Exporter refuses to store biotech grain that lacks Chinese regulatory approval

By MATEUSZ PERKOWSKI

Capital Press

A major biotechnology company wants to force a global grain company to buy a new variety of transgenic corn by invoking a 95-year-old warehousing law.

The lawsuit is thought to rely on an untested legal theory that could have important consequences for genetic engineering in agriculture, experts say.

"Farmers are caught in the middle," said Doug Jones, executive director of Growers for Biotechnology, a policy group. "This will be an ongoing problem."

Syngenta Seeds claims the Bunge North America grain company is unlawfully refusing to accept insect-resistant "Agrisure Viptera" corn at grain elevators throughout the U.S.

The biotech firm has filed a federal lawsuit against Bunge seeking an injunction that would compel the grain company to accept the new corn cultivar at its facilities.

The company cites the 1916 United States Warehouse Act, which requires grain elevators to treat storage-seeking farmers in a fair and reasonable manner.

The lawsuit also claims Bunge violated similar state laws and unlawfully made false representations, defamed Syngenta's product and interfered with its contracts with farmers.

"Syngenta believes that when a product has been legally approved, growers should be able to use that technology without subsequently being subjected to arbitrary actions," said Paul Minehart, head of corporate communications for the company, in an e-mail.

Bunge could not accept the corn variety because it has not yet received regulatory approval in China, "a major export market for U.S. corn producers," said Soren Schroder, the company's president and CEO, in a written statement.

A spokesperson said Bunge would not comment on the litigation beyond the written statement.

It appears Syngenta is trying to break new ground with its legal strategy in the case, said Drew Kershen, a law professor at the University of Oklahoma who has studied U.S. Warehouse Act litigation for roughly two decades.

In Kershen's experience, the "anti-discrimination principle" contained within the statute has never been used in a federal lawsuit before now -- it's unclear how such an old law will be applied to new technology, he said.

"Nobody knows how this would be interpreted in a particular fact pattern," Kershen said. "As far as I know, none of the anti-discrimination principles have ever been cited. ... My guess would be the anti-discrimination laws have hardly ever been used at the state level as well."

It's possible that Syngenta isn't genuinely trying to test its unique legal theory in federal court, said Andrew Kimbrell, executive director of the Center for Food Safety, a group that has filed several prominent lawsuits against biotech crops. The company may just be trying to send a message to the grain industry as such litigation is expensive.

"It's a bullying tactic. The odds of it actually succeeding don't seem very high," Kimbrell said. "Lawsuits aren't always filed to win. Lawsuits are sometimes filed to frighten."

Regardless of the lawsuit's outcome, Kimbrell said, the dispute points to the increasing likelihood of conflicts over biotechnology within conventional agriculture -- as opposed to a controversy between biotech and organic farmers.

"This is the tip of the iceberg as you see a rift between the chemical companies (that develop biotech crops) and conventional agriculture," he said.

Doug Jones of Growers for Biotechnology said such disputes may recur as USDA deregulates new transgenic traits, especially as divergent foreign regulatory schemes for such crops affect trade.

"That really has to be settled at the international level," Jones said.

The possibility of similar disputes in the future is particularly worrisome for farmers, who bear a great deal of risk when planting a crop, he said.

"That's your whole year of work out there in the field, and now the elevator says it won't take it," Jones said.

Conflicts may be especially prone to arise with output-based crops -- those that have specific end use, said Kevin Richards, director of regulatory relations for the American Farm Bureau Federation.

Until now, most biotech crops have been geared toward making life easier for farmers with pest resistance and herbicide tolerance, he said. Such crops are treated as regular commodities that typically don't require separate storage.

With crops that are grown for output-based traits, such as alpha-amylase corn for improved ethanol production efficiency, that process is more problematic, he said.

"You start to create a difference in the actual commodity," Richards said. "It's going to have an impact on how you manage that commodity in the supply chain."