Best, Michael J.

English

Research Papers in Economics

Journal of Agribusiness 24,1(Spring 2006):111S114
© 2006 Agricultural Economics Association of Georgia
BOOK REVIEW: Stuart Smyth, Peter W.B. Phillips,
William A. Kerr, and George G. Khachatourians. 
Regulating the Liabilities of Agricultural Biotechnology.
Cambridge, MA: CABI Publishing, 2004, xiii + 210pp.,
$85 hardcover. ISBN 0-85199-815-1.
Regulating the Liabilities of Agricultural Biotechnology offers an in-depth view of the
current and emerging trends related to the regulation of and liabilities from producing
and marketing genetically modified foods. Collectively, this book’s four University of
Saskatchewan authors have been involved in researching agricultural biotechnology
since its inception. Their book divides the issues related to the complex nature of
biotechnology liabilities into four key parts: (a) an analysis of the current situation,
which includes an introductory discussion of liability and agriculture; (b) a “diagnosis”;
(c) a current “prescription”; and (d) a “prognosis.”
The authors introduce the concept of liability and transformative technologies in their
first chapter, with an ensuing discussion of chaos. “Chaos” is an appropriate term here
because there is great potential for these technologies to change our lives in ways not yet
known, and continuation of the rapid emergence and adoption of these technologies is
likely. Although it is true these changes may create misgivings for consumers, entre-
preneurs, however, may find them full of opportunities.
While technological advancements in agriculture over the past 80 years have come
through machinery, chemicals, and genetics, the authors argue it is genetics that may
have fundamentally changed the industry. As the centerpiece of this book, liability from
the production and marketing of transgenic crops is currently an evolving concept.
Undoubtedly, agricultural producers and marketers will continue to face new issues
related to that liability in both the near-term and long-term future.
A brief history of these transformative technologies is offered by the authors. Only
30 years ago, recombinant DNA was identified, allowing for developments leading to
the first commercial planting of a GM crop—tobacco—in China in 1992. Shortly there-
after, the first commercial acreage of a GM crop for food was established in 1994 with
Calgene’s Flavrsavr™ tomato. Although this product was a commercial failure, other
crops like cotton, canola, potatoes, and maize followed in 1995. The number of GM crop
types continues to grow as an increasing number of transgenic fruits, vegetables, spices,
and flowers are being granted regulatory approval.
The United States, Canada, and the European Union have reacted differently to this
new technology. In North America, some estimates indicate that nearly 70% of all
processed foods have genetically modified food incorporated into them (a number which
shocked me initially). In the United States in 2003, over 80% of the soybeans grown
were transgenic. The release of these transgenic crops has created a split in agriculture.
One can see elements of this split when examining the North American organic market
where the fear is that if transgenic seeds are detected in organic shipments, then export112   Spring 2006 Journal of Agribusiness
markets will be jeopardized. According to the authors, it is these types of splits that give
rise to the potential liabilities of transformative technologies.
The analysis of agricultural biotechnology liability is framed in an institutional setting.
The authors build on the work of Picciotto (1995), who examined some of the institu-
tional fundamentals required for successful international development projects. That
methodology is used to first define the institutional actors in biotechnology and then to
demonstrate how they interact. These actors are identified as (a) the regulatory agencies,
(b) the private firms, and (c) the civil society.
The authors’ “diagnosis” comes with a closer examination of liability and agriculture.
With civil liability as the focus, the authors address issues such as negligence, strict
liability, nuisance, trespass, and pollution. I believe the existing case law identified in the
book reveals how far we have yet to go in terms of being able to successfully deal with
the rapidly developing challenges related to the production and marketing of biotech
crops. Before reading this book, I had hoped that some of the major issues noted above
had already been resolved, but this seems not to be the case. For example, the authors’
illustration involving proving trespass or nuisance (Hunter v. Canary Wharf Ltd., 1997)
appears to be a standard that will not be in favor of producers claiming damage to their
crops from GM pollen. Case law relating to strict liability (Rylands v. Fletcher, 1868)
is analyzed several times in an attempt to determine how the courts might view liability
coming from the production of GMO crops, and the results seem mixed.
As with most transformative technologies, technological advancements typically out-
pace the ability of government to regulate them. An inherent complication associated with
these new biotechnologies is that the level of risk cannot be known with certainty due
to the fact that complete scientific information may not be available. This creates diffi-
culty for those attempting to manage the liabilities that might be generated as a result of
the production and marketing of GM products. The authors apply Kuhn’s paradigm—i.e.,
the process by which a science is born and undergoes change and development—to agri-
cultural biotechnology. Kuhn’s paradigm of knowns and unknowns is used to demonstrate
the effects of policy and liability implications on the institutional actors. The authors use
rBST, BSE, and cross-pollination as examples in illustrating how this paradigm works.
It is presumed that once these knowns and unknowns are delineated, they can be
acknowledged and debated by policy makers, regulators, and even courts. However,
since emotion and rhetoric are often more influential than objective data, it will still be
difficult to identify risk and adjudicate liabilities.
In Part III of the book, the authors begin with a discussion of the regulatory issues
involved in dealing with a new transformative technology in the agricultural industry.
The obvious goal of this type of regulatory system should be to reject unsafe technol-
ogies and allow safe ones to enter the market. They go on to offer a brief review of the
scale and scope of the new transgenic technologies that have been introduced into
developed and developing country markets, and examine various theoretical approaches
to understanding risk analysis.
The “current prescriptions” discussion is continued by describing how international
institutions operate and how they react to change. According to the authors, the World
Trade Organization (WTO) and the BioSafety Protocol (BSP) appear to be the two com-
peting international organizations that will be the primary regulators of biotechnology.Book Review   113
These institutions are voluntary and generally react slowly to change. Consequently, it
is predicted that it will be some time before an international liability regime for biotech
products emerges, leading to less than smooth international relations over the regulation
of these products in the foreseeable future.
The potential for biological mechanisms to control GM liabilities is discussed as well.
Much of the economics literature on the gains from GM technology has acknowledged
the potential for “externalities” that could reduce the net value of these technologies. GM
crop liabilities stemming from gene flows can come from seeds left behind during harvest
or from pollen flow. The authors argue that these genetic use-restriction technologies
(“terminator genes”) provide some advantages by first acting as built-in safety mechan-
isms to prevent the escape of potentially harmful traits from new GM crops. Second,
they could prevent pirate growers from exploiting GM seeds and compounding risks, and
third, they might reduce the liabilities assigned to the seed growers by preventing
contamination with nontransgenic crops.
The authors conclude their discussion of current prescriptions with supply-chain
responses to liability and product differentiation strategies. Given the tenuous public
perception of GM products, consumers clearly need to be able to trust the systems that
bring these products to them. This gives rise to the need for identity-preserving produc-
tion and marketing (IPPM) systems. The authors state that the ultimate question facing
the industry is whether it makes any economic or commercial sense to develop (IPPM)
systems to serve the GM-free or other differentiated food markets. This is “where the
rubber meets the road,” and there seems to be limited information on the costs of such
systems.
The system requirements for input traits as well as output trait technologies are also
discussed, to give an idea of the scope of changes we are confronting. New supply chains
have created closer relationships among participants along the chain for these new GM
products. The authors provide a review of the evolving systems that allow for identity
preservation, traceability, and segregation of the new differentiated products created by
the biotechnology. These systems are seen as bridging the gap between the old system
of food production that delivers homogeneous commodities and the new differentiated
products desired by consumers. For years, the focus in production agriculture has been
on producing homogeneous products that reduce production and marketing costs. Now
the question has become: For what product characteristics are people willing to pay
premiums, and how can we deliver these product traits? The authors conclude that
efficient use of product differentiation systems can contribute greatly toward the reduction
of potential liabilities, thus making these systems cheaper than the alternative of failure.
They also note that on-farm assurance seems to be one potential area of weakness—having
contributed to the StarLink™ maize failure and thought to have challenged the Monsanto
and Aventis systems for HT canola.
The book’s final section, the “Prognosis,” discusses issues related to the liabilities of
plant-made pharmaceuticals and the challenge of handling the liabilities created by the
utilization of transformative technologies. The chapter on plant-made pharmaceuticals
demonstrates there may be substantial non-food value in these biotechnologies. The
Rylands v. Fletcher case is revisited in this section of the book. As asserted by the
authors, a strong argument could be made that these crops are not naturally occurring,114   Spring 2006 Journal of Agribusiness
and the pollen flow from these transgenic crops may be foreseeably inherently danger-
ous. The rationale they give is that production of these crops might lead to the presence
of pharmaceutical genes in crops destined for human consumption which might be
inherently dangerous. Such a scenario presumably would lead to different outcomes in
the courts.
Where do we go from here? The approach taken with traditional incremental technol-
ogies has been to do nothing; however, this strategy is unlikely to be optimal. The authors
suggest an alternative approach is to implement a multi-stakeholder strategy, engaging
the various groups in a constructive way, not mobilizing them, and with the public sector
having the most important role. The government needs to make fundamental contribu-
tions to the system—specifically, it should provide the rules that underpin the system.
According to the authors, the greatest threat to the public good comes when the private
interests are allowed to have opaque political or administrative systems and then exploit
their position to benefit themselves or their counterparts. Thus, creating transparent and
accountable structures that deliver credible, predictable, appropriate decisions about
technologies and products would protect the public health and environmental safety.
Finally, the authors argue that to limit the liabilities associated with new transformative
technologies, both the public and private actors need to become more open to engaging
with the appropriately structured collective actors.
Overall, I found this book to be informative about the fast-paced developments within
the biotech industry as it relates to agriculture. The information provided in the book’s
latter chapters regarding the supply-chain responses to liabilities and product differ-
entiation strategies would be especially insightful for those interested in the areas of
agricultural marketing and international trade. With its detailed discussions on the many
problems now facing the food industry related to the production and marketing of
genetically modified crops, this book would also serve as useful reading for graduate
courses in agricultural economics.
Michael J. Best
Tennessee Tech University

BOOK REVIEW: Stuart Smyth, Peter W.B. Phillips, William A. Kerr, and George G. Khachatourians. Regulating the Liabilities of Agricultural Biotechnology.

BOOK REVIEW: Stuart Smyth, Peter W.B. Phillips, William A. Kerr, and George G. Khachatourians. Regulating the Liabilities of Agricultural Biotechnology.

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