Getting to the root of the GE tree debate
By Hedda Bird
The pulp and paper industry faces a dilemma over genetic engineering (GE) in forestry. The new technology promises great potential benefits in terms of reduced costs and improved product offerings, but it is coming under strong attack from environmental groups and others. The benefits of GE forestry may also simply increase commoditization of paper products and reduce prices for customers, without adding any profits to the industry's bottom line. In the long run, there maybe new types of fiber that offer enhanced properties commanding premium prices, but work in this area is barely off the drawing board.
Before too long, the pulp and paper industry will have to make strategic choices about the genetic manipulation of trees. Supporters of GE say it is a benign technology, no different in its operation from computer software. But critics of genetic manipulation say it is an abuse of mankind's powers and is potentially as dangerous as nuclear power. In either case, the assessment of financial risk and return is in its infancy.
Look before you leap
In a decade, early adopters of genetic engineering (GE) in the paper industry could own a wide range of GE paper products with valuable properties offering the prospect of price premiums and market share. The forest products company that holds the leading genetic patents could even dominate the sector for the next 50 years.
Alternatively, those same companies could be sitting on a mountain of stock that cannot be sold. Their balance sheets may collapse under the weight of written-off investments in a technology that the market is not prepared to accept. Even worse, after 10 years of multi-million dollar investments in research and development, the companies could be left with no saleable products and demands for further funding. Those who choose not to invest now may be left behind, or may be congratulating themselves for avoiding a public relations and marketing disaster.
GE technology is moving fast, but so are its opponents. In Europe, scientific and government announcements are mistrusted by the public and the media, following public health scares on asbestos and 'mad cow disease'. American scientists and regulatory authorities do not understand these fears. The diversity of American and European views makes it more difficult for the pulp and paper industry to develop a global strategy for GE in forestry, but it is vital that the industry takes decisions now. One point that the scientists, environmentalists and industry can agree on is that further research into the potential ecological impact is needed. The challenge now is to devise research programs that are acceptable to all sides.
Clearly, GE cannot succeed in isolation. To bring GE products to market, molecular biologists will need to work with many different aspects of the paper supply chain, ranging from mill operations to front line marketing research. Joint ventures between the pulp and paper industry and bioscience companies will also be required, but these are outside the experience of the deeply conservative forestry, pulp and paper sector. New management skills will also be a top priority in the future of GE forestry.
The promise held out by bioscience visionaries for the forestry sector is for greater efficiencies in silviculture management, hugely improved yields and the development of trees that are grown for specific uses. The vision appalls environmentalists and others, who see GE in forestry as a flawed technology that is neither safe nor needed, and will only benefit a handful of multinational corporations. Between these two perspectives sit molecular biologists who cannot see why improved forest productivity should not benefit both society and business.
Economic analysis shows that financial success cannot be assumed though. Investment of around $100 million dollars over a 10-year plus timescale is needed to bring the technology to market. The paper industry is used to this level of capital expenditure for pulping technology, but has never budgeted for the same resources to be used in new technology for forestry. GE forestry may offer a winning market position for one or two companies in the sector. Indeed, one proposition for GE suggests that a 1% improvement in pulping productivity could save the global industry billions of dollars. But this attractive theory is unlikely to result in extensive bottom line profits for many companies. The challenge facing pulp and paper executives today is whether to adopt the technology early or see how the market responds. One thing is clear, those companies that take up the challenge and decide that their future income streams lie indirectly or directly with GE products, must decide now how to handle the inevitable public debate.
Hedda Bird is managing director of 3C Associates (formerly Conservation Communications). This article is based on the company's new briefing 'lf You Go Down to the Woods Today ... Genetic Engineering (GE) in Forestry'. For more details, telephone +44 (0)1491 842922 or e-mail firstname.lastname@example.org