Gene rules threaten $60m deal - Fonterra

By SIMON COLLINS

Fonterra has signed a $60 million contract to research genetic modification in the dairy industry - but says the high cost of regulations may force it to cancel the deal.

The cooperative, which represents 97 per cent of the NZ dairy industry, told a parliamentary committee in Auckland yesterday that it was still considering moving its genetic research overseas, despite the Government's approval for controlled field trials.

Fonterra Enterprises managing director Alexander Toldte said the cost of complete containment of field trials and destruction of "heritable" genetically modified material afterwards could make research costs in New Zealand prohibitive.

"We have just signed a New Zealand-based research joint venture that has a volume of $60 million of research in the next five years," he said.

"We have put into it a clause to be able to at any time stop that investment.

"Originally, we didn't have that. Part of the reason we put that in is we said that if the regulatory environment is difficult here, then we certainly don't want to invest that sort of money."

He was making submissions on the Hazardous Substances and New Organisms (Genetically Modified Organisms) Amendment Bill, which implements the tight regulatory system recommended by the Royal Commission on Genetic Modification.

Fonterra's written submission said a two-year ban on commercial release of genetically modified organisms "will lead to a loss of investment in biotechnology in general and agricultural biotechnology in particular".

Fonterra had "no plans involving the release of such organisms in the short term".

Dr Toldte said the two-year ban was not the issue, but any extension beyond two years would be.

He said the bill's requirement that all "heritable material" must be removed after a trial would seriously increase the costs of research.

"It's about the site remediation cost.

"If it costs $US500,000 ($1.2 million) in a research programme that in total was costing $1.5 million prior to that, then you have just added 30 per cent to the cost.



A scientist with Fonterra's biotech subsidiary ViaLactia, Dr Kieran Elborough, said Fonterra had two research projects with the crown-owned institute HortResearch, one with AgResearch, one with Forest Research and "several others with other science partners within New Zealand".

ViaLactia, based at the Auckland Medical School, has said that it is working on genetically modifying cows, to produce different varieties of milk, as well as the grass cows eat.

The submission said Australia "is a particularly attractive alternative to New Zealand for GM research and development".

"Similarly, the USA becomes more attractive because its environmental risk management regime is less prescriptive than that currently in and proposed for New Zealand, without compromising safety standards."

Dr Toldte said research had to be done within the next 18 months or competitors would get in first.

"We run in a very tight time-frame. From an investor point of view, if we can't capture that time-frame, why invest at all?"

Government MPs on the committee did not respond to Fonterra's threat. But Green MP Jeanette Fitzsimons told Dr Toldte that evolution had been driven over millions of years by genes transferred from one species to another through mutations. Dangerous mutations could occur through GM.

Dr Elborough replied: "Evolution is on a different time-scale. What you're talking about happened over millions of years. What we are talking about here [GM] happens over tens, maybe hundreds or thousands of years."

Ms Fitzsimons: "Yes, but that mutation could just as easily happen next year as in millions of years."

Dr Elborough: "Evolution doesn't happen at a particular time. One mutation does not change the identity of a gene. One gene on average is about 5000 units and a mutation is a single unit."

Ms Fitzsimons: "Let's not be pedantic. A mutation will change the expression of the genes."

Dr Elborough: "A mutation cannot change the expression of the genes. It is a single mutation in a genome of a billion units. It will be dealt with by the body's natural defence systems - that's how we have a defence against cancer ... "

Ms Fitzsimons: "But there will be some mutations that are not dealt with by the body's immune system."

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