Canada regulatory model not quite perfect, but getting closer

Posted on January 30, 2012

by Peter Phillips

On January 16, BASF announced that for all intents and purposes it is ending its plant biotechnology discovery research program in the EU and expanding activities in Raleigh, North Carolina. They also announced the headquarters of BASF Plant Science would move from Limburgerhof, Germany, to Raleigh, North Carolina.

BASF Plant Sciences has read the tea leaves and appears to have decided its long-term future prosperity is not going to be driven by the EU and its needs or interests.

This announcement highlights three interrelated and important policy issues in the plant biotechnology sector.

First, the global agri-food market continues to be fragmented. While development, production and trade in GM foods expanded in 2010 to 25 plant species grown on more than 148 million hectares by 15.4 million farmers world-wide in 29 producing countries (ISAAA 2011), the EU and many countries exporting to the EU remain only minimally engaged in GM crop production and trade. The two blocks of countries have the same basic processes and methods for assessing safety and risk, but make substantially different risk decisions based on alternate views of the appropriate role of biotechnology in the economy and society. Some trade between those two solitudes continues, but has seen frequent disruption, increased costs and significant uncertainty.

Second, BASF would appear to have judged that public attitudes, which are at the root of this regulatory disconnect, are too wide apart and entrenched to lead to any near term change. All other things being equal, the majority of the exporting countries and key markets for traded food stuffs accept the value and need for cultivars developed with biotechnology. The risk is that both theory and evidence suggests that any country that slows technological change will ultimately jeopardize its competitiveness—given that the EU is the world's single largest producer of food, any significant shift in their production could have major impacts on global food security.

Third, when firms face truncated, costly or uncertain markets, they in aggregate tend to invest less in serving that market. Individual firms do exactly what BASF has done—they look for more promising investment opportunities. These major shifts in focus often raise questions about where they should locate. Generally, firms move to places where there is an aggregation of competitors and collaborators, where the communities facilitate innovation and where innovators are tolerated and respected. Research Triangle Park in NC is one, but not the only site where this is possible. Saskatoon in Canada, St. Louis in the US mid-west, Ghent in Belgium and a number of sites in Asia, Latin America and Africa are emerging as key candidates for firms seeking to relocate

. In a world of fragmented markets, entrenched public attitudes and mobile firms, research and development is lower than what is probably needed to secure adequate quantities of safe and nutritious food to feed the growing world population. While the debate focuses on views in North America and Europe, it will have a greater fundamental effect on those areas of the world with lower food security. There is an economic, political and moral imperative to find ways to work around the effect of this disconnect. Thoughtful policy is needed. Governments and industry associations can contribute by leading, following or getting out of the way. The Saskatchewan and Canadian biotechnology and agri-food industries are key actors in the global system and have contributed to each of these policy areas. Canada's regulatory regime, while not perfect, has some unique features that could bridge the two solitudes. Our novelty trigger and well-respected, science-based processes offer options for reform and convergence of decision making. Our voluntary, procedurally-based, national standard for labeling of genetically engineered foods is arguably the only WTO compliant standard in the world, and could offer a model for consumers everywhere to exercise their preferences in the market. Canada offers an appropriate venue to advance the science and commercialization of new crops. We brought GM canola to the world and got a good return on our investment but also generated significant economic benefit to consumers and producers around the world.

Canada is at the leading edge of trying to work around the inflexibilities in regulations, citizen perceptions and industry by developing a national co-existence policy. If successful, such a policy could facilitate multiple marketing streams. In a perfect world, we would have the processes in place to allow GM crops to co-exist with conventional, organic, industrial and other differentiated crops.

If Canadian producers, industry, consumers and government are able to construct such a system, they may finally open up the global market to the optimal production and consumption of food, perhaps banishing food shortages forever.

Peter Phillips
is an international political economist, is Professor of Public Policy in the Johnson Shoyama Graduate School of Public Policy at the University of Saskatchewan.