A year after issues surrounding genetically engineered rice first hit the Missouri Bootheel, a new report finds the benefits of pharma-crops to producers aren't as grand as first hoped. The report, authored by Robert Wisner, an economics professor at Iowa State University, says any claims regarding high farmer compensation and booming pharma-crop acreage are likely overblown.
But readers beware: while Wisner doesn't claim adherence to their beliefs, the study was commissioned by the Union of Concerned Scientists (UCS), an organization deeply suspicious and critical of the pharma-crop industry.
“Agriculture has been in a transitional period from being primarily food-and-fiber production to being a source for both energy and food,” said Wisner. “That transition has gone relatively smoothly.
“But we've now run into a third stage, a further transition from food, fiber and energy to pharmaceutical drugs. We're in the extremely early stages but this latest transition has turned out to be very complicated. It's not clear where the pharma-crop industry will end up.”
Many of the issues involved in pharma-crops center on whether they can be separated from food and feed supplies so there's no risk of commingling. Early in 2005, the importance of this was driven home as fears about commingling, and resulting market problems, at least temporarily derailed plans to grow pharma-rice in the Missouri Bootheel.
“The fear of mixing pharma-crops with food adds many unknowns. One is: does the present system and regulations provide for that separation? Many have stressed the extreme importance of avoiding any commingling.”
The Union of Concerned Scientists has concluded that significant changes are needed in order to insure complete separation, said Wisner.
“Looking at the economic impacts, one of the first questions is, ‘What will be the cost of maintaining the kind of total isolation from food and feed supplies?’ At this point, we don't know. But it will affect net returns to farmers and net benefits to users of pharma-crops. What will it take to provide such a system? Is the best route sterile male plants? Sterile seed? Growing the crop in closed facilities? All those are being explored.”
Looking at potential returns to growers, the stage the industry is currently in suggests there will be only modest niche-market opportunities. This is largely due to the small acreage needed by the pharma-crop industry.
“One study indicates approximately 10,000 acres of transgenic tobacco will be needed to supply the world's needs. That's very small acreage compared to the 230 million acres U.S. farmers devote to grains and other major crops.”
The pharma-rice and barley acreage planned for Missouri is another example. “That venture is supposed to be for slightly less than 10,000 acres. That's less than 1 percent of the total crop acres in the northwest part of Missouri, where the rice would be grown. While there could be more significant acreage later on as the industry develops, there are no huge short-term benefits for producers.”
Wisner also says there's no evidence of benefits to consumers from lower drug costs due to pharma-crops. “How could we know? There are no actual pharma-crop drug products yet available to consumers. That's after about 15 years of trials and test plots.
“Pharma-crop industry people indicate the major source of benefits will likely be reduced production costs. While producing the feed stock material from crops would involve adding acres, it may take years to expand conventional pharmaceutical production facilities.
“Again, we don't know the cost for providing the kind of segregation the food industry is asking for. We also don't have actual examples of pharma-crop products to say, ‘Here, indeed, are the cost savings.’”
According to several sources, said Wisner, the products to be derived from pharma-rice will actually cost about the same as producing similar products under conventional production. But it's early in the game, he admitted, and that could change. “Because of the proprietary nature of some of the products, there are likely some unknown products that are yet to surface.”
Wisner said given the limited bargaining power of farmers and small acreage that's anticipated, the primary impact of pharma-crops would likely be on two business sectors: research work (either private, university or a combination of the two) and processing.
The pharma-crop industry will undoubtedly point to the fact Wisner's paper — the first by a land grant university economist — was commissioned by the UCS. While making it clear he isn't part of the UCS, Wisner isn't cowed.
“First of all, their call for immediate halt of open-air production of these crops isn't from my report. That's just the organization speaking and a substantial part of that is based on a study published about a year ago.
“The UCS has been monitoring key pharma-crop issues and hoping to generate dialogue. From my perspective, the purpose in providing this report was to look at some of the underlying issues and address what we know and don't know. And I wanted to point to some of the issues that need to be examined in pharma-crops.
“If you look at the report carefully, you'll find I attempted to provide a balance with issues raised especially by the food industry as well as what's being presented in terms of pharma-crop advantages.”
How far out is Wisner projecting?
“This is something that needs constant monitoring. There may well be changes (requiring number adjustments) in five to 10 years. The success of pharma-crops hinges heavily on keeping them separate from food and feed supplies. If that challenge is successfully dealt with, many of the other challenges in this industry are greatly diminished.”
Editor's note: to see Wisner's full report visit http://www.ucsusa.org/food_and_environment/genetic_engineering/economics-of-pharmaceutical-crops.html