Pharmaceutical Flax Boon or Bust
Opinion Divided Over Whether Agragen Project Will Be a Help or Hindrance to Flax Industry
ANN BAILEY / Grand Forks Herald 9may2005
A proposal to make pharmaceutical products from North Dakota flax shows a lot of promise, its supporters say, but the project has run into strong opposition from the state's flax industry.
Agragen, a new company that has leased space in a technology park building in Grand Forks, N.D., has proposed to make albumin and a recombinant form of omega-3 fatty acids from flax grown in North Dakota. North Dakota farmers annually grow more than 90 percent of the U.S. flax supply.
Research on the Agragen project is under way and shows the market potential for the plant-made pharmaceuticals or PMPs would be a big boon to the flax industry in North Dakota, says Sam Huttenbauer Jr., an Agragen owner and Cincinnati entrepreneur.
But AmeriFlax, a branch of the North Dakota Oilseed Council, which determines use of the producer checkoff, has voiced opposition to the Agragen project and issued a prepared statement expressing its concerns.
The statement reads in part: " ... Plant-made pharmaceuticals and industrial products are not intended to be cultivated for food and feed use, and are not required to seek food and feed approvals. Therefore, their presence at any level is currently not allowed in products meant for consumption by humans or animals. Under current USDA regulatory standards, this zero tolerance creates an intolerable risk for U.S. producers and food processors.
"AmeriFlax has significant concern that current confinement systems for controlling the seed, pollen and output of plant-made pharmaceuticals and industrial products cannot control 100 percent of the genetic material of the newly developed organism or prevent deliberate evasion of the security protocol.
"AmeriFlax believes the risk of adulteration from genetic material not approved for food and feed entering the food chain is unacceptable ... ."
Huttenbauer Jr., a Harvard business school graduate with a history in agriculture-related projects, acknowledges the flax farmers' concerns, but believes the Agragen project could provide farmers across North Dakota with an opportunity to profit from lucrative markets which would yield them big profits.
Huttenbauer Jr. is the former owner of United Beef Producers, a 50,000-head beef cattle feeding operation in Texas, and former owner of a corporate farming operation in Texas and New Mexico. He also has headed several businesses including E. Huttenbauer and Son, Huttenbauer Foods, High Pressure Dynamics and InterNutra, which recently was sold to Diamond Crystal, a division of Hormel Foods.
Huttenbauer Jr., his son, Sam Huttenbauer III, also of Cincinnati, and Eric Murphy, Agragen's chief scientist and a University of North Dakota Medial School researcher in pharmacology, have been meeting with members of AmeriFlax about the Agragen project since January 2004, says Ernie Hoffert, AmeriFlax secretary-treasurer.
Hoffert and some other North Dakota flax farmers worry that the risk of contamination could destroy the food and feed market they have worked to build. Hoffert annually grows about 1,000 acres of conventional flax on his farm near Carrington, N.D., and is the state's largest organic flax buyer.
Ventria Biosciences, a California company, this year received a permit from USDA to grow 200 acres of genetically modified rice in southeast Missouri, where the bulk of the state's conventional rice is grown. The company's plan was met with resistance from environmental groups, food companies, farmers and rice buyers Anheuser-Busch and Riceland Foods, Hoffert says.
Anheuser-Busch initially threatened to boycott all Missouri rice production, but later agreed to continue buying rice if the PMP rice was grown at least 120 miles from commercial areas. In late April, Ventria announced it has given up plans to grow the PMP rice this year because it doesn't believe it can obtain a revised permit from USDA in time for this growing season, the Associated Press says.
Huttenbauer is aware of Ventria and of the controversy over the PMP rice in Missouri but doesn't view it as a negative.
"I'm familiar with Ventria and some of the folks there. I think Ventria is plowing some new ground because they're probably the first field-based transgenic of any magnitude.
"Resistance is not an unhealthy thing. We anticipate resistance. I don't think it would be good if there wasn't resistance because I think everyone has to be involved in the acceptance of the transgenic crops," Huttenbauer says.
AmeriFlax views the controversy over PMPs
The response of Anheuser-Busch and Riceland Food Inc. to the PMP rice illustrates the concern food buyers have about PMPs and demonstrates what could happen to flax food and feed sales if Agragen's project goes forward, Hoffert says.
"This is the exact response that we will
get from the food and feed industry."
When Agragen initially approached flax farmers with its PMP project, he wasn't aware of the zero tolerance stance that organizations such as the North American Miller's Association have taken, Hoffert says. Because that organization and others, including the Grocery Manufacturers of America, have expressed concern about PMP production, Hoffert believes that a project such as Agragen's could jeopardize existing markets for flax.
"There's nothing to gain and everything to lose," he says. "All of our new demand is in food and feed, and that's where the risk is.
"We aren't willing to run the risk of
possible contamination in light of zero tolerance for commingling."
But Agragen representatives believe public perception of plant-made pharmaceuticals, even in the European Union, which traditionally has been opposed to genetically modified organisms, is changing.
Besides albumin, which would be used in blood transfusions for trauma patients, such as victims of vehicular accidents and burn patients, Agragen also plans to produce a recombinant form of omega-3 fatty acids similar to the kind found in fish oil.
Greenpeace, which normally opposes GMOs, was quoted in a recent news report saying it favors PMP production of a recombinant form of omega-3, Murphy says.
"It's a key element because Greenpeace is a
driving force behind" opposition to GMO crops, he says.
Meanwhile, "the Europeans are far more loose about it now than they were two years ago, even a year ago," he says.
Huttenbauer says Agragen is prepared to work with farmers in a "closed-loop system" in which the company would supply the farmers with of the equipment to produce and harvest the pharmaceutical flax.
Under USDA's Animal and Plant Heath Inspection Service regulations, PMPs in test plots must follow a stringent set of rules that include dedicating planting and harvesting equipment for use only in PMP production and storing the equipment in a locked building.
Besides growing the plots according to APHIS regulations, Agragen also plans to work with the North Dakota Agriculture Department, Murphy says. He and the Huttenbauers have worked hard to talk to people involved in North Dakota's agricultural industry, including farmers, from the inception of the Agragen project.
The opposition from flax growers comes mostly from organic producers who are concerned about losing their markets, Murphy says, noting that the Agragen project has had strong support from some nonorganic farmers.
But Hoffert says the potential for economic damage is not limited to the organic flax industry or even to the conventional flax industry.
"When they talk about flax farmers in North Dakota, there are no flax farmers. The only thing that segregates a flax farmer from a nonflax farmer is a bag of flax seed. It's not like a sugar beet or potato grower," who need special equipment to produce their crops.
North Dakota Lt. Gov. Jack Dalrymple says the increasing popularity of flax with North Dakota farmers may present a challenge for Agragen. The large increase in flax acres in the state may make it hard to produce the PMP flax in isolation, he says.
When Agragen initially proposed its project, there were far fewer flax acres in the state that there are now, he says. Last year, flax acreage rose to 490,000 and this year, farmers are projected to plant 850,000, according to the North Dakota Agricultural Statistics Service.
"I'm hearing farmers all over the state, including the Red River Valley, saying they're planting some flax," Dalrymple says. "It (isolation) will be more difficult than it was a couple of years ago."
But the positive side of the project would be the potential return on investments the PMP flax could offer farmers, Dalrymple says.
Doug Goehring, a Menoken, N.D., farmer, believes the future of agriculture is in nutraceuticals and pharmaceuticals produced from plants.
Goehring shares some of the concerns other farmers have had about the potential risk for contamination of conventional crops by PMP crops, but he believes issues such as segregation and identity preservation can be "sorted out" when Agragen makes its final proposal to farmers. He believes PMPs will gain public acceptance because they have health benefits.
Benefit or burden?
"I think the whole thing behind biotech when you listen and talk with consumers is, 'What benefits are there for me? ... Anytime you can show there is a benefit and it will help us have a better, lifestyle, a healthier happier lifestyle ... ."
Paul Sproule, a Grand Forks farmer and owner of P.D. Sproule Co. Inc., also is interested in learning more about Agragen's project.
"I'm for it. I think it's exciting, the
things they can do with crops," Sproule says.
But Hoffert says pursuing the Agragen project will jeopardize the markets that already exist for North Dakota-grown flax.
"Are we going to risk our new and emerging markets for the flax on something that hasn't even been licensed yet? This is absurd," Hoffert says.
But the market for Agragen products do exist, say Murphy and Huttenbauer. There already is a $1.7 billion market for omega-3 fish oil, Murphy says. Meanwhile, albumin is in great demand for use in trauma cases.
"The use of this protein as a pharmaceutical already is done. Making it in large quantities in a recombinant fashion has not been done," Murphy says. "There is a growing market for a need for a recombinant form."
"The market is there," Huttenbauer. says. "We're not creating a cancer drug that may or may not work. There is a market for albumin every day ... . It is an expanding market."
The albumin on the market, however, is found in human blood protein, not manufactured from plants. Although research on producing albumin from plants has been conducted for several years on several different crops, including tobacco, no PMPs grown to produce albumin - or any other type of plant-made pharmaceutical - have to date been approved by the U.S. Food and Drug Administration.
Agragen conducted laboratory research on producing albumin from tobacco, but discontinued it after it became evident that other biotechnology firms were having trouble harvesting and processing the seedless crop, Huttenbauer says.
The Huttenbauers decided to move their product to North Dakota and concentrate their efforts on producing a PMP from flax because they wanted to help the state's farmers, Huttenbauer says.
His involvement in agriculture has shown him that "the profitability in farming is passed up the food chain to the manufacturers and retailers," he says. "A limited amount flows back to the people also doing the work in the field. We see this as an opportunity to pass on some of this profitability."
Both Huttenbauer and Murphy have worked to gather input from farmers and others in the North Dakota agriculture industry, they say.
But Hoffert believes those concerns, such as the potential he believes there is for pollination drift from the PMP flax to other crops, have fallen on deaf ears.
"I tell them this stuff all the time and they tell me it's not a problem," Hoffert says. "They say we'll take care of this stuff when we go along. They don't listen to the scientists in North Dakota."
Ken Grafton, director of the North Dakota State University College of Agricultural Food Systems and Natural Resources and Experiment Station in Fargo, says researchers at his university are not currently working with Agragen.
"Several of our scientists that potentially could be involved have expressed concern about the project," he says. After several months of negotiations with Agragen, the NDSU AgBiotechnology Center of Excellence decided not to pursue the company's project, Grafton says.
"We evaluated the proposal that Agragen submitted, and we felt it did not meet the AgBiotechnology Center's framework," Grafton says. However, that does not mean the center is opposed to PMP research, in general, he says.
"We are very interested in
bio-pharmaceutical new uses of existing crops as well as other novel
North Dakota Agriculture Commissioner Roger Johnson says Agragen has significant regulatory issues to overcome. Still, he hopes the project meets with success.
"This is brand-new technology. I think with new technology there's more risk. With more risk, there's more opportunity to lose your money faster or make your money faster."
Potential investors in Agragen should consider the project's market potential, just as they should do with any other agricultural investment opportunity, and weigh the potential risks and benefits, Johnson says.
"I would just go into it with my eyes wide open, just like you do any other investment opportunity. I hope it's successful."
Eugene Nicholas, who chairs the North Dakota House Agriculture Committee and is an outspoken proponent of genetically modified crops, says Agragen is providing North Dakota residents with an opportunity to look at a new and innovative product and determine whether it is compatible with the state's agriculture.
"The risk-to-reward ratio may be worth it. That's what will come out as time goes on."
source: http://www.grandforks.com/mld/grandforks/business/11599407.htm 9may2005