PA arc
PA arc PA Consulting Group is a leading global management, systems and technology consulting firm. Committed to innovation, responsive to our clients' needs, and focused on delivery of value, PA designs and delivers innovative solutions to complex business issues.

1998

The rich modified harvest to come

By Steve Mayes and Nick Staples

Genetic modification of crops will transform agriculture once its benefits are shared with consumers

Financial Times (UK)17 November 1998

The public debate in Europe over genetically modified (GM) crops is in danger of becoming a polarised argument about good versus evil. The "feed the world" proponents, on the one side, see a solution to the problems of starvation and malnutrition in the developing world. The "Frankenstein crops" camp, on the other, see an uncontrollable monster being unleashed.

The argument is extreme and irrelevant. While the companies developing GM crops may see more of the world being fed as a result of their endeavours, such selfless motives are not the driving force.

When companies such as Monsanto, DuPont, Novartis, Zeneca and Dow

Agrochemicals share the benefits of GM crops with European consumers, most of the latter may discover that their principles are only as deep as their pockets.

The herbicide and insect-resistant crops on trial in Europe have not been accepted by the public for one overriding reason: they provide no direct benefits to the consumer. In time, however, economic, functional and socio-political benefits will drive acceptance of GM crops - first, in North America and then, properly marketed, in Europe. Agriculture and its industries will be transformed.

Agriculture is inefficient. Crops give sub-optimal yields due to insect damage, drought, and weeds. Wastage occurs after harvesting, thanks to spoilage, imperfect processing techniques, pest attack and short shelf-lives. GM crops can deliver big economic benefits. A 3 per cent increase in corn yields, for example, adds Dollars 1bn to the US economy; within three years, the contribution of GM corn varieties should increase yields further.

Herbicide-resistant crops require up to 40 per cent less herbicide, and deliver up to 9 per cent better crop yields, by controlling weeds. Already, 30 per cent of the US soya crop alone is GM herbicide-resistant and the economic benefits are being cosily shared between producers of the GM seed and the farmers. The US consumer has received next to nothing.

By contrast, consider Zeneca's European launch of a delayed-ripening tomato.

Savings from reduced spoilage after harvesting were shared between supermarkets, food processors and consumers. While the moral debate raged, tomato paste made from these tomatoes rapidly won consumer approval as a result of a 10-15 per cent price reduction. GM tomato paste has outsold its non-GM competitor in the UK by about 30 per cent since 1995. The message is clear: European consumers want a taste of the economic benefits.

Next is the harvest of new functional benefits from GM crops. Supermarket customers will see an increase in the quality and diversity of GM produce: better appearance, enhanced texture and flavour; and longer storage time in the home. More compulsively, however, a wave of neutraceutical products - foods with health benefits - will follow by 2010, from cholesterol reduction (by lowering the saturated-fat content of oilseeds), to protection against tooth decay (by genetic introduction of antibacterial agents into breakfast cereals).

European socio-political benefits will help sway the debate in favour of GM crops. Following the BSE scare, GM cereals with increased nutritional value, already under development, should be applauded by the European public as they will replace artificial supplements in animal feeds. Novartis is one of the companies pioneering insect-resistant crops which have eliminated 250,000 gallons of insecticide on cotton alone in the US. Comparable reductions in Europe would be welcomed, judging by the increasing pressures on governments, particularly in the Netherlands and Denmark, to limit agrochemical usage.

Plants are also being engineered as "bioreactors" so that textiles and materials can be produced in cleaner environments than industrial chemical plants. Monsanto, for example, is developing blue cotton plants in California, which would preclude the use of chemical dyes in the manufacture of denim.

Life sciences companies have the potential to transform agriculture and its related industries globally. Resistance from agriculture is likely to be minimal as the economic benefits are shared.

The commercial seed business has been radically transformed from a stagnating commodity business to a high-growth sector, where GM seeds will have premium pricing. The transformation continues as the life sciences companies integrate businesses along the agricultural chain and outside their traditional areas to add value to GM crops. DuPont's 1997 acquisition of Protein Technologies International, the US soya bean processor, is a sign of things to come.

A handful of life science giants will ultimately achieve international domination of agriculture and its related industries through GM crops. Their fastest route to success in Europe is to focus immediately on marketing and consumer benefits. The traditional production push of agriculture - farm to fork - will increasingly become a market-driven pull - fork to farm.

Steve Mayes, a molecular biologist, and Nick Staples, a biochemist, work at PA Consulting Group

  Previous  |    |  Next  |

Sign in |  Register
Advanced search
Site map    Help   
 
Locations