Illustration by Michael George Haddad
Canadians are the first in the world to eat a genetically engineered (genetically modified or GM) fish, thanks in part to years of funding from the federal government. This outcome is either a triumph or a failure of Canada’s innovation policy.
In this case, the federal government supported the development of a product that is sold unlabelled in grocery stores, but that 38% of Canadians say they would “definitely not eat” if given the choice. Public grants and loans were issued for developing GM salmon, and its commercial success relies on government regulatory approvals.
The product’s success also, arguably, depends on the government maintaining its position against mandatory labelling of genetically modified foods, which goes against the wishes of the vast majority of Canadians and bucks the international trend.
Public investment, private product
Genetic modification has been controversial in Canada for 20 years. Yet in that time, according to a Vice article this March, the federal government has provided at least $8.2 million in various grants and loans to support the development of the world’s first genetically modified food animal.
The product in question is an Atlantic salmon that has been genetically engineered with a growth hormone gene from Chinook salmon and genetic material from ocean pout. The company AquaBounty says its AquAdvantage™ salmon grow to market-size twice as fast as other farmed salmon. It is currently produced in small quantities at the company’s pilot plant in Panama, and Canada is the first and, so far, only market.
Public funding for private research is common across industry sectors, from many government agencies and departments. However, biotechnology was identified early on by the federal government as an economic driver and therefore a priority for innovation investment.
As documented by Devlin Kuyek in a 2002 report (see Further Reading below), Canada reorganized its public research system to privilege biotechnology. In the late 1980s, major federal granting councils were given mandates to support Canadian competitiveness, and new sources of research funding such as Genome Canada, the Canadian Foundation for Innovation, and the Technology Partnerships Program were opened up, each with biotechnology as a priority.
AquaBounty’s GM salmon is a beneficiary of this reorganization. The technology behind the GM salmon was commercialized from university research and the key patent is jointly owned by Canadian university professors Garth Fletcher and Choy Hew. Fletcher, of Memorial University in Newfoundland, received over $2 million in public funding from 1982-2012 to develop the technology. According to a 2015 article in the Gazette, the university’s official news site, the Natural Sciences and Engineering Research Council (NSERC), a federal granting agency, encouraged the commercialization of his research.
“In 1991, when we were applying to renew our NSERC grant to continue our growth hormone gene transfer research, we were reviewed by an NSERC site visit committee who encouraged us to look for an industrial partner so that the results of our research could be commercialized,” elaborated Fletcher in his October 2016 testimony before a parliamentary agriculture committee.
Ultimately, the professors became two of four founding members of AquaBounty. Fletcher worked with the company for approximately 10 years and supervised much of the research needed for its data submissions (for safety assessments) to Canadian and U.S. regulators. The U.S. government’s approval of the product in 2015 “demonstrates that with care, good science and patience, innovative research in this somewhat controversial field can be taken from the laboratory bench to the market place,” he told the Gazette.
Both funder and regulator
The Canadian government also invested in the research and development of the GM salmon through at least two agreements that included royalty repayment. The government is set to receive 10% royalties from sales relating to the GM salmon research, as part of a $2.8 million funding agreement in 2009 between AquaBounty and the Atlantic Canada Opportunities Agency (ACOA). The agency provided almost $3 million to support the company’s research into technology to improve the sterility rate of the GM fish in an arrangement that is not strictly a loan or a grant.
The federal government will collect royalties until the $2.8 million is repaid, but only if the technology is a success. The first repayment, scheduled for 2015, has yet to happen. In 2017, AquaBounty stated that it expected to begin paying royalties in 2018, then clarified in a quarterly report this year that sales of the GM salmon itself were not subject to the royalty and that it “does not expect to commercialize products that would be subject to the royalty in the next five years.”
In 1999, according to company circulars, AquaBounty negotiated a similar interest-free loan for just under $3 million from Technology Partnerships Canada, “to support the Canadian Subsidiary’s efforts to develop commercial applications of its transgenic growth enhanced fin fish technology.” That loan was repayable by a 5.2% royalty “on revenues generated from the sale of transgenic based growth enhanced fin fish commercial products,” but it was never repaid because such obligations expired in 2014, before the company received any government approval to sell its GM fish.
The federal government knew that if the GM fish research led to a viable product it would also be responsible for regulating it. In fact, while ACOA was supporting development of the GM fish, Fisheries and Oceans Canada was conducting world-class research into the possible environmental risks—research later used in the regulatory assessment process that led to an approval from the environment minister in 2013.
AquaBounty was given approval to grow the GM salmon at its small Bay Fortune, Prince Edward Island site where the company was already producing GM fish eggs for research and development purposes. In 2016, Health Canada also approved the GM salmon as safe to eat. However, as clarified by a 2016 court ruling, the company still needs federal approval before it can produce its planned 250 tonnes of GM salmon at a commercial facility now under construction at Rollo Bay, P.E.I.
AquaBounty reports that the Rollo Bay factory is key to its business plan. If approved, it would be the world’s second commercial-scale GM fish factory after a larger facility that was recently approved, but is not yet operational, in Indiana. Commercial success is only possible with regulatory approvals for production and sale. On this, AquaBounty is explicit.
“In the future, our revenue will depend upon the number of countries in which we have received regulatory approval for the sale of our products, the number and capacity of grow-out facilities we have in operation, and the market acceptance we achieve,” the company said in a November 2017 filing with the U.S. Securities and Exchange Commission (SEC).
Policies to aid market acceptance
Government funding was critical to helping one company commercialize the world’s first GM animal. The product’s success, however, may also depend on Canada’s position against mandatory labelling in the grocery store.
Canadians have no information about where the genetically modified salmon is sold because of the long-standing, firm federal position against requiring labelling of GM foods. This position has been maintained despite 20 years of polling that consistently shows over 80% of Canadians want mandatory labelling, and a number of nationwide campaigns to spur this regulation. Canada’s position also bucks the global trend, since various forms of mandatory labelling are implemented in 64 other countries.
Protesters outside an AquaBounty facility in Bay Fortune, P.E.I., 2015. (Photo courtesy CBAN)
In December 2016, the parliamentary agriculture committee held hearings on “Genetically Modified Animals for Human Consumption,” which included a study of “what steps should be taken to best inform the public about new products planned for introduction to the market.” The committee ultimately recommended “greater transparency in the regulatory system that evaluates genetically modified animals intended for human consumption,” but said there should be no mandatory labelling.
In May 2017, when the House of Commons voted down a private member’s bill for mandatory GM labelling, the industry-funded International Service for the Acquisition of Agri-biotech Applications (ISAAA) called it “a manifestation of government support of biotech crops.” A month later, the GM salmon was shipped to market for the first time.
Mandatory labelling would jeopardize commercial success. A 2015 poll conducted by Ipsos Reid for the Canadian Biotechnology Action Network (CBAN) found that 38% of Canadians would “definitely not eat” the GM salmon if they had the choice. As AquaBounty stated in its 2016 annual report, “We may have limited success in gaining consumer acceptance of our products.”
Announcing its first sales in 2017, the company admitted it “is subject to risks and uncertainties common in the biotechnology and aquaculture industries,” including “the commercial acceptance of any products approved for sale and the Company’s ability to manufacture, distribute, and sell for a profit any products approved for sale.” Without labelling, this risk of market rejection is mitigated.
AquaBounty said its first-ever sale of GM salmon “was very well received by its customers in Canada,” but who these customers are is unknown. Canadians were eating the GM fish before any public announcement of the product hitting the market. AquaBounty disclosed its first sales in its August 2017 SEC filing, after it had already shipped 4.5 tonnes of product into the Canadian market (sometime in the April-June quarter).
Investigations by CBAN and the Quebec network Vigilance OGM (GMO Watch) discovered that the GM salmon arrived via shipments to Quebec in June 2017. Some of that went into grocery stores, but most was bought for the food service industry. Also, all of Canada’s major grocery chains stated, in correspondence to CBAN, that they have no plans to sell GM salmon at their seafood counters.
A June 2018 MacLean’s article named the two wholesalers who purchased the first shipments of GM salmon, but one company refused to comment and the other denied importing the GM fish. Ultimately, there are only two players who know where the GM salmon is: the company producing it and the companies that bought it.
Innovation policy collision course
This is not the first time that federal innovation policy has collided with the controversy over genetic modification. In 2003, the media reported that Agriculture and Agri-Food Canada would collect royalties if Monsanto’s GM wheat was approved and sold. The federal department had provided publicly-owned germplasm to the U.S.-based company to develop its GM “Roundup Ready” herbicide-tolerant wheat. Monsanto also received $800,000 in Matching Investment Initiative (MII) funding from the government.
Monsanto ultimately withdrew its request for approval of that product in 2004 because of farmer and consumer protest in Canada and the U.S., along with sustained international market rejection.
“GM wheat will lead to massive market losses and will effectively close borders to Canadian exports,” said the National Farmers Union in 2003. And they were right. Earlier this year, though GM wheat is still not approved for cultivation anywhere, a few wheat plants with Monsanto’s “Roundup Ready” GM trait were found on a road in Alberta, leading Japan and South Korea to suspend trade with Canada pending tests for GM contamination.
“At this time, there is no domestic or international market demand for a GM wheat product,” stated the Canadian Food Inspection Agency (CFIA) following this year’s detection of contamination in Alberta. However, the question of market demand and risk is not part of the government’s GM product assessment. Farmers were not consulted before Agriculture and Agri-Food Canada entered into an agreement with Monsanto, nor were they consulted before the CFIA approved field tests of GM wheat and started assessing it for commercial release.
Government investment in research and development, and royalty collection from GM products, changes how we understand other policies that support the introduction or commercial success of genetically engineered products.
By 2009, when ACOA and AquaBounty signed their latest royalty arrangement, at least two private member’s bills for mandatory labelling had been defeated in the House of Commons (in 2001 and 2008). And while Monsanto and the department of agriculture were collaborating on GM wheat research, the CFIA removed a provision for considering market impact from the variety registration process that could have blocked the new GM product’s commercialization.
In both examples, the government made public engagement in decision-making over genetic engineering less possible, while continuing to invest in product development.
Risky investments
The public is not consulted before the government invests in research, nor before it approves any new GM product. For all the public funding that went into the genetically modified salmon, the public was never part of the decision-making.
Removing opportunities for public participation helps create a more predictable environment for the introduction of GM crops, food and animals, but without the benefit of public consultation, funding biotechnology research has saddled the government with some risky and controversial investments.
AquaBounty co-founder Fletcher told Memorial’s Gazette magazine in 2005 that when he and Hew were genetically engineering Atlantic salmon, “[t]he thinking was that rapidly growing salmon would have worldwide appeal to the aquaculture industry.” This may have been the case when they first began their research in the early 1980s, but the first protest against the GM fish was at AquaBounty’s P.E.I. research site in 2001, and by the time the company requested regulatory approval in Canada all the corporate members of the Canadian Aquaculture Industry Alliance had publicly disavowed it.
In 2002, Kuyek, now a researcher with the non-governmental organization GRAIN, said the Canadian government was supporting a “losing industry,” since there were still no major Canadian biotechnology companies. Canada’s biotech industry was “simply a feeder industry for the big TNCs (transnational corporations)of the U.S., Europe, and Japan,” consisting almost entirely of small firms, spun off from university or hospital research, none of which were profitable.
A genetically engineered Atlantic salmon, top, and conventionally bred salmon of the same age at the AquaBounty Farms facility on P.E.I., July 26, 2007. (Paul Darrow/The New York Times/Redux)
Even today, GM salmon typifies this trajectory. AquaBounty was itself spun off from Canadian university research into a U.S.-owned subsidiary, and has been majority-owned by the U.S. biotechnology company Intrexon since 2003. Intrexon also owns the small Canadian biotechnology company Okanagan Specialty Fruits, producer of the controversial GM non-browning apple.
Despite its foreign ownership, in November 2017 the biotechnology industry lobby group BIOTECanada presented AquaBounty Technologies Inc. with an award for Best Emerging Agriculture Company.
“As many of you know, AquaBounty is a small company with a long history,” said CEO Ron Stotish on receiving the award. “Our efforts in Canada have been greatly aided by the supportive business development environment, the support of national and provincial governments, and in particular the support of BIOTECanada and the PEI BioAlliance.”
For BIOTECanada, “AquaBounty highlights the particular strengths of the Canadian ecosystem, where game-changing innovations are being developed and supported by a community of entrepreneurs and leaders in all parts of the country.” And yet, earlier that year AquaBounty’s financial reporting stated, “We have incurred losses from operations since our inception in 1991, and, as of June 30, 2017, we had an accumulated deficit of $103.4 million.”
The company earned just $53,000 from its 2017 GM salmon sales, and lost $2.1 million in that same year. Intrexon’s stock price has dropped from a record high of US$64 in July 2015 to just over US$14 in July 2018. In its August 2017 SEC filing, AquaBounty made reference to its profitability: “Until such time, if ever, as we can generate positive operating cash flows, we may finance our cash needs through a combination of equity offerings, debt financings, government or other third-party funding, strategic alliances, and licensing arrangements.”
Public participation is the way out
A “frequently asked questions” document from Health Canada asks, “Does the Government of Canada endorse AquAdvantage Salmon?” The answer: “The Government of Canada neither advocates for, nor opposes, specific products. Regulatory decisions are evidence-based and impartial.”
However, because the government has already assumed a significant role in funding biotechnology research, this claim to impartiality needs to be supported by increased transparency and new mechanisms for public engagement.
The Canadian Biotechnology Action Network suggests that such measures should include publishing all loan and grant agreements (currently classified as confidential business information) and reporting any royalty payments and payment schedules to the public. Fundamentally, the public should have a role in deciding priorities for innovation investments.
Moreover, if the government continues to invest in biotechnology research and development, it also needs to establish mandatory labelling of all GM foods so that there is transparency for consumers and the government is not perceived as interfering in the prospects for market acceptance. This is especially critical if the government is to collect royalties from the sales of any GM foods.
The federal government does not consult the public before deciding to support biotechnology research projects or allowing GM crops or animals into our food system. Without such consultations, decisions are also made without the inclusion of economic, social and ethical considerations.
Canada’s experiences with GM wheat and GM salmon show that innovation cannot be governed by scientific curiosity and commercial interest alone. There needs to be a place for public engagement. If, as Kuyek argued in 2002, the federal government is the biotechnology industry’s largest Canadian shareholder, then Canadians should be a part of decision-making. Consulting the public and industry stakeholders such as farmers would help the government assess which innovations are economically viable and of social worth.
***
Lucy Sharratt is Co-ordinator of the Canadian Biotechnology Action Network (CBAN), which brings together 16 groups to research, monitor and raise awareness about issues relating to genetic engineering in food and farming. CBAN members include farmer associations, environmental and social justice organizations, and regional coalitions of grassroots groups. CBAN is a project on the shared platform of Tides Canada, a registered charity.
FURTHER READING
The Real Board of Directors: The Construction of Biotechnology Policy in Canada, 1980-2002, by Devlin Kuyek, The Ram’s Horn (2002).
Resistance is Fertile: Canadian Struggles on the BioCommons, by Wilhelm Peekhaus, UBC Press (2014).
Growing Resistance: Canadian Farmers and the Politics of Genetically Modified Wheat, by Emily Eaton, University of Manitoba Press (2013).
Canadian Biotechnology Action Network (www.cban.ca).
National Farmers Union (www.nfu.ca).