BACK TO MAIN  |  ONLINE BOOKSTORE  |  HOW TO ORDER

BRIEFING PAPER No.9

BIOTECHNOLOGY AND THIRD WORLD COUNTRIES:
ECONOMIC INTERESTS, TECHNICAL OPTIONS AND SOCIO-ECONOMIC IMPACT

by
ACHIM SEILER (GERMANY)

Profferred Paper


Biotechnology and Third World Countries:
economic interests, technical options and socio-economic impact

This paper addresses some of the social opportunities and risks that might arise for societies in the economic South in the event of the widespread introduction and application of the new biotechnologies.

The new biotechnological processes, including genetic engineering, offer a vast spectrum of applications in agriculture and industrial production, but the social consequences of these technology-driven innovations will only be fully recognized over a period of years and decades.

First economic assessments predict negative employment effects with a range of losses of up to 50%. (Galhardi 1993:17), but at the moment there are only a few empirical studies available focusing on single agricultural products (cocoa, vanilla, palmoil, maize), and even these studies tend to be rather speculative.

"Biotechnology" is neither a new discipline nor a specific field of technology like, say, microelectronics. Instead, biotechnology is a whole range of new techniques and methods (= bio-techniques), which are increasingly influencing and enhancing one another and also improving the effectiveness of established tools, e.g. in the area of conventional breeding. It can best be characterized as a cross-sector key technology which is highly likely to affect all areas of production and service industry in the North, and will then affect the South with a time-lag of a few years.

The application of the new techniques, including genetic engineering which is a very controversial approach due to our lack of knowledge of the risks involved, is intended to offer innovative products, processes and services across a broad range of agricultural and industrial sectors.

It comprises the entire food sector, the production of medical equipment for humans and animals (diagnostic kits), methods for the early treatment of plant diseases, vaccines, the production of specialized chemicals in bio-reactors or industrial plants, the production of (bio)-polymers on the basis of plants or microbes, the bacterial mining of ores (bio-leaching), as well as the whole environmental sector, e.g. the restoration of contaminated areas, the purification of drinking water, the recycling of organic waste and its processing for food and feed purposes, the development of drought-tolerant shrubs for the greening of desert areas and the containment of erosion, renewable energies, biogas installations, and much more, besides.

The new biotechniques offer many ways of alleviating pressing problems in the 3rd World immediately, especially below the threshold of genetic engineering (recombinant methods), for example through the rapid multiplication of healthy (virus-free) plant material or the improved adaptation of crops to their specific geoclimatic environment.

A) Inconsistent expectations

Attitudes and predictions regarding the socioeconomic opportunities and risks the application of modern biotechnology will entail for the 3rd World diverge sharply.

Whereas the natural science-oriented advocates of these techniques anticipate that the economic South will reap significant benefits and predict not only the elimination of hunger but also, almost as a side-effect, the technical solution of most environmental problems, most experts remain extremely sceptical. Pointing to the fact that the Southern countries are part of a structurally unjust world economic order, and referring to the predominantly private-owned character of the new techniques, these experts stress the significant socioeconomic risks and disadvantages biotechnology might entail - especially for the poorest parts of the population.

If these predictions are proved correct, the bulk of the adverse socio-economic effects would have to be borne in agricultural areas with small-scale production patterns, e.g. the poor countries of subsaharan Africa.

Some UN officials are already warning that the introduction of biotechnology could have drastic consequences for the rural poor living in this part of the world.

The data with regard to the time horizons and market expectations for the new techniques are by and large poor and contradictory. The reasons for this are the failure, even in the specialized literature, to distinguish clearly between biotechnology and genetic engineering, delays in the development process, a lack of clarity concerning the legal framework, and secrecy surrounding the research and development decisions of private industry.

Specific agricultural products are the target of many different bio-techniques (see table), and their likely effects could complement and enhance each other, but could equally well cancel each other out. Projects aiming at the substitution of Southern agricultural exports and the shift of production to the North are undermined by efforts - partly undertaken by the same industrial actors - to increase agricultural outputs in the Southern economies, sometimes through the application of quite different bio-techniques.

Thus, in some cases, import substitution might be feasible in a technical sense but quite irrational from an economic point of view.

Although it is widely expected that the broad introduction new products and processes will get under way in the coming years (1995 onwards), only a few marginal attempts have been made by the social sciences to find ways of enhancing the positive potentials and minimizing the feared negative impacts.

Furthermore, there are only a few case studies available (mostly ILO studies) which deal with the techniques used in specific projects, which means that the empirical base cannot yet offer any very far-reaching conclusions.

The observers however are quite unanimous that the new techniques might cause changes in the social and economic structures, which would go deeper and be more far-reaching than any earlier changes caused by technology.

Table: Time-frame of application of two main categories of biotechnologies to selected commodities and corresponding value of affected exports of developing countries


Time-frame
for routine
use

Value
of exports
(in $ billions)

Commodities affected
(number of developing
-country exporters)
A. Tissue and cell culture techniques
Up to 1995

 

1995-2000

 

After 2000

20.9

 

21.2

 

3.4

Coffee (28), bananas/plaintains
(16), rice (6), rubber (5), tobacco

(2), vanilla (2), cassava (1),
potatoes (1)

 

Sugar-cane/sugar-beet (16),
cocoa (15), tea (4), soybeans (3),
oil palm (3), wheat (3), maize (1),
sunflower (1) Cotton (15), coconut (10)

B. Plant transgenesis
Up to 1995

 

1995-2000

 

After 2000

 

Source: Sasson
1993:35

  6.4

 

17.5

 

21.7

Rubber (5), tobacco (2), maize (1),
potatoes (1)

Sugar-beet (16), bananas/plaintains
(16), cotton (15), rice (6), soybeans (3),
cassava (1), sunflower (1)

Coffee (27), sugar cane (16), cocoa (15),
coconut (10), tea (4), oil palm (3), wheat
 and flour (3)

B) Biotechnology and agriculture

Where the agricultural sector is concerned, it is expected that the ambivalent results of the "Green Revolution" will be experienced a second time, but with significantly enhanced social impacts.

But in contrast to the "Green Revolution" which only focused on 3 main food crops (rice, wheat, maize), the new biotechniques can be used to improve the characteristics of all target plants, which means that the genuine subsistence plants like cassava or sweet potatoes could also be affected.

While in the 1970s significant increases in agricultural output only became feasible when the specific agricultural environments were adapted to the needs of the newly developed, standardized high yielding varieties (necessitating the installation of expensive irrigation systems as well as high inputs of fertilizer and pesticides), the new bio-techniques make it possible to improve the plants adaptation to their specific geoclimatic surroundings and in this way to achieve higher outputs, improved nutritional values, longer shelf-life capabilities, etc. This also means that salty areas, often the result of inadequate irrigation schemes, could be used again for agricultural purposes.

This new approach to increasing agricultural productivity could be especially valuable for those regions and social groups which were never reached by the "Green Revolution", whether for geoclimatic (no possibility to install irrigation schemes) or social (no access to credits in order to buy machinery and pesticides) reasons. This applies to the whole African continent with the exception of Kenya and Zimbabwe.

Furthermore, biotechnology could also contribute significantly to a pattern of agriculture which is more sustainable and ecologically sound as well as to the reforestation of desert or erosion-prone areas.

But in sharp contrast to the "Green Revolution", the central protagonists of this new and highly effective technology are no longer the semi-public international agricultural research centers (IARCs) of the international consultative group (CGIAR), which were institutionally embedded in the UN system and made sure that access to their research results was open to everybody who was interested. Instead, the central players in the new biotechnological innovations are the big chemical, pharmaceutical and food transnationals. They already dominate the international research agenda, have the most qualified scientific personnel at their disposal, and play a central role in negotiations on how to shape the international framework for the application of the new biotechnology, e.g. intellectual property rights.

Critics stress the fact that the present direction of development of agrarian biotechnology is dominated by the research agenda of the industrialized countries.

Thus, the main concern is not the realization of the potential offered by the new techniques to combat hunger and malnutrition in a highly specific and target-oriented way, but almost exclusively the profit interests of northern companies.

C) Technology development in the service of industry

The most glaring example of this main research direction, broadly bypassing the basic needs of third world countries, is the obstinate effort of all chemical companies involved in agrarian biotechnology not to improve the resistance of cultivated plants against pests and diseases, but to enhance the tolerance of these seeds against pesticides produced by the same company. This package-strategy" will guarantee significant additional turn-over for the northern companies but will probably lead to an increased pollution of soils and drinking water with chemicals. Furthermore, rural poverty and unemployment will increase if labour-intensive jobs in agriculture, e.g. weeding, become obsolete as a consequence of the application of chemicals in combination with high quality seeds specially designed to fit these chemicals. Weeding contributes approximately 30% to labour volume in third world agriculture and assures a reliable basic income mainly for women.

Southern countries are highly suspicious of other research approaches which aim at the substitution of nearly all important agricultural export products from the South (spices, high value plant compounds for medical purposes and even cocoa and coffee) and a shift of production to the North - be it through the application of cell culture methods or industrial enzyme technology in bio-reactors, or the insertion of desired traits via genetic engineering and the production of desired plant compounds in domestic northern crops like rapeseed, soya and tobacco. The socio-economic impact in the event of technical successes in these research approaches and a sudden decline in important export markets could well be disastrous for many countries in the 3rd World.

Apart from the possibility of producing high value plant compounds like vanilla in northern countries bio-synthetically (in bio-reactors), the new techniques offer the option of producing agrarian commodities for the food- and non-food sector variably, on the basis of a whole spectrum of substances which are now increasingly becoming interchangeable. For example: using enzyme techniques, high value cocoa butter substitutes can be produced on the basis of a whole spectrum of plant- or animal- derived oils and fats (palmoil, soya-oil, whale-oil, etc.) which have so far been unconnected to the production of cocoa. For many years now the same technique (enzyme technology) has been used to produce a maize-based starch sweetener (HFCS) which is substituted for sugar in the US soft drink industry, and this has led to a sharp decline in the export earnings of some sugar cane - exporting countries.

D) Growing industrial control over markets

Given the high level of research and development investment by northern companies and the improvement of technical options in industrial processing, especially in the field of enzyme technology, it can be presumed that the range of potential raw materials which might become bases for the production of high- valued substitutes will continue to increase.

Because of the technical possibilities of reducing agricultural products to their central components (fats, carbohydrates, etc.), in order to separate these commodities and then refine them into novel foods or industrial products, world markets are arising on the basis of components. These markets might then be restructured from the demand side and oriented towards the economic interests of the companies.

This implies that the traditional producers of these basic substances, even if they have not so far been in competition with one another, become increasingly interchangeable and can be played off against each other by the companies which already control the agricultural exports of third world countries to a considerable extent.

'The small scale cocoa-producing farmer in Ghana is no longer competing on a world cocoa market just with the cocoa estates in Indonesia and Brazil, but on a world fat market with the coconut farmers in Thailand and the palmoil estates in Malaysia, the cultivation of olives in the Mediterranean area, the growing of rapeseed in orthern Germany and - possibly - with the Japanese fishing fleet.' (Flitner 1991:81)

Furthermore, through well-planned investments in forward or backward linked business areas or strategic alliances, the companies are also able to establish institutional control over complete production chains, from seeds and the marketing or appropriate pesticides via the cultivation of these plants through to the harvest and the post-harvest processing of agricultural products.

While the application of modern biotechnology will result in an enhanced flexibility of production processes, it will also make it easier to establish industrial control over whole production chains and facilitate the vertical integration of the newly acquired business areas, e.g. seed companies, into the main production line of the investor. The new techniques make it possible to precisely adapt modern high yielding seeds, which are vital for the cultivation and internationally competitive production of agricultural commodities, to specific pesticides.

This means that the desired plant characteristics can only be achieved by the farmers if they stick exactly to the instructions given by the agro-input industry on how to use which type of chemicals (even the brand), at what time and in what concentration. From the companies point of view it becomes possible to implement attractive sales linkages which enable them, through the application of technical resources, to bind the weakened agricultural producers in the 3rd world into their overall economic strategies.

E) Global remote control over the production of plant commodities

In taking over the traditional seed companies, which sometimes have fairly high world market shares, the chemical and food transnationals are automatically acquiring the world-wide distribution networks, which were built up by these companies during the Green Revolution. This ensures that there are no additional market entrance barriers, and the companies are able, especially against the background of recent political efforts to liberalize the world markets for agricultural products, to deliver their specific high yielding seeds (even with an established brand-name) to the targeted customers.

The concentration processes and takeovers in the seeds sector that have been evident for years could well lead to a situation in which the smaller suppliers will sooner or later disappear from the market, and together with them the scarce landraces.

Instead of a multitude of indigenous varieties there will be only the uniform high yielding varieties produced by the transnational companies on the market, which will have been equipped biotechnologically with operational instructions for the farmers. These instructions will have to be followed if plant cultivation is to remain internationally competitive, especially against the background of the increasing interchangeability of producers.

The increasing flexibility of production processes by means of biotechnological processes, together with international control over complete production chains, will finally lead to a global commodity roulette (Fowler et al. 1988:64) whereby small-scale farmers but also whole product sectors or export regions could be crushed between the technical instructions provided by the agro- input-industry delivering the modified seeds and the requirements of the food and chemical companies processing the harvest. If farmers do not cultivate the plants in a way that suits the economic interests of the companies, they will not be able to survive.

While the companies top management will come to exert remote control (Ruivenkamp 1986:89-101) over the cultivation of plants by means of modified seeds carrying economic-technical instructions, and will thus be able to establish one-sided rules for the production of agricultural commodities, the third world producers, especially small-scale farmers, have no say in this matter and do not enjoy a level of market transparency which might give them some marginal freedom of manoeuvre against the industry.

Especially against the background of the introduction of genetically engineered industrial crops, third world farmers might not even know what type of product for what purpose they are actually growing in their fields.

The establishment of producer cartels to stabilise export incomes or a novel integrated commodity program suited to the roulette- like patterns of interaction, which might take into account the incalculable structure of the emerging global component markets, already seems to be impossible.

F) Genetic engineering as a process booster

The new possibilities of moving production sites and rendering agricultural producers interchangeable, which have been made feasible by the new biotechnological processes, will be further and significantly enhanced by the introduction of genetic engineering. This will make the demand-side situation even more incalculable and further worsen the situation of traditional suppliers of agricultural commodities.

Because it will in future be possible to produce specialized chemicals or pharmaceutical substances which are important for industry through recombinant organisms, be they modified plant cultivars, single cell-organisms or traditional feedstock which synthesize the desired compounds biologically and excrete them via the glands, quite new actors are now emerging on the supply side. This is rendering the terms of competition completely incalculable.

As a result, hitherto unimaginable market constellations are arising, since the application of genetic engineering will not only lead to a removal of the species barrier but also to a removal of the distinctions between animal and plant-based commodity production, between the agricultural and industrial 0 sectors, and between the traditional industrial areas.

Breweries which have a lead in the practical applications of bioreactors (fermentation plants) could switch to the production of pharmaceutical compounds, as has been done by the Kirin and Suntori companies in Japan (Fowler et al. 1988:191). Dairy farms, on the verge of ruin after the broad application of bovine growth hormones (BGH), significant increases of production outputs leading to overproduction and a fall in manufactures prices, might be urged to "induce" their feedstock to produce high-value low-volume medical substances, e.g. interferons or human insulin. In this specific case, they would be competing with plantations and breweries in the bio-synthesizing of pharmaceutically important compounds.

Especially in the case of high value specialized chemicals, e.g. expensive fragrances or flavourings which could technically be produced in cell cultures but where the scaling-up is not yet possible on competitive terms, the molecular biological genetic engineering procedures now make it possible to increase the productivity of selected cell lines significantly, and thus perhaps to reach the break-even point relatively quickly.

Decision-makers from the South, who are already confronted with the difficulty of evaluating the danger of potential shifts of production on the basis of inadequate information, because of the need to implement the necessary countermeasures in good time, are no longer even able to make a reliable calculation of whether and when their agricultural products can be substituted and the production of specific plant compounds in northern bio-reactors will begin.

G) Summary

From what has been outlined above, it can be stated that the application of the new technical methods will lead to significant alterations in the international commodity production system, whose economic range and social impact cannon be assessed at the present time.

While the new bio-techniques and methods, especially below; the threshold of genetic engineering, do indeed offer a number of ways of alleviating pressing problems in the 3rd world in a comparatively simple manner, e.g. by making available virus-free plant material and so avoiding related harvest losses, the more realistic expectation must be that, in view of the existing structures of economic power and interests which will largely determine the further development of biotechnology, there will in the short term be a further deterioration of the market position of 3rd world actors and a worsening of social inequalities. On the other hand, the economic dominance and political market power of industry will increase.

Due to overproduction and the decline in manufacturing prices, increasing competition in conditions of weakened export markets and the entrance of new suppliers into an incalculable market situation, the exporting countries in the third world will be negatively affected, and the small scale agricultural areas will suffer worst of all.

Initial economic studies predict employment losses of up to 50%, which must then be compensated either through a diversification of the export structure or by the implementation of rudimentary adjustment programs.

But the attempt to compensate for declining exports by opening up new markets will only lead to a further deterioration in the terms of trade, given the present debt situation and the protectionism of the industrialised countries.

Countries which are negatively affected will be even more exposed to the instructions of international finance institutions, e.g. to clear their export areas for the cultivation of genetically engineered industrial crops for the North. If they do not do this, they run the risk of becoming detached from the world market due to the production shifts which are to be expected, especially in cases where monocultural export structures prevail.

Actually, even the proponents of the broadest possible application of the new techniques - including genetic engineering - are seriously concerned that, by contrast with the discussions of the 70s on how to reshape the world economic order, the issue at stake in the near future in North-South trade talks will not be "fair trade", but trade itself (Sasson 1988:255ff).

H) Conclusions

The main concern of the critics is therefore not initially the technology itself, notwithstanding the technical risks which do exist and are still not properly understood, but the inadequate transparency of the R+D efforts of transnational companies and the strong trend towards the private appropriation of genetic starting materials and shuttle techniques, under the control of those very enterprises on which the global markets for agricultural commodities will become dependent.

Because of the predominantly private character of biotechnology and the orientation of the international research agenda towards the profit-maximising interests of industry, which disposes of the most effective research infrastructures and the best-trained personnel, it is already clear that the deficiencies of an unjust world economic order are structurally, as well as in terms of content, built into the present technology generation process.

If there is no clear correction of the way biotechnology is presently being shaped and no counterbalancing interventions in the research agenda by public research institutions, the fears of the critics that the outcome of the "biorevolution" will repeat the ambivalent results of the "Green Revolution" will be confirmed. This time, though, the social impact will be even greater, notwithstanding the high potential for improving the situation of the poor which now is theoretically at hand in the form of the new techniques.

I) References

AHMED, Iftikhar: The Bio-Revolution in Agriculture: Key to Poverty Alleviation in the Third World, in: International Labour Review, Vol. 127, 1988, No.1, S.53-72

ALBRECHT, Stephan (Ed.): Die Zukunft der Nutzpflanzen, Frankfurt 1990

BIDWAI, Raful: Biotechnology: The Second Colonisation of the Third World?, in: The Times of India, Sunday, April 19, 1987, S.I

BROCK, Lothar: Nord-Sud-Kontroversen in der internationalen Umweltpolitik: Von der taktischen Verknupfung zur Integration von Umwelt und Entwicklung? HSFK-Report No. 7/1992 (PRIF - Peace Research Institute Frankfurt), Frankfurt 1992

COMMANDEUR, Peter; Gerda van ROOZENDAAL: The Impact of Biotechnology on Developing Countries - Opportunities for technology-assessment research and development co-operation; A Study Commissioned by the Buro fur Technikfolgen-Abschatzung beim Deutschen Bundestag, (TAB), Amsterdam 1993

FAO: Biotechnology in Agriculture, Forestry and Fisheries, Rome 1993

FLITNER, Michael: Biotechnologie und Landswirtschaftliche Produktion in Entwicklungslandern, in: Geographische Rundschau Nr. 27/1991

FOWLER, Cary; Eva LACHKOVICS; Pat MOONEY; Hope SHAND: The Laws of Life. Another Development and the New Biotechnologies, in: Development Dialogue 1-2/1988

FRANSMAN, Martin; Gerd JUNNE; Annemieke ROOBEK (Eds.): The Biotechnology Revolution?, Oxford 1995

GALHADI, Regina: Employment and Income Effects of Biotechnology. in Latin America: A Speculative Assessment, Geneva (ILO) 1993

HOBBELINK, Henk: Biotechnology and the Future of World Agriculture. The Fourth Ressource, London 1991

JUNNE, Gerd: Avenues for Future Social Sciences Research on Impacts of Biotechnology, in: Development: Seeds of Change 4/1987, S.86-90

JUMA, Calestous: The Gene Hunters. Biotechnology and the Scramble for Seeds, London 1989

JUMA, Calestous; John MUGABE; Patricia KAMERI-MBOTE (Eds.): Coming to Life. Biotechnology in African Economic Recovery, ACTS-Press, Nairobi 1995 (Zed-Books, London)

KLOPPENBURG, Jack Jr. (Ed.): Seeds and Souvereignty. The Use and Control of Plant Genetic Ressources, Durham and London 1988

KLOPPENBURG, Jack Jr.: First the Seed. The Political Economy of Plant Biotechnology 1492-2000, Cambridge 1988

MOONEY, Roy, et al.: The Law of the Seed. Another Development and Plant Genetic Ressources, in: Development Dialogue, 1-2/1983

OECD: Biotechnology: International Trends and Perspectives, Paris 1983

OECD: Biotechnology and the Changing Role of Government, Paris 1988

OECD: Biotechnology: Economic and Wider Impacts, Paris 1989

OECD: Field Releases of Transgenic Plants, 1986-1992, An Analysis, Paris 1993

ROEMPCZYK, Elmar: Bio-technologie fur die Entwicklung der Dritten Welt - vielleicht, in: Vierteljahresberichte, Dez. 1988, S.359-366

RUIVENKAMP Guido: The Impact of Biotechnology on International Development: Competition between Sugar and New Sweeteners, in: Vierteljahresberichte, March 1996, pp.89-101

SASSON, Albert: Biotechnologies and Development, Paris 1988

SASSON, Albert: Vivien COSTARINI (Eds.): Biotechnologies in Perspective, Paris 1991

SASSON, Albert: Biotechnologies in Developing Countries: Present and Future, Paris 1993

SHIVA, Vandana: Das Geschlecht des Lebens. Frauen, Okologie und Dritte Welt, Berlin 1989; (Org.: Staying Alive. Women, Ecology and Survival in India)

SPANGENBERG, Joachim: Das grune Gold der Gene. Vom Angriff der Gentechnik auf das Leben in der Dritten Welt, Wuppertal 1992

STUDIER, Alphons (Hg.): Biotechnologie: Mittel gegen den Welthunger?, Hamburg 1991

WALGATE, Robert: Miracle or Menace? Biotechnology and the Third World, London 1990

 


BACK TO MAIN  |  ONLINE BOOKSTORE  |  HOW TO ORDER