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USA Today: Increasing Debate Over Gene-Foods in the US
U.S. renews debate over biotech foods

By James Cox, USA TODAY
http://www.usatoday.com/money/bcovthu.htm

01/13/00- Updated 11:14 PM ET

BASEL, Switzerland -- When activists dumped a pile of genetically engineered
corn at its headquarters here, Novartis quickly turned the protest into
public relations grist.

The pharmaceutical and biotech giant trucked in cows from outlying dairy
farms to clean up the mess. The sight of the animals grazing amid the city's
trams and office towers was irresistible to the Swiss media, which gobbled up
the story as fast as the cows could munch the grain.

That's the full extent of Novartis' public relations derring-do these days.
Europe's battle-weary biotech firms have hunkered down until the public furor
over bio-engineered crops blows over. They have halted public-image
advertising, mothballed applications for regulatory approvals and focused on
researching genetic advances that won't come to market for five to seven
years. But as they wait out the storm, many are horrified by signs that
Europe's biotech backlash may be spreading to the USA.

"What's happening in your country?" asks an incredulous Arthur Einsele,
public relations chief at Novartis Seeds, a leading developer and marketer of
bio-engineered seed.

Until now, Europe's biotech industry has viewed the USA as an island of
sanity in the debate about the safety of genetically modified (GM) foods. The
U.S. government has OK' d far more varieties of biotech crops than any other
country -- more than 30 vs. only nine in the 15-nation European Union . U.S.
and Canadian farmers last year planted 81 million acres of bio-engineered
seed, which accounted for 47% of the U.S. soybean harvest and 37% of the U.S..
corn crop. GM ingredients are contained in hundreds of grocery items, from
salad dressing and soft drinks to tortilla chips and cooking oil.

European biotech firms, meanwhile, have had to cope with threats and
vandalism from anti-biotech radicals, along with a regulatory stonewall that
has blocked their products from both field and food store. Public outcry over
biotech foods has prompted thousands of European supermarkets to remove them..
Share prices of industry leaders such as Novartis have been pummeled.

"We thought you already had this debate in America. But I guess we were
wrong," Einsele says.

The U.S. biotech industry suddenly faces:

Protests. Opponents costumed as mutant ears of corn took to the streets last
month in Seattle, where they and other protesters disrupted the World Trade
Organization summit. Other noisy demonstrations took place last fall at U.S.
Food and Drug Administration hearings on biotech foods in Washington, D.C.,
Chicago and Oakland.

Environmental and consumer groups fighting bio-engineered foods have
recruited Hollywood celebrities such as Jane Seymour and Roseanne to the
cause.

Washington scrutiny. This spring, Congress is likely to consider a bill to
require mandatory labeling of foods that contain GM ingredients. Labeling is
required in the EU, but the labeling issue has split U.S. biotech firms and
others close to them. Many U.S. supermarket chains quietly favor labels; most
farm groups and food manufacturers oppose the idea.

Agriculture Secretary Dan Glickman said Monday the federal government wants
consumers to have more details about bio-foods but is unlikely to require
labels.

Farmers' uncertainty. U.S. farmers are expected to plant fewer acres of
biotech corn this spring, despite heavy lobbying and discounting by Monsanto,
DuPont and other seed companies. Most say they still believe in GM seeds but
worry about their ability to sell their grain or keep conventional and GM
crops separated, as some buyers have asked.

European farmers, many of whom want to try GM crops, understand the
predicament of their American counterparts.

"You have to follow the tide, and the tide is completely against GM crops,"
says French farmer Xavier Beulin. "It's not a rational issue."

Finicky customers. Japanese trading companies are the biggest foreign buyers
of U.S. soybeans, which are used to make tofu. They have quietly shifted
suppliers to ensure that they get non-GM beans.

Similarly, European food retailers and farm cooperatives are shunning biotech
corn and soybeans when they buy in the USA. U.S. officials say EU buyers'
insistence on non-GM corn cost American farmers an estimated $200 million in
lost sales in 1999, a figure certain to grow this year.

Wary retailers.Whole Foods Market and Wild Oats Markets, the USA's two
largest natural-foods retailers, want manufacturers of their private-label
foods to stop using GM ingredients. Observers are watching to see if any
mainstream supermarkets follow suit.

Wall Street scorn. Shares of many biotech firms have taken a beating. Shares
in St. Louis-based Monsanto traded as high as $50 13/16 last March.
Wednesday's close: $36 3/16.

Investors in the biotech sector expected a quick pay off from the technology,
but have been spooked by anti-biotech activism, regulatory inertia and
negative publicity, says Jay Hickman, analyst at Credit Suisse First Boston.

Investor pessimism has forced big players to consider spinning off or selling
their seed and crop-protection businesses.

Last month, Novartis and Anglo-Swedish concern AstraZeneca announced plans to
merge and spin off their agriculture operations. In the USA, Monsanto and
Pharmacia & Upjohn took a similar approach last month in announcing their
marriage. Their combined agriculture business is quickly being distanced from
core pharmaceutical and life sciences operations: It will have a separate
board and headquarters; 20% of its shares will be issued in a public
offering.

Behind Europe's backlash

European mistrust of GM foods is largely a reaction to events of the past
decade, particularly Britain's Mad Cow disease and last year's dioxin chicken
and Coca-Cola scares in Belgium. Health officials were slow to react and
initially understated the risks to the public.

There are other factors. Many of Europe's anti-biotech "greens" hold public
office and are well placed to influence policy. And European supermarket
chains have tight control over the supply chain -- dictating farming methods
and food-manufacturing specifications.

U.S. officials are furious with European regulators for ducking the GM issue..
The EU has resorted to "a variety of ploys and political maneuvers to delay
and deny" approval of GM products because it can't find scientific grounds to
reject them, Commerce Undersecretary David Aaron told European officials last
fall.

He said a decade of U.S. experience shows biotech foods are as safe as those
made with conventional ingredients .

There has been "not one sneeze, not one cough, not one rash," Aaron said.
"There is simply no evidence to the contrary."

That's a story the U.S. biotech industry is eager to tell. It is mounting an
expensive image campaign, reaching out to scientists, food retailers,
regulators, Congress and anti-biotech activists. U.S. seed companies are
holding town-hall meetings with farmers and financing independent scientific
research into crop genetics.

In Europe, the approach is different. Novartis, AstraZeneca and others have
made a strategic decision to wait for perceptions to change gradually. They
are taking small steps -- opening their research labs to the public, for
instance -- but are exerting little public pressure on regulators to untangle
the approval process. They're banking on products with clear consumer
benefits -- better taste, more nutritional value, disease-fighting
capabilities -- to change public opinion.

"We see this as a very, very long game," says Nigel Poole, external relations
chief at Zeneca Agrochemicals, a division of AstraZeneca, until he retired
last month. "This is just the start of the biological revolution."

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