AGRICULTURAL INNOVATION IN THE 21ST CENTURY: OPTIMISTIC SCIENCE MEETS

GLOBAL DEMAND* JAMES C. BOREL EXECUTIVE VICE PRESIDENT WITH RESPONSIBILITY FOR DUPONT CROP PROTECTION AND PIONEER, DUPONT FALL 2010

I. AGRICULTURE: THE OPTIMISTIC SCIENCE Economics is often called the “dismal science.” Perhaps the most famous example came when the Reverend Thomas Malthus said that the human race would face horrifying starvation as the growth of population inevitably exceeded the growth of our food supply. He was wrong. Instead we have produced more food, for more people, and we have done it with less. Agricultural productivity has increased by almost any measure you care to use. And it was enabled by science. Science, for example, that led to the creation of hybrid corn by Henry Wallace, the founder of DuPont’s Pioneer Hi-Bred business. Or the science that Norman Borlaug deployed to power the Green Revolution that saved an estimated one billion lives. Or the science of modern farm equipment that has enabled farmers to cultivate more acres in less time and with less labor. And all of this science originated from creative people and was then put to use by innovative farmers who recognized that progress requires the adoption of new approaches. There is, as I will explain in greater detail, more to be done, especially in the developed world. But we have the tools to be successful in meeting the great global challenge of our time – to essentially double agricultural production to meet the demands of the nine billion people who will crowd our planet in the year 2050. This is why I think of what we do in agriculture as the “optimistic science.” The science in which my company invests over half of our $1.4 billion annual R&D budget toward increasing global food production. This includes developing better seeds that produce higher yields, discovering better products for controlling crop pests, providing food ingredients that benefit consumers and applying cutting-edge technology to the food safety challenge.

                                                            * This essay is an expanded version of remarks delivered by Mr. Borel at the Federal Reserve Bank of Kansas City on June 8, 2010.  

 

2

To date, agricultural production has worked hard to keep pace with population and economic progress in the developing world. But, in the year 2011, our global population will exceed seven billion people. And it won’t stop then. By 2050, the globe will be home to more than nine billion people.1 The need is great. Increased, sustainable productivity will become necessary as available arable land and resources shift, remain unchanged, or in some areas, decrease. The production of food must accompany environmental and economic progress, as sustainable development integrates social, economic and environmental needs to develop better solutions to today’s problems (including climate change), while also providing good stewardship of the resources needed for the future. Two centuries ago, Malthus was wrong, but he wasn’t asking the wrong question. The question today is how we will feed nine billion people. The answer is clear: only by nearly doubling food production – in a sustainable way – and ensuring that the food is available to the people who need it. And, of course, we also need agriculture to produce more and more of our energy supply. Roughly one third of the world’s population is employed by agriculture2 and nearly 40 percent of the global landscape is arable.3 We can feed ourselves and we can fuel renewable energy to meet the demands of 2050. But to do that we need to get the economics right; we must incentivize the right kind of private behavior (and do it in the right ways); we need governments to support research while promoting competitive, free markets. Today, that optimism must be combined with resolve. As this essay will explain, we must begin by re-thinking the way in which we do science, to place more emphasis on the use of collective ingenuity. We must ensure that innovation works in concert with, and advances, economic trends, to grow more crops without tumbling into the chasm of low commodity prices. (Indeed, the recent upward trend in commodity prices that has just led the Chinese government to impose price controls on food is a stark reminder of the new economics of agricultural production – demand is in the hunt for supply.) Finally, we must work to ensure that global demand is met by farmers everywhere – which will require focused attention on the challenges to agricultural productivity in the developing world.

II. THE ORIGIN OF A SEED To begin, however, it is important to understand how a seed is developed. The production of modern seed begins with a base of “elite germplasm,” plant genetic material that has been improved through decades of traditional breeding to produce the highest yields, the greatest

                                                            1 The World Bank, World Development Indicators. (April 2009) 2 Citizen Watch and Resources Development Society (http://cwards.org/Agriculture.aspx) 3 United Nations, World Population Prospects: The 2008 Revision 

 

3

resistance to pests, durability in particular conditions and consistency of performance year after year. In addition, new molecular breeding techniques have been incorporated into plant breeding, accelerating the process. Researchers are now able to scan large and diverse gene pools to select favorable traits within a crop species in a fraction of the time of traditional methods. Biotech trait development is a more recent and different process, and the result can produce a step change in yield improvement. Researchers work to identify genes that provide the desired functionality, such as herbicide tolerance or insect resistance. Genes can be found in plants and species other than the crop of interest and, through modern genetic technology, transferred into that crop’s germplasm. Once a gene of interest has been identified, it is incorporated into the elite germplasm through a multi-year process to create a marketable seed product. Traits are not commercially valuable unless they are combined with the highest-performing germplasm in order to be best-suited to the individual needs of the farmers who will ultimately plant the crops. Agriculture biotechnology has revolutionized farming in the U.S. by enabling farmers to better protect crops from certain insects, herbicides and other soil and plant conditions that evolve over time. Consider that between 1996 and 2008, the total number of acres planted worldwide with genetically modified biotech seed increased from 4.2 million to two billion acres.4 Simply put, the food we eat is a human invention – no doubt the most successful invention in human history.5 And, today, the science of growing food combines advances in conventional breeding with innovations unleashed through the advent of biotechnology and advanced processes that build more robust seeds. And, like all science, the science of growing food depends not just on the advance of knowledge; it depends on the efforts of people. There are many reasons why we should

                                                            4 Graph: “Global Area of Biotech Crops Million Hectares (1996-2009) Clive James (2010) 5 Thomas Standage, An Edible History of Humanity, Walker & Company (May 12, 2009). 

 

4

embrace an optimistic vision of science in agriculture. And then shape our efforts – public and private, local and international – to make it so.

III. COLLABORATIVE INGENUITY CAN BOOST AGRICULTURAL PRODUCTIVITY

Through global collaboration and innovation, we can increase the future productivity of agriculture even more than past history would suggest. We can meet the world’s demand for more food – and we can do it while delivering new consumer benefits and raising the standards of environmental stewardship. And, with that, we can avoid catastrophic hunger and all that it brings, including civil unrest. We can empower farmers to be productive in all parts of the world. In short, we can set the stage for the next agricultural revolution. To do that, we must create a global culture of collaborative ingenuity. Because agriculture is an innovation industry. As an innovation industry, we should adopt principles of creativity from our agricultural past and other fields in our technological present. To put it very simply: we need farmers, we need governments and we need the agricultural industry to all work together, each supporting innovation in the science of agriculture. With collaborative ingenuity, I’m confident we will build solutions that will surpass current agricultural trend lines. In this case, historical trends are not, I believe, a speed limit on the future. We should ask ourselves:

• Is the ability to improve yield with innovation an opportunity to better meet world demand?

• Is the shift to more nutritional foods a way to add “value” to commodity pricing? • Can we embrace environmental and sustainable solutions as a way to do more with

fewer natural resources, with the goal, of course, of increasing efficiency in agriculture? • Can we ensure that food reaches the people who need it?

I believe that the answer to each of these questions is “Yes.” But optimism does not mean that we should ignore challenges. We can fall short of predictions as well as exceed them. Here’s another question: “Can we defeat the challenge of new Roundup®-resistant weeds or ‘superweeds’ (as the popular press refers to them) that shrug off the impact of existing herbicides and threaten agricultural productivity?” I believe the answer to that question is also “Yes.”

 

5

But there is, of course, a big “if” – actually a series of “ifs.” We can meet the global challenges of food only if we embrace contributions from all sources, if we empower collaboration, if we ensure that farmers can choose the seeds and other products that work best for them and if we enhance the ability of farmers in all parts of the world to be as productive as possible. I believe that this can be done, starting, first and foremost, with the people who farm our land. In other words, the innovation challenge can be summed up in two principles: First, we must produce more, everywhere, in increasingly sustainable ways. Second, it must be available – truly available – to those who need it. How can that be achieved? On the science side, today, seed companies use a sophisticated toolkit, combining advances in genetics to continuously breed better germplasm for diverse conditions, and technological advances in biotechnology to incorporate new input and output traits. The results include:

• Greater Yield: Biotechnology used to accelerate plant breeding progress is beginning to accelerate the rate of genetic gain. Additional biotech traits, especially in certain combinations, can boost yield. For example, combining our Optimum®GAT® trait in soybeans with the traditional glyphosate-resistant trait provides a 6 percent increase in yield over today’s commercial varieties with Roundup Ready® alone. This would be worth more than $2 billion of increased productivity annually for U.S. soybean growers.6

• Benefits to Consumers: In June 2010, USDA gave final approval for our Plenish™ high oleic soybean product, which will provide nutritionally enhanced oil with the highest oleic content in soybeans under commercial development, meeting food industry needs and consumer demand for a soy-based trans-fat solution with increased functionality and lower saturated fat. 

• Increased Flexibility and Control: In May 2010, the EPA approved our Optimum® AcreMax™ product, which is the first in-the-bag solution for insect refuge management, providing growers increased convenience, reduced refuge and an additional tool for maximizing field-by-field productivity.

• Environmental Sustainability: We are using advanced genetics and biotech expertise to develop drought tolerance, nitrogen use efficiency and new forms of insect and disease resistance.

                                                            6 Optimum®, GAT®, Plenish™ and AcreMax™ are trademarks of Pioneer Hi-Bred. Roundup Ready® is a registered trademark of Monsanto Company. 

 

6

• Defense Against New Threats: Combining different biotech traits in a single seed allows farmers greater flexibility in the use of herbicides – an important way to combat the rise of weeds resistant to Roundup® herbicide, or “superweeds.”

But improvements isolated to science and technology will not be enough. Innovation requires collaboration – the ability to harness our collective ingenuity and resources. A single plant, a single farmer, even a single computer, makes for very small advances. But a field of plants, a community of farmers and a network of computers creates new forms of value and boosts economic productivity and growth. So what does collaboration look like in agriculture? It begins, of course, with incentives – chief among them are intellectual property rights and open, competitive markets. The right incentives not only encourage single companies to invent, they encourage companies to share the benefits of their inventions with each other. Intellectual property rights assure inventors that they can work with others without fear of losing the legitimate advantage of their invention. There are many places where the greater protection of legitimate intellectual property rights would lead to greater productivity, as more technologies would become available. Open, competitive markets mean that inventors can reach customers with new innovations. These markets require both domestic competition policies and, of course, an international emphasis on enabling trade. Similarly, the applicable regulatory requirements would better foster innovation if they were speedier, squarely based in science and harmonized across the globe, so that farmers are not caught between shifting and discordant standards. With the right mechanisms in place, seed companies will be able to “build” the seeds that have the best combination of components for their customers. Collaboration also works between research universities and seed companies. The important research done in universities can be invaluable in finding new approaches to seed technology and crop production management. Farmers play an equally critical role. By choosing the best seed for their farms, while broadly encouraging better farming practices and better governmental policies, farmers can help encourage better farming practices and can influence their governments to support increased productivity. Indeed, Pioneer has been working in developing countries for more than 50 years.

 

7

The difference between a farmer having access to higher yielding seeds – or not – can often be traced to the presence or lack of supporting structures or policies. Innovation is not “wishful thinking.” Think of the history of American agriculture – a legacy of experimentation, creativity and education. Diversity of plants. Breeding of crops. Competition in the market. Only within a healthy marketplace will farmers reap the benefits of unlocked innovation, fair and open competition, increased choice and continued growth in international trade. Unlocking innovation will result in the ability of multiple companies to offer differentiated products and services in an open marketplace promoting agricultural productivity and economic efficiency as companies strive to compete with each other in pricing, quality and above all, innovation. Here’s an example from a different field. Think about Aspirin. When Bayer’s patent on acetylsalicylic acid expired, researchers and pharmaceutical companies were able to use it as a key input in a variety of new branded and generic products from over-the-counter cold medicine to heart attack prevention pills. That meant that the innovation was delivered once, when the patent was issued, but then again when generic-based competition came to market – offering new combinations of ingredients. In other words, fair and open competition spurs companies to do their best – to invest in research and development, to listen carefully to their customers and to create new forms of value that benefit farmers and consumers worldwide. In a competitive market, prices are driven by the value delivered. And of course, we must continue to foster growth in international trade of agricultural goods. This growth must start at home, including at the homestead of the family farm. Thus, the ability of American farmers to meet local regulatory requirements through access to regulatory data impacts an important sector of U.S. exports. Farmers are dependent on the continued ability to export products and they must have confidence that the products they produce will continue to be accepted into the international grain channel. Agriculture can prosper if collective ingenuity is empowered. With collaboration and access to capital (and the intellectual property rights that make that possible). With smart governmental policies, ranging from agricultural extension to trade to wise monetary policy. With substantial commitments of R&D from businesses that take risks in order to achieve reward.

 

8

IV. ECONOMIC TRENDS IN AGRICULTURE FAVOR INNOVATION

No one understands the nature of supply and demand better than a farmer. Produce more than the market wants, and prices go down. Produce less and prices go up. Produce too little and total revenue declines. Innovation that boosts productivity might therefore, be viewed as bad for prices. But I do not think this is true, because demand is on the rise. We saw that in the food unrest of 2008 that spilled across continents.7 And in the recent decision by the Chinese government to impose price controls on food in order to curb rising prices.8

Not only is the global population growing, the composition of global demand is changing. Most of our population growth occurs in less economically developed places. In 2005, for instance, we added about 81 million people to the globe and about 79.5 million were in the developing world. Urban areas are growing especially quickly.9 And the rising income in countries like India and China drives demand for more protein in the diet, which in turn demands more grain. In addition, the need for energy and energy security is increasing, and agriculture can be an important source of

renewable energy.10 These are all fundamental drivers of demand and there is no reason to believe they will slacken. Greater agricultural production will not, therefore, automatically result in lower prices. In fact, we need to drive production increases to avoid price spikes like we saw in 2008. Think about                                                             7 David Streitfield, “Farmers struggle to keep up with world food demand.” The New York Times. (3/9/08) 8 Jeff Wilson, “Corn, Soybeans Rise on Expectations China Food Demand to Climb” Bloomberg Businessweek. (11/18/10) 9 Population Reference Bureau, 2005 World Population Data Sheet; United Nations Food and Agriculture Organization, The Importance of Food Quality and Safety for Developing Countries 10 Graph: “World Population Growth, Population Projections, and Agricultural Land” U.S. Bureau of the Census, IFPRI (Rosegrant, Agcaoili-Sombilla, and Perez); FAO (Alexandratos) 

 

9

corn prices in the U.S. over the past century. From an average of 65 cents per bushel in the opening years of the 20th century, we reached a plateau from 2007-2009, with an average price of about $3.95/bushel. The long-term trends of growth in population and per-capita income will continue to support agricultural demand. Consumption of grains, meat and fiber has remained firm, even with a very volatile price environment since the economic crisis in 2008. Corn demand is expected to be sustained by continuing demand for ethanol. The result favors innovation. Increased demand and the current level of pricing will act as a strong driver of improved agricultural productivity. And greater productivity is on the horizon. For example, the National Corn Growers Association holds annual yield contests. Already the top yielding hybrids deliver more than 300 bushels/acre,11 compared to the record average yield today of about 165 bushels. Perhaps more importantly, we are working toward doubling the rate of genetic gain before the end of this decade using new breeding and biotechnology tools. This achievement is, however, only the beginning. Although the conventional baseline suggests that corn yield will reach 180 acres/bushel in 2018, I believe that much more is within our reach. What’s true for corn is also true for soybeans – another mainstay of production agriculture. The U.S. average for soybeans is about 42 bushels/acre, but soybeans have produced as many as 155 bushels. The sorghum average is about 70 bushels/acre but yield has reached 216 bushels. So while some studies predict that increasing yields will lower the price of commodities, it is worth noting that current projections and estimates based on historical data do not account for our changing world dynamics, the drastic increase in demand or the impact of emerging technologies. Productivity will continue to rise as long as demand exceeds or outstrips supply. I believe that the world will consume all that we can produce. The economics, in other words, support innovation.

                                                            11 National Corn Growers Association 2009 Yield Corn Contest 

 

10

V. AGRICULTURAL INNOVATION EVERYWHERE: SUSTAINABLE AGRICULTURE BECOMES SELF-SUSTAINING

To double agricultural output by 2050 is, by itself, a daunting challenge. But that is not all. Today, about one billion people – roughly 14 percent of the world’s population – live in hunger.12 Most are in developing nations but they are all, in a real sense, our neighbors. Think of it in this way: If the 100 people you know best represented the population of the Earth, then 14 of them would simply not be able to find enough food to feed themselves. Not just for one day, but every day. Where would those 14 people get food? Even in today’s era of international trade and the strength of U.S. exports, it may come as a surprise that 85 percent of all food never crosses a single international border.13 It is grown and consumed within the same nation. That means that the bulk of food to feed the hungry must come from the place where the hungry live.

Indeed, the geography of agriculture is too-often overlooked. We speak of the looming food “gap” between production and population. We don’t speak enough of the potential “mismatch” between the location of production and the location of people. Food only feeds those who have access to it and the income to afford it.14 The

potential for an agricultural “mismatch” can only be cured by encouraging productivity by all, by ensuring that food flows freely across the globe to places where it is needed and by ensuring that economic growth supports both local production and the purchase of imports. This will require changes in trade policy, food aid policy, international development policy and many other areas.                                                             12 United Nations Food and Agriculture Organization 13 Ibid. 14 Graph: Note: Commodities = Wheat, Rice, Corn and Soybeans. Developed are categorized as ag developed countries in N. & S. America, Developed Asia & Europe. Africa and rapidly developing Asia are in the developing category. Projections to 2050 are internal DuPont Projections. 

 

11

Not surprisingly, new types of collaboration are forming between foundations, governments and private companies with an aim to accelerate the deployment of key technology advances to regions where the markets are today less developed, but where advances could help prime the pump of both agricultural and economic development. Building better farms is a critical first step. For example, farmers in Africa often have little access to fertilizer and must plant on degraded soils. Recognizing this need, we’ve partnered with the Kenya Agricultural Research Institute (KARI), the South African Agricultural Research Center (ARC), USAID and CIMMYT, a Consultative Group on International Agricultural Research, to develop and deploy maize hybrids that have improved nitrogen use efficiency through the use of tools like modern breeding and biotechnology. These hybrids are projected to increase yields by 30 to 50 percent. Once they start to grow, crops need to be protected against threats like insects and fungus. DuPont was recently recognized with an award for environmental excellence in Pakistan, for example, for its Coragen™ insecticide, which delivers long-lasting, broad spectrum control of targeted pests. And then harvests must be able to reach consumers. Here’s a basic example. In Langkat, Indonesia, a new bridge was built that provides farmers a way to transport their harvest so that food, once grown, is not wasted. That is a simple way to enhance productivity. But as more and more production must occur in the developing world to avoid a mismatch of production and people, this kind of example is an important one. In other words, it is easy enough to discern the benefits that innovation will convey. And it is obvious that they must be widely shared. But the great challenge is how to build an ecosystem of creative ingenuity so that sustainable agriculture becomes self-sustaining globally. In other words, how do we ensure that specific steps yield not just a year or two of better crops but a virtuous cycle of productivity and success? The answer is not easy. DuPont has asked a distinguished panel of experts to constitute an independent Advisory Committee on Agricultural Innovation & Productivity for the 21st Century, Chaired by former Senator Tom Daschle. Its members include Charlotte Hebebrand, chief executive of the International Food & Agricultural Policy Council; Jo Luck, World Food Price Laureate and president of Heifer International; J.B. Penn, chief economist of John Deere &

 

12

Co.; and Pedro Sanchez, 2002 World Food Prize Laureate and director of Tropical Agriculture at Columbia University’s Earth Institute. That Committee’s report, due in mid-2011, will recommend both public policy priorities and new business practices to build global food security. Even now, however, we can begin to identify some of the fundamental building blocks of a self-sustained agricultural system that will thrive globally. They include:

• Innovation that boosts productivity while helping to increase the nutritional value of locally adapted crops. That includes tropical crops like sorghum, as well as adapting commodity crops like corn to developing markets, so that crops can be used in the development of the more stable food systems characteristic of the developed world. Innovation comes from better practices, better seeds and better functioning markets. Innovation is often embodied in intellectual-property rights that incent needed investment.

• Eliminating waste. About 30 percent of all food is wasted, and that average holds for very different societies around the world, ranging from un-eaten restaurant meals in developed nations to the problem, illustrated above, of barriers that keep harvests from reaching markets in some developing nations.

• Creating and enhancing the core rules of civil society. For example, farmers’ efforts to secure financing can be complicated in places where legal title to land is unclear. Similarly, widespread civil unrest is antithetical to the stability that agriculture demands.

• Infrastructure. Of course, no farmer can succeed without access to water, without the roads to bring crops to market and without processing, like farm-to-market grain handling and storage. But today, information technology is also an agricultural tool, especially in places where travel may be difficult but mobile telephony is widely available; one that allows farmers to decide whether current prices are acceptable before setting out on a long trip to the nearest markets.

• New business models. The techniques that lead to the greatest efficiencies in the developed world may not be directly applicable to all farmers, especially to small landholders who are so prevalent in Africa and Southern Asia. Support is needed for approaches that work locally. Here’s an example from Africa. The seed industry in Africa is weak. So we helped create an “Alliance for the Seed Industry in East and Southern Africa,” that will develop a competitive seed industry. One that will produce high-quality seeds for small-holders while supporting the creation of a stronger agricultural infrastructure. One that will enhance the competitiveness of seed companies in East and Southern Africa and support the creation of agricultural infrastructure, which will sustain the path of achievement.

• Education. In the history of American innovation, agricultural extension stands tall – a basic means of bringing new techniques to farmers who needed them. That lesson is just as applicable internationally, as new crop techniques can be shared with local farmers

 

13

and as agricultural extension is made more effective by an emphasis on “training the trainers.” In the Internet age, it is equally possible to imagine farmers in one part of the world exchanging lessons with farmers in another. For example, farmers in Eastern Europe are experimenting with management techniques that bring greater efficiencies to smaller farms by, for example, dividing the key operational tasks, like planting and marketing, among themselves. That lesson could be easily shared via a farmer’s global information network.

• Governmental policies of the kind discussed above that incentivize innovation and competition through the protection of legitimate intellectual property rights, science-based regulation and global standards that work aside each other to speed benefits to farmers and consumers.

And there is one more key ingredient – a change in the way we all think. Innovation is, after all, an act of imagination and leadership. So we need to see local production everywhere as a necessity, not a threat to the developed world or to the established prices of commodity crops. We need to understand that leadership must be both local, as local as planting a seed, and global, recognizing the shared demands that our growing population places on our planet. For leaders in agriculture, innovation is an opportunity, not a burden.

VI. CONCLUSION: HARNESSING THE CREATIVITY OF COLLABORATION

All of this explains why I believe that farmers will rise to the challenge of producing enough food for the world, growing economies here and around the globe in the process. With collaborative innovation as our touchstone, global agriculture can:

• Employ biotechnology, conventional breeding techniques and biological diversity to stay one step ahead of weeds resistant to Roundup® herbicide and similar challenges from Mother Nature, so long as we ensure that we are not “locked in” to a single approach;

• Improve yield per acre substantially with new combinations of technologies making new seeds;

• Develop “output” traits that enhance benefits to consumers and, with it, the value of crops;

• Use fewer natural resources, while growing more, including biofuels; and • Foster productivity in farming in virtually all parts of the world.

The seeds of this collaboration are found in sustained commitment from business leaders to research and science. When you are a science company, you can’t invest in R&D only in the

 

14

good years. We must make sustained investment every year to ensure a continually robust pipeline. Meaningful scientific breakthroughs seldom occur in the isolation of a single laboratory. Collaboration is often the spark plug that ignites the next big idea. In our increasingly complex and interconnected world, it is collaboration that brings together all the different elements that must combine to actually create a solution. We are a society of rising expectations and, as the global population soars, these expectations will be shared by the bigger, more urbanized, more economically developed nations of the world. Will there be a rising tide of expectations along with the rising tides of population growth and urbanization? Yes, there will be. And I believe that the creativity of collaboration is also the way to surf that wave – because collaborative innovation encourages not just the designs of a few, but the contributions of everyone, everywhere.