The Potential Effect Of Two New Biotechnologies On The World Dairy Industry

Lovell S Jarvis

• Publisher: CRC Press
• Year: 2019
• Print ISBN: 9780367295288
• eBook ISBN: 9781000304909
• Edition: 1
• Topic: Biological Sciences
• Subtopic: Biology
• Index: Biological Sciences

Biotechnology is expected, by many observers, to have a significant impact on the world dairy industry over the next decade. In this timely volume, Lovell Jarvis analyzes the potential effect of two biotechnologies—multiple ovulation and embryo transfers (MOET) and recombinant bovine somatotropin (rbST—on the dairy industry around the world. According to Jarvis's research, the effects of these two technologies will vary greatly between the developed and developing nations. He predicts that the technologies will be most profitable for the developed nations, where their use will increase milk production and strengthen their positions in dairy export markets. Developing country dairy sectors will probably lose from the use of these two biotechnologies, as their own international trade position will be weakened, though their own consumers should benefit. Jarvis concludes his study with a look at alternative approaches that might improve the competitive position of developing countries in the dairy sector.

1
Introduction

Technological change is the main force leading historically to higher milk output, lower costs of production, and lower consumer prices. In recent years, the development of biotechnology has offered the potential for the emergence of new technologies that may further reduce the cost of milk production. This study analyzes the expected profitability, use, and effect of two new biotechnologies. One of these biotechnologies involves the administration to dairy cows of a genetically engineered hormone, recombinant bovine somatotropin (rbST), which can increase milk yields and feed efficiency. The other biotechnology involves the use of drugs to induce multiple ovulation in cows, the subsequent collection and fertilization of the eggs produced, and the transfer of the resulting embryos to other recipient cows. By permitting an increase in the intensity of genetic selection, multiple ovulation and embryo transfer (MOET) can also achieve a more rapid rate of increase in milk yields. The continual creation of first generation (F1) crossbred dairy calf embryos and their transfer to donor cows also offers an opportunity to increase milk production in some developing countries where crossbred dairy cows are the preferred choice of dairy farmers.

rbST and MOET are among the first two major biotechnologies created. That fact alone has gained them considerable attention. That they are used to produce milk, perhaps the most basic and one of the most widespread foods consumed by man, has heightened interest in their effects. rbST has generated particular attention because of concerns that its use might cause harm either to the cows who are injected with it or to the humans who drink the milk from these cows. Even if rbST is not harmful to human and animal health, there is also concern that its use might so increase milk supply that the disruptions created in the dairy market would bring greater social costs than benefits. MOET has been less discussed in the popular press, probably because MOET has not raised the same health issues. However, the long-term effects of MOET on milk production, milk price, and the structure of the dairy industry should be similar to those of rbST.

The two biotechnologies have potential to substantially affect the world's supply of milk during the next two decades. These biotechnologies are already being adopted in the United States. A number of other developed countries have begun adopting MOET, though most have postponed approval of rbST. What will be the eventual extent of the adoption of these biotechnologies in developed countries? Will these biotechnologies also prove profitable in developing countries and be adopted there too? These issues are explored here. The worst scenario from the viewpoint of developing countries would seem to be that the new biotechnologies will prove profitable only in developed countries. If so, although consumers in developing countries might benefit from lower international milk prices, dairy producers in developing countries would not be able to adopt them and thus would find their comparative advantage in milk production decreased.

On the other hand, high rates of population growth and the combination of high income elasticities of demand for milk and high rates of income growth should lead to substantially higher demand for dairy products in many developing countries. The development and adoption of rbST and MOET could achieve a substantial rightward shift in the supply curve of milk, permitting the growth of global milk supply to keep up with rising demand and perhaps even sustain a long term decline in consumer prices.

In addition, it appears that milk is a particularly important food from the viewpoint of human nutrition so that there should be special interest in technological developments that lower its cost. Research has shown that child nutrition in developing countries is positively associated with the amount of animal products in the child's diet (Allen et al., 1991). Although the way by which animal products affect child nutrition are not fully understood as yet, this finding suggests that the consumption of animal products conveys special benefits, probably via micronutrients, that are reflected in child development, perhaps cognitively and emotionally as well as physically. If this is so, increasing access to animal products is especially desirable. Food products of animal origin are usually more expensive than food products of vegetable origin, but milk is the animal product most likely to be accessible to most children in terms of availability and cost.

This study proceeds along three dimensions:

1. an analysis of the microeconomics of rbST and MOET in developed and developing countries, given those factors in each region that are expected to influence the profitability and adoption of these biotechnologies,
2. an estimate of these technologies' likely effect on milk costs, and
3. projections of possible supply/demand balances of dairy products in both regional and world markets under several different assumptions regarding the adoption of the two new biotechnologies in developed and developing countries.

Chapter 2 analyzes the profitability of rbST in developed and developing countries, and the factors on which such profitability depends. Chapter 3 discusses the profitability of MOET in developed and developing countries, including a specific analysis of MOET's use for the continuous development of first generation (Fl) cross-bred calves for dairy use. Chapter 4 reviews the recent growth in milk production, consumption and international trade for major milk producing countries and for different regions, and projects future supply-demand balances with and without the increased production that the use of rbST and MOET might achieve. Chapter 5 contains conclusions.

Some advance knowledge of the book's conclusions may be helpful. It would be relatively easy to dismiss the current applicability of both rbST and MOET to developing countries because each requires a high level of management skill and of animal nutrition in order to achieve the increase in productivity that makes its use profitable. Few developing country milk producers can offer either of these inputs at the levels that will be required. In addition, developing countries already possess a large stock of conventional technologies that appear more appropriate to their existing resources than do these two biotechnologies, whose use taxes even the management skills available in developed countries. Investments in these conventional technologies or to facilitate their use will usually be more profitable in the foreseeable future than investments in the two new biotechnologies discussed here.

Nonetheless, it is crucial to understand the new biotechnologies, their effects, and the constraints on their use if appropriate policies are to be formulated in developed and in developing countries. From the viewpoint of this study, the issue is less one of safety and more one of profitability. Each of these two biotechnologies appears safe from a human health perspective, given the information currently available. Each poses some health risks for cows, but these appear relatively small and manageable.

It now appears that both rbST and MOET will be adopted and used on some farms both in developed and in some developing countries. Their rates of adoption will increase over time and it appears that their use will reduce the cost of milk production, mainly to the benefit of consumers. The technologies will be used more in developed countries than in developing countries for the foreseeable future. This fact does not mean that the two biotechnologies will soon become standard practice. Even in developed countries, most dairy producers will have to learn a considerable amount about the new technologies in order to make their use profitable, and they will have to significantly alter their management systems. In developing countries, more extensive management changes will be required, and the production context will also have to change. Most developing countries are beginning to make substantial progress in improving their production systems and in adopting more conventional technologies to bring down the cost of milk. This progress should be continued as it will provide greater benefits than efforts to use the new biotechnologies in the short run. Such progress is also the surest approach to the profitable use of rbST and MOET in the future.

2
Recombinant Bovine Somatotropin (rbST)

bST is a hormone that is naturally produced in cows' pituitary glands (Asimov and Krouze, 1937). bST is a homeorhetic control that coordinates the metabolism of many tissues in dairy cattle. It is scientifically known both as bovine somatotropin (bST) and also as bovine growth hormone (bGH). Among other effects, it triggers milk production in cows' mammary glands. Although bST was identified over a century ago, the high cost of its production restricted research and practical applications until recently.

Recombinant bovine somatotropin (rbST) is a genetically engineered synthetic analog of the natural hormone. Scientists identified the gene responsible for production of the natural bST and, using standard genetic-engineering techniques, duplicated the gene and spliced it into the DNA of E. coli bacteria. These bacteria can be multiplied in fermentation tanks where they secrete large amounts of the rbST (a protein closely similar or identical to bST), which then can be inexpensively extracted for injection into cows (Bauman et al., 1985; Roush, 1991).

The injection of rbST produces a biological reaction that is essentially the same as that which occurs in dairy cows that naturally produce high levels of bST. Indeed, some researchers have suggested that conventional breeding programs designed to increase milk yields in dairy cows may have been selecting for genes which lead to high levels of bST production. Under the appropriate conditions, cows injected with rbST produce more milk. Although they require an increase in nutrition in degree similar to that which naturally higher-yielding cows also require, rbST also increases the efficiency by which feed is converted into milk. rbST coordinates metabolic processes so that more nutrients are partitioned toward milk production during lactation and toward accumulation of lean tissue during growth (Bauman et al., 1989).

Four pharmaceutical firms applied to the Federal Drug Administration (FDA) for permission to market rbST. Approval of rbST was long pending because of controversy regarding its safety for humans and for cows. However, the Food and Drug Administration (FDA) of the United States determined that rbST is safe and approved the variety produced by Monsanto (Recombinant Methionyl Bovine Somatotropin — Sometribove) for on-farm use in November 1993. Sometribove became commercially available in the United States in February 1994. It is still uncertain how rapidly or to what degree on-farm adoption of rbST will occur, although several recent studies suggest that adoption in the United States will occur rapidly. The situation is different in Europe. For example, although the Committee for Veterinary Medicinal Products of the European Economic Community concluded that rbST is safe for use (Commission of the European Communities, 1993), the Economic Community (EC) nonetheless imposed a moratorium on the commercial use of rbST, primarily out of concern that its adoption would exacerbate EC milk surpluses.² Canada has also imposed a moratorium on the use of rbST.

The use of rbST has been opposed on the basis that its use will:

1. be dangerous to humans who consume the milk produced,
2. harm the cows to which it is administered, and
3. so dramatically increase milk supply that it will seriously decrease milk prices, causing special harm to poorer farmers who may not find it profitable to adopt rbST.

No evidence has been discovered that rbST is dangerous to humans, though debate on this issue continues (e.g., Rouse, 1991; McGuirk and Kaiser, 1991. The evidence regarding rbST's effect on the cows to which it is administered generally suggests no serious effects, (e.g., Burton et al., 1987; Bauman et al., 1989; Phipps et al., 1990, and Jordan et al., 1991), but again there is debate (e.g., Kronfeld, 1993). ...

Table of contents

• Cover
• Half Title
• Title
• Dedication
• Contents
• List of Tables and Figures
• Acknowledgments
• 1 Introduction
• 2 Recombinant Bovine Somatotropin (rbST)
• 3 Multiple Ovulation and Embryo Transfer (MOET)
• 4 The Projected Effects of rbST and MOET on World Dairy Markets
• 5 Summary and Conclusions
• Appendix I. List of Study Regions and Countries
• Appendix II. Data and Methodology for Projections
• References
• About the Book and Author
• Index