Thank you for the opportunity to be here today. I intend covering a range of issues including biotechnology, environmental and social accountability. Accountability means auditing and identity preservation, so yes… I do have a point of view. No doubt there are different points of view on these issues. Perhaps differences in perceptions, perhaps differing levels of awareness. I shall be talking about perceptions later.

Emerging is an interesting word; it starts with an E, which is a great start these days. In dictionaries the ‘e’ is usually given as from e, ex meaning ‘out of or from ‘ as in emigrate/migrate and merge to blend, join, dip. Emerge is related to emergency (crisis) and to submerge (suppress). I think it is an ideal word for this paper on biotechnology.

Sainsbury in UK values its customers feedback, they have over a million items a year. Sainsbury runs a Customer Hotline averaging 10,000 calls a week. At the height of the ‘mad cow’ scare, they were receiving up to 900 calls a week. In March 1999 the GMO issue was

Running at 1300 calls a week. As a result Sainsbury changed their policy from being a supporter of GM to removing GM foods by Christmas. This was despite having a market leader GM product with their GM tomato paste (labelled).

Item 2.

The Financial Times in April was running GM stories on the front page. All the newspapers were. The FT science editor said it was frustrating to have an issue come up and then see it grow out of reach. He explained that biotechnology was a ‘science page’ topic; regularly, he had items on the topic. When GM food (or any other topic) becomes ‘front page’ the normal page one rules apply, editors and sub-editors run with the top journalists. The views of the science editor become less important. The topic has legs; it will run and run.

Item 3

Carrefour maintains an information database on each of its private label products (food and non-food) which covers technical and non-technical matters. The technical data includes genetic criteria, DNA tracing/fingerprinting, detailed chemical and physical analysis, performance testing. The non-technical database is principally consumer information, obtained by market-segmented consumer testing with other products for comparison. The goal is to position a private label just above a leading brand on customer perception of quality and just below on price to create an unbeatable value proposition.

Recent reports from the United States indicate 52% of consumers are happy to pay more for perceived benefits, such as organic or local. A GMO backlash is occurring there too. The passing of a morbidity milestone has triggered the sensitivity of Americans to ‘food issues’; namely over half the American population now dies from cancer. Americans face an over 50% chance of dying from cancer. The safety of American food is under suspicion by some as a result of this. Could it be that this statistic is the main driver for the change in markets?

But the intensity of public feeling is not unique to food. The British people surprised observers (and themselves) with their reaction to the death of Diana. The death of John F Kennedy Jr. (with his wife and her sister) also produced a much greater response by Americans than observers expected.

Is this due to new skills in marketing newspapers, competition in the media, the information society, information overload? Perhaps to new-age thinking, emphasis on relationships, self image me-now materialism? Maybe to conspiracies, sectarianism, multi-nationals, resistance to the rate of change?

There are also the political factors. Although united, the countries of the European Union maintain their differences within the EU. Food standards rules relating to soft cheeses, pates, yogurts and fermented smallgoods are seen as interference with tradition or trade barriers.

Externally EU policies are seen as trade barriers, particularly by American commentators. The issue is market access; one that Australians have been facing since Britain joined the EU.

Within the EU some countries are trying to support ‘inefficient’ agricultural systems because of non-agricultural values, environmental, general economic and social. The main issue here is the accelerated rate of change and the reluctance of some interested parties to accept it. It is also difficult for these parties to provide updated measurement and analysis of the impacts on these externalities.

The issues include multifunctionality, local food, small farms, sustainable agriculture, animal husbandry, biological diversity and access to genetics. Loss of non-agricultural values such as rural populations/amenities, biodiversity, landscapes, animal freedoms and inheritance has consequences for all of us. We can identify these issues in the settler societies of USA and Australia. Imagine their significance in Europe where heritage values are so high!

All these factors contribute to the possibility of trade barriers/market access at the national/international level and to consumer preferences/product differentiation at the retail level. It is sometimes difficult to differentiate these.

Two examples, both from France, are eggs and fish.

There is a brand of eggs exploiting traditional values through the "laid on straw" slogan. The program has number of critical controls, on genetics, feed, handling, storage and delivery etc. All are audited externally but the message to the consumer is laid on straw.

The food needs of individual consumers can be structured into a hierarchy (after Maslow). The prime need is hunger, then safety, these are the life and death issues. The others are of diminishing impact. The series goes

Hunger>Safety>Variety>Convenience>Customisation>Environment

Understanding this hierarchy of food needs allows the marketing people to construct products and services that offer a competitive edge. For example, it allows Carrefour to work on product development, positioning products to suit particular demographics.

Designing the product is one aspect; another is informing the consumer about the product. Public relations, advertising, store promotion etc are all tools to implement this stage.

Some analysis may be necessary; for example the ‘environmental’ needs can be subdivided further, social, global, national, regional, local and individual. If the ‘environmental’ issue is seen as a ‘safety’ issue, then its importance rises dramatically. The rise of the GMO issue in UK was attributed by some to a change in consumer perception from environmental to safety.

We are used to standards based on dimensions, performance, durability and so on. We also have the technical infrastructure to handle the issues, labs, NATA, Standards Australia etc.

For the new product requirements the existing technical infrastructure is a barrier or a blind. It interferes with the customer communication process. We are not looking at production technicalities but rather at influencing consumers. The infrastructure is media, non-government organisations such as WorldWide Fund for Nature, consumer groups, supply chains, fashion shapers etc.

The new standards are those that these interested parties produce by negotiation or by leadership. Organisations such as the Council for Economic Priorities based in New York, Forest Stewardship Council based in Mexico, and the companies who take leadership positions such as Body Shop, Sainsbury, produce the new standards.

Note that the term ‘interested parties’ does not necessarily mean a lot of shared ground. Companies may seek to use biotechnology to improve production or improve products.

Other companies may seek to use biotechnology to create a differentiation in the market, to establish a competitive edge over a key competitor.

When Sainsbury changed its policy on GMO products, Tesco immediately responded. Tesco had to cover Sainsbury’s change of tack just as if they were match racing for the America’s Cup.

What about technical standards? What new technical standards can we foresee? As mentioned previously, the main driver in the United States is the cancer statistic, over 50% of Americans will die from cancer. The Europeans are also examining food for carcinogens.

The usual suspects are dioxin and PAHs (polyaromatic hydrocarbons such as benzopyrenes). One theory is that cooking is a mixed blessing; it destroys pathogens and creates carcinogens. The caution on burnt food has been around for many years but now it extends to processes other than barbecues.

The more discerning consumers are now prepared to pay significantly higher prices for vegetable oils, which considered less likely to be carcinogenic. Ideally vegetable oils should be cold-pressed, packaged in dark or opaque containers and stored in refrigeration.

Benzopyrene contamination can also occur from other sources such as internal combustion engine exhausts. Dioxins and metabolites of herbicides and pesticides are under close scrutiny, especially since the Belgian animal feed incident.

There will be a legislative approach based on scientific research. This will be supported by labelling initiatives.

Mandatory labelling will be resisted by industry but demanded by consumers, this is evident in USA, Australia, Europe and Japan. Industry will support voluntary labelling but the key label will be the brand logo, the brand giving confidence (remember Cadbury ‘pure’ chocolate and Guiness ‘is good for you’.

The new standards, the product labels and truth in advertising legislation mean that a raft of support services are necessary to support the marketing programs for the new standards. The supply chains need to be robust, able to demonstrate identity preservation, traceback to source and control during any processing operations. Examples of the new standards, the management systems by which organisations achieve them and the audit programs to demonstrate confidence in them include.

• CertID. Introduced by the European Retail Consortium and addressing the GMO issue. It covers propagation, production, distribution, storage, processing and manufacturing controls and includes an integrated information technology system
• Council for Economic Priorities SA 8000 -Social Accountability Introduced by this New York based NGO to address the issues such as those faced by Nike a few years back. Covers social and legal compliance such as OH&S, child labour, award rates.
• Freedom Food. Introduced by the RSPCA in UK and addressing animal welfare issues principally in intensive husbandry (poultry, pigs).
• Good Wood. Introduced by Forest Stewardship Council globally and most advanced in UK and Holland, addressing forest management issues.
• Green Globe. Introduced by the World Tourism and Travel Council and addressing environmental and social issues for resorts, attractions, cruise ships, tour operators etc.
• Nature’s Choice (Tesco, UK, whose supplier policy also requires producers to demonstrate environmental performance) It covers

• Use of Pesticides - each application being justified by agronomists.
• Handling of Pesticides- bunding of all storage areas, handling of residues, soak away areas etc.
• Use of Fertilisers - Qualified advice, soil, leaf analysis and justification to spray.
• Pollution Control Measures - Identify risks - control measures. Risks include
• excess irrigation water, water run-off, spillage of fertiliser, contamination by fuel oil, pesticides stores and equipment, soil, air (odour, noise and dust)
• plastics, packaging

When we face production issues every day, how can we expect to be able to handle the complex issues of the emerging food marketing issues? How does one examine technical issues from non-technical standpoints?

Perhaps the first rule is to select an appropriate message, messenger and medium. At the production level the biotechnologist, food technologist and engineer can participate in scientific risk assessment, rational debate, objective measurement and the like. At the market level this approach may be counter-productive. Scientists no longer can tell the public what is safe and what is not safe. Attitudes to fur coats, unprotected sex and cigarette smoke have changed considerably in the last fifteen years but the message has been more ‘front-page news’ rather than technical information on page 17. Effective delivery of the message requires the story to be front page and to have legs and run.

The second rule is to listen to the responses. No good just shouting the message, or listening only to an old favourite response. Because of the diversity of markets the different responses need to be listened to carefully and acted upon in a strategic way.

The sequence below offers a possible strategy for the industry. Four stages are envisaged.

• The time scale could be over three to five years.
• Identify good growing practices and encourage growers to follow.
• Adopt a systematic approach which is suitable for the industry and which could be regarded as equivalent to typical second party schemes. SGS can assist in achieving recognition for the scheme in addressing the new standards. Product identification is critical.
• Use robust supply chains capable of maintaining the chain of custody and enabling product certification.

Each grower could then develop the system to suit their individual requirements and seek individual certifications at any time they so choose. The supply chain can then deliver assured product, certified in compliance with the new standards.