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September 1999

BRAZIL’S TRANSGENIC-FREE ZONE

JANET BELL

The Brazilian state of Rio Grande do Sul is trying to make itself into a transgenic-free zone. As a leading producer of soybeans for the global market, making such a move presents both problems and opportunities. Agriculture’s industrial giants are strongly trying to block the state’s attempts to avoid the production or importation of transgenic crops and foods, and tension is building between the federal and state governments. But rapidly-growing consumer demand in Europe and the rest of the world means that there is no shortage of suppliers interested in sourcing their soybeans from Rio Grande do Sul. There are signs that other Brazilian states may follow suit and the transgenic-free zone could even spread across the whole country.

Latin America is the perhaps the land of greatest opportunity for the world’s agribusiness giants. It offers many possibilities for both reorienting existing production and opening up vast new tracts of virgin land for large-scale, industrial agriculture. The continent’s two largest countries, Argentina and Brazil, see their future wealth in grain production and have welcomed transnational corporations with open arms. Argentina has embraced genetically-modified (GM) crops without any hesitation and is now the world’s number two producer of GM soybeans after the US. Between the 1996/97 and 1998/99 growing seasons, the percentage of transgenic soybeans planted in the country leapt from 0.8% to 72.6%.

Brazil has been more cautious in its approach to GM crops. Non-governmental and peoples’ organisations can take at least part of the credit for this ambivalence, having been actively lobbying the government on biotech issues since 1985. At present no GM crops are permitted to be grown commercially. Although Monsanto’s Roundup Ready (RR) soybean was finally approved by CTNBio, the Brazilian biosafety agency, in September 1998, a federal judge concerned about consumer health threats immediately slapped a temporary restraining order on it. In May 1999, the Agriculture Ministry granted registration for RR soybeans, which seemed to give Monsanto the green light to start selling GM seeds in Brazil. But the company was again thwarted when hot on its heels came a ruling from a Federal Court preventing Monsanto and its Brazilian subsidiary, Monsoy, from commercialising the seeds until the government issues biosafety and labelling regulations for genetically-modified organisms.

The ruling came in response to suit brought by the Brazilian Institute for Consumer Defense (IDEC) and Greenpeace, which contested that, according to the constitution, any innovation which impacts the environment must be subjected to an Environmental Impact Assessment (EIA). While EIAs are standard requirements for GM crops to be approved in the US, they had not been required of companies planning to release GM crops in Brazil. The NGOs also argued that Brazilian Consumers Law requires labelling and no such rules have been established for transgenic food. In delivering his ruling, Judge Antonio Prudente stated that, "I believe that the irresponsible haste in introducing the advances of genetic engineering is inspired by the greed of economic globalisation."

Needless to say, the decision was challenged by Monsanto. Brazil is the world’s second-largest soybean producer after the US, harvesting 31 million tons in 1998. As such, it is a crucial new market for the company. One US analyst has predicted profits of $US 1 billion if Monsanto captures 50% of the Brazilian soybean market, let alone the benefits it will reap from the train of other GM products that it plans to introduce in the transgenic bean’s wake. But Monsanto has quite a battle on its hands. On August 10, Judge Prudente reiterated his earlier ruling, making it definitive rather than preliminary, and rendering any appeal by Monsanto less likely to succeed. It also prevents the Agriculture, Science and Technology, and Health ministries from taking any actions that contravert the ruling. IDEC lawyers consider that the earliest hearing for Monsanto’s appeal will be November, which means that even if the appeal is upheld the company will miss the 1999 soybean planting season, which runs from August to October. So, for the time being Brazil’s soy harvest will remain transgenic-free. Meanwhile, the government of the state of Rio Grande do Sul (RS) plans to keep things that way indefinitely.

Rio Grande do Sul is the second-largest soybean-producing state in Brazil, with soybean covering 3.1 million hectares. Some 80% of agriculture takes place on small family farms and 70% of production comes from farmers’ cooperatives. RS produces 6 million tones of soy per annum, half of which is exported. The Partido dos Trabalhadores (the Workers Party), which came to power in RS in January 1999, had been convinced by local NGOs that in addition to environmental and health risks, the introduction of GM crops would result in the loss of sovereignty over seed production. RS is Brazil’s largest seed producer, and at present is free from the clutches of the agbiotech giants like Monsanto. The government was also concerned that patented industrial seeds are not affordable or appropriate for small-scale farmers, who dominate the RS agricultural scene (see box).

Privatising the Seed Industry

Under strong pressure from the US and transnational corporations, controversial legislation was introduced into Brazil in 1996 allowing life patents. This move was the subject of a protracted parliamentary discussion process and was characterised by wide opposition from civil society. Rio Grande do Sul's Workers Party opposed the legislation at the time and is still against life patenting. The following year, a law allowing patent-like intellectual property rights on plant varieties was also introduced. This law was heavily based on the Union for the Protection of New Plant Varieties' (UPOV) system of so-called "Plant Variety Protection." This system of protection, developed in industrialised countries under the influence of corporations and plant breeders, actually gives patent-like rights to plant breeders and has nothing to do with protecting plants. In 1999, Brazil was one of a large handful of developing countries that rushed to sign up to join UPOV. Once again under pressure from the US and corporations, Brazilian politicians felt they were choosing the lesser of two evils by signing up to UPOVís 1978 Convention before its closing date rather than being forced later on to join the 1991 Convention, which is even more restrictive and threatening to farmers.

These events have changed dramatically the nature of seed production, distribution and control. Until 1996, seed production in Brazil was nationally-based. Since adopting life patenting legislation and joining UPOV, the private sector has increasingly been profiting from knowledge which was previously in the public domain and has progressively being taking control of seed production. One of the direct consequences has been a flood of take-overs of Brazilian companies by the transnational agbiotech giants in the last few years.

Monsanto's biggest catch in Brazil so far has been the national company Agroceres, a move which has helped it gain a 60% market share of the Brazilian corn market. In the soybean arena, Monsanto acquired Brazilís largest soybean seed producers, FT Sementes and Monsoy, in 1996, and gobbled up another national soybean company, Terrazawa. It also owns or partially owns other US seed companies operating in Brazil, including Cargill seeds, Asgrow (soybean) and DeKalb (corn). In March 1999, Du Pont (which now owns 20% of Pioneer Hi Bred) entered the Brazilian market by setting up Du Pont do Brasil and taking over Brazil's Sementes Dois Marcos. In May, AgrEvo completed the acquisition of the Brazilian seed companies Sementes Ribeiral and Sementes Fartura.

The new patent and PVP legislation has profoundly affected the public institutions producing seeds. In 1997, NGOs from the Alternative Technology Project (PTA) had to pull out of a joint research project to examine locally-grown bean varieties with EMBRAPA, because the contract presented to them contained clauses about the research findings and genetic materials being the intellectual property of the Brazilian agricultural research institution. While the researchers were eager to work with the NGOs without such strings attached, their hands were tied by the legal department. EMBRAPA's research agenda, like many other public institutions, is also becoming increasingly influenced by corporate agriculture: it is currently working on introducing Monsanto's RR gene into local varieties of soybean.

The impact on agricultural biodiversity has yet to be fully realised, but the implications are obvious. In order to be listed, the new seed law requires seeds to meet certain norms of distinctness, uniformity and stability. These descriptors pay no attention to objectives of improvement, and place value on morphologic characteristics rather than agronomic qualities. Diversions from the norms are described as "aberrations," and only 4 aberrations are allowed in every 150 plants. Many local varieties do not meet the standards of genetic uniformity required, and in this way the law actively stifles any attempts to maintain or broaden the genetic base of agriculture, which is so critical to small-scale farmers.

Sources: Angela Cordeiro (1998), "Brevets & DOVs & OGMs: un triple probleme pour les paysans brasiliens," for Solagral magazine; various newswire and newspaper reports.

Going transgenic-free

So, on January 1, 1999, the new state government announced its decision to go GM-free. It began by enforcing a 1991 State Biosafety Law, which the previous government had ignored. The law requires that environmental impact assessments are undertaken before trials of transgenic crops can be started. As none had been carried out by the companies involved, the government declared all 79 ongoing GM trials illegal. Data was collected from the sites, and harvests were confiscated and dumped in sealed packages at a depot in the appropriately-named town of Nao-Me-Toque ("Don’t-Touch-Me.") An Agro-Evo rice trial plot was also destroyed because it was not covered by nets or surrounded by an adequate buffer zone, as required at test sites. Meanwhile, a Workers Party deputy submitted proposed new legislation to the State Assembly which would make the commercialisation and importation of any GM produce illegal.

In the meantime, it remains impossible for field trials to continue because there are no agreed criteria for environmental impact assessments. Commitment to pursing the transgenic-free zone is strong. According to RS agriculture secretary José Hermeto Hoffman, "We have a very clear objective and [Monsanto] has a very clear objective, so it’s like a war." A recent government leaflet states that, "Our government favours the progress of science under public control and in the service of life, not private control and in the service of profit." Monsanto, meanwhile, has been launching newspaper advertisements attacking the "intolerance" of the RS government and the "incorrect and deceitful information" it has been propagating relating to the fruits of biotechnology.

The RS government believes that creating a transgenic-free zone is a sound economic move, given the increasing demand for GM-free products in Europe and Japan. As Hoffman says, "Brazil has the historic opportunity to become the world’s largest producer of conventional soybeans." The country is the biggest and most reliable source of non-GM soybeans for importers, since all of its 37-40 million ton crop is GM-free and there are no uncertainties or complications regarding segregation. Canada has good segregation systems, but only produces 7-10 million tons of GM-free soybeans a year. Although it doesn’t like to admit it, the US also has competent segregation systems (see box). But Brazil seems to be emerging as the country of choice for GM-free soybeans for the European market. Which is good news for Brazil, given that 60% of its soy exports already head for Europe.

Made to make the farmer's life harder?

The widespread assumption that GM soybeans will reduce costs and produce higher yields is totally unfounded so far. Extensive studies undertaken in the US, where in 1999 more than 50% of the soybean crop came from genetically-modified glyphosate-resistant soybeans, have shown that farmers growing Roundup Ready soybeans have suffered yield losses and increased costs. One review of more than 8,200 soybean trials found the "yield drag" of the top varieties of GM beans compared with conventional varieties to be 6.7% (see table). Moreover, farmers growing transgenic soybeans used 2-5 times more herbicide compared with those growing conventional varieties. This figure is likely to increase because there is clear evidence of tolerance developing in several weed species.

The yield drag and Monsanto's technology fee impose a sizeable direct tax on the income of Roundup Ready soybean producers, ranging from a few percent where these varieties work best to more than 12% in less favourable areas. The report concludes that the remarkable popularity of Roundup Ready soybeans amongst US farmers despite their cost and yield drag is evidence of the gravity of the problems created by today's herbicide-dependent soybean weed management systems. Despite the advent of herbicides, weeds pose as much trouble for soybean farmers in 1999 as they did in 1959. Farmers can no longer afford or have lost the knowledge of how to implement more effective, integrated, multiple tactic weed management systems.

Source: Charles Benbrook (1999), Evidence of the Magnitude and Consequences of the Roundup Ready Soybean Yield Drag from University-Based Varietal Trials in 1998, AgBioTech InfoNet Technical Paper No 1, July 13. http://www.biotech-info.net/RR_yield_drag_98.pdf

Demand for GM-free soybeans increases

Processors and retailers in Europe were initially skeptical about the public’s rejection of GM crops, but are now convinced that demand is real and will not go away, so they are taking product-sourcing very seriously. In the UK, in response to unprecedented consumer pressure, all the major supermarkets have committed to going GM-free, as have many of the market leaders in neighbouring countries (see table). In April this year, both Rio Grande do Sul and Parana, the number one soy-producing state, were visited by representatives of a consortium of leading European supermarkets which had all committed to eliminating GM ingredients from their own-brand products. The consortium comprised Sainsbury (UK), Marks and Spencer (UK), Carrefour (France), Superquinn (Ireland), Esselunga (Italy), Migros (Switzerland) and Delhaize (Belgium). On August 19, Marks and Spencer announced that it intends to go GM-free in animal feeds as well as soy products, and that some animal-based products will be GM-free by October. The company made a point of noting that it will be sourcing its products from Brazil. This is a particularly significant move because about 80% of the UK’s 1.5-2 million tons of soy imports are for animal feeds, but up to now the search for GM-free sourcing has been limited to whole soybeans and soybean products such as lecithin. If other UK retailers also follow through in their quest for GM-free feed, GM-soy imports into the UK will slow to a trickle.

COUNTRY	COMPANY	COMMITMENT	FOOD TURNOVER 1997 (BN US$)	NATIONAL RETAIL RANKING 1997
Austria	Adeg	Will not sell GM-labelled products	0.8	5
	BML	Will not sell GM-labelled products	4.7	1
	Hofer	Will not sell GM-labelled products	1.8	4
	Spar	Has own GM-free brand; will not sell GM-labelled products	2.3	2
Belgium	Delhaize	Eliminate GM-ingredients from own-brands	2.9	2
France	Auchen	Own-brand products GM-free from Apr 99	14.9	3
	Carrefour	Own-brand products will be GM-free	11.3	4
	Systeme U	All own-brand products are GM-free	7.7	7
Ireland	Superquinn	Will make own-brand products GM-free	0.5	4
Italy	Coop	Plans to go GM-free	7.2	1
Italy	Esselunge	Will make own-brand products GM-free	2.0	5
Spain	Pryca	Own-brand products GM-free from May 99	2.3	3
Switzerland	Coop	Own-brand products are GM-free	6.2	2
Switzerland	Migros	Will make own-brand products GM-free	7.6	1
UK	Asda	Labels products with GM ingredients	10.7	3
	Iceland	Own-brand products are GM-free	2.5	12
	M&S	Will make own-brand products GM-free	4.7	6
	Safeway	Labels all products with GM ingredients	10.4	4
	Sainsbury	Will make own-brand products GM-free	19.0	2
	Tesco	Will make own-brand products GM-free	22.4	1

In April, an RS government delegation also visited the UK and France to talk to importers, retailers, food manufacturers, NGOs and politicians to assess markets, to seek technical help and to foster interest in setting up sales agreements. Despite the strong interest generated in the potential markets for GM-free soy, passing the legislation to turn the state into a GM-free zone is far from a fait accompli. In the Assembly, the government party has a minority of seats (22), and has to convince the remaining 35 opposition seats of the wisdom of its choice. The government’s enthusiasm is strongly countered by the influence of the biotech lobby, which has done a good job of convincing people that GM crops will be far more lucrative for Brazilian farmers.

The biotech giants’ propaganda machines have been whirring away efficiently at all levels, targeting everyone from parliamentarians to farmers. In the office of one RS town’s cooperative sits a poster advertising GM soya. "Made to make the farmer’s life easier," it reads. Many soy producers are not very interested in the ideological questions of the GM debate. They are far more concerned about whether they can retain competitiveness when Brazil’s main competitor – Argentina – has already switched to GM. NGOs are working hard to counter the industry’s propaganda and help farmers realise that RR soybeans are no panacea (see box), but they have a tough task ahead of them. The rougher the ride the industry gets, the more pervasive becomes its propaganda. In August this year, for example, Monsanto announced its plans to invest a mind-boggling $US 1 billion in the country in order to introduce its RR seeds.

US farmers feeling the squeeze

US soybean farmers are feeling the heat. Soybean prices have been steadily dropping due to increased competition from Brazil and other up-and-coming soybean producers around the world. Soybean farming is not getting any easier and many feel trapped on the chemical treadmill because weeds are becoming more and more persistent and difficult to deal with. Many have turned to Monsanto's Roundup Ready soybeans to help with the weed problem and to reduce labour costs, which they see as essential given the plummeting prices for soybeans. And now there is trouble in Europe.

Export markets account for 50% of the US soybean crop, with Europe taking 30-40% of the beans (worth $US 2.3 billion in 1997). Roundup Ready soybeans accounted for 50% of the US crop in 1999. While there is still a ready home market for them, Europe is shying away from the transgenic bean. US soy exports to Europe dropped by 46% between the first six months of 1998 and 1999. "When you look at Europe, you get depressed, you get really depressed," says Jim Hershey, international marketing director for the American Soybean Association (ASA). Other key markets, such as Japan ($US 1 billion) South Korea and Australia, are also looking shaky.

For the first time, the ASA has been telling farmers to consider segregating bioengineered beans from traditional beans. But in the current climate a segregated system could bring the kiss of death to GM crops, because they offer no advantages to consumers, just added risks. As Scott McFarland of the National Corn Growers Association has observed, "If we see a two-tier pricing system in the US , you will see a departure from that technology." This partly explains why US agroindustry and government officials have been so unwilling to support segregated systems, even though they are already operating. The emergence of a two-tier system is the very reason that Germany's Deutsche Bank recently advised investors to sell their stock in Pioneer Hi-Bred. "If a two-tier system takes hold, we see price premiums for high-value-added GMO seeds collapsing," its' analysts say.

The Archer Daniels Midland (ADM) company has been publicly denying that it can segregate, but it does not seem to have any problems in supplying its UK subsidiary, Haldane Foods, which went GM-free 18 months ago. DuPont launched a GM-free, herbicide-resistant Synchrony-Treated Soybean (STS) earlier this year, and all of its 500,000 kg of supplies were gobbled up by eager customers. ADM has been offering farmers a premium of 18c per bushel to grow STS, which is expected to cover 12-14% of farmlands devoted to soybean production in 1999. Meanwhile, AgrEvo suspended commercialisation of its transgenic herbicide-resistant LibertyLink soybean in both 1998 and 1999 until its export market could be assured.

1999 could be a tell-tale year for US farmers - and for transgenic crops. Low crop prices have farmers asking for a further $US 6-8 billion in aid, despite the fact that the government has just approved a $US 574 million farm bailout.

Sources: 1999 ASA and Agro-Evo News Releases; Soya and Oilseed Bluebook Online

NGOs, meanwhile, have been rallying farmers and citizens in rural and urban areas. Since April, a coalition of NGOs has organised meetings for 12-15,000 people in the state. And on August 20, more than 2,000 people gathered in the RS capital, Porto Alègre, to vocalise their support for a transgenic-free state. They issued a declaration calling on the government to suspend the production, commercialisation and importation of GM products; to take action to clarify the risks of GM technologies to the public; and to promote public research to solve the problems of the majority, rather than to promote dependence and market concentration.

If the RS law fails to pass the Assembly, the government’s idea is to increase bureaucracy so that it is not worth the farmers’ while to grow GM crops, or to introduce a heavy GM tax. By simply not drawing up guidelines for EIAs, the government may be able to stall for years. But at the same time, it needs to keep a watchful eye on the illegal planting of RR soybeans, which are reportedly being smuggled in to Rio Grande do Sul from Argentina. To ward against this, the state inspection is being equipped with kits for GM soybean detection and will carry out strict border controls. The state is also planning to install a DNA lab for GMO detection. Meanwhile, NGOs like the Centro Ecologico will continue to work at the local level, raising awareness amongst farmers and getting them to lobby local politicians. They are also being encouraged to declare their municipalities "GM-free zones," a move which doesn’t mean anything legally, but has political clout.

Pointers to the future

The RS initiative has created rumblings all around the country. Brazil’s Ministry of Agriculture remains in favour of GM crops and has approved the sale of five GM seeds. But its position looks increasingly untenable as it has little support from its states. At their national meeting in May, 18 out of the 27 state secretaries for agriculture issued a motion calling for a halt to the commercial release of GM crops pending assurances on a long list of concerns from a lack of risk assessment studies to increased interest from Europe in the Brazilian market as a source of GM-free agricultural products. The state of Matto Grosso do Sul, another key agricultural player, is currently working on implementing a 5-year moratorium for GM crops and other states are also working on measures to restrict them. According to Angela Cordeiro, biodiversity consultant for EMATER, the Brazilian agriculture extension agency, the key to getting more support for such initiatives is convincing people of the economic advantages of going GM-free. She points out that labelling of GM products is now required in Europe and may even become a reality in the US before long. "It is far more expensive to segregate crops than simply to remain GM-free."

The demand and support from Europe and the rest of the world for Brazil’s GM-free crops is key to making Rio Grande do Sul’s dreams of a transgenic-free Brazil turn to reality. The signs so far are positive, but time will tell. On August 27 the Edeka retail association (representing about 6,500 European retailers) announced it would not sell products containing GMOs. Edeka members independently operate about 9,000 outlets including supermarkets, bakeries and drugstores in Germany, the Czech Republic, Denmark, France and Poland. Japan’s largest maker of soybean protein food products, Fuji Oil Company, also announced on September 1 that it will also be switching to GM-free soybeans. In Brazil itself, the IDEC/Greenpeace suit against Monsanto has been critical in giving GM-free advocates more time to convince people of their arguments. According to Maria Guazelli of the Centro Ecologica, "This growing season is critical. This year distributors, not farmers, have felt the benefits of the increased premiums that Europe is paying for GM-free soy. But come March when the next soy crop is harvested, farmers will realise how easily they can sell it to Europe and will start to reap the benefits themselves."

There are signs that there may be a sea change in opinion occurring over GM crops in the business world, which has so far been very supportive and optimistic about the GM industry. Industry analysts are getting skittish about GM crops and are advising investors to pull their money out of seed companies, which could profoundly affect the viability of the whole industry. On August 21, Europe’s largest bank, Deutsche Bank, issued a statement encouraging investors to sell their stock in Pioneer Hi-Bred. "GMOs are, in our opinion, becoming a liability to farmers," it says. Deutsche Bank’s analysts point out that up to now, market analysts have focused intently on the value-added that biotech would provide (higher yields, decreased herbicide use, etc), and that this is what has sent agbiotech company stock prices soaring. But now it sees this "value-added" as "value-detracted," because it is GM-free crops that are selling at a premium. The value chain has turned upside down.

Both biotech’s lovers and adversaries think that Brazil is an important test case of whether transgenic crops continue to spread internationally and even whether they continue to thrive in the US (see box). "Brazil is critically important to the rate of biotech adoption or decline," says Steven Sonka, an economist at the US’ National Soybean Research Laboratory. "It will be closely watched by the rest of the world."

Janet Bell is a freelance writer and editor living in Boulder, Colorado, USA. She can be reached at [email protected] Special thanks go to Angela Cordeiro for her extensive input to this article.

Main Sources:

* Personal communication with: Angela Cordeiro, biodiversity consusltant for EMATER; Maria Guazelli, Centro Ecologico; Andrea Salazar, IDEC; Silvia Ribeiro, RS Agroecological NGOs; José Hermeto Hoffman, RS Agriculture Minister; Lindsay Keenan, Greenpeace UK; Tanya Green, GAIA Foundation, Antonio Wusch, COTRIMAIO.

* Various newswires and newspaper articles from Europe, Brazil and the US.

* Web page of the Partido dos Trabalhadores: http://www.pt.org.br

* EMATER/RS web page: http://www.emater.tche.br/

* IDEC web page: http://www.uol.com.br/idec/

* Soya and Oilseeds Bluebook Online: http://www.soyatech.com

* American Soybean Association home page: http://www.oilseeds.org/asa/frontdoor.htm

BRAZIL'S TRANSGENIC-FREE ZONE