Wall Street on the Taco Bell Scandal

September 25, 2000

Kraft Taco Shell Puts Focus
On Biotechnology Oversight
By Scott Kilman and Sarah Lueck
Staff Reporters of The Wall Street Journal

Kraft Foods Inc., scrambling to recall taco shells made from a type of
genetically modified corn unapproved for human consumption, is calling for
tougher regulation of crop biotechnology.

The packaged-food giant's recommendations, while milder than anything
pushed by the major anti-biotechnology groups, signals a widening breach
between the food and biotechnology industries.

Kraft said Friday it is voluntarily recalling from U.S. supermarkets all
taco shells in a line of Mexican food it sells under a license from Taco
Bell, the fast-food chain.

The recall is the first in America of a genetically modified food. The taco
shells in question are in products that generate about $50 million in
annual sales for Kraft, which has total annual revenue of $27 billion.
Kraft said consumers will get refunds for the products they return.
A handful of American companies, fearful that the public might turn against
the fledgling technology, already have banned certain genetically modified
ingredients from their products. But the move by Kraft, a unit of Philip
Morris Cos., New York, is the first time a major marketer has gone out of
its way to call for stronger oversight of crop biotechnology.

Among other things, Kraft said it wants the government to stop approving
the planting of genetically modified crops that aren't yet cleared for
human consumption. Kraft said that laboratory tests done for it confirm a
report by an anti-biotechnology coalition last week that the company's taco
shells contain ingredients from a line of insect-resistant corn that is
supposed to be eaten only by livestock or processed into ethanol fuel.
Aventis SA, the French pharmaceuticals giant, developed the corn, called
StarLink. The plant uses a gene transplanted from a common soil
microorganism, Bacillus thuringiensis, to make protein that is toxic to
certain insects. Federal regulators have approved several lines of
so-called Bt corn for use in food. But StarLink corn makes a unique toxin,
called Cry9C, that the government has yet to confirm isn't a potential food
allergen.

Federal authorities and Kraft said there isn't any evidence that consumers
have harmed their health by eating the Kraft taco shells. Kraft is
conducting the recall because under the law, the StarLink corn shouldn't be
in food.

Some biotechnology executives are skeptical about Kraft's laboratory
results, saying that the protein is hard to detect reliably. Indeed, one of
Kraft's recommendations is that regulators begin to require that the
inventor of a genetically modified crop have a rapid test available for
detecting its presence in food.

The biotechnology industry, which is usually quick to refute calls for
tougher oversight, is keeping a low profile this time. "Kraft's suggestions
have merit and deserve to be taken seriously," said Val Giddings, a top
official of trade group Biotechnology Industry Organization.

The Food and Drug Administration said it doesn't expect any more food
recalls because of StarLink. But food-industry officials say the scope of
the problem is far from clear because the reason for the mix-up isn't yet
known.

The spotlight is on a corn-flour mill in Plainview, Texas. One of the
biggest of its kind, the mill produced the main ingredient used to make
Kraft's taco shells, and is a supplier to many Mexican-food brands. The
mill is owned by Azteca Milling, a partnership between Archer-Daniels-
Midland Co. of Decatur, Ill., and Gruma SA of Mexico.

Dan Lynn, president of Azteca Milling, said the Plainview facility has
stopped shipping yellow corn flour so that it can screen its inventory for
the StarLink protein. "We're trying hard to figure this out," he said.
None of the Plainview mill's flour should contain any genetically modified
corn, let alone StarLink, according to Mr. Lynn. The corn hybrids that the
mill contracts with neighboring farmers to grow are all conventional
varieties.

Mr. Lynn wouldn't identify the companies that use corn flour produced by
the mill to make everything from taco shells and tortillas to extruded
snack foods.

However, the Taco Bell restaurant unit of Tricon Global Restaurants Inc.
said it is testing its taco shells because some of them are made with corn
flour from the Plainview mill. While the tests are under way, the
restaurant chain has told the makers of its taco shells, such as ConAgra
Inc. and the Sabritas unit of PepsiCo Inc., to get their corn flour from
outside Texas. Taco Bell said it also is replacing all the taco shells in
its restaurants.

The FDA and Environmental Protection Agency are continuing to investigate
how the unapproved corn got into Kraft taco shells. One theory is that the
wind might have blown pollen from a field of StarLink corn into fields of
corn being grown for Azteca.

Garst Seed Co., a U.S. unit of European seed concern Advanta BV, confirmed
that it has sold StarLink seed to a few farmers in the region that corn is
grown for the Plainview mill. The EPA requires farmers to plant StarLink
seed at least 660 feet from other cornfields in order to prevent
crosspollination. Alan Hawkins, Garst director of research, said corn
pollen is so heavy and sticky that it is unlikely any StarLink pollen made
it into another field.

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