Don’t mess with my Tacos
A case study into
Genetically Modified (GM) food
Thomas D Battell FCII, FCILA, MBEng, FIFAA, MAE
Director, Adjusting Solutions
What is a Taco?
Main ingredient - MAIZE
European Corn Borer
Ostrinia nubilalis
Corn Borer Damage
The Solution
Corn with a “deadly” gene
Bacillus thuringiensis (or Bt)
Bt corn is a variant of maize, genetically
altered to express the bacterial Bt toxin,
which is poisonous to insect pests. In the
case of corn, the pest is the European
Corn Borer.
StarLink Corn
• Aventis Cropscience designed and marketed
StarLink
• StarLink has a pesticidal protein (the Cry9C gene)
that makes the corn more resistant to certain types
of insects.
Basically the worms ate the gene and their
stomachs exploded!
Licence
Licence granted to commercialise the seed:
– Only for animal feed usage initially (EPA)
– All liabilities to be borne by Licensee
– Ongoing research into possible allergies
– Precautions taken at farms to include a “no
grow zone” barrier from other crops to stop
cross pollination
A Higher Authority
“...thou shalt not sow thy field with mingled seed...”
King James Version
Leviticus 19. v 19.
TACO Surprise
• NGO representatives were
randomly taking product from
supermarket shelves for testing
• StarLink corn gene Cry9c was
found in Taco Bell tacos
(human consumption) by a
Greenpeace member
• Government bodies,
businesses and the general
public became alarmed at food
“contamination”
Regulators
• US Environmental Protection Agency (EPA) –
Mission to safeguard the natural environment
• US Food and Drug Administration (FDA) –
protecting the public health in respect of food
supply
• US Department of Agriculture (USDA) –
everything the others don’t do - and then some!
• The White House – whatever you thought
others could do – think again!!!
Public Relations
• Public Relations disaster
for Aventis (now Bayer) and
the biotechnology industry as
a whole.
• Surge of public testing for
StarLink DNA on all food and
drink products
StarLink seed sales discontinued and all
contaminated product recalled
Enforcement
• Nil tolerance for StarLink DNA in human food
• Recall all products with traces of DNA in market
• Remove all co-mingled corn from supply chain
(in silos, storage and transport)
• Address issue of stray StarLink seed
propagating with other seed on-farm
• Fines that could make you weep
• Imprisonment for the CEO in default!!
Extensive Interests
1. Government and Regulators
2. Bio-tech companies
3. Seedsmen/Developers
4. Growers/Farmers
5. Trade Associations
6. Food Manufactures/Processors
7. Wholesalers, Restaurants
8. Retailers, Supermarkets
9. Exporters
10.The Public
Technical
1. Not physically possible to remove the StarLink
DNA without destroying the product
2. 1 corn seed (kernel) in 1 million is still traceable
by DNA (1ppm)
3. Re-contamination – a real risk in every stage
– cross fertilisation, co-mingling, transportation,
milling, food processing
Insurance
• Low limits - bought on affordability rather than
exposure
• Failure to understand exposure
• No coverage for regulatory fines or corn itself
• Damage to Property or just financial loss?
• Absence of BI cover –leading to potential
insolvency, redundancies and sale
• D&O coverage for CEO?
• Reduction in Bio-Tech coverage in market
ACTIONS TAKEN
1. Public awareness including absence of injury risk
(PR risk- third largest news story in year)
2. Co-operation with government, regulators and
trade associations
3. Agreed practical plan for recall to avoid future
contamination
4. Monetary compensation levels agreed at start
5. Process for claiming tied into return of corn
6. “Comingled corn” sold back into cattle feed market
at discount whilst maintaining prices for food corn
to create goodwill (mitigation)
7. Food corn market price and confidence restored
8. Insurers – Regular Market meetings and
agreement
Result
•
•
•
•
Claim settled (insured aspect less than 50%)
High percentage recall result
Testing regime agreed at manufacture stage
Zero tolerance level renegotiated to five year
removal plan (with technical evidence)
• Corn market and export position restored
• Business sold to Bayer (more resource and
experience)
• CEO kept out of prison!!
Lessons for Today
• New Technology = New (unknown) Risks
• Governmental/Regulatory breach is often more
costly than negligence/contractual loss
• GM or other new technology needs insurance
backing (and risk assessment) to develop
• Policies need to consider the political issues as
well as commercial and legal
• Territory risks varies e.g. GM accepted in US but
not in Europe or Japan
• Huge exposures and changing law
BP and Deepwater Horizon
•
•
•
•
•
•
•
High profile – PR issues
NGO activity
White House involvement
1000’s of third parties
Technical issues with remedy and clean up
Share price fall
CEO – personal liabilities, standing and
response
Losses for Tomorrow
• Is “nanotechnology” the next major
loss waiting to happen?
• new/untried, potential contaminant
• tiny “irrecoverable” particles
• unknown health risks
• lean development budgets
• international exposure
• potential group litigation
• new law
Thomas D Battell FCII, FCILA, MBEng, FIFAA,
MAE
Adjusting Solutions
One Alie St
London
E1 8DE
tom.battell@adjustingsolutions.com
www.adjustingsolutions.com