Safe Food_ Bacteria, Biotechnology, and Bioterrorism - Marion Nestle [92]
THE ECONOMIC REALITIES
If food biotechnology companies are primarily businesses, then their primary concern is to recover the costs of research and development and to maximize returns on investment. Research costs can be high; it takes years and hundreds of millions of dollars to bring a genetically engineered food to market. Nevertheless, even before the FDA approved the first such food for production, business analysts viewed the industry as one with a huge market potential. In 1992, they predicted that the value of the industry would increase to at least $50 billion by the year 2000. As late as 1998, some were predicting that worldwide sales could exceed $300 billion by 2010. These predictions were overly optimistic, but food biotechnology is still big business. Worldwide sales of genetically modified crops rose from $1.6 billion in 1998 to about $2.2 billion in 1999, and are now expected to rise to $25 billion by 2010.6
Regardless of the accuracy of such estimates, the rapid expansion of the food biotechnology industry is impressive. By 1998, about 1,400 companies had invested more than $110 billion in agricultural biotechnology, and the FDA had approved about 50 food products for marketing. By 2001, genetically engineered crops were growing on at least 109 million acres throughout the world, a 25-fold expansion just since 1996. Although 80% of the acres were in North America, Argentina, and China, 10 other countries also had substantial plantings and more than 40 countries permitted field trials of one crop or another, most intended for animal feed.7 Despite the recent decline in planting of genetically engineered corn that occurred as a result of European opposition (discussed in chapter 8), some segments of the industry are doing very well.
One especially successful agricultural biotechnology company is Monsanto, which has played an unusually active—some might say aggressive—role in the industry. Monsanto is a multinational company based in St. Louis, Missouri, whose corporate motto used to be Food, Health, Hope.8 After the company merged with Pharmacia & Upjohn in 2000 to form an agricultural unit of Pharmacia, it changed the slogan to A Single Focus: Agriculture/A Renewed Purpose: Value. Monsanto employed about 14,000 people worldwide in 2002. Its agricultural biotechnology products exceed financial expectations. Its stock price rose by 75% in 1995 and by another 70% in 1996; at that time, company officials estimated that their products would earn $2 billion by the year 2000, $6–7 billion by 2005, and $20 billion by 2010. By 2000, sales exceeded $5 billion, well ahead of projections.9
Not all companies are this fortunate or skilled. In 1998, for example, just 8 out of 350 publicly traded food biotechnology companies were profitable.10 Business analysts attribute the typically poor performance to uneven management, corporate shortsightedness, and product failures. Most companies were slow to invest sufficient funds in research, as was the U.S. government. Investors are leery of regulatory hurdles and consumer opposition. Financial imperatives require food biotechnology companies to work on projects that are technically feasible and likely to repay the costs of investment in short order. Thus, they focus research efforts on “input traits” that will make crops easier and less expensive to grow through control of weeds, plant diseases, ripening, insects, or herbicide-resistance, or will make foods last longer on the shelf and cost less to process. If these characteristics benefit the