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The Development and Introduction of Genetically Modified Potatoes in the Netherlands

W.J. Bijman, Agricultural Economics Research Institute (LEI-DLO)

Abstract

This report is part of a Technology Assessment process. It analyzes the state of the art in genetic engineering of potatoes. It discusses the perspectives and barriers for commercial introduction of transgenic potatoes in the Netherlands. The information is based on documentary analysis and interviews. Emphasis is put on the interaction between the development of transgenic potatoes and the restructuring of the potato chain. The introduction of transgenic potatoes will further the vertical integration in the product chain, but economic effects are hard to quantify. Public attitudes towards genetically engineered food products are still rather reserved.

1. Introduction

This report analyzes the development and introduction of genetically modified potatoes in the Netherlands. This study is part of a larger research program on "Ecological, Societal and Ethical Aspects of Biotechnology," funded by the Ministry of Agriculture, Nature Management and Fisheries. Genetically modified potatoes were chosen as a first case study for the following reasons: the potato is an important crop in Dutch agriculture; potato farmers are obliged to reduce the use of chemical pesticides, and are thus looking for alternative ways to prevent damage and loss by pests and diseases; applied research on genetically modified potatoes is relatively advanced.

This report is part of a Technology Assessment (TA) process. A TA studies the impact of new technologies, and introduces the outcome of the studies in decision making regarding the new technologies. A major part of the TA is analyzing the technological development itself. The following questions are answered in this report:

  • What is the state of the art in applied research on genetically modified potatoes (transgenic potatoes)?
  • When shall the first transgenic potatoes be marketed in the Netherlands?
  • Who are the main (Dutch) actors involved in developing and introducing transgenic potatoes? Why are they involved?
  • How is the development and introduction of genetically modified potatoes related to other (structural) developments within the potato industry?
  • What can be said about the economic impact of transgenic potatoes?
  • What are the prospects for public acceptance of transgenic potatoes?

The information given in this report is based on documentary analysis, on data from LEI-DLO data banks, and on interviews with key persons directly or indirectly involved in the production, trade, or consumption of potatoes. The concept of the product chain is used, both for defining the actors involved, and for looking at the economic impact. The potato chain consists of all actors involved with potato research, potato breeding, potato farming, potato trade, potato processing, and potato consumption.

2. Dutch Potato Production and Sale

In 1990, almost 22,000 farms were engaged in potato production. The potato is the most important crop in arable farming, generating 45% of the total production value of all arable crops. In recent years, potato prices have decreased, mainly because of abundant supply. This has had a negative effect on income for Dutch arable farming.

One of the major challenges for potato farmers is the reduction of pesticide use. The use of chemical pesticides is very high in Dutch potato cultivation, owing to intensive farming methods. In 1990, farmers used more than 12 million kg (active ingredient) of chemical pesticides for the potato crop (purchasing costs: 162 million guilders). Government environmental policies oblige farmers to reduce the use of pesticides by at least 50% by the year 2000.

In 1990, Dutch potato production totaled seven million tons. This total consisted of 3.5 million tons of ware potatoes, 1 million tons of seed potatoes, and 2.5 million tons of starch potatoes. Seventy percent of all seed potatoes are exported. Of the ware potatoes, two thirds are exported - either as fresh potatoes or as potato products (frozen French fries, potato chips, etc.). In recent years, the export of potato products has shown the highest growth rate. The industrial processing of potatoes has become more and more important. More than fifty percent of all ware potatoes are now supplied to the processing industry.

The trend in consumer preferences towards higher quality products and increased attention to environmental concerns is also affecting potato markets. This can be seen from the growing market for ecologically produced potatoes. The demand for higher quality products has led to "Integrated Chain Control" initiatives. This means that all stages of the potato chain are incorporated in efforts to enhance the quality of the final product. The assumption here is that each stage of production that affects the quality of the final product is determined by the preceding stage of the product chain.

3. Introduction of Genetic Engineering in Potato Breeding

Three groups of actors are directly engaged in the introduction of genetic engineering in potato breeding: public research institutes, biotechnology firms, and potato breeding companies. The most important public research institutes are the Center for Plant Breeding and Reproduction Research (CPRO-DLO) of the Ministry of Agriculture, Nature Management and Fisheries, and the Department of Plant Breeding (IVP) of the Agricultural University of Wageningen. Two new biotechnology firms are doing research on transgenic potatoes in the Netherlands: Keygene, of Wageningen, and MOGEN, of Leiden. Also important for the Dutch potato industry is the new Belgian biotechnology firm, Plant Genetic Systems (PGS). Several Dutch potato breeding companies have research contracts with PGS.

The potato breeding companies, the third group of actors, are currently going through a process of restructuring. First of all, there is a concentration of companies under way, through mergers and takeovers. Second, potato breeders have expanded breeding research activities, as potato breeding research at public institutes has been restructured. Third, the rise of genetic engineering has encouraged companies to increase investments in biotechnology research, either in-house or as contract research. All companies feel the need to stay in touch with the latest research findings. Fourth, pressure has increased on breeding companies to come up with varieties that have better pest and disease resistance, and thus need less pesticides. As a result of the restructuring process, the potato breeding companies will become stronger and more influential in the potato product chain as a whole.

4. Applications of Transgenic Potatoes

Two kinds of transgenic potatoes can be distinguished: those with better resistance to pests and diseases, and those with improved characteristics for storage and processing.

All important potato pests and diseases are subject to genetic engineering research, including diseases and loss caused by nematodes, viruses, fungi, bacteria, insects, and herbicides. Although several of these pests and diseases are not a major threat to potato cultivation in the Netherlands, they are important because of the large export of seed potatoes. For instance, Dutch seed potatoes exported to Mediterranean countries are faced with subtropical diseases endemic to these countries.

In the Netherlands, the first genetically modified potatoes were virus resistant potatoes. Transgenic potatoes with resistance to Potato Virus X (PVX) will be ready for commercial introduction within a few years. Currently these potatoes are subject to cultivation tests. Genetic engineering research on resistance to nematodes and fungi - the two most important threats to the Dutch potato crop - is only in its infancy. Commercial introduction of transgenic potatoes with improved resistance to nematodes or fungi is not expected until the end of the century.

Transgenic potatoes with improved storage and processing characteristics have already been developed in the Netherlands, and are now subject to cultivation tests. In one kind of transgenic potato, the starch content has been changed. This amylose-free potato may make industrial starch processing more efficient. Another kind of transgenic potato has been made less vulnerable to bruising in order to reduce the loss of raw material during storage, transport, and processing. In Denmark, research on transgenic potatoes is directed at improving cold resistance. Potatoes with better cold resistance can be stored at lower temperatures, and therefore need less chemicals for restraining sprout growth. In other countries, genetic engineering research is directed at enhancing the starch content.

5. Economic Aspects of Transgenic Potatoes

Because both the efficacy and the price of transgenic potatoes are still unknown, it is difficult to make a quantitative assessment of their economic impact. However, it is already evident that genetic engineering research requires potato breeders to increase their investments in R&D. Whether and when these investments will yield profits is still very uncertain. The necessity of making this kind of investment furthers the process of concentration among breeding companies. Return on investment in genetic engineering research is also dependent on the system of intellectual property protection.. National and international systems that pertain to plant breeding rights are currently under discussion.

For potato farmers, the introduction of transgenic potatoes with improved disease resistance may lead to a shift in variable costs: lower costs for pesticides but higher costs for starting material. Transgenic potatoes with improved storage or processing characteristics may earn higher prices for potato farmers, while here too, the starting material may be more expensive. However, the economic impact can only be stated in hypothetical terms.

The introduction of transgenic potatoes will reinforce the vertical integration in the potato chain. Transgenic potato varieties will only be grown under approval from the customer (trading firm, processing company, retailer or consumer). This approval will only be given if the transgenic variety has some evident qualitative improvement when compared to non-modified varieties. Qualitative improvements can involve the characteristics of both the product and the production process (for instance the environmental impact). The need for approval strengthens the integration between different stages of the product chain.

6. Public Acceptance

Whether transgenic potato varieties will be grown depends mostly on the attitude of the public (or consumer). As far as consumer acceptance goes, many issues are involved. The environmental impact of transgenic potatoes and their safety for human consumption are the most important. Because there are no definite findings on these issues, public attitudes remain uncertain.

Public attitudes towards biotechnology have been studied in various countries, as well as in the European Community as a whole. Most studies showed that transgenic crops are valued moderately. Of course, the sine qua non is safety for human consumption and the absence of environmental effects. There seems to be a clear difference in risk perception for transgenic food products in various EC countries. Because Dutch potatoes are exported to almost all other EC member states, public attitudes in all of these countries is important for the Dutch potato industry.

In an EC study on public attitudes towards biotechnology, it was shown that most people consider environmental and consumer organizations the most trustworthy sources of information on the impact of biotechnology. Concerning transgenic potatoes in the Netherlands, the environmental organizations are the most critical. They favor a restrained approach, because it is still uncertain what the long term environmental impact will be. Consumer organizations stress the importance of sufficient information for the consumer. Therefore they favor compulsory labeling.

To achieve broad acceptance of transgenic agricultural products, a dialogue must be set up between proponents and critics of genetically modified food products. Only in this way may consensus be reached on which applications of genetic engineering hold benefits for all groups in society. Concerning transgenic potatoes, this implies that biotechnology firms and the potato business on the one hand, and environmental and consumer organizations on the other hand, must enter a dialogue to discuss which transgenic potatoes should be developed and introduced.

7. Conclusions

So far the development of genetically modified potatoes has been determined mainly by technological feasibility. Their commercial introduction, however, will also be determined by other structural developments in the potato industry. One of the major structural developments is horizontal and vertical integration in the potato industry. In the sale of potatoes and potato products, more emphasis will be placed on quality and environmental aspects. Transgenic potatoes will only be accepted by consumers if they hold evident qualitative improvements that are beneficial for all.


Reprinted with permission. For further information, or to request a translation of the original paper, contact:

Jos Bijman
Agricultural Economics Research Institute (LEI-DLO)
P.O. Box 29703
2502 LS THE HAGUE
The Netherlands
E-mail: W.J.J.BIJMAN@lei.agro.nl


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