3 April 1998

All set to gain from added

value

Providing added value for

crop buyers and sharing it

from the farm to the

processing plant is Du

Ponts policy for genetically

modified crops. But will it

work? Charles Abel investigates the companys

policy

PREMIUMS of £60/ha (£24/ acre) for genetically modified crops? Surely not. Public discomfort with the technology suggests that is far from likely.

Yet growers in North America are already reaping that reward for GM soya beans. The modified soya had a gene inserted to raise oleic acid levels, making the seed more valuable to food and animal feed producers. But the story doesnt stop there. Not only is GM crop producer Du Pont quietly working with top seed company Pioneer, it is also taking a role further up the food chain.

Du Pont already owns Protein Technologies International, a US soya-based food and feed ingredients company. It also bought Dalgetys cereal-based functional ingredients business in the UK.

The strategy is to use genetic engineering to develop added value products and then keep more of that added value at the production end of the food chain, explains Bill Kirk, senior vice-president for Du Pont Agriculture.

"Developing the science is not enough. We need integrated systems to hold onto the added value in the food chain. This is where we are at least five years ahead of our competition."

The approach is good news for farmers. Du Ponts food chain interests mean US soya growers get contracts guaranteeing a £60/ha (£24/acre) premium. And EU growers are set to benefit too. Du Ponts high oil soya is in the EU approvals process, high oil conventional grain maize is hot on its heels and the company expects to have added value GM wheats within five to 10 years.

Such crops will have a huge impact on farming, says Mr Kirk. "With input traits, like herbicide tolerance, you are targeting a global agchem market of $30-35bn, of which GM crops could take $5bn. But on the output side you are looking at a market worth $500bn. The potential to boost incomes is huge."

Having said that, Du Pont has developed its own herbicide tolerant crop – soya beans resistant to a Du Pont sulfonyl urea herbicide. "Last year 7m acres were grown in the US," says Mr Kirk. But that is not the key use of GM technology, he stresses.

Added value is the key, with two roles – more useful food and feed processing ingredients, and raw materials for industry. Du Ponts industrial chemicals base offers the chance to use sustainable GM crop products in both polymer and chemical intermediary production, he says.

Dual purpose crops which produce functional feed ingredients in the grain and industrial raw materials in the straw are a possibility, he says. "Farmers need to maximise the output from their land and we have material in the pipeline that can help them do just that."

Indeed, the knowledge is building at a phenomenal rate. "Two years ago it took us two to three years to find and isolate a gene and cost $2-3m. Now we can process tens of thousands of genes a year for $100 each.

"Agriculture has never had progress anything like this. We will secure more biotech patents this year than we did in the past 15 years put together. Farming has been used to improvements of 1-2% a year. This technology is going to far outpace that."

The companys relationship with growers will differ from other players in the market, Mr Kirk says. "We dont want contracts that leave the farmer with all the risk. I want the best seed companies, the best farmers, the best distributors and the best processors. And they will all share in the added value. Were only as good as the weakest link in the chain."

He expects contracts to carry a premium to ensure swift uptake of new added value crops and to ensure the quality and supply demands of processors are met. The premium will also help justify segregated storage of added value GM crops throughout the food chain, he notes.

The desire to get professional farmers on side is so great that Du Pont is paying for progressive US farmers to go to business school to develop the skills necessary to become key players in the added value GM crop chain.

At the moment US growers can sign up for one-year GM crop contracts on Du Ponts web site. But preferred supplier deals are clearly part of Mr Kirks thinking. "If a grower has the right business and is in the right place we will want to work very closely with him. I believe five-year contracts will come.

Labelling

"To capture the full benefit of added value, food products will need to be labelled," says Mr Kirk. That may or may not show the produce is from a GM crop. "It depends on the legislation." But either way it is not seen as a problem. "At the retail level the added value we will be bringing will be an asset, which we will want to talk about."

Cereals innovation centre

Acquisition of Dalgetys functional food ingredients business in Cambridge is considered a key part of Du Ponts global value added food strategy. Efforts to improve the nutritional content, baking quality and feed value of cereal varieties using conventional technology are already well advanced, says Mr Kirk. Results can be expected soon, he adds. And further acquisitions in the seed and processing sectors, to complete Du Ponts position in the cereals food chain are not ruled out.

Why pursue input savings with GM crops, when added value for food, feed and industrial markets offers far greater scope to boost margins? asks Bill Kirk, vice president for Du Pont Agriculture.

DU PONT BIOTECH

&#8226 Added value the key.

&#8226 Contracts to keep fair share of extra value at production end of food chain.

&#8226 High oil GM soya growers in US on £60/ha premium already.

&#8226 Soya, corn and wheat key crops for adding value.

&#8226 Integration into food chain vital.

&#8226 "Huge potential for growth."

Human health benefits

High oil soya beans contain more oleic acid, reducing the need for hydrogenation and improving the nutritional profile of vegetable oils in food manufacturing, claims Du Pont. In future isoflavin levels in soya could also be enhanced or transferred into other crops, including wheat. "That would bring real health benefits to processed food products, including a better fatty acid content," notes Mr Kirk.