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BIOTECHNOLOGY WORKS IN NORTH CAROLINAAgricultural BiotechnologyTakes Root StatewideFebruary 2006

AuthorsMaria Rapoza, PhDJennifer OlsonBarry TeaterKen Tindall, PhDAcknowledgementsThe authors were assisted in the development of this report by thecontributions of many Biotechnology Center staff, including:Leslie Alexandre, Dr. P.H.Steven BurkeRobin DeacleSarah JacksonKathleen Kennedy, PhDSperry KruegerRobert PetersonBill Schy, PhD

AGRICULTUR AL BIOTECHNOLOGY IN NORTH CAROLINAAgricultural BiotechnologyTakes Root Statewidee x e c u t i v e su m m a ryAgriculture has always been North Carolina’s largest industry, as well as a way oflife for many of the state’s people. It contributes 59 billion annually to the state’s economy,accounts for one-fifth of its income, and employs almost 20 percent of the workforce. Modernagriculture, a fast-moving and challenging industry, has changed dramatically in recent years. Thesechanges bring exciting and lucrative opportunities, particularly in the application of biotechnologyto agriculture. With its strong research and education, rich agricultural tradition, and progressivefarmers, North Carolina is at the forefront of agricultural biotechnology.North Carolina is implementing a statewide plan for developing biotechnology: New Jobs AcrossNorth Carolina: A Strategic Plan for Growing the Economy Statewide through Biotechnology. Thisreport is designed as a companion to the statewide plan. It describes what agricultural biotechnologyis and how it’s used, looks at North Carolina’s leadership role in agricultural biotechnology, andcalls for partnerships as North Carolina strengthens agricultural biotechnology statewide.What is agriculturalbiotechnology?Creating new cropsEver since humans began cultivating crops instead ofhunting and gathering food, we have been genetically improving our food. Until recently, this meant simply breeding crops with the best characteristics and saving thoseseeds to plant the next year.Biotechnology is a broad collection of tools and technologies that involve the manipulation of living cells and/orbiological molecules to solve problems and make usefulproducts. Agricultural biotechnology is the application ofbiotechnology to agriculture. Agricultural biotechnologyis increasingly involved in the foods we eat, the clotheswe wear and other everyday products we use. It has thepotential to produce more food and fiber and other commodities at lower cost and with less environmental impact. It can help improve existing products, find new usesfor obsolete products, and develop entirely new products.As we’ve learned more about DNA — the molecule inevery cell that gives the instructions for life — we understand better, for example, why some corn tastes sweeterand why squash and other plants can resist viruses. Thesetraits are associated with genes, pieces of DNA that givea plant or animal specific traits.Today we can insert into a plant cell a gene that carries abeneficial trait. That gene can come from the same typeof plant, from a different plant or even from an animal.For example, a gene from citrus fruit may allow potatoesto grow in soil with high acid levels. Plants that havebeen developed in this manner are generally referred toas Genetically Modified (GM) or Genetically ModifiedOrganism (GMO).Biotechnology has broad applications in both plant andanimal agriculture. This report focuses primarily onplant agriculture.The tools and technologies of biotechnology have threemain applications to plant agriculture: Creating new crops Making a tool to improve crops Finding new uses for old cropsThese advances represent great potential benefits forfarmers, food processors, consumers and the environment. These GM crops have a new trait that was notpresent before but adds value for the farmer, the processor, or the consumer.Each of these categories is broad and has many opportunities for farmers and other members of the agriculturalcommunity to add value to what they are already doing.Following is an overview of each category, and how it isimportant to North Carolina.The accompanying table shows examples of these typesof improvements.The creation of crops with new traits has been occurringfor many years. The humble corn chip, found in super-NORTH CAROLINA BIOTECHNOLOGY CENTER302/2006

AGRICULTUR AL BIOTECHNOLOGY IN NORTH CAROLINAmarkets across the U.S.,actually contains multipleingredients that are likelyto have been made from genetically modified plants, asshown in the Figure, Anatomy of a corn chip.Agricultural BiotechnologyCategorySpecific Example1Resistance to harmful environmental factors such as insects,agricultural chemicals (including herbicides and pesticides),viruses and other diseasesBt cotton, Round-upReady soybeans2Modification of existing characteristic such as growth rate, fruitsize, drought resistanceSunDance Genetics’drought-resistant cornThe corn chip example is3 Added nutritional value such as increased vitamin content,Golden Rice increasedincreased inherent nutritionVitamin A content,a demonstration of howmany newly created foods4 Totally new trait/biopharming such as plants or animals thatBiolex’s transgenicare present in today’s marmake therapeutic productsduckweedketplace. More than 50 biotechnology crops have beenMaking a tool to improve cropsapproved for sale in the United States and Canada, andThe second application of biotechnology to agriculturethree have been approved in Mexico. The list includesis to add value to agricultural commodities. Again, thisenhanced soybeans, cotton, corn, canola, cantaloupe, patype of agricultural biotechnology is already widespreadpaya, potato, squash, sugar beets and tomatoes. Most ofand growing rapidly. Uses include animal vaccines,the biotech crops now on the market have been enhancedgrowth hormones, antibiotics, fertility applications, charto make them resistant to harmful environmental factors.acterization of crop traits, feed additives and many otherMany farmers have deliberately chosen to plant biotechapplications. (How biotechnology tools are used as feedcrops for very simple reasons: biotech crops give higheradditives is described more extensively on pages 9-10.)yields, have lower costs, and require less spraying. AAnimal vaccines are a great example of biotechnology2002 study of biotech crops by the National Center forapplied to agriculture. For instance, vaccines that proFood and Agricultural Policy found that six biotech cropstect commercially grown fish from disease can result in aplanted in the United States — soybeans, corn, cotton,much greater commodity yield. Biotechnologypapaya, squash and canola — produced an additional 4tools have been widely used in the researchbillion pounds of food and fiber on the same acreage,laboratory to help create many new animalimproved farm income by 1.5 billion and reducedvaccines for diseases costly to the farmer.pesticide use by 46 million pounds.In North Carolina, biotechnology tools haveThe economic effects ofalso been used to improve the way vaccinesthese new cropsare delivered. In the old days of the poultryextend bebusiness, newborn chicks were vaccinatedyond theby hand, a cumbersome and expensivefarm.method that was also stressful to the birds.In CornTodaymany poultry hatcheries around theBeltworldusean automated egg-injection systemstates withtovaccinatepoultry in ovo, or in the egg.higher adoptionThistechnologywas developed by a Northlevels of biotech crops,Carolinacompanyand is described morethere are more agricultureextensivelyonpage9 in the section, ‘Ofand food science jobs than inchickensandeggs.’states with lower levels of adoption. In Iowa, there are 50 such jobs per100,000 jobs, with an average salary of 52,310 — more than 1.5 times the U.S.average salary of 34,020. Although it’s Anatomy ofa corn chipdifficult to say if these results are thecause or effect of the adoption of agricultural biotechnology, it seems clear that states that areag-biotech savvy are seeing benefits.Biotechnology tools will help agriculturein many ways, some of which are yet to beforeseen. In the future, biotechnology toolswill touch just as many lives as tools of theinformation technology industry do today.Finding new uses for old cropsBiotechnology is applied to agriculture in a third waythrough the development of new uses for traditionalcrops. This application of agricultural biotechnology isThe North Carolina success story on page 10, In TallCotton, shows the positive economic impact of a biotechcrop in North Carolina.NORTH CAROLINA BIOTECHNOLOGY CENTER402/2006

AGRICULTUR AL BIOTECHNOLOGY IN NORTH CAROLINABiotech’s effect on the chemical industrynot as tied to GM technology, although crops alreadyon the market (such as Roundup-ready and Bt varieties)might be used simply because of their prevalence. In thefuture, food crops may be specifically modified for industrial uses. For instance, soybeans could be geneticallyengineered for higher soybean oil production versus plantprotein content, for use in biodiesel fuel production.Adapted from Chemical Week, February 11, 2004MarketSize(in billions)SectorFine ChemicalsIndustrial biotechnology begins with agriculture, using arenewable resource such as corn, soybeans, or other typeof biomass as the starting material. An example of thistype of industrial process is shown in the figure below.The starting material (corn) is processed into its components: protein, starch, oil, fiber, and lignin. After additional refining and synthesis, the components are turnedinto the end products. In this example, the end productsinclude ethanol, solvents, pharmaceutical intermediatesand surfactants.CurrentBiotechImpact2010BiotechImpact 5015%30-60%Polymers 2501%6-12%Bulk Chemicals 3003%6-12% 4000-15%0-50% 20005%10-20%SpecialtyChemicalsTotalwill have to plan its strategy carefully, because it facescompetition from the Corn Belt states, which are investing heavily in this sector. Fortunately, improvements inthe technologies are making the use of biomass other thancorn economically feasible.Industrial biotechnology is of interest to both the chemical industry and the energy sector. In the chemical industry, current industrial biotech products include alcohols,fine chemicals, organic acids, amino acids, enzymes, flavors, and fragrances with a current sales value of around 300 million. Experts project that the potential marketfor bio-based materials is up to 1 trillion.It is encouraging that crops that have traditionally beenfor low-value uses such as animal feed may be increasingly used for bio-based applications. Depending on howethanol production value chains are structured, muchmore of the economic return for biomass could accrue toNorth Carolina’s growers.In addition to the chemical industry, the energy sectoris experiencing renewed interest in the use of biomass toproduce ethanol (sometimes referred to by the broad termindustrial bioprocessing). Major multi-national corporations are beginning to test the waters in the bio-fuels sector of the economy. Additionally, recent legislation fromthe federal government to provide grant assistance for theconstruction of ethanol production plants from biomassshould help subsidize remaining costs involved in building this infrastructure. Finally, technical advances fromcompanies such as Novozymes (with its North Americanheadquarters in Franklinton, N.C.) are making ethanolproduction far more economically feasible.North Carolina as a leader inagricultural biotechnologyNorth Carolina’s farmers grow many economically important agricultural products and rank first in the nation in the production of many food, fiber, and forestryproducts. In the east, farmers raise sweet potatoes, watermelons, hogs, tobacco, cotton and many other importantcrops. In the west, other agriculture-related industriessuch as the forestry industry and wild-crafting (harvesting of medicinal herbs from the wild) thrive.Industrial bioprocessing will grow in importance toNorth Carolina. This has beendemonstrated by the 5 million Golden LEAF investment in the Atlantic Bio-Energybiodiesel plant, the North Carolina Legislature’s passage of a taxmoratorium on biodiesel sales, andlegislation introduced to providetax credits for biodiesel production, and the planned constructionof several ethanol plants.Corn has been the first crop ofchoice for most ethanol production plants in existence and on thedrawing board. North CarolinaNORTH CAROLINA BIOTECHNOLOGY CENTER502/2006

AGRICULTUR AL BIOTECHNOLOGY IN NORTH CAROLINANorth Carolina’s ag biotech companiesNorth Carolina has all the components for success in agricultural biotechnology: astute farmers, agricultural biotechnology companies, stellar research, committed teaching institutions, an entrepreneurial spirit, informed citizens, and strong state leadership. North Carolina leadersunderstood very early that the tools of biotechnologywould impact many industries vital to North Carolina’seconomy, including agriculture. North Carolina’s government leadership has been evident in the North CarolinaDepartment of Agriculture and Consumer Services, funding for universities with a focus on agriculture, and alsoin the establishment and maintenance of the North Carolina Biotechnology Center and its programs.North Carolina ranks in the top two states in the nationwhen it comes to agricultural biotechnology companies.North Carolina has more than 30 ag biotech-relatedcompanies employing at least 2,500 workers in the state.These companies include major multi-national corporations such as Bayer CropScience, Syngenta, Monsantoand BASF, established biotechnology companies suchas Embrex, and small entrepreneurial ventures such asSun Dance Genetics and BioResource International. (Seethe table on North Carolina agricultural biotechnologycompanies. Please note some companies fall into multiplecategories.)AgBio/ Advanced Animal DiagnosticsAgraSoLAgraSoLAmerican AgriculturalServicesAkkadix GeneticsBiogaiaAthenixBioResource InternationalBASFCropsolutionBayer Crop SciencesEmbrexCropsolutionIdexxJabb of the CarolinasJabb of the CarolinasKHH BioSciMedtox DiagnosticsMedtox DiagnosticsNovartis Animal HealthMonsantoPiedmonºt PharmaceuticalPhytoMycoSun Dance GeneticsSyngenta BiotechnologySyngenta Crop ProtectionYellow Creek BotanicalsBecause agricultural biotechnology is driven by innovation,it naturally clusters around excellent universities. NorthCarolina has world-class research in agricultural biotechnology at multiple institutions. In addition, North Carolina’s teaching institutions are committed to agriculturaleducation. The North Carolina Community College System(NCCCS) recently announced a focus on agricultural biotechnology as part of the BioNetwork System, a new economic development initiative funded by the GoldenLEAF.Robeson Community College has been established as aNCCCS BioNetwork Center for BioAgriculture.FoodsEnvironmental/ BiofuelsAjinomotoAlderonBiogaiaAthenixCorn Products InterationalEcoGenomixDSM Food biotic Detection SystemsIndustrial BiotechNovozymesNorth Carolina’s modelfor biotechnology developmentand its application to agricultureWanting North Carolina to be at the forefront of biotechnology,the State in 1984 created the North Carolina BiotechnologyCenter to stimulate the biotechnology economy and createjobs for North Carolinians.The Biotechnology Center’s mission is to provide long-termeconomic and societal benefits to North Carolina by supportingbiotechnology research, business and education statewide.Although the Biotechnology Center works with all aspectsof biotechnology, many of its resources have been devotedspecifically to agricultural biotechnology.NORTH CAROLINA BIOTECHNOLOGY CENTER602/2006

AGRICULTUR AL BIOTECHNOLOGY IN NORTH CAROLINAFrom Research to Row Crop: putting agriculturalbiotechnology to work for North CarolinaNorth Carolina has become a leader in agricultural biotechnology because it has made theright investments to move biotechnology innovations from research to row crop. This sectionof this report looks at the work of the North Carolina Biotechnology Center and its partnersthat has helped make North Carolina a leader in agricultural biotechnology. Strategies used toachieve this leadership position have included generating new ideas, moving ideas to market, creatingreasonable regulations, preparing teachers and educating the public.Generating new ideasAgriculture Awards to North CarolinaUniversitiesGenerating new ideas that can eventually lead to newcompanies and jobs is essential for North Carolina’seconomic prosperity. University research is the primarysource of these ideas and drives innovative new businesses and job creation. The most immediate payoffcomes from applied research, but even basic research canultimately lead to commercial products. North Carolinahas some of the world’s foremost research universities ofagricultural biotechnology. Nurturing this research andbuilding infrastructure are critical to growth and innovation in agriculture. 8,545,803Total Follow-on Funding: 76,624,250For every dollar invested by theBiotechnology Center, amount theseprojects secured in subsequent fundingfrom other sources: 8.97Planting seeds for the future: six sneakpreviewsA total of 10,188,967 in agricultural biotechnologyfunding was awarded through multiple Biotechnology Center programs from 1984 to 2004. Funding wasdistributed through two broad categories: grants toNorth Carolina universities and loans to North Carolina companies. This investment has spurred more than 173 million in follow-on funding from other sources.Grant funding is described on this page; loan funding isdescribed on page 9, in the section on Moving Ideas toMarket.The Biotechnology Center has funded early stage research projects that may be pivotal for future innovationin agricultural biotechnology. Following are summariesof six recently funded Biotechnology Center researchprojects that may yield innovations with commercial potential for farmers.Sweet potatoes for fuelResearchers are developing sweet potatoes that can easilybe processed for ethanol extraction. North Carolina is thenational leader in sweet potato production, growing 40percent of the nation’s sweet potatoes, so our state couldbenefit tremendously from increased use of this crop.Overview of Biotechnology Centeragricultural grant fundingThe Biotechnology Center made more than 170 awards inagriculturally related research to universities from 1984to 2004 through its Science and Technology DevelopmentProgram. Many of the projects funded went on to garnersubsequent funding (follow-on funding) for the researchinitiated by the original Biotechnology Center award. Total follow-on funding for grants awarded between 1984and 2001 is currently 76,624,250, or 9 for every dollarinvested by the Biotechnology Center. Follow-on funding continues to accumulate for as long as the projectis active, so this figure (particularly for the more recentawards) is likely to increase.NORTH CAROLINA BIOTECHNOLOGY CENTERTotal of Grants Awarded:Cleaner hog wasteWaste management has become a key environmental andregulatory issue in North Carolina’s large hog industry.Researchers are developing ways to reduce phosphorouspollution from hog farms by adding a microbial enzymeto hog feed, which helps the animals absorb more phosphorous in the gut.702/2006

AGRICULTUR AL BIOTECHNOLOGY IN NORTH CAROLINABetter watermelonsSpotlight on agricultural biotechnology:BiopharmingResearchers are working with scientists at Syngenta tomap the watermelon genome — all the genes that make upthe plant. The genetic tools derived from these studies mayenable scientists to develop disease-resistant watermelon.This would be good news for North Carolina farmers whogrow watermelon. More acres of watermelons are plantedthan any other vegetable in North Carolina.The Biotechnology Center initiated the BioProcess &Process Devel

What is agricultural biotechnology? Biotechnology is a broad collection of tools and technolo-gies that involve the manipulation of living cells and/or biological molecules to solve problems and make useful products. Agricultural biotechnology is the application of biotechnology to agriculture. Agricultural biotechnology

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