StarLink's
Impacts on the Farm Economy
By
Genetically Engineered Food Alert
In 1998,
Aventis rushed its genetically engineered StarLink corn to market despite not
gaining approval from the Environmental Protection Agency (EPA) for human
consumption. Instead, StarLink was only approved for animal feed and industrial
uses. The EPA had not approved StarLink for humans because the powerful Bt
protein, Cry9C, inserted in StarLink has common characteristics of known
allergens. Regulators feared that the corn could trigger allergic reactions.
Due to concerns of wind blown Cry9C pollen contaminating ordinary corn, the EPA
required 660 foot buffer strips around StarLink fields. The EPA's registration
of StarLink obligated Aventis to inform growers of the restricted use and the
requirement for 660 foot buffer strips. Additionally, the company was
responsible for ensuring that these restrictions were followed and that
StarLink corn be kept out of the human food chain.
Aventis did not fully comply with any
of these requirements. Many seed dealers and farmers were not informed of these
restrictions. In fact, these
restrictions were not even printed on StarLink seed bags or tags.[1] Aventis did nothing to ensure the buffer
zones were being used.[2] They did nothing to monitor the
effectiveness of the buffer zones. In addition, they did nothing to test to
ensure that contamination was not taking place.
This
failure of Aventis to live up to its legal obligations during any of the three
years of StarLink’s commercialization has become evident since Genetically
Engineered Food Alert discovered that Taco Bell taco shells contained StarLink
in mid-September 2000. Subsequently,
over 300 food products have tested positive for StarLink. Clearly, Aventis
failed in its legal obligation to inform farmers of StarLink's restrictions and
keep StarLink out of the food chain. US regulatory agencies failed to monitor
the company's behavior. These failures
are having negative economic reverberations throughout the farm economy.
Although StarLink was grown on no more than 0.5% of US corn
acres in 2000 (362,000 acres), 1999 (250,000 acres) and 1998 (10,000 acres),
the resulting contamination has significantly impacted the farm economy. Without a system of segregation and an
inability to control pollen drift, StarLink contaminated much of the US corn
supply. The full costs of this
contamination are continuing to be felt; however current estimates are that it
has run in the hundreds of billions of dollars.[3]
Aventis calculated that 50 million bushels of StarLink corn
were produced by farmers licensed to use it and another 20 million bushels came
from neighboring fields. These calculations do not account for contaminated
corn beyond the 660 foot buffer strip.
In March 2001, Aventis stated that 430 million bushels of corn in
storage across the country contained some StarLink.[4] This was a marked increase from original
estimates the company had made.
The contamination of conventional seed corn by StarLink
through wind pollen, clearly indicates that contamination has occurred beyond
the 660 foot buffer strip. Several
varieties of non-StarLink seed corn sold in 1999 contained the Cry9C protein.[5] This has resulted in farmers raising corn
with the Cry9C protein without their knowledge.[6]
As of June 25, 2001, the USDA had purchased and destroyed
332,000 hybrid seed corn units intended for sale in 2001 that were found to
unintentionally contain the Cry9C protein. This seed came from 63 small and
medium sized seed companies.[7]
The USDA is still reviewing applications from eight other companies. While
companies that were licensed by Aventis are not eligible for the USDA seed buy
back program, other large companies announced their decision not to participate
in the program in a March 2001 letter to Secretary of Agriculture Ann Veneman.
The seed industry has assured the USDA that they are undertaking proper
procedures to eliminate the contaminated seed.[8] However, there will be no official reporting
which will result in the public not knowing the true extent to which seed corn
has been contaminated.
Finally, the FDA announced on July 3, 2001 that it had found
StarLink in corn chips made from white corn – the first time StarLink had been
found in a white corn product. Last year, many chip and tortilla makers
switched to using white corn to avoid contamination. StarLink is a yellow corn.
It is unclear how the white corn became contaminated.[9]
The
contamination of StarLink in the nation’s corn supply has created enormous
headaches for grain elevators. Corn shipments have been rejected because they
tested positive for StarLink. This has resulted in extra shipping costs,
demurrage, lower corn prices and sometimes lost sales.[10] For example, Superior Cooperative Elevator
Company in Superior, Iowa had 600,000 bushels of train-loaded corn test
positive for StarLink which resulted in a $22,000 loss for the elevator just
for the first of the two train cars.[11]
Some
elevators had to default on contracts they had signed with processor or
exporters to deliver corn because their corn had been contaminated by
StarLink. Even some processors who were
going to use the corn for animal feed rejected corn tainted with StarLink
because of concerns of liability risks.
In order
to avoid rejection of corn shipments, most elevators now test corn as it is
delivered to the elevator by farmers and test shipments prior to leaving the
elevators. Corn that tests positive
must be routed to a StarLink approved site.
While Aventis is covering most of the costs of the tests, the process is
burdensome and can be costly. Early
estimates of the total cost incurred by an individual elevator ranged from one
thousand to tens of thousand of dollars.[12]
Because of
heavy pressure from State Attorney Generals, Aventis has agreed that if these
costs are documented, there is the possibility for elevators to be compensated.[13] However, data on how much elevators are
actually being reimbursed and what percentage of elevators seeking compensation
actually receive it is not being made public by Aventis. There is no third
party monitoring of the elevator reimbursement process.
The grain handling industry estimates that it takes four
years to channel all the corn from a year's crop out of the grain handling system. This means that elevators will continue to
incur costs related to testing, segregating and re-channeling StarLink
contaminated corn for the next four years. There are concerns that Aventis'
November 15, 2000 announcement that it plans to sell its CropScience division
by the end of 2001 will remove corporate responsibility for these costs. This would leave taxpayers, elevators, and
in turn farmers, left to absorb these costs.
IMPACTS
ON FARMERS
Through negotiations with (and lawsuit threats from) Attorney
Generals from 17 states, Aventis and the USDA established a program to channel
StarLink corn to non-food uses from the 2000 crop that had not already been
sold. (Most of the StarLink that had already been sold was inadvertently
co-mingled with non StarLink corn.) Under the program, farmers receive a $.25 a
bushel above the market price (or above the October 2, 2000 county posted price
if a farmer chooses to sell their corn through the USDA Commodity Credit
Corporation) for their StarLink corn and corn raised in the 660 foot buffer
strip. For non-StarLink corn inadvertently mixed with StarLink in on-farm
storage, farmers received a $.05 per bushel premium when the corn is fed on
farm and a $.10 per bushel premium for co-mingled corn marketed to feed or industrial
uses. In order to participate in this program farmers had to sign an agreement
with Aventis by February 15, 2001 and market or use the corn on farm by
September 15, 2001.
Aventis stated that the company set aside $100 million Euros
($90 million) (pre-tax) "to cover certain [StarLink] liability and
recall-related costs".[14] However, the actual amount Aventis has paid
out to farmers and elevators is not being disclosed by Aventis.[15]
To ensure
that no StarLink seed or harvested corn is hidden in equipment used in
planting, harvesting, transporting and storing, farmers will need to
meticulously clean all their equipment.
This includes cleaning row crop planter boxes, combines, augers, grain
bins, trucks and gravity boxes. In fields where StarLink corn was raised or
Cry9C pollen drifted, farmers must control for volunteer StarLink plants so as
to not contaminate their 2001 corn harvest.
Farmers are not being compensated for the extra costs and labor required
to clean their equipment or fields to rid it of StarLink.
Additionally,
the USDA is advising farmers to test their 2001 seed corn and return bags that
test positive for Cry9C to the manufacturers for a refund. Who will cover these
testing costs has not been specified.
While
Aventis is covering some of the costs incurred by farmers who raised StarLink
and buffer corn, many farmers who planted seed corn free of the Cry9C protein
have suffered financial loss and are not being compensated. As a result, there are several class-action
lawsuits against Aventis seeking compensation for alleged financial losses due
to contamination by StarLink of farmers fields and the negative impacts of the
StarLink debacle on the domestic and international corn markets.
Soon after the StarLink debacle broke,
the US Department of Agriculture (USDA) tried to appease exporters and
importers of US corn by stating that StarLink would have no negative impact on
corn exports.[16]
However, in April 2001 the USDA
contradicted its original assessment when it released a report, "StarLink:
Impacts on the U.S. Corn Market and World Trade" that stated that StarLink
caused “major disruption in domestic and export markets” and "had a
negative impact on US corn exports".[17]
The discovery of StarLink in foods in
Japan significantly slowed exports of US corn to Asia. Japan and South Korea
are the first and second largest importers of US corn. In both countries StarLink is not approved
for any use and they have a 0 tolerance level for Cry9C. Japan cut their imports
of US corn by half after news of the StarLink debacle broke. While exports to
Japan have increased since the USDA established a Cry9C testing protocol for
corn exports, they still remain significantly lower than other years. According
to the USDA’s Foreign Agricultural Service data, as of June 14, 2001 Japan had
imported 1.2 million metric tons (47.8 million bushels) and South Korea had
imported .72 million metric tons (28.5 million bushels) less US corn than at
the same time last year.[18]
In addition to the current year's loss
of US corn sales because importers do not want to risk importing StarLink, the
long term loss of market share due to loss of confidence in the reliability of
US exports and distrust in the US biotechnology regulatory process could have
economic consequences for year to come.
COSTS TO USDA (TAX PAYERS' DOLLARS)
The USDA has covered costs of the program to channel
StarLink and co-mingled corn to non- food uses, the seed buyback program and
the testing of exports bound for Japan.
The USDA is directly paying farmers that choose to market their StarLink
and buffer corn through the USDA’s Commodity Credit Corporation and Aventis is
reimbursing the USDA for what they pay out to farmers. However, the overhead costs of administering
this program are not being reimbursed.
The USDA has spent $13 million buying up hybrid corn seed
contaminated by StarLink and could spend up to another $5 million. This money is coming out of the Commodity
Credit Corporation’s borrowing authority.[19]
A USDA spokesperson stated that the USDA has not "made a determination on
whether it will seek reimbursement from Aventis for any costs associated with
the program".[20] A spokesperson for Aventis declined to
comment on whether they would reimburse the USDA if requested.[21]
In order to meet Japan’s demand for a 0 tolerance level of
StarLink in corn shipments, the USDA
established a protocol and
testing program to screen corn bound for Japan. USDA staff is testing and
monitoring the cleaning of equipment elevator unloading equipment, conveyors,
scales, storage bins, etc. to prevent inadvertent commingling and will monitor
the unloading of incoming railcar or barge shipments. USDA will retain a
representative file sample of each export shipment for 90 days in accordance
with USDA regulations. This sample will be available for monitoring
purposes. [22] The costs for administering this screening
program have not yet been determined.
The need for testing of seed corn and exports will continue
for a number of years. Are these costs
also going to fall on the taxpayer and cut into money available to farmers
through government programs?
[1] IATP obtained a StarLink seed bag. Also see Neil E. Harl, Roger G. Ginder, Charles R. Hurburgh and Steve Moline, “The StarLink Situation,” March 15, 2001, Iowa Grain Quality Initiative, Iowa State University, updated June 25, 2001
http://www.exnet.iastate.edu/Pages/grain/publications/buspub/0010star.PDF (Downloaded June 26, 2001).
[2] Brian O'Reilly, "Reaping a Biotech Blunder," Fortune, February 19, 2001.
[3] Ann Thayer, “StarLink Corn Derails Ag Chain,” Chemical and Engineering News, Vol. 79, No.4, January 22, 2001.
[4] Kaufman,
Marc. "Biotech Grain Is in 430 million bushels of Corn, Firm Says,"
Washington Post, March 16, 2001.
[5] Personal communication with representative at StarLink Logistics representative, June 26, 2001. Also see "Aventis CropScience Claims Procedure for Growers with Losses Related to Non-StarLink Corn Containing Cry9C" http://www.us.cropscience.aventis.com/AventisUS/CropScience/stage/html/intro.htm
[6] Aventis has not made public the number of farmers affected or amount paid out and an Aventis spokesperson declined to provide that information when contacted. Personal communication with Aventis’ Director of Public Affairs- Biotech, June 26, 2001.
[7] "USDA Buys Corn Seed Affected By Bioengineering," Food Chemical News, Vol. 43, Issue 19, June 25, 2001.
[8] Personal communication with USDA, June 25, 2001.
[9] Kaufman, Marc. “Engineered Corn Found In White Tortilla Chips.” Washington Post. July 4, 2001.
[10] William Lin, Gregory K Price and Edward Allen, “StarLink: Impact on the U.S. Corn Market and World Trade,” Economic Research Service, USDA Feed Yearbook, April 2001.
[11] Des Keller and Dan Miller, "Biotech's Black Eye," Progressive Farmer, December 2000.
[12] Sarah Muirhead, "Grain Elevators, Handlers Caught in Middle of StarLink Confusion," Feedstuffs, November 6, 2001
[13] See "Aventis CropScience Elevators Claims Procedure for Losses Related to StarLink Corn," http://www.us.cropscience.aventis.com/AventisUS/CropScience/stage/html/claimpolicyandformselevators1.htm
[14] "Aventis Reports Full Year Results for 2000," Aventis press release, March 2, 2001.
[15] On November 15, 2000 Aventis announced that they plan to divest their CropScience and Animal Nutrition divisions by the end of 2001.
[16] Randy Fabi, “USDA Says StarLink Bio-Corn Won’t Hit US Exports,” Reuters, October 30, 2000.
[17] William Lin, Gregory K Price and Edward Allen, “StarLink: Impact on the U.S. Corn Market and World Trade,” Economic Research Service, USDA Feed Yearbook, April 2001.
[18] “Outstanding Export Sales and Exports by Country, Region and Marketing Year as of June 14, 2001,” USDA, Foreign Agriculture Shttp://www.fas.usda.gov/export-sales/corn.htm
[19] Personal communication with USDA, June 25, 2001.
[20] Ibid.
[21] Personal communication with Aventis, June 26, 2001.
[22] “Protocol for Food Corn Exported to Japan,” USDA, November 20, 2000. http://www.usda.gov/gipsa/biotech/starlink/protocol.htm, downloaded June 27, 2001.