world population that the United Nations estimates will nearly double by 2050. "There is only one product produced on Earth that is indispensable for us--food," Caulder notes. "So I don't think it's possible to overstate what biotechnology is going to do. It gives us a way to control our food destiny."

Next-generation transgenics won't have a major market impact for another five years, according to industry estimates. Producers point out that agrochemical and transgenic crop development can take five to 10 years from discovery to product engineering (which biotechnology, compared with conventional breeding, has helped speed up) and then through field-testing and regulatory approval. Implementation of the Food Quality Protection Act of 1996 hasn't made the process any faster, companies comment. The act has changed the procedures and criteria EPA uses to review and register new pesticides, and requires that the agency reevaluate all existing product registrations (C&EN, Sept. 28, 1998, page 20).

As chemistry and biotechnology platforms are drawn closer together in the discovery and development of crops and chemicals, producers are eagerly adopting technologies to improve the process. Agribusiness companies are applying genomics to identify plant and pest genes. They then use these to create crops via genetic engineering or as targets for high-throughput screening of potential agrochemicals. Combinatorial chemistry is helping to create new chemical entities for screening.

"One of the exciting things about biotechnology is that it has really improved our chemistry," says Zeneca's Poole. "People often forget that because they get carried away by the sexy plants." Zeneca and most other producers emphasize that there is a future for products based on both chemistry and biotechnology.

The opportunities are vast considering the diversity of plants, insects, and microbes whose genetics researchers have yet to decipher. DuPont says it is focusing on sequencing the corn genome. Within 12 to 18 months, a public effort is to complete the sequencing of Arabidopsis, a small plant in the mustard family that is widely used as a model system because of its small genome, small physical size, and rapid life cycle. Researchers will have about 25,000 genes to play with from this small plant alone.

Early leads on drought tolerance have already come from studies of Arabidopsis, says David Dennis, president of Performance Plants, set up by scientists from Queens University in Kingston, Ontario.

To take advantage of gene sequencing and other developments, agribusinesses with affiliated pharmaceutical operations--such as Cyanamid, DuPont, Novartis, Rhône-Poulenc, and Zeneca-- are finding many tools they need in-house. "Internal links have really been highlighted," says Novartis' Ward. "Five or six years ago, to try to find real intellectual synergy between pharmaceuticals and agriculture was sort of a forced fit.

"The biology didn't really drive them together, because human and plant systems are very different," he continues. "Now the technologies are really linking us together and we have more of a firm intellectual basis for interacting with our colleagues across the different divisions within this company."

Novartis is spending $600 million, over 10 years, to build the Novartis Agricultural Discovery Institute in La Jolla, Calif. NADI will focus on plant genomics and be located near the company's new $250 million pharmaceutical genomics effort. University collaborations are also important, Ward notes, as illustrated by NADI's $25 million, five-year agreement with the University of California, Berkeley, for first access to discoveries in plant and microbial biology (C&EN, Dec. 14, 1998, page 41).

Monsanto has created a new subsidiary, Cereon Genomics, through a$ 218 million alliance with Millennium Pharmaceuticals to apply its gene discovery technologies to agriculture. The slower adoption of these technologies by agribusiness has "been largely a matter of price," says William Timberlake, copresident of Cereon.

"The investment needed in genomics was unaffordable for ag companies in the early '90s because they don't have the big margins of pharmaceutical [producers]," he says. "But as the technology is developed, it becomes more affordable and more accessible."

To access technologies, all top 10 agrochemical producers have signed collaborative research deals with small companies in the past few years. Most of these small firms focus on drug discovery, but now are supplying their tools to an eager agribusiness industry.

Table: Novartis dominates in agribusiness sales

BASF made its initial foray into plant biotechnology last year by investing about $55 million to create two small joint-venture companies for plant genomics and testing new genes in plants. This year, BASF combined its ag biotech research operations with plant breeding company Savlöf Weibull to form an 85-15 joint venture called BASF Plant Science. BASF also took a 40% interest in the Swedish company.

Although a world leader in the insecticide market, Bayer has no seed operations or transgenic crops in its portfolio. The company signed three agreements last year, committing up to $77 million, with small technology-based companies. These firms are helping Bayer to use genomics to identify targets for screening chemicals and combinatorial chemistry to develop and optimize compounds.

Bayer, along with AgrEvo and a handful of investment banks, established an $85 million ag biotech venture-capital fund last year. Internally, Dow Chemical also has a $40 million venture fund to invest in small ag biotech companies. The success of the first-generation products has sparked investor interest in ag biotech.

Seeing both the scientific opportunities and willingness of large companies to invest, a new generation of small ag biotech start-ups is emerging. Besides Mendel, Xyris, and Performance Plants, others include Ceres, CropDesign, Paradigm Genetics, and SemBioSys Genetics. Like Mendel and Xyris, which managers or scientists formerly at major companies started, four scientists from Novartis started Paradigm Genetics.

"There's so much consolidation going on in the industry that it creates opportunity," says John Ryals, Paradigm's president and CEO. "The big players tend to focus on much bigger markets, instead of some of the smaller stuff, and so this is the time in a business cycle to create new entities." Small technology-based companies, Ryals and other believe, have more focus, react faster to change, and can take more risks.

Caulder draws parallels to trends in drug discovery and believes that agrochemical producers are coming to similar realizations. "Large companies will make investments in the small companies to keep their pipelines full because they recognize that their real strength is commercial development, testing, dealing with the regulatory agencies, and marketing," he says.

Large companies, through earlier ag biotech acquisitions, have locked up some enabling technologies for transferring genes into plants, notes Dennis. Performance Plants intends to develop transgenic crops through "proof of principle in the field" and then hopes to work with large corporate partners to get products tested, registered, and marketed.

"Technology is moving at an incredible pace, and it would be arrogant for any company to think that internally you can build enough critical mass to stay up to speed on everything that needs to be done," says Dow AgroSciences' Meeusen. "So we simply accept that as a reality and we have a very aggressive portion of our research program aimed at finding new technologies being developed by universities and small start-ups."

Both Meeusen and Hein stress that alliances are a key overall strategy for Dow AgroSciences. "The range of opportunities is so broad and the field is so wide that there is room for everybody," says Meeusen. "It is not necessary to pursue a strategy of trying to find choke points in the distribution chain, to pay exorbitant fees to try to tie those up, and to forward integrate to ensure your success. One can actually go in and form partnerships and alliances with a wide range of value-chain participants and get to the market."

The agriculture and food value chain is complex. Starting with seed and chemical sales to distributors and then to farmers, it can pass through crop collection and handling, crop processors, traders, distributors, wholesalers, food and feed producers, and on to retail food companies. Companies developing transgenic crops and foods are working hard to decipher how they can get a return on the technology they've created and how to set product value.

"What really scares the [agrochemical producers] are not the transgenics themselves, but the fact that supplying those is building an interface with the farmer that's never been there before," Mendel's Fromm says. "You are right in there trying to sell them seed, trying to sell them chemicals, trying to sell them information, and it's starting to be a captive acre in which this farmer really works with a single company. That's something they've never dealt with before."

With input traits that improve a farmer's crop production, the benefit is up front and producers can get a return relatively easily through higher seed prices or per-acre technology fees while still giving the farmer a net gain. However, getting returns on the anticipated output traits is expected to be more challenging. These will be sold as specialty products and will offer value at different links in the chain, such as with a major processor, retailer, or end user.

"It has been a controversial subject and it's a big challenge confronting the industry," admits Novartis' Ward. "We're going to see [many] new ways that value gets captured by technology companies over the next several years." These could be project-based alliances with end users, joint ventures with firms at different stages of the chain, contracts, licensing, or other means.

"There is a lot of room here for creative marketing and business thinking in the next decade or so," Ward adds. "It's fair to say that in no company has it been completely sorted out yet. If you look at the complexity of the value chain for different crops, you realize that for each crop and each 'value add' that you can bring, you may need to use a different value-capture mechanism. There is no general rule for how you do it."

Monsanto says that technology fees have been an "integral part of its marketing program." Recently, it increased fees for a few crops as it decreased Roundup prices more. In contrast, when AgrEvo launched Liberty Link corn in 1997, it said it would make the genetics available to seed producers, and it would not charge a technology fee or have any restrictive contract with growers who plant the seeds.

Germplasm or seeds, a $15 billion global industry, are the vehicles for marketing new genetic traits. Dow acquired seeds when it bought Mycogen in 1998. Monsanto and DuPont--which just spent $7.7 billion for the last 80% of Pioneer Hi-Bred--have spent billions on seed companies, while AgrEvo has been making smaller purchases. Novartis has had seed operations for nearly 25 years, and Zeneca bought seeds in the 1980s before acquisition fever inflated prices. Others, including Cyanamid, Bayer, and Rhône-Poulenc, say they will reach the marketplace with partners.

Partnering has also begun on the food side, entrée to a $500 billion industry. DuPont created Optimum Quality Grains with Pioneer, and acquired soy processor Protein Technologies in 1997. Last year, Monsanto and Minneapolis-based Cargill put together a grain and feed products joint venture. Novartis, which already has a health and functional foods business, created a food and feed alliance with Land O'Lakes, Golden Valley, Minn.

For a food producer--or any enterprise down the value chain--to sell a product differentiated by its genetics, the material must be keep separate and identified throughout handling. The Department of Agriculture's Economic Research Service, in its March Agricultural Outlook , discusses how complicated and difficult this might be and how it would work best for higher value crops. %For valued-added crops that require this "identify preservation," labeling would differentiate products and possibly offer a competitive advantage. However, ag biotech product developers often object to labeling commodities, such as grains or soybeans, where separation is difficult and not cost effective. Product identification would also let anyone, up to and including consumers, decide whether to buy products based on their content.

The U.S. and Canada have readily accepted ag biotech crops. Growth is good in Australia and South America, especially in Argentina and Brazil, and is expected in China, according to ISAAA. In Europe, the welcome has not been as warm. These differences in attitude are reflected in the desire for product labeling. In the U.S., labeling is required only when there is an inherent health or safety risk; many European countries want to see it always.

Food is an entitlement in the U.S. and that's an anomaly among prosperous nations. "In the rest of the world, people are still struggling for food. I think the naysayers to biotech are those who are well fed and don't have to worry about their next meal," Caulder comments.

The production and labeling of transgenic crops and foods has already become a trade issue (C&EN, March 15, page 36 and 40). Agricultural-commodity-producing nations clearly don't want anything that could restrict trade. Developing nations, which in broad terms want control over the introduction of transgenic crops, also often express concerns about human health and safety, the cost and control of seed supply, and environmental disruptions.

However, some European markets are slowly opening and producers are optimistic that acceptance will develop. "As soon as consumers in Europe perceive a real value to themselves then the acceptance will go up," Ward says. "The issue in Europe has been that the consumers perceive the technology as pure risk with no benefit, [because] any benefit is realized at the grower level or at the processor level and then the consumer doesn't see it."

Several agribusiness firms believe that stumbling blocks are Europe's lack of a fully established and united regulatory philosophy or system for genetically engineered products. This apparent political indecision contributes to a lack of credibility with the European public (C&EN, Feb. 22, page 9). Says one company representative: "You see generically across Europe that they just don't trust their regulatory authorities to make sound decisions based on risks and benefits, which is a real big difference between the U.S. and Europe."

Assuming these hurdles to market acceptance can be overcome, the growth of agricultural biotechnology products is anticipated to continue at its tremendous pace, even accelerate with new technologies. Having already seen the impact in the U.S., which is just a fraction of global agriculture, agribusiness companies will have a tremendous potential market.

"It's a major shift in the industry," Zeneca's Poole concludes. "The whole concept in dealing with this change is to understand your market correctly. Those companies that understand it and can work in it are the ones that are going to succeed."

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Copyright © 1999 Ame rican Chemical Society