Subject: today's interactive version of the wall street journal
November 19, 1999
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Midwest Farmers Lose Faith
They Had in Biotech Crops
By SCOTT KILMAN
Staff Reporter of THE WALL STREET JOURNAL
COLERIDGE, Neb. -- As farmers this month place their orders for
spring planting, there is growing evidence that a boom is
fading.
Next year looks as if it will bring the first decline in sales
of genetically altered seeds after three years of heady growth.
Many farmers remain fans of the seeds and don't share consumers'
anxiety over the safety of genetically modified crops. But they
can't afford to ignore those concerns.
"Even when the customer is wrong, the customer is right," says
Boyd Ebberson. For three years, he has sown his mammoth farm
with genetically modified seed. Next year, he says, "I'm
changing back."
Holding Their Ground
Mr. Ebberson's decision is distressing news for the
biotechnology industry, which has invested tens of billions of
dollars in developing genetically modified crops. This
technology makes crops so much easier to grow that farmers --
typically a cautious bunch -- embraced it with gusto, happily
paying a 25% premium for genetically modified seed. Sales of the
seed, first available in 1996, had jumped to $1 billion by last
spring. Some biotechnology executives foresaw a leap next spring
to $2 billion.
FDA May Change Oversight of Genetically Modified Crops
DuPont Praises Biotechnology (Sept. 23)
Gerber, Heinz Shun Gene-Altered Foods (July 30)
None do now.
"We'll be happy if we can hold our ground," says Edward T.
Shonsey, president of the U.S. seeds unit of European biotech
and pharmaceutical giant Novartis AG.
That sounds optimistic to Robert K. Wichmann, a top executive at
DuPont Co.'s Pioneer Hi-Bred International Inc. unit, who
predicts "some slippage" in sales. Pioneer is the country's
biggest seed company.
The reversal is turning a routine autumn farm task -- placing
seed orders -- into a kind of political campaign. In recent
weeks, Mr. Shonsey, the Novartis executive, has ridden in dozens
of combines to try to persuade farmers to keep ordering
genetically modified seed. He told his staff to lobby growers as
well. Monsanto Co., which produces genetically modified seeds
for corn, soybeans and cotton, also has its executives
barnstorming the Midwest. Other crops that have been genetically
modified include: potatoes, tomatoes, squash, canola and sugar
beets.
In radio advertisements, town meetings and combine-cab confabs
with individual farmers, these executives are struggling to
shore up sales of the new seed. After steady price increases,
they are promising to freeze prices on next year's batch of
seeds. They are also promising to help farmers find buyers for
genetically modified crops.
But that offer only underscores the question that most troubles
farmers: At harvest time next year, will a strong market exist
for genetically modified crops?
The problem is that U.S. public opinion is up for grabs. As yet,
most Americans aren't aware, let alone concerned, that countless
items on their grocery shelves contain genetically modified
ingredients, from the sweetener in their soda to the cornflakes
in their cereal bowl. But when asked in polls, American
consumers say they want to know whether their groceries contain
bioengineered material.
This month, a bipartisan bill was introduced in Congress that
would require labels identifying whether fresh produce or any
ingredient in packaged foods was grown from genetically
modified, or GM, seed. The bill's introduction drew protests
from government food and health agencies, and its passage faces
further hurdles from food-industry lobbies. Industry executives
fear that a labeling law could initiate in America a backlash to
bioengineered food similar to what Europe has seen in recent
years.
In addition, Thursday the Food and Drug Administration signaled
it is considering changes in its oversight of GM crops.
In Europe, consumer opposition is so intense that "GM-Free" has
become an effective marketing slogan. Almost certainly, food
companies in the U.S. would rather remove any genetically
modified ingredients than carry a label announcing the presence
of such ingredients. Indeed, many U.S. food companies are
scrambling to find nonmodified ingredients for the products they
export to Europe.
All this is clearly weighing on the Farm Belt. This past growing
season, more than half the cropland in Nebraska was sprouting
genetically modified crops. But a survey released in late August
by the University of Nebraska's Center for Rural Community
Revitalization and Development found that among rural
Nebraskans, a group closely tied to agriculture, only 36%
favored using genetically modified seeds.
"The results were a shock, considering how quickly Nebraska has
adopted the technology," says John Allen, director of the
center. "Farmers feel like they're caught in the middle."
That's the case across the Midwest, home of the vast majority of
the world's land planted to genetically modified crops. In just
four years, nearly 70 million acres of Midwestern cropland-an
area equal to all the farmland in Iowa and Illinois-were
switched to genetically modified crops.
'A Big Rollback'
But now, based on early orders so far, some local seed dealers
expect sales of their bioengineered varieties to drop 20% or
more. The retreat is so big that seed executives are worried
about a possible shortage of conventional, unmodified seed. "The
handwriting is on the wall," says Leon Corzine, an Assumption,
Ill., farmer and seed dealer. "We see a big rollback next
spring."
DuPont hopes to stem this reversal. Executive Vice President
Charles S. Johnson recently flew the company Learjet to the
Nebraska town of Wayne to hold a town-hall-style meeting with
farmers. DuPont has invested heavily in genetically modified
seeds -- including the $7.7 billion acquisition in October of
the 80% of Pioneer it didn't already own -- so Mr. Johnson is
one of several ambassadors being sent to the Farm Belt this
month.
A handful of farmers accepted Mr. Johnson's invitation to a
catered lunch on the campus of Wayne State College. In theory,
these farmers are huge fans of biotechnology. Before its
arrival, a corn-killing caterpillar was wreaking such havoc that
farmers had to hire crop-dusters to cover their land with
insecticides so powerful they couldn't enter their fields for
days afterward. All sorts of beneficial insects died, too, such
as ladybugs and honeybees.
But the transplantation into corn seed of a gene from a common
soil micro-organism called Bacillus thuringiensis solved the
problem, killing the caterpillar without harming other species.
The genetically modified corn, called Bt corn, resulted in a 20%
decline in local insecticide sales. Without all those chemicals,
farmers felt they were delivering a healthier crop. "Personally,
I'd rather eat a bowl of cornflakes made from Bt corn than from
regular corn," says Rick Gruber, 40, a corn farmer near
Benedict, Neb.
An Awkward Moment
Still, the farmers who have gathered to hear Mr. Johnson hardly
give him a hero's welcome. It doesn't help that public speaking
isn't easy for Mr. Johnson, a quiet 61-year-old who concedes
that his flat delivery is more John Wayne than Jesse Jackson. He
brings little punch to lines like: "We can't just throw this
technology away. This is what can feed the world's growing
population."
An awkward moment arises when Mr. Ebberson, the Coleridge
farmer, speaks. Last spring, he spent nearly $160,000 on
genetically modified seed, and it worked as advertised. He
didn't have to spray nearly as much insecticide, and he allows
his 17-year-old son to snack on genetically engineered soybeans
picked right from the field.
"If anything, biotechnology is safer than what we'd been doing
to crops," Mr. Ebberson says.
But who can say what the market will be like for his crops next
year? And here's another inducement to switch: A grain elevator
near Mr. Ebberson's farm is offering a premium of 10 cents a
bushel for nonbioengineered corn. The corn is for a Japanese
brewer that doesn't want any genetically modified organisms in
its beer. "I've got to think about what the customer wants right
now," Mr. Ebberson tells the group.
When Mr. Ebberson announces his decision-next spring he's taking
his 6,000-acre farm back to non-modified crops -- DuPont's Mr.
Johnson is speechless.
In a Nebraska farm town, the market speaks through the town's
grain elevator, and the message these days seems loud and clear
to Harold Hummel, general manager of the farmer-owned elevators
around Waverly.
The companies those elevators sell to, such as the
Archer-Daniels-Midland Co. soybean-crushing plant just down the
road, are starting to ask Mr. Hummel to supply conventional
crops. To do that, he has to persuade farmers to keep their
genetically modified crops separate from their conventional
crops. The only way farmers could do that would be to build new
storage bins and clean their combines between fields, a
logistical nightmare that could negate the advantages of
genetically modified crops.
"We're stuck in the middle between the farmers who own the
elevator and the markets we serve," says Mr. Hummel. "It is a
predicament."
Mr. Hummel himself isn't equipped to store two different kinds
of corn. His main storage complex is outfitted with only one pit
for corn. But for next year, he is thinking about using an
elevator in a neighboring town for handling only nongenetically
modified crops.
Then, Mr. Hummel -- who this year paid the same price for
bioengineered and conventional crops -- would pay a premium for
unmodified grain. "The market is trying to tell us something,"
he says. "Farmers don't like it, but I think biotech is losing
momentum."
Standing Firm
Some farmers are standing firm. A bioengineered soybean enabled
Jim Miller, 41, to eliminate a big problem with soil erosion.
The soybean is genetically rigged to survive a dousing by
Monsanto's Roundup weedkiller, which is designed to kill
everything green. The change makes it so easy for Mr. Miller to
chemically weed his fields that he no longer needs to
mechanically disturb the soil, which left it vulnerable to
erosion from the wind and rain.
So Mr. Miller isn't switching back. In fact, he believes the
best is yet to come. He has compiled a collection of articles
predicting that someday genetically modified crops will become a
new source of expensive drugs. "I got a lot of hopes riding on
biotechnology," says Mr. Miller. "I want to get away from
growing cheap corn. I want to grow something that the
pharmaceutical companies will pay a lot for."
But does that possibility still exist? Mr. Miller worries that
widespread defections from genetically modified crops will bring
the revolution to a halt before it can fulfill its proponents'
dreams and his own.
"Everybody around here likes biotech," says Mr. Miller, who runs
an 1,700-acre farm near Belden, Neb. "But not a lot of guys are
willing to take a bullet for biotech."
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