Companies Overstate Economic Benefits to Rural Communities (9/12/2005)

1.State, scientists differ on biopharming's upside
2.Companies Overstate Economic Benefits to Rural Communities
3.Biologics project cut from $30M to $12.35M

1.State, scientists differ on biopharming's upside
By Rachel Melcer
ST. LOUIS POST-DISPATCH, 8 December 2005

Missouri officials see biopharming - using plants to produce medicines and polymers - as an exciting new industry, worth pursuing with tax dollars, despite uncertain economic returns.

But the state's stance flies in the face of a report being issued today by the Union of Concerned Scientists. The study says any biopharming payday would benefit private companies, rather than farmers and rural communities.

The nonprofit group, headquartered in Washington, opposes the technology as unproved and a potential threat to the food supply. Its report, commissioned from economist Robert Wisner at Iowa State University, is meant to balance rosy pictures painted by the industry, said Jane Rissler, senior scientist in the Union's Food and Environment Program.

Missouri is negotiating an incentives package for Ventria Bioscience, a Sacramento, Calif.-based company that wants to relocate to Maryville. It has genetically modified rice to produce human proteins for use in drugs, such as an improved oral rehydration solution for infants with acute diarrhea.

2.Report Finds Only Modest Gains for Farmers Who Grow Genetically Engineered Pharmaceutical Crops
Companies Overstate Economic Benefits to Rural Communities
Union of Concerned Scientists, December 9 2005

States like Missouri and Iowa are lining up to grow crops genetically engineered to produce pharmaceuticals and industrial chemicals, in large part because proponents have touted the crops as an engine of rural economic development and farmer prosperity. But a new report by a leading agricultural economist finds that while some drug and biotechnology companies may profit from these "pharma crops," aggregate farmer benefits are likely to be small and rural community benefits may be much more modest than often portrayed.

"Proponents of pharmaceutical crops have inflated the rewards and downplayed the risks," said Dr. Jane Rissler, deputy director of the Food and Environment Program at the Union of Concerned Scientists, which commissioned the study. "State officials, farmers and rural communities should be wary of rosily optimistic claims."

The new report, http://www.ucsusa.org/food_and_environment/genetic_engineering/economics-of-pharmaceutical-crops.html
The Economics of Pharmaceutical Crops: Potential Benefits and Risks for Farmers and Rural Communities, was written by Dr. Robert Wisner, University Professor in the Department of Economics at Iowa State University. The report is the first analysis by a land-grant university economist of potential economic benefits and risks of pharma crops to farmers and rural America.

The major benefits of a successful pharma crop industry would be expected to go to companies in the form of reduced production costs. If the companies pass cost savings along to consumers, society may benefit from cheaper drugs. The net savings in production costs will be at least partially offset by the costs of containment needed to protect the food supply from pharma crop commingling. Contamination from open-air production is considered likely because most drug-producing crops are food crops such as corn, rice, and soybeans, and most pharma crop production occurs in areas where food versions of the crops are grown.

"Those looking at pharma crops as a boon to rural America view increased farm income as a key benefit," said Dr. Wisner. "However, in the end, economic principles dictate that only a small part of the pharma crops' value would be expected to go to growers."

Farmers are unlikely to benefit in a big way because they will be unable to negotiate with pharma crop companies from a position of strength. Market forces, including potential foreign competition, will drive farmer compensation down to the lowest levels that pharma crop companies can achieve. Moreover, the acreage likely required if the pharma crop industry meets its expectations is so small that only a few growers would be needed. Rural communities, then, are likely to benefit in a substantial way only if a drug-processing company locates in their town or a local university or private businesses win large research contracts.

In addition, those growers who produce food and feed versions of the pharma crop could be put at risk because of the potential for contamination. For example, Missouri rice farmers worry that they may lose domestic and foreign markets out of fears that their rice is contaminated with drugs.

With the release of this report, UCS is renewing its call to the U.S. Department of Agriculture (USDA) to ban the outdoor production of genetically engineered pharma crops because of threats to the integrity of the food supply. UCS urges the USDA to lead a major campaign to encourage and fund genetically engineered alternatives to food and feed crops for the production of drugs and industrial chemicals.

3.Biologics project cut from $30M to $12.35M
Northwest still waiting for approval from Ventria and for a portion of the money
Forum Managing Editor
Maryville Daily Forum, 9 December 2005

Plans for the Missouri Center of Excellence for Plant Biologics have been whittled down from nearly $30 million to about $12.35 million, and Northwest Missouri State University officials are waiting to hear from Ventria Biosciences about whether the company still wants to relocate to Maryville.

On Thursday, the Northwest Board of Regents approved the scaled-down version of the plan, which would include an "incubator" building with Ventria's headquarters and a 500-kilogram extraction facility to pull proteins from genetically-modified crops. Eliminated from the original plan is an academic building.

A larger, 5,000-kilogram extraction facility could be built off-campus in Maryville through the creation of a limited-liability corporation, likely in the old AC Lightning building. The LLC may or may not be affiliated with the university.

Despite the regents' approval of the plan, the university is still waiting to hear from Ventria, which had originally planned to relocate to Maryville. Ventria backed away from its agreement with Northwest after the Missouri Development Finance Board decided not to consider a $10 million pledge from the state for construction of the Center of Excellence.

On Thursday afternoon, a Ventria official said the company's president, Scott Deeter, had no comment on the Northwest proposal.

Northwest officials were optimistic about the plan, and even said it was an improvement in many ways over the original version.

"This turns out to be a better deal, actually," Northwest President Dean Hubbard said.

Jon Rickman, the university's vice president for information systems, said he had problems with the original plan that were alleviated in the scaled-down version.

"This plan is much better in my eyes in terms of the 5,000-kilogram facility," Rickman said. "I have expressed concerns along the way that that was too much production and not enough research and needed different funding."

But Northwest Provost Kichoon Yang pointed out that an important piece of the plan was cut.

"The trade-off here is that we're not building the academic building," he said. "So in a way it's a wash."

A handful of new degrees would still be offered even though the academic building is no longer part of the plan, Yang said, such as a bachelors in nano-skills science, a masters in biotechnology, and a bachelors and masters in alternative energy.

Hubbard said the academic building could still become a reality in the future when more money becomes available.

"When the state is back in the business of building capital projects, this project will have major support," Hubbard said.

To fund the current version of the project, Northwest will use $4 million in "internal resources and not through the issuance of any bonds," Hubbard said. Also, the university is hoping for a $6 million pledge from the Missouri Development Finance Board; a $2 million federal grant from the Economic Development Administration; and $350,000 from a local Community Development Block Grant.

Since a large portion of the funding is not finalized, Northwest officials are hoping Ventria will believe the university can pull in the money.

Hubbard said he has been in negotiation sessions recently with several state officials, determining where money would come from, how much would be spent on the project and who would technically "own" the facility.

The last issue has still not been completely worked out.

"We've been back and forth on that, and the latest is that it (will be) co-owned" between the university and the state, Hubbard said.

But even if the building is completely owned by the state, Hubbard said he doesn't foresee any problems with the university being able to run the center as it sees fit.

"The building is on our campus, and you can't move it," Hubbard said. "If it's owned by the state, who cares? It's our building, and we'll run it."

As the project now stands, several different entities could be involved in leadership roles, mainly the university, the State of Missouri, Ventria, other biosciences companies that may occupy the Center of Excellence and a private LLC that would own the off-campus facility.

Hubbard admits that with so many entities involved, the leadership of certain projects could become muddied. However, he believes the entities can work through those problems.

"It's the problem of how many cooks can you have in one kitchen?" Hubbard said. "You can answer to two people about two different things, but not two people about one thing... But the projects (will be) clearly differentiated from one another. I want to avoid situations where two different entities will think they're in charge, and I don't think we'll have that problem."

Ventria and the university have set a "drop dead date" of Monday, Dec. 12 to finalize the deal. After that, if no decision is made, the entire project apparently may have to be revamped.

If Ventria agrees to the arrangement, Hubbard said construction on the Center of Excellence could be completed by mid-July.

Although the project has face a rocky path in recent weeks, Hubbard said plant biologics research is still a worthwhile endeavor - Ventria and companies like it are developing life-saving drugs with innovative technology.

"You have to back up and look at the big picture and say, 'Is it worth it?'" Hubbard said. "At this point, everybody at the table agrees that it is."

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