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The Seed of Success


After years of hiccups, hurdles and false-starts, the genetically modified seed market is all set to take India and the world by storm; an analysis by Arun Goyal
ARUN GOYAL | Issue Dated: November 5, 2016, New Delhi
Tags : Bayer AG | St. Louis-based Monsanto | K.V. Thomas |

Bayer AG has acquired Monsanto Co. for about $56 billion to create the world’s biggest maker of seeds and pesticides. India too will be specially affected as a major play in the genetically modified (GM) seed market. The German company agreed to pay about $128 a share. Bayer is also offering an antitrust break fee of about $2 billion. This is the biggest deal this year and the largest ever by a German company.

Bayer’s wooing of St. Louis-based Monsanto has played out against a backdrop of a rapidly consolidating crop and seed industry as falling prices weighed on profits. A series of big deals may leave just a few global players. India’s Competition Commission will examine the filing of this deal since both Bayer and Monsanto have a footing in the market.

China National Chemical Corp. agreed in February to acquire Syngenta AG, while DuPont Co. and Dow Chemical Co. plan to merge and then carve out a new crop-science unit.

Thus the Seed World is now dominated
by just two MNCs with the third one based in China.

Monsanto's ambition has been to become a one-stop shop for farmers, and to sell a comprehensive array of fertilizers and seeds to be used in conjunction with big data applications. Monsanto pursued Swiss pesticide maker Syngenta to boost its farm chemicals portfolio, making three failed offers as recently as last year. Finally, the Chinese CNC Corp. took over Syngenta.

In the past two decades, Monsanto has pioneered the commercialization of genetically modified organisms, or GMOs. GMO varieties of corn and soybeans now account for more than 90 percent of corn and soybean crops in the U.S. India has not allowed GM to come in, Bt Cotton was allowed only after extensive illegal planting took place.

The combination of both companies could account for more than 30 percent of the global crop-inputs business, stoking concern over whether the deal will be passed by competition authorities.

Bayer was founded in 1863 and made its name by introducing heroin as a cough remedy in 1896 and then aspirin in 1899. Bayer’s stated ambition is to be the global leader in pharmaceuticals and chemicals for people, plants and animals. In India, Bayer chemicals are widely used in production of table grapes for world market.

Now that Monsanto has a German owner, GM cultivation in Europe is a possibility.

EU approval to import genetically modified products widely grown and marketed in the United States and South America will be easier. India too imports soybean oil from US and Latin America which comes
from GM soybean; but India refuses to grow GM crops on its soil.

EU approval requests to grow five GM maize varieties, one variety of soybean, and one sugar beet are pending.

Much of Europe still remains hostile towards the idea of GM food; only three varieties have ever been given the green light for cultivation - two of which are only for industrial purposes.

Impact on biodiversity: Strong public opposition and scientific studies showing that MON810 seed could harm biodiversity have also driven several European countries - including France, Germany, and most recently, Italy - to impose national bans on Monsanto’s MON810 maize, even though it has been approved for cultivation throughout the EU.

Brussels adopted a more open approach to GM imports in 2011, when it backed away from its zero tolerance policy. While almost 50 GM products have been approved for import into the EU - the vast majority for animal feed or food processing - approval of new products for import will likely be a slow and difficult process.

Europe is one of the world’s major buyers of biotech grain, importing more than 30 million metric tons of mostly GM animal feed each year for its livestock industry.

As far as China is concerned, the government supports genetically-modified organisms. “So far we only have had GM plants for cotton and horticulture, not for food,” one official said.

However, although the country does not grow genetically-modified soybeans, it does import them in significant amounts. In addition, a new policy introduced last year now allows Chinese farmers to grow genetically modified rice.

China’s $34 bn trade deficit for agricultural goods expanded by 47 percent in 2011, according to recently-released figures from the ministry of agriculture. While farm exports increased by $61 bn, or 23 percent, imports grew by $95 bn, or 31 percent.

There is a consensus building in India as well. K.V. Thomas, who piloted the National Food Security Bill in Parliament before it became law during his tenure in the Food Ministry in 2013, says we should not unnecessarily oppose GM without any scientific reasons. How are you going to feed such a huge population, ask similar thinking officials... Former Environment Minister Jairam Ramesh though is among the strong opponents.

Meanwhile, Monsanto Co. pulled an application seeking regulatory approval for the next generation of genetically modified cotton seeds in India amid a debate with the government on royalty fees.

The application was withdrawn in July this year because of “regulatory uncertainties and ongoing discussions”. This was for cotton seeds containing next generation technology from those currently sold in India, called Bollgard II Roundup Ready Flex.

India cut royalties for genetically modified cotton seeds in March, which caused Monsanto to say it would reevaluate its business in the country. In May, India temporarily withdrew the limits on royalties.

Monsanto sells cotton seed in India via Maharashtra Hybrid Seeds Company (Mahyco), a company where Monsanto owns 26% of equity. The venture licenses Monsanto technology to seed companies and then collect trait fees.

Despite India’s moratorium on the release of genetically-modified Bt brinjal, there is a possibility of gene contamination of Indian brinjals from Bangladesh due to illegal entry of Bt brinjal seeds through the porous border.

Mahyco, to its credit, developed the Bt brinjal technology, and has transferred it to the Bangladesh Agricultural Research Institute (BARI). At the same time, West Bengal has banned field trials of genetically modified crops.

In India, all genetically engineered organisms and products thereof are regulated as per “Rules for Manufacture, Use/Import/Export & Storage of Hazardous Micro-organisms/GE Organisms or Cells, 1989”, notified under the Environment (Protection) Act, 1986.

The biosafety dossier submitted by the Centre for Genetic Manipulation of Crop Plants (CGMCP), University of Delhi South Campus has been received by GEAC, whichhas constituted a sub-committee of scientific experts to thoroughly examine the biosafety data submitted by the applicant.

CGMCP has applied for the approval of environmental release of Genetically Engineered mustard (Brassica juncea) hybrid DMH-11 and use of parental events (Varuna bn 3.6 and EH-2 modbs 2.99) for the development of new generation hybrids, to the GEAC.

“The biosafety study that has been carried out is as thorough as it can be, and now ideology should not overwhelm scientific evidence,” says Deepak Pental, a plant geneticist at the University of Delhi here who developed the GM variety.

India, in 2004, introduced GM cotton, which now makes up more than 90% of all cotton cultivated in the country. But it has been leery of allowing widespread cultivation of GM food crops.

In 2010, the environment ministry put on hold the commercial planting of GM brinjal, an eggplant variety, equipped with a bacterial gene that thwarts insect pests. The moratorium continues and is unlikely to be lifted anytime soon.

Prospects are looking brighter for GM mustard. India is one of the world’s biggest producers of mustard (Brassica juncea), which is cultivated for its edible leaves and its oil.

The GM variety is equipped with genes from a soil microbe that manipulate pollen development such that the variety produces hybrids more easily in the usually self-pollinating crop. The GM-derived hybrids produce about 25% more seeds—and thus more oil, which is pressed from the seeds—than traditional varieties now in cultivation.

The 133-page safety review raises one cautionary note: It calls for more studies on whether GM mustard could harm honey bees and honey production in mustard-growing areas. And it calls for continued monitoring of insects and other organisms that live in or near mustard fields.

Pental says he was willing to help the government with that goal and would approach the state-run Indian Council of Agricultural Research (ICAR) to pass on a laboratory-tested GM cotton variety his team has developed over the past decade.

The variety is similar to Monsanto's Bt cotton but can be more resistant to pests, Pental said, adding he handed another GM cotton variety to ICAR last year for further research. No field trial has yet been done on either cotton strand.

Meanwhile, a lot is happening on the pulses front as well.

Kiran Sharma, formerly from ICRISAT, and his team of biologists are perfecting a recipe that may solve the nation’s inflation woes.

Sharma, for six years, has been testing a new variety of pigeon pea, a 3,000-year-old indigenous crop used to make dal, a staple diet in India. By adding a gene to the seed’s DNA, he hopes to make it pest-proof, boost output by 30 percent and help reduce dependence on imports in a country that’s both the world’s biggest producer and consumer of dry legumes, also known as pulses.

Insects are one major problem—if you want to increase the productivity of the pigeon pea, then genetic engineering is the only way of doing it.

Widespread use of the revamped pigeon pea—known locally as tur dal—has the potential to boost yields that are less than half of China’s, and could help the country reach its longer term inflation target of 4 percent, lowering borrowing costs. Yet, it could take years to get to market: Many states in India separately oppose genetically modified crops, and will not allow field trials.

Pulses are a key driver of Asia’s second-highest inflation rate. Prices of beans, chickpeas and lentils as a group have risen between 20-40 percent each month for the past year.

Except for a few African countries, India’s yield for pulses is among the lowest in the world. The country produces 654 kilograms (1,441.82 pounds) per hectare, compared with 1,550 kilograms in China and 3,653 kilograms in France, according to data compiled by the Indian Institute of Pulses Research.

Modi has yet to take a stance on genetically modified food, which remains controversial. Farmers and activists say the technology carries risks for the environment and human health; this has helped convince the previous government to declare a moratorium in 2010 on transgenic eggplants.

Sharma at ICRISAT has waited three years for state-level authorizations to test his pigeon peas in a confined field, the next stage in the process. While he has a permit from the central government, he hasn’t received approval from authorities in Telangana, the state where the field trials would
take place. 

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Issue Dated: Feb 5, 2017