Midwest Farmers Lose Faith
They Had in Biotech Crops

By Scott Kilman
Copyright 1999 Wall Street Journal
November 19, 1999

COLERIDGE, Neb. -- As farmers this month place their orders for spring planting, there is growing evidence that a boom is fading.

Next year looks as if it will bring the first decline in sales of genetically altered seeds after three years of heady growth. Many farmers remain fans of the seeds and don't share consumers' anxiety over the safety of genetically modified crops. But they can't afford to ignore those concerns.

"Even when the customer is wrong, the customer is right," says Boyd Ebberson. For three years, he has sown his mammoth farm with genetically modified seed. Next year, he says, "I'm changing back."

Holding Their Ground

Mr. Ebberson's decision is distressing news for the biotechnology industry, which has invested tens of billions of dollars in developing genetically modified crops. This technology makes crops so much easier to grow that farmers -- typically a cautious bunch -- embraced it with gusto, happily paying a 25% premium for genetically modified seed. Sales of the seed, first available in 1996, had jumped to $1 billion by last spring. Some biotechnology executives foresaw a leap next spring to $2 billion.

None do now.

"We'll be happy if we can hold our ground," says Edward T. Shonsey, president of the U.S. seeds unit of European biotech and pharmaceutical giant Novartis AG.

That sounds optimistic to Robert K. Wichmann, a top executive at DuPont Co.'s Pioneer Hi-Bred International Inc. unit, who predicts "some slippage" in sales. Pioneer is the country's biggest seed company.

The reversal is turning a routine autumn farm task -- placing seed orders -- into a kind of political campaign. In recent weeks, Mr. Shonsey, the Novartis executive, has ridden in dozens of combines to try to persuade farmers to keep ordering genetically modified seed. He told his staff to lobby growers as well. Monsanto Co., which produces genetically modified seeds for corn, soybeans and cotton, also has its executives barnstorming the Midwest. Other crops that have been genetically modified include: potatoes, tomatoes, squash, canola and sugar beets.

In radio advertisements, town meetings and combine-cab confabs with individual farmers, these executives are struggling to shore up sales of the new seed. After steady price increases, they are promising to freeze prices on next year's batch of seeds. They are also promising to help farmers find buyers for genetically modified crops.

But that offer only underscores the question that most troubles farmers: At harvest time next year, will a strong market exist for genetically modified crops?

The problem is that U.S. public opinion is up for grabs. As yet, most Americans aren't aware, let alone concerned, that countless items on their grocery shelves contain genetically modified ingredients, from the sweetener in their soda to the cornflakes in their cereal bowl. But when asked in polls, American consumers say they want to know whether their groceries contain bioengineered material.

This month, a bipartisan bill was introduced in Congress that would require labels identifying whether fresh produce or any ingredient in packaged foods was grown from genetically modified, or GM, seed. The bill's introduction drew protests from government food and health agencies, and its passage faces further hurdles from food-industry lobbies. Industry executives fear that a labeling law could initiate in America a backlash to bioengineered food similar to what Europe has seen in recent years.

In addition, Thursday the Food and Drug Administration signaled it is considering changes in its oversight of GM crops.

In Europe, consumer opposition is so intense that "GM-Free" has become an effective marketing slogan. Almost certainly, food companies in the U.S. would rather remove any genetically modified ingredients than carry a label announcing the presence of such ingredients. Indeed, many U.S. food companies are scrambling to find nonmodified ingredients for the products they export to Europe.

All this is clearly weighing on the Farm Belt. This past growing season, more than half the cropland in Nebraska was sprouting genetically modified crops. But a survey released in late August by the University of Nebraska's Center for Rural Community Revitalization and Development found that among rural Nebraskans, a group closely tied to agriculture, only 36% favored using genetically modified seeds.

"The results were a shock, considering how quickly Nebraska has adopted the technology," says John Allen, director of the center. "Farmers feel like they're caught in the middle."

That's the case across the Midwest, home of the vast majority of the world's land planted to genetically modified crops. In just four years, nearly 70 million acres of Midwestern cropland-an area equal to all the farmland in Iowa and Illinois-were switched to genetically modified crops.

'A Big Rollback'

But now, based on early orders so far, some local seed dealers expect sales of their bioengineered varieties to drop 20% or more. The retreat is so big that seed executives are worried about a possible shortage of conventional, unmodified seed. "The handwriting is on the wall," says Leon Corzine, an Assumption, Ill., farmer and seed dealer. "We see a big rollback next spring."

DuPont hopes to stem this reversal. Executive Vice President Charles S. Johnson recently flew the company Learjet to the Nebraska town of Wayne to hold a town-hall-style meeting with farmers. DuPont has invested heavily in genetically modified seeds -- including the $7.7 billion acquisition in October of the 80% of Pioneer it didn't already own -- so Mr. Johnson is one of several ambassadors being sent to the Farm Belt this month.

A handful of farmers accepted Mr. Johnson's invitation to a catered lunch on the campus of Wayne State College. In theory, these farmers are huge fans of biotechnology. Before its arrival, a corn-killing caterpillar was wreaking such havoc that farmers had to hire crop-dusters to cover their land with insecticides so powerful they couldn't enter their fields for days afterward. All sorts of beneficial insects died, too, such as ladybugs and honeybees.

But the transplantation into corn seed of a gene from a common soil micro-organism called Bacillus thuringiensis solved the problem, killing the caterpillar without harming other species. The genetically modified corn, called Bt corn, resulted in a 20% decline in local insecticide sales. Without all those chemicals, farmers felt they were delivering a healthier crop. "Personally, I'd rather eat a bowl of cornflakes made from Bt corn than from regular corn," says Rick Gruber, 40, a corn farmer near Benedict, Neb.

An Awkward Moment

Still, the farmers who have gathered to hear Mr. Johnson hardly give him a hero's welcome. It doesn't help that public speaking isn't easy for Mr. Johnson, a quiet 61-year-old who concedes that his flat delivery is more John Wayne than Jesse Jackson. He brings little punch to lines like: "We can't just throw this technology away. This is what can feed the world's growing population."

An awkward moment arises when Mr. Ebberson, the Coleridge farmer, speaks. Last spring, he spent nearly $160,000 on genetically modified seed, and it worked as advertised. He didn't have to spray nearly as much insecticide, and he allows his 17-year-old son to snack on genetically engineered soybeans picked right from the field.

"If anything, biotechnology is safer than what we'd been doing to crops," Mr. Ebberson says.

But who can say what the market will be like for his crops next year? And here's another inducement to switch: A grain elevator near Mr. Ebberson's farm is offering a premium of 10 cents a bushel for nonbioengineered corn. The corn is for a Japanese brewer that doesn't want any genetically modified organisms in its beer. "I've got to think about what the customer wants right now," Mr. Ebberson tells the group.

When Mr. Ebberson announces his decision-next spring he's taking his 6,000-acre farm back to non-modified crops -- DuPont's Mr. Johnson is speechless.

In a Nebraska farm town, the market speaks through the town's grain elevator, and the message these days seems loud and clear to Harold Hummel, general manager of the farmer-owned elevators around Waverly.

The companies those elevators sell to, such as the Archer-Daniels-Midland Co. soybean-crushing plant just down the road, are starting to ask Mr. Hummel to supply conventional crops. To do that, he has to persuade farmers to keep their genetically modified crops separate from their conventional crops. The only way farmers could do that would be to build new storage bins and clean their combines between fields, a logistical nightmare that could negate the advantages of genetically modified crops.

"We're stuck in the middle between the farmers who own the elevator and the markets we serve," says Mr. Hummel. "It is a predicament."

Mr. Hummel himself isn't equipped to store two different kinds of corn. His main storage complex is outfitted with only one pit for corn. But for next year, he is thinking about using an elevator in a neighboring town for handling only nongenetically modified crops.

Then, Mr. Hummel -- who this year paid the same price for bioengineered and conventional crops -- would pay a premium for unmodified grain. "The market is trying to tell us something," he says. "Farmers don't like it, but I think biotech is losing momentum."

Standing Firm

Some farmers are standing firm. A bioengineered soybean enabled Jim Miller, 41, to eliminate a big problem with soil erosion. The soybean is genetically rigged to survive a dousing by Monsanto's Roundup weedkiller, which is designed to kill everything green. The change makes it so easy for Mr. Miller to chemically weed his fields that he no longer needs to mechanically disturb the soil, which left it vulnerable to erosion from the wind and rain.

So Mr. Miller isn't switching back. In fact, he believes the best is yet to come. He has compiled a collection of articles predicting that someday genetically modified crops will become a new source of expensive drugs. "I got a lot of hopes riding on biotechnology," says Mr. Miller. "I want to get away from growing cheap corn. I want to grow something that the pharmaceutical companies will pay a lot for."

But does that possibility still exist? Mr. Miller worries that widespread defections from genetically modified crops will bring the revolution to a halt before it can fulfill its proponents' dreams and his own.

"Everybody around here likes biotech," says Mr. Miller, who runs an 1,700-acre farm near Belden, Neb. "But not a lot of guys are willing to take a bullet for biotech."

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