Although this article was published nine years ago, it continues to be very timely and speaks of the disturbing ripple effect that occurs when a developed country such as the United States alters, replaces or in other ways interferes with the products that are the lifeline of the tropics. Note: there is a segment in this article that directly addresses laboratory-created vanilla.

Splicing Genes, Slicing Exports?
US Firms’ Bio-Engineered Tropical Plans May Threaten
Third World Farmers

Washington Post
September 27, 1992

By Sally Lehrman

In laboratories all over the United States, scientists are working on new, genetically altered tropical plants whose resistance to disease and insects could vastly improve agriculture in the Third World.

But alongside that research, biotech companies also are developing products that ultimately could rob thousands of tropical farmers of the livelihoods, and cost Third World countries millions of dollars in agricultural exports.

The newly genetically engineered products, some of which could reach commercial markets as early as next year, include natural flavorings, low-fat cooking oils and cheap oils used by industry. Flavorings and essences made in fermentation tanks in California, and crops now being grown in Idaho test plots, could one day displace whole export markets.

US biotechnology executives point out that their work is far from one-sided. Knowledge about the genetics underlying tropical crops already is helping small farmers. Singapore and Thailand have used the technology to boost production of high-quality orchids. Vietnam is using it to protect its potato crops from viruses.

Referring to work being done to alter rapeseed grown in North America so that its oil can substitute for tropical coconut and palm kernel oils, Roger Salquist, chief executive of Calgene Inc., said: "Basically, we’re creating new markets. We can be a huge company and still be just a blip on the world curve. It’s a huge commodity."

But others say that U.S. agricultural biotechnology is likely to have less beneficial effects on Third World farmers.

"We’re going to see fundamental changes in world agriculture and trade due to these emerging technologies," said Hope Shand, research director at Rural Advancement Foundation International, a North Carolina nonprofit organization that monitors the social and economic effects of agricultural biotechnology. "At the very least, the people and countries affected need the information to begin diversifying their economies."

U.S. imports of coconut, palm and palm kernel oil came to slightly more that $200 million in the 1991-1992 crop year, according to the Department of Agriculture. While that is not a large figure in the world trade, the loss of those exports could be devastating to certain countries and regions.

For example, a vanilla made in cell culture by Escagenetics Corp. in San Carlos, California, would cost a fifth as much as the vanilla bean extract sold by Madagascar, one of the poorest countries in the world. Natural vanilla is derived from the pod of a species of orchid. Growing it requires years of labor-intensive nurturing. It takes as long as five years for a vanilla plant to reach maximum yields, and vines have to be checked frequently by hand.

The United States imported 439 tons of vanilla from Madagascar in 1990, slightly less than the 500 tons it imported from Indonesia. Other suppliers are the Comoro Islands, Mexico and the Southwest Pacific nation of Tonga.

Escagenetics is producing vanilla in the laboratory, from cells of the vanilla plant, circumventing the laborious, expensive and time-consuming process involved in raising vanilla orchids of farms and plantations.

The company and its partner, Unilever, are scaling up production of the flavoring in huge vats of vanilla orchid cells and aim to begin test-marketing it this year. The companies hope to capture around $30 million of the $250 million market for both artificial vanillin, a byproduct of wood-pulp in, and natural vanilla extract for baked goods, ice cream, soft drinks and candy.

AgriDyne Technologies Inc. of Salt Lake City is spending $3 million to learn to produce a natural pyrethrum insecticide from genetically engineered microbes. Such a product potentially could displace almost 200,000 pyrethrum flower growers and deprive East African countries of as much as 200 million a year in export revenue, according to a report by the rural Advancement Foundation.

The Rapeseed Factor

Producers of tropical oils face even bigger potential problems as biotech companies transform rapeseed, which is already grown in Idaho, Washington, North Dakota, Oregon, Montana, Utah and Canada for food and other uses.

The oil has long been used to make marine oils and lubricants that could not compete with imported tropical oils. But the genetic engineers would change the seed oil’s physical properties to make it useful in a host of products, such as detergents and hand soaps, which now use coconut and palm kernel oil as key ingredients.

A biotech breakthrough would mean that North American and temperate zone farmers might one day take over this market — a development that would be good for the US trade balance and jobs, but not so good for farmers halfway around the world.

Another case in point: The tiny south Pacific nation of Vanuatu earns 80 percent of its export revenue from high-value coconut oil, which is used in soap, detergent and personal-care products. About 210,000 families on Vanuatu and other Pacific islands, plus another 9 million in the Philippines, Indonesia and other Asian countries, grow, harvest and process coconuts.

This industry could be harmed by work now going on at Davis, California based Calgene, as well as at other biotech companies. Scientists have been experimenting with altered varieties of rapeseed that could yield oils with physical properties similar to coconut oils for use in shampoos and detergents.

This same genetically altered rapeseed also could substitute for the palm kernel oil exported by Nigeria, Brazil, Malaysia and Indonesia for use in soaps and lubricants. Palm Kernel oil, which is derived from grinding up the pits in the center of the palm fruit, is often interchangeable with coconut oil.

Testing the Technology

Calgene is field-testing the new rapeseed plants in Michigan now, and has set up an oleochemical market subsidiary that is selling rapeseed and other vegetable oils for foods, cosmetics, lubricants and other products. The company also has a variety of supply and other agreements with companies including Mobil Corp. and Procter and Gamble Co.

Calgene is also field-testing another variety of rapeseed that would be especially low in saturated fats and would harden naturally because of a high level of stearic acid. This would be used for margarine, chocolates, and other confections.

Potentially, this genetically engineered rapeseed could take over a portion of the $2.6 billion world market for cocoa butter, the world’s Number two tropical commodity after coffee, and a critical export for Ghana.

DNA Plant Technology Corp. of Cinnaminson, New Jersey is field-testing genetically altered rapeseed varieties that have less saturated fat, which builds cholesterol, and are odorless and smokeless at high frying temperatures — and thus ideal as cooking oils. Consumers are already tasting the company’s high-tech canola oils, which are not genetically engineered but are created by breeding cells instead of whole plants. The oil is used in granola bars, cake mixes and cold cereals.

The company’s rapeseed oil would compete in part with cocoa butter and other tropical oils sold for candies and food.

Third World Benefits?

Many biotech companies say, however, that on balance their work will be a net benefit in the Third World.

DNA Plant Technology is working with Costa Rica to speed up breeding of varieties of banana, pineapple, coffee and tropical palms. Monsanto Agricultural Co. has given Mexico the technology for virus-resistant potato varieties. Pioneer Hi-Bread International Inc. of Des Moines, one of the world’s largest producers and sellers of specialized corn seed, is working with companies in 50 countries to improve local varieties of corn, sorghum and sunflowers.

"These programs draw on our breeding that’s been going on in the United States for 60 years," said Nick Frey, Pioneer’s director of specialty oilseed products.

Creating New Markets

Some say that genetically engineered tropical products, by stabilizing the supply of oils that have been unreliable because of weather and pests, will create new markets and help Third World farmers. "I’ve always had a feeling that we would build the market — we would add new applications. It should open up new doors and horizons for Madagascar and Indonesia as well," said Walter Goldstein, Vice President of Research at Escagenetics.

"We’re not in a position to put anybody out of business, we’re just trying to plug a hole," said David Clark, Vice President for Business development at AgriDyne Technologies.

"I’m somewhat politically sensitive, but I just don’t see this as having a material negative impact on a Third World economy," said Andrew Baum, Chief Operating Officer at Calgene.

He contends that a predictable supply might encourage new product development and open up more market opportunities for developing countries. "The worldwide market for coconut oil is close t $2 billion — we’ll be on the fringe for a long time," Baum said.

Others are more skeptical.

"Overall, the Third World countries will probably be the losers, though they have the opportunity to benefit," said Martin Kenney, professor and rural sociologist at the University of California at Davis.

Kenney points out that Third World countries are not all innocent victims. In some cases, their strategies have not been wise. But right now, he said, "The technology is not going in the direction that would benefit Third World economies."

In a sense, the dangers posed by scientific breakthroughs in the industrial world constitute a second blow to tropical farmers. Oils high in saturated fats — especially coconut, palm, and palm kernel oil — lost some of their markets when candy and cookie manufacturers attuned to the health worries of consumers began substituting other oils in the late 1980s.

The immediate beneficiaries were oils low in saturated fat, particularly soybean and canola oil — both of which are produced in North America.

Some international experts believe the companies and their home governments have an ethical responsibility to confront the impact of their work on poor competitors.

Roger Beachy, a member of the Scripps Research Institute in La Jolla, CA, said he hopes industry will find some way to compensate the economies it harms, through technological training or by making technology available to the countries hardest hit.

"The large multinationals need to be informed and assist," he said. "They’ve used [these countries] for years and made lots of money from them."

A Role for the US

Shand of the Rural Advancement Foundation International said that U.S. government agencies that are sponsoring biotechnology research that could displace imports should reconsider their investments. Instead, she said, they could inform Third World countries of the market threat and help develop replacement industries.

Some companies are stepping forward. A consortium of chocolate manufacturers in 1986 endowed a $1.5 million program to study the molecular biology of cocoa plants at Pennsylvania State University. According to a September research update, scientists there are making progress toward understanding the development of chocolate flavor; breeding in resistance to ruthless fungal diseases; and increasing the saturated fat content of cocoa grown in cooler climates, so chocolate bars won’t melt on warm days and the cocoa butter can be sold for higher prices.

The work may help the chocolate industry enjoy constant prices and steady supplies. It may mean better prices for Brazilian cocoa growers, and healthier plant varieties for smaller growers.

[Editorial Note: Prices for coffee and chocolate in most developing countries are at an all-time low in 2001. Rapeseed oil has now replaced tropical oils in many foods. To date, vanilla has not been effectively reproduced in the laboratory, but this could change at any time.]