Regulatory challenges reduce opportunities for … CALIFORNIA AGRICULTURE, VOLUME 58, NUMBER 2...

106 CALIFORNIA AGRICULTURE, VOLUME 58, NUMBER 2

Regulatory challenges reduce opportunitiesfor horticultural biotechnology

RESEARCH ARTICLE

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Keith RedenbaughAlan McHughen

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Development of transgenichorticultural crops has slowedsignificantly in recent years forseveral reasons, including theEuropean Union’s moratorium onbiotech approvals, lack of tolerancelevels for adventitious (accidental)presence in food and seed,significantly increased regulatorycosts and decreased acceptance byfood wholesalers and retailers. Whileprogress in the United States hasslowed and approvals in theEuropean Union stopped, somecountries such as China continue todevelop biotech products for theirinternal and external markets thatwill affect the U.S. and Californiaindustry. Within a few years, Chinawill emerge as the leader in biotechhorticultural crops.

Horticultural crops were the firstbiotech crops commercialized in

the United States, beginning withCalgene’s ground-breaking Flavr Savrtomato in 1994, followed in 1995 byAsgrow’s virus-resistant squash andDNA Plant Technology’s Endless Sum-mer tomato. The Flavr Savr tomato,with its superior flavor and shelf life,was well received by consumers, gar-nered repeat purchases and demon-strated that consumers were receptiveto fresh produce labeled as geneticallyengineered (Bruening and Lyons 2000).In 1996, Zeneca launched a biotechprocessing-tomato product that from1999 to 2000 was the best-selling to-mato paste (puree) in the United King-dom. The paste reduced processing

costs and resulted in a 20% lower price.However, despite their consumer ben-efits and initial market acceptance,none of these tomato products were fi-nancial successes and none are beingsold today. In the first instance, produc-tion and distribution costs of the FlavrSavr proved prohibitive. In the secondcase, Zeneca decided not to continuegrowing the tomatoes in California andshipping the paste to the United King-dom. When Zeneca ran into the Euro-pean moratorium, they were unable toget approval for growing the tomatoes inEurope. Once the supply of the tomatopaste was exhausted, the product disap-peared from the grocery store shelves.

These early products of horticulturalbiotechnology are often overlooked be-cause of the huge successes of biotechfield crops such as feed corn, soybeansand cotton. Since their introduction in1996, biotech field crops have quicklygained wide acceptance by farmers andwere grown on more than 167 millionacres worldwide in 2003, primarily inthe United States, Canada, Argentina,Brazil and China (James 2003) (fig. 1).India recently approved biotech cotton

and Brazil approved biotech soybeans,for a total of 18 countries that have ap-proved commercial field production ofbiotech crops. All of these crops are de-signed for pest and weed control, witheither insect or herbicide resistance. Asa result, sales of conventional agricul-tural pesticides declined 7.4% in 2000,while biotech-based varieties jumped12.9% (Schmitt 2002). The worldwidevalue of all seed business (biotech plusconventional seed) rose from $15.3 bil-lion in 1996 to $16.7 billion in 2001, butthe value of conventional seed fellduring the same period from $14.9billion to $13.4 billion, indicating ahealthy value of $3.3 billion in 2001for biotech seed worldwide. Althoughthe European Union (E.U.) moratoriumon new registrations has affected intro-duction of the newest biotech fieldcrops, the utilization of current prod-ucts is increasing.

The success of biotech field crops isin sharp contrast to restricted commer-cial opportunities for biotech fruits andvegetables. There are few examples oftransgenic horticultural crops that arecurrently being grown and marketed

Calgene’s Flavr Savr tomato was successfully sold under the MacGregor’s brand in theUnited States. Consumers were willing to purchase it, but the product was not financiallyprofitable and was ultimately withdrawn from the market.

http://CaliforniaAgriculture.ucop.edu • APRIL- JUNE 2004 107

1.5 million pounds of pesticide activeingredients applied if growers hadwidely planted the New Leaf potato(see sidebar, page 94). Research activi-ties with horticultural crops have alsobeen cut back, with the number of fieldtrials conducted declining since 1999(fig. 2). Together, the E.U. moratorium,the failure of the European Union to es-tablish tolerances for the adventitious(accidental) presence of biotech crops infood and seed, labeling issues and thereluctance of the marketing chain to ac-cept new biotech foods have virtuallyhalted commercialization of newbiotech fruits and vegetables.

Crops approved as safe

Despite initial consumeracceptance, biotech horticul-tural products are virtuallyabsent from today’s market.Are U.S. consumers con-cerned about the safety ofthese products? They do notappear to be, and in generalseem to trust the U.S.government’s oversight. Theregulatory requirements todemonstrate food, feed andenvironmental safety ofbiotech crops are well estab-lished in the United States.The U.S. Department of Ag-

successfully: virus-resistant squash isplanted on a small acreage in the south-east United States, and virus-resistantpapaya has been grown in Hawaii since1998 (Ferreira et al. 2002; see sidebar,page 92). Whereas Zeneca was able toobtain food approval for its tomato inthe United Kingdom in 1995 (as didCalgene for the Flavr Savr tomato), nofood approvals have been allowed inthe European Union since an unofficialmoratorium was imposed in 1998, in ef-fect stopping the import or cultivationof any new biotech crops. Japan hasalso restricted imports of biotech foods,requiring suppliers to obtain food andenvironmental approvals prior to im-portation. Commodity organizations,shippers-packers and grocery chains inthe United States have also been reluc-tant to introduce new biotech varietiesand foods because of logistical difficul-ties in segregating food for export mar-kets to Europe and Japan. For example,even though it resulted in a significant re-duction in insecticide use, Monsanto’sinsect- and virus-resistant New Leaf po-tato is no longer available because a ma-jor processor (McCain Foods) andfast-food chain (McDonald’s) prohibitedtheir suppliers from using this variety(Cornell Cooperative Extension 2003).

Gianessi et al. (2002) calculated thatthere would have been 1 billion poundsof yield gain in 2001 and a reduction of

riculture (USDA) Animal and PlantHealth Inspection Service (APHIS)regulates the field testing and commer-cial release of genetically engineered(GE) plants; the U.S. EnvironmentalProtection Agency (EPA) ensures thesafety and safe use of pesticidal andherbicidal substances in the environ-ment; and the U.S. Food and DrugAdministration (FDA) governs thesafety and labeling of the nation’sfood and feed supply (APHIS 2002).

Extensive safety data are generatedfor each specific transformation event(the insertion of a specific segment of re-combinant DNA into a specific variety).In general, it takes dozens or hundredsof transformation events, each of whichmust subsequently be regenerated intoa transgenic plant, to identify one ortwo that will be used for commercial-ization. This compares to the hundredsor thousands of plants that may beevaluated in a traditional breeding pro-gram to identify a single commercialline. However, unlike with traditionalbreeding, each commercial transforma-tion event must have its own dossier ofsafety assessments and meet key datarequirements, including toxicity, nutri-tional data, allergenicity and environ-mental impacts (see box, page 108).

Companies have conducted thesestudies for all biotech products com-

Fig. 1. Percentage of commercialized transgenic cropsplanted by countries, out of total global acreage (167million) in 2003. (*Numbers in parenthesis are millionacres.) “All others” includes countries that planted200,000 acres or less: Australia, Mexico, Spain, Romania,Bulgaria, Germany, Uruguay, Indonesia, India, Colombia,Honduras, Philippines and France. Source: James 2003.

Fig. 2. U.S. field trials of biotech fruits and vegetables, 1987 to 2003. (Brassica oleraceaincludes broccoli, cauliflower, kale, cabbage and Brussels sprouts.) Source: http://www.nbiap.vt.edu/cfdocs/fieldtests1.cfm.


mercialized to date, and U.S. and inter-national regulatory agencies havegranted approvals (see box, page 109).No case has been documented to dateof harm to humans or the environmentfrom the biotech crops currently beingmarketed, although “genetic drift”from transgenic to conventional cropshas occurred as it has for millennia be-tween conventional crops. Now someMexican growers have expressed con-cerns under the North American FreeTrade Agreement (NAFTA) about pre-serving the biodiversity of their maizedue to gene flow from transgenic corn(NACEC 2004).

Certainly, information of this type isneeded to identify potential hazardsand ensure the food and environmentalsafety of crops developed using bio-technology. Despite the track record ofcurrently approved biotech crops,many opponents continue to demandthat additional safety studies be con-ducted due to concerns such as geneticdrift, out-crossing with wild speciesand food safety. For example, the U.K.Royal Society (2002), an organization ofdistinguished scientists, made the fol-lowing conclusions:

• “There is at present no evidence thatGM foods cause allergic reactions.”

• “There is no evidence to suggestthat those GM foods that have beenapproved for use are harmful.”

• “Risks to human health associatedwith the use of specific viral DNAsequences in GM plants are negli-gible.”

• “It is unlikely that the ingestion ofwell-characterized transgenes innormal food and their possibletransfer to mammalian cells wouldhave any significant deleterious bio-logical effects.”

Nonetheless, in the same report, theRoyal Society recommended that morestudies be conducted using the latestanalytical techniques to test each andevery compound produced by the

biotech crops, including compounds re-leased as volatiles. The Royal Societythen recommended that post-marketingsurveillance be conducted, “should GMfoods be reintroduced into the marketin the U.K.” Although it could not iden-tify any specific safety hazards in cur-rent biotech products, the Royal Societydid not recommend that such foods beallowed back into the United Kingdom.Regardless of the extent of safety test-ing and absence of evidence of harm,the bar may continue to be raised asnew testing technologies are devel-oped, making it increasingly expensiveto meet regulatory requirements.

Regulatory and other barriers

In addition to safety assessments,there are a number of significant barri-ers to developing new biotech horticul-tural crops, including the added costsof variety development, regulatory ap-proval, post-commercialization stew-ardship and the reluctance of thehorticultural marketing industry to ac-cept products grown from biotech vari-eties. Many of the hurdles faced bycompanies developing biotech varietiesdo not exist for traditionally bred vari-eties, including the following issues.

Seed movement and field testing.Experimental biotech varieties can bemoved interstate and tested in the fieldonly under permit from the APHIS, toprevent mixing with nonbiotech seed.During the experimental phase, it takesat least 10 days to obtain a permit forseed movement and 30 days to obtainone for field release.

Zeneca’s biotech tomato puree (paste) was successfully sold in the United Kingdomfrom 1996 to 2000.

Key data requirements for U.S. safetyassessments of new transgenic crops

Product description: data on the host orparent plant, introduced or novel ge-netic material, and intended effect ofthe inserted gene.

Molecular characterization: data on thelocation and manner in which the tar-get gene is inserted into a single site inthe host plant’s DNA.

Toxicity studies: as necessary, testsdemonstrating the safety of thetransgenic protein.

Nutritional data: analyses of the fruit orcommodity collected over several grow-ing environments and growing seasons.

Substantial equivalency: data and in-formation showing that the biotech va-riety differs from comparablenonbiotech varieties only with respectto the intended effect.

Allergenicity: analyses showing that atransgenic protein is unlikely to causeallergic reactions in humans.

Natural toxicants: analyses showingthat there is no increase in the levels ofnatural toxicants.

Environmental impact: studies demon-strating that the biotech variety is un-likely to have an adverse effect on theenvironment, including:• Outcrossing and gene flow, to evalu-

ate whether the introduced trait islikely to move from the crop to re-lated wild species.

• Germination and flowering, to deter-mine whether the introduced trait islikely to alter seed germination, flow-ering time or other properties thataffect the plant’s ability to reproducein the wild.

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Adventitious mixing. Specific proto-cols must be developed, implementedand enforced to prevent adventitiousmixing with other varieties. Such mix-ing can occur as a result of pollenmovement from a biotech field to a con-ventional field or during seed harvestand cleaning. Adventitious mixing oc-curs when very small amounts ofbiotech seed mix with other nonbiotechseed. Regulatory agencies in somecountries establish “tolerances,” themaximum allowable amount of adven-titious material (similar to tolerancesfor pesticide residues). For biotech vari-eties at the experimental stage (unap-proved events), the tolerances areusually zero in food and seed. Forbiotech varieties approved for commer-cial growing and consumption, thethresholds for adventitious presencevary from country to country, rangingfrom less than 1% to 5% for food in-gredients, and 0.3% to 1% for seed. Bycomparison, conventional seed-puritythresholds are usually between 1%and 10%, depending on the crop andvarieties.

Handling procedures. Separatebreeding and seed production pro-grams are needed for biotech crops,with increased isolation and stricthandling procedures to prevent cross-pollination or adventitious mixing.Increased seed purity standards —over the standards for conventionalseed — are also required throughout

growing, harvest-ing, cleaning, mill-ing, storage,coating, packagingand shipping.

Tracking, train-ing. In order toachieve tolerancesan order of magni-tude stricter forbiotech varietiesthan is required forconventional vari-eties, biotech-

specific internal tracking and testingprocedures must be implemented. Ad-ditional training on handling of biotechcrops is required throughout the devel-opment and marketing chain — frommolecular biologists and breeders toseed producers and distributors. Eachnew employee who might be involvedwith biotech varieties at any level mustbe specially trained. Depending uponthe type of product, grower trainingand post-commercialization steward-ship programs may be required.

Increased development costs

These additional requirements haveincreased the cost of developingbiotech varieties (in excess of costs todevelop traditionally bred varieties) toat least $1 million per allele (if limitedstrictly to the United States) and morelikely to $5 million or more per allele,depending on the number of countriesin which approvals are required. An al-lele is a single transformation event,which contains the genetic trait of inter-est and expresses the desired pheno-type in the crop.

These additional costs and issues arethe same for both field and horticul-tural crops. Due to the large acreage offield crops, the costs can be justified bythe market size of the biotech varieties.The same is not true for horticulturalcrops because of the small acreage ofeach crop. One strategy has been tolimit marketing of a biotech horticul-

tural crop to just the United States.However, due to the international tradein horticultural commodities, there arefew examples of products under devel-opment in which both the seed and theproduct could be contained solely inthe United States. More likely, a biotechvariety will need approvals in a num-ber of countries to which the productmight be exported. For example,biotech processing-tomatoes grown inCalifornia will end up being exportedas tomato paste or other products tomany countries around the world, eachof which must give food approval priorto commercialization. And, if the pro-cessed product contains seeds thatmight be viable, environmental studiesand approvals may also be required inthe importing country, even if the im-portation is intended only for food con-sumption. Importing countries mayalso impose additional and unique re-quirements, such as labeling or the abil-ity to trace the product back to theproducing farm, as in pending E.U.regulations.

The end-result of a successfulbiotech development program is a newallele that produces the intended effect,has passed the thorough safety testingand has received approvals and regis-trations from appropriate governmentagencies. In the 1990s, developers ofbiotech varieties assumed that once abiotech product was shown to be safe,it would be produced and marketedjust like any other commodity. Abiotech allele would be equivalent to atraditional allele, and there would beno need for product segregation, label-ing or special handling. While this islargely the case in the United States,this assumption is no longer valid be-cause of labeling requirements in theEuropean Union and other countries.

Another assumption was that prod-uct approvals could be achieved generi-cally for a specific gene and crop. Thatis, once a particular gene product was

U.S. regulatory approvals of biotech crops

http://vm.cfsan.fda.gov/%7Elrd/biocon.htmlhttp://usbiotechreg.nbii.gov

http://www.isb.vt.edu

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There are often dozens of varieties for a particular horticulturalcrop. Above, seeds of the world’s most unusual lettuces aresafeguarded in an ARS gene bank in Salinas. Geneticallyengineered lettuce has not been commercialized.

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IR-4 Project targets specialty crops

Robert E. HolmDaniel Kunkel

Pesticide applications for “minor” or“specialty” crops — typically those

grown on less than 300,000 acres na-tionwide — often do not get the fullsupport of product registrants becausethe potential economic benefits are per-ceived as much more limited than forapplications targeting crops grown onlarge acreages, such as soybeans andfield corn. The IR-4 Project is a uniquepartnership of researchers, producers,the crop-protection industry and fed-eral agencies designed to increase pest-management options for specialtycrops, which include vegetables, fruits,nuts, herbs, nursery crops and flowers.(Most of the crops grown in Californiafit into this category.)

With funding from the U.S. Depart-ment of Agriculture, state agencies,commodity groups and other industrysources, IR-4 researchers and coopera-tors generate field and laboratoryresidue data, which are submitted tothe U.S. Environmental ProtectionAgency (EPA) to secure regulatoryclearances for using safer pest-controltechniques on specialty crops.Projects are prioritized based on re-quests from growers, commoditygroups, and USDA and land-grantuniversity researchers. Since 1963,IR-4 has contributed to more than 7,300regulatory clearances for specialty crops.

In 1996, IR-4 responded to the fed-eral Food Quality Protection Act(FQPA) by shifting its strategy fromproduct defense (support for older pes-ticides needing reregistration) to work-ing with reduced-risk/safer chemistriesand biopesticides. The program also ex-panded its Good Laboratory Practices(GLPs) efforts, started a Methyl Bro-mide Alternatives Program and initi-

ated a pilot program to supportnew transgenic horticulturalcrops. Because they are alsogrown on smaller acreages,transgenic horticultural cropsface many of the same regula-tory hurdles as uses on conven-tional specialty crops.

Focus on herbicide tolerance

The IR-4 team initially identi-fied herbicide tolerance and in-sect resistance as potentialopportunities for assistingtransgenic specialty cropsthrough the regulatory reviewprocess. It then narrowed down the fo-cus to herbicide tolerance, recognizingthat the FQPA could possibly limit theuse of several key herbicides for veg-etables due to regulatory concernsabout toxicology and groundwater con-tamination. The other justification forfocusing on herbicide tolerance wasthat the newer herbicides in the devel-opment pipeline for major crops hadlimited tolerance on specialty crops,prompting companies to restrict theiruses on vegetables due to product li-ability concerns.

Sweet corn. IR-4’s first transgenicproject was the result of research con-ducted by Gordon Harvey at the Uni-versity of Wisconsin, who was looking

for alternatives to the use of atrazine —a potential groundwater contaminant —in Wisconsin sweet-corn production.Harvey conducted studies onglufosinate-tolerant (Liberty Link)sweet corn and demonstrated excellentweed control. The commercial varietieslinked the Bt gene with the glufosinate-tolerant gene to provide additional pro-tection against corn borer and corn

earworm, two major sweet-corn pests.IR-4 then facilitated the residue as-

sessment programs required by EPA in1997, 1998 and 1999. As a result, EPAgranted Section 18 “emergency use”permits for the herbicide-tolerant sweetcorn in Wisconsin, Minnesota andMichigan in 1999 and 2000. However,due to concerns about consumer accep-tance expressed by sweet-corn proces-sors, no significant commercialacreages of these varieties were plantedin 2001 and 2002. Nonetheless, IR-4submitted a complete registration pack-age to EPA for glufosinate-tolerantsweet corn in 2003.

Lettuce. IR-4’s other herbicidetransgenic project was glyphosate-

tolerant (Roundup Ready) lettuce.IR-4 staff met with Seminis Veg-etable Seeds (licensee of transfor-mation technology) and Monsanto(glyphosate registrant and genetechnology licensor) in 1998 to dis-cuss potential technology applica-

tions. The project was placed on theIR-4 30-month “fast track,” with sub-mission to the EPA scheduled for 2001.The program was a cooperative part-nership between Seminis VegetableSeeds (seeds and technology support),Monsanto (residue analysis and techni-cal support) and IR-4 (field residue pro-gram, project management and petitionpreparation and submission).


The IR-4 Project is a unique partnership of researchers,producers, the crop protection industry and federal agencies de-signed to increase pest-management options for specialty crops.

Matt Hengel, regional laboratory coordinator of the IR-4Western Region, tests hops residue at the UC DavisDepartment of Environmental Toxicology.

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shown to be safe, it could be intro-duced into additional varieties withoutretesting. Instead, approvals are basedon specific transformation events. Con-sequently, if different varieties aretransformed with a given gene to pro-duce a range of biotech varieties, eachis an independent transformation eventsubject to all of the regulatory require-ments. Because this is prohibitively ex-pensive, developers must transformjust one variety, register that event, andthen use traditional breeding methodsto incorporate the transgene into othervarieties. This greatly delays and in-creases the cost of developing multiplebiotech varieties in a given crop. This isparticularly restrictive for horticulturalcrops, in which many varieties are re-quired to meet different seasonal produc-tion requirements and diverse consumerpreferences, and any single variety has arelatively small market share. For ex-ample, dozens of different types and va-rieties of lettuce (such as iceberg,romaine, leafy) are grown throughoutthe year as production shifts betweensummer and winter locations in Califor-nia, Arizona and Florida.

Some agronomic seed companiesbudget $50 million for the full commer-cialization of a new biotech crop, in ad-dition to the standard costs fordeveloping and marketing a traditionalvariety. Given the small acreage of hor-ticultural crops and their much loweroverall value, it is difficult to justify theinvestment in transgenic horticulturalcrops. For example, the total U.S. mar-ket for iceberg lettuce seed is about$27 million. A typical single variety isworth about $150,000 to $250,000 dur-ing its 5-year market lifetime, whichsuggests that garnering a large marketshare of lettuce varieties with signifi-cant added value would be necessaryin order to pay for the additional costsimposed on biotech varieties.

Commercialization opportunities

Despite this gloomy picture, regula-tory strategies may be possible thatwould protect public and environmental

However, in 2000 sev-eral grower groups ex-pressed reservationsabout the program prima-rily due to concerns aboutpublic acceptance, leadingthe partners to slow theprogram down. Duringthis period, field resultsfrom several universityresearchers demonstratedexcellent weed control inglyphosate-tolerant lettuce,resulting in reduction ofhand-hoeing costs. It is stillnot certain when or if IR-4will submit a registrationpackage to EPA.

Future directions

IR-4 cannot take on ad-ditional specialty-crop bio-technology projectswithout new funding fromthe USDA (AgriculturalResearch Service and Co-operative State Research,Education, and ExtensionService) and support fromIR-4 management andstakeholders. Current funding is justadequate to cover the existing core pro-grams of reduced-risk chemistries,biopesticides, ornamentals and methylbromide alternatives. Additional fund-ing from Congress or other sources (ei-ther public or private) would benecessary. IR-4’s core competencies arein field residue studies and chemicallaboratory analyses conducted underGLPs. Safety and environmental testingon specialty crops, especiallyallergenicity testing of newly expressedproteins in transgenic crops, is well be-yond IR-4’s existing capabilities.

Under current and proposed regula-tory guidelines, the best approach forsuch testing might be to seek ap-proval first in major acreage rowcrops such as corn, cotton, soybeansand rice, and allow those approvals toapply to specialty-crop uses, as wasthe case for Bt sweet corn followingthe approval of Bt field corn. Ofcourse, this approach is limited to


traits that are applicable in bothagronomic and horticultural crops,and will likely exclude many traitsdirected toward output quality.

The IR-4 management and stake-holder support issue is even moredifficult, as they are not in unani-mous support of developing agri-cultural biotechnology, principallydue to consumer concerns in Eu-rope and to a lesser extent theUnited States. In the future, the IR-4framework could be useful to ad-dress the pest-control needs of hor-ticultural and other specialty cropsvia plant biotechnology, once a con-sensus is reached that they are cost-effective and safe for theenvironment and consumers.

R.E. Holm is Executive Director andD. Kunkel is Assistant Director, IR-4Project, North Brunswick, N.J. — continued on page 114

The interagency IR-4 program evaluates the safety ofagricultural chemicals intended for use on specialtycrops. In Salinas, Agricultural Research Serviceagronomist Sharon Benzen displays broccoli grownin test plots, which will be used to determinepesticide residue levels.

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China aggressively pursuing horticulture and plant biotechnology

Jikun HuangScott Rozelle

AS the world debates the costs and benefits of plant biotechnol-

ogy, swinging between optimism gen-erated by a long list of breakthroughsand pessimism caused by a consumerbacklash in some places, a new sourceof plant biotechnology discoveries isemerging in a most unlikely place:China. And the discoveries beingmade are more than cosmetic trans-formations. China’s research commu-nity has made a major investmentinto understanding the structure andfunction of the rice genome, the use ofagrobacterium to transform the riceplant, and new methods of transform-ing other crops, including a wide arrayof horticultural plants.

China has one of the largest andmost successful agricultural researchsystems in the developing world (Stone1988). Historically, much of China’s re-search was focused on grain, and thegovernment invested in research anddevelopment (R&D) as part of its pur-suit of food self-sufficiency. Horticul-ture played only a small role in China’sdevelopment strategy.

Economic growth, the rise of mar-kets and the opening up of China’seconomy have resulted in a sharp shift

in government policy and producerdecision-making. As markets emergedin the 1990s, farmers reduced their areasown to traditional grain and fibercrops and began to cultivate vast tractsof produce. Fruit andvegetable area hasnearly doubled inChina, expanding bymore than 20 millionacres during the 1990s,adding the equivalentof a “new California”every 3 years for thepast 12 years.

The Chinese re-search system has re-sponded to the newdemands. In the mid-1990s, top researchadministratorsbegan allocating more funds to nontra-ditional crops. Researchers, includingthose in a nascent private-sector seedcompany, were given more freedom towork on broader array of crops andprovided with incentives to shift tohorticultural crops.

Research in modern plant biotech-nology began in the mid-1980s. Chinesescientists now apply advanced biotech-

Chinese scientistsnow apply advancedbiotechnology toolsto plant science,regularly workingon the synthesis,isolation and cloningof new genes, andthe genetic transfor-mations of plants.

TABLE 1. Field trials, environmental releases and commercializationof genetically modified horticultural plants in China through 2000

Field Environmental Commer-Crop Introduced trait trial release cialized

Cabbage Turnip mosaic virus resistance Yes No NoTomato Cauliflower mosaic virus

(CMV) resistance Yes Yes YesTobacco mosaic virus (TMV) and CMV resistance Yes No NoShelf-life altered Yes Yes YesCold tolerance Yes Yes No

Melon CMV resistance Yes No NoSweet pepper CMV resistance Yes Yes YesChili CMV and TMV resistance Yes Yes NoPapaya Papaya ringspot virus resistance Yes Yes NoPetunia Flower-color altered Yes Yes YesPogostemon* Bacteria wilt resistance Yes No No

Source: Author survey.*An Asian shrub, used to make patchouli oil for fragrances and medicinal purposes.

nology tools to plant science, regularlyworking on the synthesis, isolation andcloning of new genes, and the genetictransformations of plants. Our surveyof China’s plant biotechnology labora-

tories identified morethan 50 plant speciesand more than 120 func-tional genes that scien-tists are using in geneticengineering, makingChina a global leader.China’s scientists havegenerated an array oftechnological break-throughs in transgenicplants and animals(Huang et al. 2002), andare currently working ona large number of horti-cultural crops such as to-

matoes, melons and peppers (table 1).The technologies that have been

approved for commercial release alsodemonstrate China’s ability to moveahead with its biotechnology program.Among the varieties approved and li-censed for commercialization before2000 were shelf-life-altered tomatoes,color-altered petunias and pest-resistantpeppers. Although approvals for ge-netically modified (GM) food cropshave slowed recently, China was allo-cating about 9% of its research budgetto plant biotechnology in 1999. In thelate 1990s, China accounted for morethan half of the developing world’s ex-penditures on plant biotechnology. Re-cently, officials announced a plan todrastically raise research budgets.

Many issues face China’s researchadministrators. China’s government re-cently put into place a regulation andbiosafety system, but it is new,underfunded and has not proven itsability to enforce regulation. Chineseleaders are struggling with issues ofconsumer safety and acceptance, bothwithin their own country and in coun-tries that import its farm commodities.Almost nothing is known about how



Chinese consumers would react if theyknew that their food was producedwith GM varieties, although recent re-search suggests a relatively high degreeof acceptance.

China’s government also must de-cide if it will continue to bear almostthe entire burden for funding biotech-nology research. There is almost noprivate-sector funding. In the late1990s, total spending by foreign firmson agricultural research in China wasless than $16 million (Pray et al. 1997).China has options for increasing pri-vate research but is constrained by poorintellectual property rights (IPR), un-derdeveloped seed markets and pro-hibitive regulations on private firms.

Finally, the size of China’s researchinvestment, the improved education ofits scientists that are involved in plantbiotechnology research and its past suc-cess at developing biotechnology toolsand GM plants suggest that its plantbiotechnology industry may one daybecome an exporter of research meth-ods and commodities. In both industri-alized and developing countries,opportunities are expanding for con-

tract research, exporting GM varieties,and selling genes, markers and otherbiotechnology tools. China has advan-tages such as large groups of well-trained scientists, low-cost research,limited regulation and large collectionsof germplasm.

At the same time, it has the disad-vantages of almost no commercialbiotech industry, a fragmented seed in-dustry, public researchers inexperi-enced in working with corporationsand a weak IPR regime. The Chineseagricultural-biotechnology sector willhave to compete with the private andpublic sectors in other countries — theprivate life-science giants, smaller pri-vate biotech firms in industrializedcountries, and universities in theUnited States and other industrializedcountries. Because of its lack of capitaland experience in global competition,China may have trouble competing inthe most lucrative markets. However,the multinational life-science compa-nies may be willing to leave relativelyminor crops, including many horticul-tural crops, to China.

The emergence of China as an agri-cultural trading nation, and its risingstrength in plant biotechnology re-search, offers fundamental challengesto California. China has a large advan-tage in producing labor-intensive horti-cultural crops, given its low wagestructure and virtually unregulated ag-ricultural economy. Indeed, China hasalready begun to make inroads intofruit and vegetable markets in East Asiathat were once dominated by Californiagrowers. In contrast, California’s mar-keting infrastructure and UC-basedagricultural R&D system give it anedge in producing and delivering high-quality products and competing for for-

eign markets. To the extent that sciencewill improve the quality and market-ability of China’s fruit and vegetableproducers, plant biotechnology will im-prove China’s competitiveness.

Inside China, where consumer ac-ceptance is less of an issue, a more pro-ductive farming sector could mean lessroom for California’s products. How-ever, if China relies primarily on plantbiotechnology to improve productquality, it might give California an ad-vantage in world markets. As a devel-oping country with a poor reputationfor emphasizing food safety, Chinamay not easily garner access to worldmarkets for commercial releases of GMfruits and vegetables. Countries such asEurope and Japan are already skepticalabout GM foods and likely would beespecially concerned about importingthem from a nation with a relativelyshort and untested consumer andbiosafety record.

J. Huang is Director, Center for ChineseAgricultural Policy, Institute of Geographi-cal Sciences and Natural Resource Re-search, Chinese Academy of Sciences,Beijing; and S. Rozelle is Associate Profes-sor, Department of Agricultural and Re-source Economics, UC Davis, andAssociate Director, UC Agricultural IssuesCenter.

ReferencesHuang J, Pray C, Rozelle S, Wang G. 2002.

Plant biotechnology in China. Science295:674–7.

Pray C, Huang J, Rozelle S. 1997. Agricul-tural research policy in China: Testing thelimits of commercialization-led reform.Contemp Econ Stud 39(2):37–71.

Stone B. 1988. Developments in agricul-tural technology. China Quarterly 116 (Dec).


China has dramatically expanded its production of fruits and vegetables, while allocatingsignificant research funds to agricultural biotechnology. Above, Chinese scientists havedeveloped genetically engineered crops, including peppers, tomatoes, papaya andcabbage (conventional crops shown).


safety while decreasing the cost of in-troducing biotech specialty crops(Strauss 2003). Plant breeding compa-nies employing biotechnology canmanage and reduce regulatory costs bycarefully and deliberately determiningthe necessary testing requirements.Costs can be reduced by focusing de-velopment on biotech genes that havealready been commercialized in agro-nomic crops, since expensive toxicitystudies done on a new protein pro-duced in a biotech agronomic crop canbe used for the same protein producedin a biotech horticultural crop.

The USDA IR-4 program conductsand pays for the collection of efficacyand safety data on pest-control chemi-cals for “minor” or “specialty” crops,which include most horticultural crops(see sidebar, page 110). A new, ex-panded “biotech IR-4” program fo-cused on full crop registration,including EPA, USDA and FDA re-quirements, could benefit horticul-tural crops being developed inuniversities, government laboratoriesand small companies. This is particu-larly critical for the next generation oftransgenic products, which will bemore consumer-oriented and specific tohorticultural crops. Because horticulturalproducts in the pipeline are likely to havealtered nutritional or quality traits, spe-cific safety tests will be required that can-not rely on data generated for agronomiccrops. Without a program like IR-4, test-ing requirements could preclude suchproducts from ever being developed andreaching the market.

As demonstrated by Calgene andZeneca with their early tomato prod-ucts, consumers are receptive to labeledproducts that have clear quality orprice benefits. However, focusing en-tirely on consumer-oriented traitswould forgo valuable benefits for cropproduction, such as virus resistance,which could have enormous advan-tages for producers that would not bereadily recognized by consumers. Asfurther experience is gained withbiotech methods, regulatory require-ments should be relaxed for categoriesof products posing little health or envi-ronmental risk. In addition, genericcrop and gene approvals (such as

glyphosate-resistance approval for allalleles in all leafy vegetables), ratherthan the current “event-specific” ap-proach (separate approvals for each al-lele in each vegetable), would do muchto encourage further development ofsuch products.

Around the world, farmers desireand in some cases demand the benefitsthat can come from the improved vari-eties. In India, for example, extensiveprecommercialization field trials ofinsect-resistant cotton found averageyield increases of 80% along with a 68%reduction in insecticide use (Qaim andZilberman 2003). Farmers saw thevalue of the varieties and grew 25,000acres of insect-resistant cotton in 2001,prior to government approval (in 2002).Similarly, a significant percentage ofsoybeans in Brazil was grown fromherbicide-resistant seeds smuggled intothe country from Argentina and propa-gated by farmers, as Brazilian courtsheld up their release despite govern-mental approval. While planting ofinsect-resistant corn has not been ap-proved in Mexico, Mexican workers re-turning from the United States havebrought back seed corn for planting,and biotech food grain sold in Mexicohas also been planted. At the 2002 Insti-tute of Food Technologists’ annualmeeting, E.C.D. Todd of Michigan StateUniversity reported that Thai farmersare smuggling and planting biotechseeds from China. While the distribu-tion of biotech varieties outside of legalchannels cannot be condoned, these ex-amples illustrate that farmers are awareof the advantages these varieties can

deliver. As research continues at manycompanies, universities and govern-ment laboratories, biotech horticulturalproducts having similar attractions forgrowers and consumers (see page 89)may overcome the current financial andlogistical hurdles facing their commer-cial development.

Future prospects; biotech in China

Despite vocal opposition, agricul-tural biotechnology continues to ad-vance. China has made significantstrides in commercializing GE horticul-tural crops over the past 10 years andmay well become the world’s leaderduring the next 10 years (see sidebar,page 112). China was the first countryto commercialize biotech plants, begin-ning with field production of thou-sands of acres of virus-resistant tobaccoin 1988, followed by virus-resistant to-matoes (500 acres) and sweet pepper(6 acres) in 1994 (Chen and Zhu 1994;Rudelsheim 1994; Zhou et al. 1994;Stipp 2002). In the mid-1990s, Chinawas criticized by an American delega-tion for having only a provincial andnot a national product-approval sys-tem. For several years afterward, itwas difficult to determine whetherfurther commercial plantings ofbiotech crops occurred in China(Redenbaugh et al. 1996).

Interestingly, China established1997 as the “official” commercializa-tion date for biotech cotton, tomato,sweet pepper and petunia, which iswhen the crops were authorized bythe agricultural-biotechnology safetyoffice of the Chinese Ministry of Agri-

Left, genetically engineered seed and crops are subject to stricter handling, transportingand tracking procedures to prevent cross-pollination and adventitious (accidental) mixingwith conventional crops. The presence of Starlink corn in food products showed that therewere weaknesses in the ability to segregate grains on their way to market. Right, inAugust 2003, Greenpeace activists blocked a trainload of biotech corn as it attempted tocross the Rio Grande into Mexico, claiming that it threatened native land races of maize.

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culture (Z. Chen, personal communica-tion, LMOs & the Environment Confer-ence, Durham, NC, 2001). Chinacurrently claims to be second only tothe United States in agricultural biotechresearch, development and cultivation,and China is taking full advantage ofuncertainty caused by the EuropeanUnion’s stance on biotech approvals.Beijing University vice president Chen(1999) stated, “I expect that in 10 yearsbetween 30% and 80% of the rice,wheat, maize, soya, cotton and oilseedcrops in China will be transgenic crops.We can take advantage of this 4-yearhalt [E.U. moratorium] to turn Chinainto a world power in genetically modi-fied organisms.”

China is in an excellent position todevelop and create internal markets forbiotech horticultural crops and clearlyhas the opportunity to surpass theUnited States in biotech crop develop-ment. Recently, China erected barriersto the importation of biotech grains,creating confusion for U.S. and worldexporters, while backing away fromsome of its earliest commercial biotechproducts (Macilwane 2003). It is notknown whether this is due to internalconcern over biotech products or fear ofjeopardizing its own export markets toEurope, or is a trade barrier to allow foradditional internal development ofbiotech products. Greater clarity willoccur should this issue come before theWorld Trade Organization (WTO).

Regulatory issues and costs are re-ducing commercial opportunities fornew biotech crops in the United States.Of course, China will need to meet therequirements of any country receivingtheir exports, but currently it is unclearwhether any of China’s biotech prod-

ucts are being exported. Korea and Ja-pan are not likely to press this as atrade issue. Other internal political is-sues are currently complicating com-mercialization efforts within China, butthese are likely to be only short-termbarriers (Economist 2002).

While the United States falters overbiotech fruits and vegetables, China ispositioning itself to be the world leaderin coming years. For the American hor-ticultural industry, the results could bedevastating if the United States loses itscurrent competitive edge and more ag-ricultural production moves overseas.

K. Redenbaugh is Associate Director,Seminis Vegetable Seeds, Woodland; andA. McHughen is Plant Biotechnologist,Department of Botany and Plant Sciences,UC Riverside.

References[APHIS] Animal and Plant Health Inspec-

tion Service. 2002. U.S. Regulatory Oversightin Biotechnology Responsible Agencies —Overview. www.aphis.usda.gov/ppq/biotech/usregs.html.

Bruening G, Lyons JM. 2000. The case ofthe FLAVR SAVR tomato. Cal Ag 54(4):6–7.

Chen Z. 1999. Unlimited prospects forbiotechnology. Knowledge Econ [ZhishiJingji]. December. p 22–8.

Chen A, Zhu Y. 1994. Summary of fieldrelease of transgenic tobacco, tomato andsweet pepper. In: Proc 3rd Intl Symp,Biosafety Results of Field Tests of Geneti-cally Modified Plants and Microorganisms,Monterey, CA. UC DANR, Oakland, CA. p229–31.

Cornell Cooperative Extension. 2003. AmI eating GE potatoes? Genetically Engi-neered Organisms: Public Issues EducationProject. www.geo-pie.cornell.edu//crops/potato.html (accessed 3/16/04).

Economist. 2002. Biotech’s yin and yang —

Growing fast, but facing several challenges.Dec 14. p 75–7.

Ferreira SA, Pitz KY, Manshardt R, et al.2002. Virus-coat-protein transgenic papayaprovides practical control of papayaringspot virus in Hawaii. Plant Dis 86:101–5.

Gianessi LP, Silvers CS, Sankula S, Carpen-ter JE. 2002. Plant Biotechnology: Currentand Potential Impact For Improving PestManagement In U.S. Agriculture; An Analy-sis of 40 Case Studies. National Center forFood and Agricultural Policy.www.ncfap.org/40CaseStudies.htm.

James C. 2003. Global status of commer-cialized transgenic crops. ISAAA Briefs No30. www.isaaa.org.

Macilwane C. 2003. Against the grain.Nature 422:111–2.

[NACEC] North American Commission forEnvironmental Cooperation. 2004. Maizeand biodiversity: The effects of transgenicmaize in Mexico. www.cec.org/maize/index.cfm?varlan=English (viewed 3/17/04).

Qaim M, Zilberman D. 2003. Yield effectsof genetically modified crops in developingcountries. Science 299:900–2.

Redenbaugh K, Malyj L, Lindemann J,Emlay D. 1996. Commercialization of bio-technology products. Proc N Am Plant Pro-tect Org, Saskatoon, SK, Canada.

Royal Society. 2002. Genetically ModifiedPlants for Food Use and Human Health —An Update. London, UK.www.royalsoc.ac.uk/gmplants.

Rudelsheim P. 1994. Experiences in ap-proaching commercialization of transgeniccrop plants. In: Proc 3rd Intl Symp, BiosafetyResults of Field Tests of Genetically Modi-fied Plants and Microorganisms, Monterey,CA. UC DANR, Oakland, CA. p 323–5.

Schmitt B. 2002. Conventional agchemsdecline, but biotech products boom. ChemWeek 164:33.

Stipp D. 2002. China’s biotech is startingto bloom. Fortune (Sept 2):126–34.

Strauss SH. 2003. Genomics, genetic engi-neering and domestication of crops. Science300:61–2.

Zhou R, Zhang Z, Wu Q, et al. 1994.Large-scale performance of transgenic to-bacco plants resistant to both tobacco mo-saic virus and cucumber mosaic virus. In:Proc 3rd Intl Symp, Biosafety Results ofField Tests of Genetically Modified Plantsand Microorganisms, Monterey, CA. UCDANR, Oakland, CA. p 49–55.

Many of the biotech crops on the market today are geneticallyengineered for insect resistance. At Monsanto’s laboratory in St.Louis, proteins are screened, left and right, for insecticidal activity.

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In the micro-wells, center, the insect eggs or larvae of the targetspecies are placed in protein material that is incubated for severaldays and then examined for survival or growth of the insect.


Public-private partnerships needed in horticulturalresearch and development

RESEARCH ARTICLE

▲▲

Gordon RausserHolly Ameden

▼

University-industry partnerships areproliferating in the United States, aspublic funding for high-levelresearch continues to decline yetknowledge plays an increasinglyimportant role in industrialprocesses. The horticulture industrybenefits from such arrangements byinfluencing research directions andgaining access to innovations andcomplementary research in agri-cultural biotechnology. Given thenature of this industry, the obstaclesto developing effective partnershipsare substantial. Private horticultureinstitutions should form consortia ofboth small- and medium-sized firms,and they should understand theneed for faculty and academicfreedom. More enterprising membersof a consortium can capitalize on theresearch contacts and pursue firm-specific, applied-research partner-ships. Potential drawbacks are theexclusion of smaller firms andinequitable benefits-sharing withinthe consortia.

Horticultural research is conductedprimarily in the public sector,

with research at private institutionsplaying a relatively minor role. Asa result, research gaps naturallyemerge between the basic researchgenerated by public institutions andthe research needs of industry. Oneapproach for reducing this gap is toform public-private research partner-ships that harness the complementaryresearch and academic expertise ofuniversities with the commercialization

and marketing expertise found in in-dustry. Such partnerships are prolifer-ating, especially between universitiesand large life-sciences companies. Un-fortunately, there are few concrete ex-amples of such partnerships in agricul-tural biotechnology for the horticultureindustry. The challenge is to adaptmodels of these partnerships to the re-search needs and structure of the horti-culture industry, which produces cropssuch as fruits and vegetables, nuts, andnursery and ornamental crops.

The traditional research paradigmposits a one-way flow from basic sci-ence conducted in public institutions toapplied research and commercializa-tion undertaken largely by private in-dustry. This characterization does notaccurately portray current trends in re-search and development (R&D). In-

creasingly, public universities and pri-vate firms engage in joint research andestablish interactive relationships. Sev-eral factors have contributed to thistrend, including recent legislation (theBayh-Dole Act of 1980), the restructur-ing of many of the larger life-sciencesfirms (such as Monsanto and Syngenta)and an alignment of private and publicincentives to pursue long-term R&D ef-forts (Rausser 1999).

The potential benefits from university-industry partnerships in the field ofagricultural biotechnology are obvious.Scientific and practical knowledge cancomplement each other, leading to morerapid and far-reaching innovation. Uni-versities need funding for their research-ers, as well as intellectual property heldby private companies and access to mod-ern, commercially developed enabling

Partnerships can link university research expertise with the commercialization andmarketing savvy of industry: such partnerships are proliferating in the United States. Forexample, in 1998 the Department of Plant and Microbial Biology at UC Berkeley,left, entered into a 5-year, $25 million research agreement with a multinational life-sciencescompany, Novartis, right (Basel, Switzerland), and its successor company, Syngenta.

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technologies (such as gene expressionprofiles and genome maps) to ensure afirst-rate graduate education for stu-dents. For its part, industry is inter-ested in accessing new research andinnovation, developing new productsand hiring highly trained graduatestudents.

However, obstacles to the formationof successful agreements are signifi-cant. Both parties in a research partner-ship face serious risks. These risks arerooted in the conflict between auniversity’s academic objectives andthe private firm’s corporate incen-tives. One critical risk is the potentialco-opting of the academic researchagenda by private interests. Universityresearchers risk the loss of academicfreedom and integrity while industryrisks the loss of investment capital, pri-vacy and proprietary information. Dif-ferences between the university’seducational objectives and corporategoals, as well as differences in the cul-tures, institutional incentives and timeframes, can lead to a clash of culturesand values. Intellectual property (IP)rights issues are also a frequent sourceof contention. Given these risks, bothparties need to enter into carefullystructured research agreements.

Structuring agreements

Most work examining research part-nerships focuses either broadly, onsuch issues as the source of researchfunding, basic provisions of theseagreements and associated problemsand consequences (Blumenthal et al.1996; GUIRR 1999; NAB 2001), or nar-rowly, on specific aspects of a particu-lar type of agreement (NIH 1994).Although this literature is useful, itdoes not effectively address how tostructure these public-private researchpartnerships. In response to this need,we have constructed templates basedon the three stages of any university-industry research partnerships, whichprovide a framework for characterizingtheir “front-end” and “back-end” op-tions (Rausser and Ameden 2003).

University-industry research part-nerships come in many forms. Theymay be targeted, with private firmsdesignating specific research agendas,or they may be nontargeted. Research

projects may have short or longer timehorizons. Universities may enter agree-ments with a single private company orwith groups of firms sharing a com-mon interest (an industry consor-tium). Collaborations may cover asingle research project or be “mega-agreements” covering a large range ofinteractions (examples include UCBerkeley–Novartis and WashingtonUniversity, St. Louis–Pharmacia).

Because of the inherent uncertaintyin the research process, research part-nerships can be structured in terms ofex ante decisions (those made prior toinitiating a research partnership) onthe options embedded in the threestages of any agreement. These em-bedded options are specific decisionpoints, such as determining whichpartner will control the researchagenda. Universities can define poli-cies on this option ex ante, before po-tential partners are approached.

Stage I: Setting the bargainingspace. To start, potential research part-ners consider possible collaborationsand associated tradeoffs. The vital as-pect of this stage is determining exactlyhow partners will be identified and se-

lected. Although deliberately seekingout partners rather than waiting to beapproached with a proposal requiresmore effort upfront, it can substantiallybroaden the set of choices. For example,the public partner could elicit competi-tive bids from multiple private partnersrather than just accepting or rejecting asingle proposal.

Stage II: Negotiating the agree-ment. Next, the agreement is negoti-ated and may or may not involve aformal contract. Front-end options de-termine the nature and scope of the re-search activities that the partnershipwill undertake, while back-end optionsdetermine how any benefits generatedby the partnership will be distributedand how knowledge assets such as pat-ents and commercial products are dis-seminated. Decisions in the front-endinclude specifying the research agenda,asset contributions, governance struc-

tures and scale of operations. Back-endoptions include designating patent-filing responsibility, property and li-censing rights, royalty rates and howresearch results will be disseminated.

Stage III: Reviewing and renewingthe partnership. Finally, the outcomeof the partnership is assessed, with aneye toward whether to renew the agree-ment. Currently, there is no standardapproach for formal review of large- orsmall-scale agreements. To assesswhether a research partnership wassuccessful or not, interested partiesmust rely on the informal reviews andvague impressions of both partnersalong with more tangible outcomes,such as the number of patents gener-ated by the research. A key policychallenge is the development of con-crete indicators or measures of pro-ductivity for public-private researchpartnerships.

Templates for partnerships

Based on these stages of formingagreements, we have designated fourgroups of templates.

Strategic partnerships involve com-prehensive, multiyear commitments be-

tween a university, or an academic de-partment in a university, and a largecompany, with both partners dedicat-ing significant assets. Formal proce-dures for determining research agendasand control of back-end assets arespecified. Given their size, these agree-ments tend to come under significantscrutiny and often external review.

One such agreement was the 5-year,$25 million research agreement be-tween Novartis (and its successor com-pany, Syngenta) and UC Berkeley’sDepartment of Plant and Microbial Bi-ology. The relationship, which gener-ated approximately 20 innovations, wasthe subject of an internal campus re-view by the office of the Vice Chancel-lor for Research. The review found theresearch had not been skewed towardapplied biotech research as feared andthat graduate students were the pri-mary beneficiaries.

Differences between the university’s educational objectivesand corporate goals can lead to a clash of cultures and values.


Research unit/center partnershipsusually also involve the dedication ofsignificant resources. Instead of involv-ing existing academic departments,however, these research units are set upseparately, allowing more distance be-tween the partnership and the aca-demic community at the university.Such partnerships may be linked to asingle company, commodity group orcompanies that provide some or all ofthe financial resources for the researchcenter. For example, the Seed Biotech-nology Center at UC Davis is a partner-ship between the College ofAgricultural and Environmental Sci-ences and the California seed industry.The College provides research spaceand faculty time, while the industryfunds additional research and pro-grammatic personnel. Specific researchprojects are funded through diversegrants and contracts with both publicagencies and private sources.

Sponsored projects are small tolarge commitments with a specific re-search agenda designated at the outset.As with strategic partnerships, eitherpartner may approach the other, but in-stead of defining a governing structurefor selecting research directions, specificresearch projects of particular durationand budget are proposed. Depending onthe nature of the bargaining space (e.g.,private partner proposes project versusthe university approaches private partnerwith research needs), the university’s op-tions on the front-end can be more re-stricted. Sponsored projects may act astesting grounds for relationships andserve as precursors for more far-reachingstrategic partnerships. Through morethan 50 commissions and other organiza-tions, industry groups provided morethan $22 million to support public re-search programs at UC Davis last year, alarge fraction of that in the plant sciences.

Informal arrangements are gener-ally the initial mode of contact betweenuniversity and industry partners.Through networking with contacts, in-dustry scientists identify valuable uni-versity counterparts and vice versa,and set up simple arrangements involv-ing minimal transaction costs. Theseagreements can either be transparent,public collaborations or may involve

more indirect arrangements such ascorporate gifts that are not tied to anyspecific collaboration or in-kind dona-tions of services, equipment or materi-als. This category would includepesticides or tractors donated for a fieldtrial and technical expertise for settingup a research program.

Horticultural industry and research

The horticultural research industryis composed primarily of small to me-dium enterprises (Dixon 1998) withsmall markets for individual products.Because of their relatively smaller size,these firms are able to rapidly applynew knowledge and technology. How-ever, when it comes to genetically engi-neered crops, the smaller firmsgenerally do not have the assets to de-velop new products.

Research funds in horticulturecome mainly from the public sector(Sansavini 1998; Dixon 1998). The reluc-tance of major biotechnology R&Dcompanies to dedicate funds to horti-cultural research is, in part, becausetechnological advances in horticultureare not viewed as “low-hanging fruit.”The commercial value is not nearly asattractive as for annual agronomiccrops grown on large acreages. In addi-tion, consumer acceptance of geneti-cally modified foods is considered amajor obstacle to the adoption and

commercialization of agricultural bio-technology. Current biotech researchfocuses on reducing the environmentalimpacts of horticultural production,food safety, product quality and new-product development (Robitaille 1998).

Public-private research partnershipscould greatly benefit the horticultureindustry, and domestic and interna-tional research partnerships in horticul-ture are considered especiallyimportant for developing economies(Robitaille 1998). Dixon (1998) notesthat successful entrepreneurs in horti-culture maintain a continuous dialoguewith scientists; partnerships are one ap-proach for guaranteeing this dialogue.Dixon also notes that linkages betweenresearch and industry (public and pri-vate relationships) have improved“where levy funding systems have beenestablished to support scientific endeav-ors.” In other words, more formal finan-cial arrangements between partners arelikely to yield the best exchange.

Strategies for horticulture R&D

The most relevant partnershipmodel for the horticulture industry isthat of less formal, single or multiple-project partnerships (sponsored projectand informal arrangements). In pursu-ing these partnerships, the implicationsof all three stages of the partnershipshould be considered ex ante.

Smaller firms have the capacity to rapidly apply new technology, but when it comes totechniques involving recombinant DNA they often do not have the assets to developcommercially viable products. Partnerships can help by sharing the costs of research,development and testing that are needed to bring a genetically engineered product tomarket. Above, gel is used to separate DNA molecules according to their length.

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In Stage I (setting the bargainingspace), private horticulture institutionsseek to align research incentives andform consortia of small and mediumfirms with parallel research interests toconcentrate intellectual and financial re-sources. These consortia are organized bycrop or pest type (or other research inter-ests) to facilitate networking, identify keyresearchers at public institutions andpropose specific research projects.(A proportional-contribution/equal-sharing scheme between consortia mem-bers is likely to be the most effectiveself-governing approach given the publicnature of research leads and outcomes.)

The university should accept or re-ject these proposals based on the re-search synergy and embedded options.Although all universities share a com-mon set of core principles that guidetheir decisions, different institutionsemphasize different objectives; the pri-vate partner should consider theuniversity’s research climate when con-sidering research partners.

In Stage II (negotiating the contract),the private partner considers the typeof research to pursue in the partner-ship. Given the nature of research ob-jectives at universities, the horticultureindustry partner should propose re-search projects that are more basic,have longer time frames and are notadequately addressed by current pri-vate research efforts. These partner-ships are more likely to be successfullynegotiated if the industry partner un-derstands, ex ante, the need for facultyand academic freedom. On the back-end, university guidelines and policyusually constrain its researchers to spe-cific conditions for patenting research,and licensing and disseminating results(publication delays). Although there issome variation, these constraints arefairly common at universities.

Stage III (reviewing the partnership)is best accomplished if specific goals orbenchmarks are incorporated into the ini-tial agreement. This gives both sides cri-teria to judge whether the partnership isachieving its goals and justifies renewal.

Consortia benefits and risks

Both partners should establish linksso that industry can more effectively

utilize public research and universi-ties can secure access to researchfunding and cutting-edge enablingtechnologies. These collaborations canserve as stepping-stones to more for-mal, long-term agreements. Alterna-tively, once initial consortia-universityresearch partnerships are established,more enterprising members of theconsortia can capitalize on the re-search contacts and pursue firm-specific, applied-research partnerships.

The primary obstacle to forming re-search partnerships is high transactioncosts. The process of identifying appro-priate researchers as potential partnerscan involve significant search costs.And once potential partners have beenselected, the time and effort involved innegotiating a research agreement, espe-cially given the differing objectives ofpublic versus private institutions, canbe substantial. The consortium ap-proach is a strategy for sharing thesecosts. If the consortia are not well struc-tured, however, reduced external trans-action costs may be replaced by higherinternal costs of organizing and run-

ning the consortia. Inequitable benefits-sharing within a consortium may alsobe a source of conflict. And althoughthis approach is intended to serve theneeds of medium- to smaller-sizedfirms, the smallest enterprises may stillbe excluded (especially in subsequentpartnerships).

G. Rausser is Robert Gordon Sproul Dis-tinguished Professor, and H. Ameden isPh.D. Candidate, Department of Agricul-tural and Resource Economics, UC Berke-ley. The UC Berkeley–Novartis agreementwas designed and implemented while Pro-fessor Rausser was Dean of the College ofNatural Resources at UC Berkeley.

ReferencesBlumenthal D, Causino N, Campbell E,

Louis KS. 1996. Relationships between aca-demic institutions and industry in the lifesciences: An industry survey. New Eng J Med334:368–73.

Dixon GR. 1998. Market-led horticulturalresearch: Does this provide what the indus-try needs? World Conference on Horticul-tural Research, June 17–20, Rome, Italy.http://pop.agrsci.unibo.it/wchr/wc3/dixon.html.

[GUIRR] Government-University-IndustryResearch Roundtable. 1999. OvercomingBarriers to Collaborative Research. GUIRRworkshop, March 23–4, 1998. Irvine, CA.Washington, DC: Nat Acad Pr. 60 p.www7.nationalacademies.org/guirr/PUBLICATIONS.html.

[NAB] National Alliance of Business.2001. Research Collaboration InitiativeBusiness–Higher Education Forum: Draft Fi-nal Report. www.nab.com.

[NIH] National Institutes of Health. 1994.Developing sponsored research agreements:Considerations for recipients of NIH re-search. NIH Guide 23(25). http://ott.od.nih.gov/newpages/text-com.htm.

Rausser G. 1999. Private/public research:Knowledge assets and future scenarios. AmJ Ag Econ 81(5):1011–27.

Rausser G, Ameden H. 2003. Structuringpublic-private research agreements: Thecritical role of control premiums. Draftworking paper. Center for Studies in HigherEducation, UC Berkeley.

Robitaille HA. 1998. Needs and expecta-tions of the horticulture-related industry.World Conference on Horticultural Re-search, June 17–20, Rome, Italy. http://pop.agrsci.unibo.it/wchr/wc3/robitaille.html.

Sansavini S. 1998. Key issues facing re-search in horticulture: An overview, pros-pects, and the role of cooperation. WorldConference on Horticultural Research, June17–20, Rome, Italy. http://pop.agrsci.unibo.it/wchr/wc5/sansavin.html.

The time and effort involved in negotiatingpublic-private research partnerships issubstantial, but such arrangements can befruitful for both parties. Above, a UCscientist uses tissue culture to propagategrapes in the laboratory.

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