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Agricultural Biotechnology Playing Bigger Role In Food Output

John Moore, |Special to CNBC.com
Tuesday, 26 Apr 2011 | 12:05 PM ET

Industries of all stripes typically look to technology to improve safety and cost efficiency. With both global food prices and concerns about food safety on the rise, technology is playing a more important role in the economics of the world’s food supply.

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Agricultural biotechnology is gaining traction worldwide as a method for improving crop yields. And thanks to new federal regulations dealing with food safety, information technology is becoming an increasingly important part of the equation.

Traits for Sustainability

Amid a rising global population, increasing the availability and sustainability of crops is a challenge for the farming industry.

“In 1960, on average one farmer fed 26 people per year. Now, a farmer feeds about 155 people per year,” says Jack Boyne, aspokesman for Bayer's CropScience unit. “The fact that the farming industry has risen to this challenge gives us room for optimism. But we know there will be 3 billion more people on this planet by 2050, and it’s no sure thing that that trend will continue.”

That’s why governments are embracing agricultural biotechnology, particularly insect-resistance traits and herbicide tolerance for crops, to help farmers improve their crop yields while keeping costs low.

“On average, about 35 percent of the global crop production is reduced by diseases and pests,” says Sharon Bomer Lauritsen, executive vice president, food and agriculture, at the Biotechnology Industry Organization. “Through the adoption of insect resistance, you reduce that damage caused to the crops. Through herbicide tolerance being incorporated into the plant, farmers can kill weeds more easily and still have a healthy crop.”

A new development involves incorporating drought tolerance into plants, a crucial issue for many regions in the world where water is in short supply. Drought-tolerant corn developed by Monsanto in collaboration with Germany’s BASF is awaiting approval from the U.S. Department of Agriculture.

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“The analogy is that instead of the corn gulping water it takes sips of water, and it still produces at the same yield potential as corn that has the normal amount of water that’s needed conventionally,” Lauritsen says.

Along with industry giants such as Monsanto, Bayer CropScience, and Syngenta, some smaller companies are leading the way in new agricultural biotechnology methods.

Arcadia Biosciences has been working technology that helps plants use nitrogen more efficiently, enabling farmers to use less nitrogen fertilizer — cutting costs and reducing the environmental impact — while generating the same yield.

Lauritsen notes that as of 2007, biotechnology has improved soybean yields by 30 percent per acre worldwide, while corn and canola yields increased 7.6 percent and 8.5 percent per acre, respectively. From 1996 to 2008, biotech crops have produced $52 billion of farm-level economic benefits, according to PG Economics, an agricultural industry consultant.

Much of the concern regarding the world’s food supply involves developing nations. While biotechnology has largely been adopted by developed Western countries, albeit with a fair amount of controversy, it is beginning to gain traction in the rest of the world.

Lauritsen points to golden rice as an example, which is being touted as a solution to some childhood health problems in developing regions. Beta carotene, which the body converts into vitamin A, is created naturally in the stalks and leaves of the rice plant, but not in the grain. With so-called golden rice, the beta carotene is expressed in the grain itself. It’s expected to be introduced in the Philippines in 2013.

“There’s a lot of optimism that this will do a lot to help prevent blindness,” Lauritsen says. “It’s estimated that there are 6,000 deaths per day globally due to vitamin A deficiency, so that is really looked upon as a real potential.”

Building a Smarter Supply Chain

While agricultural biotechnology is an obvious means for attempting to improve the world’s food supply, information technology is less so. But recent high-profile product recalls, along with new legislation, has put IT at the forefront.

In January, President Obama signed into law the Food Safety Modernization Act. Along with granting mandatory food recall powers to the Food and Drug Administration, the law requires the FDA to establish “a product tracing system to receive information that improves the capacity to effectively and rapidly track and trace food that is in the United States or offered for import into the United States.”

Track and trace technology involves barcodes, RFID tags, and condition sensors placed on produce to record supply chain data, which is collected and analyzed by traceability software. In the context of the food supply, traceability allows everyone within the supply chain to discover in near real time where a product originated, where it’s been, what other food it’s been in contact with, and what temperature it’s been exposed to.

Food Economics - A CNBC Special Report
Food Economics - A CNBC Special Report

In 2008, the FDA initially identified U.S.-grown tomatoes as the source of a salmonella outbreak. Later, it named jalapeño and serrano peppers from Mexico as the culprits. A thorough traceability solution would have prevented such confusion, not to mention the waste and cost associated with the initial tomato warning, says Steve Beier, IBM development director for traceability software (the episode cost the tomato industry an estimated $100 million).

An end-to-end traceability solution would allow for faster and more targeted recalls. It could determine, for example, if most of the contaminated food is still in a distribution center, allowing a company to pull the product before it reaches consumers. It could also narrow down the contamination to specific lots, eliminating the need to pull every product off the shelf.

“If your IT systems are able to know exactly who has it, it opens up lots of opportunities that you couldn’t do before,” Beier says.

Traceability also assists in cold chain management—tracking the temperature a particular product has been exposed to as it’s moved through the supply chain.

“We’ve been implementing systems with customers that provide instant alert notification based on predefined business thresholds that let supervisors at a warehouse know what’s going on with that product and try to prevent the spoilage from happening,” Beier says.

Beier notes that it will be another five to 10 years before end-to-end traceability solutions become ubiquitous. But eventually all links on the supply chain, large and small, will play a role.

“You’re not going to have a small farm in a shack in the middle of a field worrying about trying to instrument his automation line, because he doesn’t have such a thing,” Beier says. “But he does have the ability to use small handheld devices to scan his crates, cartons, containers, and so on. So he can be part of that in providing information to the supply chain at large in order to make it more efficient and responsive.”

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