Ag innovation: Squeezed between lawsuits and a biotech hard place

By Sara Wyant

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, March 3, 2015 - Ask just about any farmer leader if they support science and innovation in agriculture and the answer will usually be a resounding “yes.” But ask them about how to commercialize new seed traits and avoid sending those products to unapproved international markets, there's little consensus.

It's a debate that's been playing out in farm groups, federal agencies, in Congress, international markets, and most recently in the courts. Flocks of lawyers are buying ads on the Internet and attending farm meetings across the U.S. in an attempt to recruit farmers to sue Syngenta, a seed and crop protection company based in Switzerland with U.S. headquarters in Minnesota. More than 750 lawsuits were filed. The global company sold over $15 billion in products last year.

In the lawsuits, which are being consolidated in the U.S. District Court in Kansas, plaintiffs allege that they suffered financial losses in 2013 after China started to reject shipments of U.S. corn and distilled dried grains (DDGs) containing Syngenta's Agrisure Viptera (event MIR162).

Of the 762 lawsuits, 696 were filed by individual plaintiffs (growers of non-MIR162 corn and exporters such as Cargill and Archer Daniels Midland), and 66 by putative classes of both growers of  non-MIR162 corn and of exporters and others affected, Syngenta noted in a report to the Securities and Exchange Commission.

Syngenta's corn, which has been engineered to protect against damage from insects such as corn borers and rootworms, was approved for use in the U.S. in 2010; Argentina and Brazil gave their blessing shortly afterwards. After almost four years of trying to persuade the Chinese to approve the trait, Syngenta finally won approval last December. During the lengthy approval process, while China's demand for corn soared from under 1 million metric tons a year to over 5 million tons, the Asian giant originally approved imports containing the corn trait. However, in 2013, China stopped taking corn and DDGs - rejecting entire shiploads and causing huge disruptions in the supply chain.

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Syngenta believes the lawsuits are without merit and “strongly upholds the right of growers to have access to approved new technologies that can increase both their productivity and crop yields,” said Chuck Lee, who heads Syngenta's North American corn marketing, in a written response to Agri-Pulse. “The right to market a safe and effective grain that benefits farmers and consumers must be defended,” he said.

 

“Syngenta has done what a good company should do. We developed a superior product that helps farmers; we applied for and received government approvals from the U.S. and major export markets at the time; and we submitted an import application to the Chinese government that was timely, accurate and complete,” Lee added.The firm also launched a new website: www.vipterachinafacts.com.

 

Yet, the National Grain and Feed Association (NGFA), which also says it “strongly supports agricultural biotechnology and other scientific and technological innovations,” along with the North American Export Grain Association (NAEGA) sent a letter to Syngenta in January 2014 asking the company to immediately halt commercialization of both its Agrisure Viptera corn and Agrisure Duracade “until such time as China and certain other U.S. export markets have granted required regulatory approvals/authorizations.”

NGFA also conducted studies that estimated up to $2.9 billion in economic losses have been sustained by the U.S. corn, distillers grains and soy sectors in the aftermath of the China's enforcement of a zero-tolerance policy on Syngenta's Agrisure Viptera MIR 162 corn technology in U.S. export shipments. Its analysis suggests actual losses could be much higher.

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The debate over commercialization and stewardship is sometimes pitting farmer against farmer - even within associations like the National Corn Growers Association (NCGA) which has a long-standing policy in support of biotechnology.

Take the case of former NCGA President Wallie Hardie, one of the plaintiffs suing Syngenta. While the North Dakota farmer would not provide specifics, he told Agri-Pulse that he believes that legal action is necessary because “what happened was significant in the corn and DDGs markets.”

Yet, another former NCGA President, Kansas Farmer Ken McCauley has been encouraging farmers who are being recruited by lawyers to join the Syngenta lawsuits to “just say no, no, no.”

Farmers are “sending the wrong signal by joining the lawsuits, by basically “selling biotechnology providers down the river,” McCauley says. On Facebook, he's described farmers joining the lawsuits against Syngenta as “ambulance chasers.”

“China accepted the corn for two years before rejecting shipments and everyone knew the risks involved,” he emphasizes.

Even lawyers don't always see eye to eye on the topic. While several legal firms are encouraging farmers to sign up for the class action lawsuit against Syngenta, San Antonio, Texas Attorney Martin Phipps has been advising his farmer clients to avoid being part of any class, where he says plaintiffs could end up getting “pennies on their dollar,” versus an individual filing where he will provide expert witnesses to prove up individual losses.

“If a farmer believes he has a case, it behooves him to sign up as an individual or else he will be lumped into a much larger class of plaintiffs,” he argues. Phipps started working with farmers in 2006, after Bayer's GM LibertyLink trait had been found in U.S. rice supplies.

This most recent round of lawsuits is at the heart of a much bigger question: When biotech products are rejected in international markets, who is to blame?

Val Giddings, a senior fellow with the Information Technology and Innovation Foundation, says it is “completely understandable that farmers would get their noses out of joint and seek to recoup damages from the responsible party. But in my opinion, they are making a grave, strategic mistake going after Syngenta.

“You could make the argument that Syngenta should not thave sold the seed to American farmers until the approvals were in hand in all of the appropriate big export markets. But to make that argument presupposes that those countries that are the export markets are honoring their commitments under the WTO (World Trade Organization) to make sure that they don't have protectionist trade barriers disguised as phytosanitary or other requirements.

“The primary offender is not Syngenta; it's China,” emphasizes Giddings. “There is a severe disconnect between China's international treaty obligations and the way they are administering their system for the approval of new crop varieties.

“These folks who sued Syngenta to recoup their losses would have been far wiser if they would have grabbed their pitchforks and torches and headed to the offices of the U.S. Trade Representative to demand that they initiate conversations in Geneva with China about the unacceptable deviations between their practices and their treaty obligations,” Giddings adds. “I don't understand why these plaintiffs have taken a shortsighted and long-shot approach when a more enduring fix is not difficult to imagine.”

Outside of the courts, representatives of several farm, grain trade and biotech companies have been meeting on a regular basis to try to develop better “rules of the road” for new product introduction. The U.S. Biotech Crops Alliance (USBCA) aims to find common ground on the introduction, stewardship, and distribution of commodities and processed products containing or derived from modern biotechnology.

The USBCA's founding organizations are the National Corn Growers Association, American Soybean Association, American Seed Trade Association, Biotechnology Industry Organization, National Grain and Feed Association, and North American Export Grain Association. Other national organizations that subsequently joined include the American Farm Bureau Federation, Corn Refiners Association, National Association of Wheat Growers, National Oilseed Processors Association, North American Millers' Association, United Sorghum Checkoff Program, U.S. Canola Association, U.S. Grains Council and U.S. Soybean Export Council.

The group has been working to communicate up and down the value chain about the risks associated with the introduction of a new biotech product and how to manage those risks. On the international front, participants are still grinding out how to establish protocols in international markets for low-level presence (LLP), ensuring that small amounts of unapproved seed varieties don't lead to another full-scale rejection of a grain shipment.

USBCA participants say they've made substantial progress in persuading the U.S. government to elevate biotechnology acceptance as a trade policy issue and to play a positive role in a global LLP initiative that was originally started by the Canadians. More importing and exporting countries are at least talking about the need to synchronize their approval process, they say.

But the effort to is still very complicated and may take many more years to resolve. And the longer it takes, the more reluctant some companies may be to bring new products to the market - especially when you consider that it takes about 13 years and $136 million  to take a new biotechnology trait from the point of discovery through the domestic and international approval process, according to Syngenta. And that same trait may only enjoy a patent life of 20 years.

Until the group can fully address the LLP issue, many sources say it will be difficult to tackle perhaps the biggest challenge confronting the USBCA - how to assign liability for any damages that might occur and then how to ensure that those damages are paid. For example, what if an individual farmer violates his or her stewardship agreement? Would that same farmer be able to pay for a rejected shipment of grain? And what about the technology providers? At what point should they be required to pay damages - if at all?

The USBCA group hopes to find more consensus before their mid-summer board meeting.

In the meantime, biotech providers are trying to go the extra “stewardship mile” with new trait introductions that farmers say are so important - especially given increasing weed resistance to some products. The total area with resistant weeds doubled in the U.S. between 2009 and 2013, now numbering over 61 million acres, according to a survey conducted by Stratus Agri-Marketing.

For example, Dow AgroSciences is carefully guiding a limited launch of Enlist Duo this year, a herbicide-tolerant trait technology for corn and soybeans that was deregulated in September. Growers must adhere to a thorough set of stewardship protocols and requirements, overseen throughout the growing season by DowAgroSciences, including an agreement that grain from Enlist corn will be fed on farm when harvested.

Dow AgroSciences also announced it will allow a limited number of farmers to grow its Enlist soybeans under its Field Forward program - where the firm will manage the seed production throughout the season, including handling and storage after harvest. Enlist crops have been approved for import by many countries, and are in the approval process in many others, notes the company.

But as with any of the best designed stewardship plans, there's no guarantee that some seed trait might end up in an international market where it's not yet approved - raising the bigger question of how to make innovation a win/win for technology companies, farmers, and U.S. exporters.

“We don't have the answer to that question yet,” noted one USBCA member. “But we are doing a much better job of communicating about the risks and the opportunities.”

In the meantime, the battle over how new science and innovation in agriculture will likely be tied up in the courts, says Iowa State University law professor Kristine Tidgren.

“It remains to be seen how these legal battle will unfold,” she wrote in a blog on this topic. “Important legal principles may be established to guide the development and dissemination of emerging food technology. In the short term, however, it seems unlikely that any clear winners will emerge.”

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