Status of Genetically Engineered Wheat in North America

Status of Genetically Engineered Wheat in North America

Order Code RS21620
Updated November 4, 2004
CRS Report for Congress
Received through the CRS Web
Status of Genetically Engineered Wheat in
North America
Gwenell L. Waters Bass
Analyst in Industrial Organization and Corporate Finance
Resources, Science, and Industry Division
Summary
Genetically engineered (GE) wheat varieties developed by the biotech industry and
university researchers hold considerable promise for producers. GE wheat developed
by chemical company Monsanto is engineered to resist damage from the widely used
Roundup Ready (RR) herbicide, making it easier for farmers to control weeds. The
development of GE wheat raises issues of market acceptance and agronomic
management. Market acceptance of GE wheat focuses on its direct acceptance by
consumers, either segregated or when co-mingled with non-GE or conventional wheat.
Most research suggests GE foods are safe to eat; however, uncertainty about health and
environmental effects has led to public opposition particularly in Europe and Japan.
This is of great concern to U.S. wheat producers because the United States exports more
than half of its wheat production. Producers are concerned as to whether or not a
segregation system can be designed which ensures that no co-mingling between GE and
non-GE wheat will occur. Agronomic management issues include the effect of GE
wheat on crop management practices and profitability, issues of contamination and
spread, the development of pesticide resistance, and the cost and management of
volunteer plants. While developers of the technologies are seeking regulatory approval,
they indicate that they will postpone their commercialization until market acceptance is
assured and systems for separating GE and non-GE wheat are in place. In May 2004,
Monsanto announced that it was deferring efforts to introduce GE wheat until such time
that other wheat biotechnology traits are introduced. This report will be updated as
events warrant.
Background
GE wheat was first produced at the University of Florida in 1992. The strain of
wheat that was developed was herbicide-tolerant. The University holds a patent on the GE
wheat technology, but has granted an exclusive license to the chemical and seed company
Congressional Research Service ˜ The Library of Congress

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Monsanto.1 Herbicide-tolerant crops were developed to survive certain herbicides that
destroy a crop along with the targeted weeds. With herbicide-tolerant crops, farmers can
use potent postemergent herbicides, providing a more effective weed control than
otherwise. Monsanto’s GE wheat is a Roundup Ready (RR) crop that is resistant to
glyphosate, a herbicide effective on many species of grasses, broadleaf and other weeds.
Since the first GE crops (mainly corn, soybeans, and cotton) became commercially
available in the mid-1990s, U.S. farmers have been rapidly adopting them.2 Proponents
of agricultural biotechnology say it offers the potential to increase crop production, lower
farming costs, improve food quality and safety, and enhance environmental quality. Cited
advantages of RR products are that they cut herbicide costs and make spraying and
cleaning up of fields more convenient. For example, a key aspect of RR soybean is that
it provides enormous gains in crop and time management flexibility, freeing up labor time
for other activities. Thus, even if output remained the same, cost would be lower for weed
control chemical applications and mechanical tillage. Since producers pay more to seed
companies for the herbicide-tolerant seeds, the profitability of the herbicide-tolerant
varieties depends on weed control cost savings compared with seed cost premiums.
Presently, the United States has approved 12 different plants with GE traits for commercial
use. Two of these plants which are widely used are corn and soybeans. A study by the
United States Department of Agriculture (USDA) found the adoption of herbicide-tolerant
corn improved net farm returns of specialized corn farms. Herbicide-tolerant soybeans,
however, did not have a significant impact on net farm returns in either 1997 or 1998.3
Leonard Gianessi, a senior research associate with the National Center for Food and
Agriculture Policy in Washington, said the GE wheat could solve a key problem for
producers experiencing relatively low wheat prices. In some areas, according to Gianessi,
current weed-control measures cost about $30 an acre. The use of GE wheat could reduce
costs to $16 an acre. Monsanto’s GE wheat could make it affordable to plant more
according to Gianessi. These estimates do not include the potential cost of separating GE
from non-GE wheat or the market price implications of increased wheat production.4
The Canadian National Farmers Union (CNFU), is opposed to the introduction of GE
wheat. CNFU has cited several reasons for its opposition of GE wheat. The list includes
food safety, price impact , market loss, health concerns, environmental damage and
agronomic costs. One agronomist estimates that costs to control the potential cross
contamination between GE RR wheat and GE RR canola would require additional
chemical applications (non-RR) totaling up to $ 400 million annually in Canadian dollars.5
1 Monsanto is the third largest agri-chemical company worldwide. It is the only company
besides Sygenta (second largest) that has developed a potential GE wheat product.
2 For background see CRS Report RS21381, Adoption of Genetically Modified Agricultural
Products.
3 United States Department of Agriculture. Economic Research Service. Adoption of
Bioengineered Crops. AER-810. 68 pp. May 2002.
4 Melcer, Rachel. “Coalition Asks For In-Depth Study of Genetically Modified Wheat.” St.
Louis - Dispatch. Mar 12, 2003.
5 [http://www.nfu.org]

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Implications for U.S. Wheat -- Importance of Wheat Trade
The commercial acceptance of GE wheat is an issue of major importance for U.S.
wheat farmers because it depends on the attitudes of consumers, domestic and foreign, and
on the potential impact on food safety, health, and the environment. The United States is
the fourth largest wheat producing country, with its output exceeded only by the EU,
China, and India. In 2003, wheat ranked fourth among U.S. field crops in planted acreage,
behind soybeans, corn, and hay. During that same period, wheat represented 6% of gross
cash farm receipts, third highest among U.S. field crops.
The United States is the world’s largest wheat exporter, with wheat accounting for
approximately 7.5 % of the nation’s agricultural export value in 2003. U.S. wheat exports
equal almost one-fourth of total world wheat exports. Although nearly half of U.S. wheat
is sold to foreign customers, U.S. wheat exports have shown little to no increases since
1996/97. Global competition has intensified in recent years as several non-traditional
wheat exporters have emerged (Russia, Ukraine, India in particular) and the United States
has seen its market share decline. The degree of foreign acceptance can significantly
affect international trade and may create the need to identify and segregate GE wheat.
Market loss is a major concern of U.S. wheat producers because some of the United
States’ biggest trading partners have raised issues about accepting GE wheat if it is
commercially traded. Approximately 70% of the Upper Midwest’s hard red spring wheat,
for example, is sold to the EU and Japan, where consumers shun biotech crops like GE
corn and soybeans. Resistance to GE wheat may be even greater than for corn and
soybeans, which are principally animal feeds, since wheat products are eaten by humans
directly. U.S. corn exports to the EU have dropped from approximately $300 million in
the mid-1990s to less than $10 million in recent years. This decline is due primarily to the
fact that new biotech corn varieties have not been approved for marketing in the EU.6
Regulatory Status of GE Wheat
United States. In December 2002, Monsanto submitted a petition to the USDA
and Canadian authorities for regulatory approval of its GE spring wheat.7 USDA’s Animal
and Plant Health Inspection Service (APHIS) conducts programs to protect American
agriculture against pests and diseases. Generally, before a genetically engineered crop can
be produced on a wider scale and sold commercially, its creators must petition APHIS for
a “determination of non-regulated status.” APHIS must be provided scientific details
about the genetics of the plant, the nature and origin of the genetic material used,
information about indirect effects on other plants, field test reports, and information
unfavorable to the petition. All petitions are published in the Federal Register for public
comment. APHIS grants the petition only if it determines that the plant poses no
significant risk to other plants in the environment.
6 For background see CRS Report RS21556 Agricultural Biotechnology: The U.S.-EU Dispute.
7 Three agencies using a coordinated framework are primarily responsible for regulating
biotechnology in the United States – the USDA, the Environmental Protection Agency (EPA),
and the Food and Drug Administration (FDA). For background see CRS Report RL21556 Food
Biotechnology in the United States: Science, Regulation, and Issues.

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The EPA, which would have to set a tolerance for glysophate for the wheat variety,
is waiting for the USDA to complete its work. Monsanto then may approach the FDA for
a premarket consultation, in which the company supplies its information indicating that
the variety is safe to eat, but this consultation is not required by law. While Monsanto
expects that its wheat will pass the long regulatory process, company officials have
pledged not to sell the GE wheat seeds to farmers until the company can guarantee
domestic and export markets. They also promised to help develop grain-handling and
testing procedures that can be used to separate its modified wheat from non-modified
wheat.8
On March 9, 2003, a coalition of environmental and farming groups filed a petition
asking the USDA to conduct in-depth environmental and socioeconomic impact studies
before considering approval for GE wheat products. The groups consist of the Center for
Food Safety based in Washington DC, Dakota Resource Council based in North Dakota,
Northern Plains Resource Council based in Montana, and other farm groups. The
Environmental Working Group and Greenpeace have also questioned commercialization
of GE crops.9
Their coalition petition to the USDA sought three actions: (1) institute a moratorium
on GE wheat until all possible environmental, human health and socioeconomic impacts
are analyzed; (2) institute a moratorium until possible impacts under the Migratory Bird
Treaty Act are assessed; and (3) classify GE wheat as a noxious weed and thereby prohibit
its production.
On April 25, 2003, the National Association of Wheat Growers, U.S. Wheat
Associates, and the Wheat Export Trade Education Committee sent a letter to Agriculture
Secretary Ann Veneman in response to petitions. The three national farm groups represent
most U.S. wheat farmers. The organizations, while acknowledging that there are market
acceptance concerns to be addressed, contend that a science-based regulatory system is not
the appropriate place to address non-scientific concerns. They suggest that a mechanism
other than the regulatory process must be found to address the timing of
commercialization, so that the scientific safety determinations may proceed free of non-
scientific encumbrances.

A statement issued jointly by the three national wheat organizations said that wheat
producers would work with all segments of the industry to develop and assure that a viable
identity preservation system and testing program would be instituted prior to
commercialization of GE wheat varieties. They urged technology providers to obtain
international regulatory approval and to ensure customer acceptance prior to
commercialization. The wheat organizations declared that they support voluntary labeling
of food products, but oppose government-mandated labeling of wheat products in both
U.S. and international markets, based upon the presence or absence of biotechnologically
derived traits that do not differ significantly from their conventional counterparts.
8 Monsanto. Bringing New Technologies to Wheat: Information on the Development of Roundup
Ready Wheat. Pamphlet.
9 National Association of Wheat Growers, U.S. Wheat Associates, and Wheat Export Trade
Education Committee letter to Agriculture Secretary Ann Veneman. April 25, 2003.

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In their letter responding to the March 9th petition, the three national wheat
organizations argue that the use of Roundup Ready wheat treated with glyphosate as an
alternative to other types of herbicide treatment will have virtually no impact on migratory
birds. They also note that herbicide resistant weeds are nothing new in agriculture and
have been a problem long before the advent of biotechnology.
In May 2004, Monsanto announced that after eight years of research, it was
deferring efforts to introduce GE wheat. Monsanto stated that as a part of its realignment
of research and development investments, the company was suspending the introduction
of Roundup Ready wheat, until other wheat biotechnology traits were introduced. The
company made the announcement even as its application for commercialization remains
pending. Organizations who are opposed to the development of GE wheat view
Monsanto’s decision as a victory. Monsanto indicated that the sales potential for GE
wheat was less attractive relative to the company’s other commercial priorities.
Canada. Producers in Canada are also concerned about the acceptance of GE wheat
in export markets. Canada exports more than 80% of its wheat to Europe and Japan. In
Canada, the Canadian Wheat Board (CWB), which enjoys a monopoly on sales of wheat
to export markets, has developed a set of conditions it says must be met before a GE wheat
variety could be released.
According to the CWB, there must be identified markets for the entire production of
GE or co-mingled wheat for multiple years. The CWB maintains that in order to protect
access to non-GE wheat markets, an effective segregation system must be developed.
Farm management questions concern the effect of introduction of GE wheat varieties on
management practices and profitability with respect to different kinds of farming
operations (e.g., conventional tillage, conservation tillage, organic, pesticide-free, etc.)
across a multi-year rotation. The CWB called for research on other agronomic risks such
as contamination and spread of genetic material, the development of weed-resistance, and
the cost and management of volunteer plants. Finally, the CWB called for a
comprehensive analysis to account for the balancing of risks and costs associated with GE-
wheat. Such an analysis would incorporate possible market benefits and costs, including
segregation costs, as well as agronomic benefits and costs.10
On May 27, 2003, the CWB asked Monsanto Canada to withdraw its application for
its environmental safety assessment of its GE RR wheat product to protect wheat exports
to key foreign markets. The CWB asked Monsanto to confirm its compliance with the
request to withdraw its application by June 27, 2003. The CWB was concerned that the
unconfined release of GE wheat in Canada would result in significant and predictable
economic harm to western Canadian farmers. Monsanto did not withdraw its application.
A recent study prepared for the CWB by three agricultural scientists concluded that
the unconfined release of GE wheat into western Canada would threaten the environment
and be environmentally unsafe.11 The report points to earlier experiences in Canada with
10 Grain Industry Working Group on Genetically Modified Wheat. Conditions for the
Introduction of Genetically Modified Wheat. Draft February 5, 2003.
11 R.C. Van Acker, A.L. Brule-Babel, and L.F. Friesen. An Environmental Safety Assessment of
(continued...)

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GE canola and claims that if glyphosate-resistant wheat were granted unconfined release
in western Canada, “the trait would move between wheat cultivars and fields in a fashion
similar to that seen in canola.”
Other Countries. Internationally, regulations being developed with respect to
genetically modified crops could lead to potential loss of markets for producers and the
additional marketing costs of segregating and/or identity-preserving. These phenomena,
in turn might reduce incentives for the development of new agricultural biotechnology
products. Both Canada and the United States have approved more than thirty-five GE
products and allow voluntary labeling of them. The EU’s moratorium on genetically
modified products which was in effect for six years ended in May 2004. However, the
EU’s strict traceability and labeling laws for GE products took effect April 2004. Prior
to the moratorium the EU approved ten products. Japan has approved at least twenty
products, but it also requires mandatory labeling.
On May 13, 2003 the United States, Canada, and Argentina initiated a case with the
World Trade Organization (WTO) against the EU over its five-year moratorium on
approving new agricultural GE products. The WTO case will go forward in spite of the
EU labeling agreement. On July 2, 2003 the EU reached a compromise agreement that
settles differences over pending GE products traceability and labeling regulations. The
new traceability and labeling laws will effectively require U.S. farmers to separate GE
crops from non-GE crops if they want to export to the EU. Approval of the traceability
and labeling legislation has been one of the conditions imposed by some EU member
states for allowing a renewal of GE authorizations. The threshold level for labeling a GE
product is 0.9 %. In the absence of a system to segregate biotech from non-biotech
products all U.S. and Canadian wheat would have to be labeled as containing or possibly
containing GE products.
Conclusion
The potential benefits of GE wheat are great, according to proponents, but some
producers foresee many risks as well. Market acceptance is the biggest concern especially
in export markets. Strict segregation of GE and other wheat for export may be required
in the field and during storage, transportation and processing. Segregation could raise
production costs for all growers, not just those who produce GE varieties. Full-scale
commercialization of GE wheat appears to be many years away and will depend as much
on consumers’ acceptance as on government regulation.
11 (...continued)
Roundup Ready Wheat: Risks for Direct Seeding Systems in Western Canada. University of
Manitoba: June, 2003.