By Dennis R. Thompson, Ph.D.
(July 7, 2004)

U.S. soybean production increased significantly in the post World War II era of the 1940's-50's. The decade of the 1960's was fraught with oil seed and feed grain crop surpluses. Strengthening world economies in the 1970's created new demands for U.S. soybeans and producers responded by producing even greater quantities of commodity soybeans to satisfy export markets. Food bean market niches developed based upon specific consumer requirements and thus was born the Identity Preserved market.

Although a niche was created for "food beans," independent of commodity soybeans, the food bean niche was and continues to be further segmented into mini-niche markets, i.e., tofu, miso, soymilk, natto, soy sauce, etc. Furthermore, the greater "food bean" niche was, and continues to be, further segmented due to regional taste preferences, i.e., Japan, Korea, South East Asia, etc.

Although niche market requirements for food beans differed significantly, the U.S. system began to successfully extract soybeans from its commodity system to meet customer requirements. Customer requirements were established based upon three primary categories of criteria:

1. Performance, i.e., demonstrated processing results, component composition (protein), taste, texture, etc.
2. Perception, i.e., what by the consumer's knowledge and experience one would expect processing results to be, etc.
3. Practicality, i.e., ease of differentiating soybeans, i.e., visual (yellow or clear hila), geographical source (IOM), variety specific (Vinton 81), etc.

U.S. soybeans destined for international food bean markets were typically transported by ocean vessel and in quantities much smaller than what the vessels typically accommodated for commodity soybean shipments. In some cases, vessels successfully partitioned off larger holds to accommodate the smaller food bean shipments. All too often, a few commodity soybeans infiltrated food bean shipments. To rectify the matter smaller bulk quantities or bagged soybeans were consigned for shipment in cargo containers, although this increased shipping costs. These systems worked reasonably well until customer requirements changed due to the 1995 introduction of biotechnology in seed development and the U.S. soybean industry's rapid adoption of the technology. Within just one decade the vast majority of U.S. soybean producers had adopted the RoundupR Ready technology.

Seed stock increases of seeds (GMO's) developed using biotechnology first occurred in 1995. Commercialization at the farmer level commenced with the 1996 planting season. The rapid farmer adoption rate of this technology (RRR owned by Monsanto) has been unprecedented in the history of U.S. agriculture. Initial reactions to the new technology included: a) U.S. seed and grain producers objected to restrictions on the saving of planting seed and the requirement to pay "technology" fees; b) Economic concerns of U.S. seed and grain producers emerged related to potential "yield drag" from the initial incorporation of the technology into available varieties that may have lacked agronomic competitiveness; c) Uncertainty with regards to potential food safety and human health concerns surfaced in some market regions, i.e. Europe; d) Societal concerns arose related to the possible impact on lifestyles, i.e., Japan; e) Consumers questioned governmental capability and effectiveness in assessing potential risks associated with the new technology. Feelings differed in belief and in intensity throughout various regions of the world, and; f) Significant efforts began to develop by some governments, consumer groups, and facets within commerce to disallow the entry of GMO's into the food system. Soybean markets segmented further with both the food bean and commodity market channels specifying with increasing frequency that GMO's were not desired. This negative selection against GMO's transformed the Identity Preserved food bean market to effectively become a Non-GMO market. Immediately, Non-GMO soybean programs became the IP norm. Ever since, the food bean market has experienced even greater segmentation presenting more challenges to both buyers and sellers.

Creative means of differentiating one source of soybeans from another emerged in a flourish in an effort for sellers to capture a share of the new order (Non-GMO) IP soybean market. The methods of differentiation generally used fall within some combination of five broad categories. The categories include: a) Contracts offered on a "not to exceed" a specified GMO content, i.e., 99.5% GMO free; b) Contracts based primarily on production and handling process criteria, i.e., ISO; c) Contracts in which production and handling activities were documented in an electronic database format, i.e., traceability of non-conforming products; d) Contracts offered where buyer's issued multiple criteria for any entity to fulfill, i.e., "pull through system"; e) Contracts proposed by organized producer groups purporting to have the unique ability to offer superior IP products or services, i.e., "push through system."

The U.S. member agencies of the Association of Official Seed Certifying Agencies (AOSCA), as a result of their collective longstanding experience in administering state and federal seed certification programs, were approached by industry and asked to develop IP programs which would be grounded in both science and practicality and could be administered by a reputable third party (AOSCA). AOSCA, in 1999, established General Standards for the Identity Preserved (IP) Program, which were designed to be used to underpin the development of multiple specific programs for clients having unique needs. Each proposed program must have undergone a peer review process designed to maintain integrity of the AOSCA program. Numerous programs have now been developed and all remain under the umbrella of AOSCA.

The General Standards are published by AOSCA in "Operational Procedures of the Association of Official Seed Certifying Agencies" (2001). They may also be found in their entirety on the AOSCA web site at www.aosca.org/. The purpose of the Identity Preserved (IP) logo is to identify products that have met specific requirements designed to preserve the genetic and/or physical identity of the product. Primary criteria categories include: a) Eligibility Requirements; b) Applicant's Responsibilities; c) Application for Field Inspection; d) Establishing Source of Seed; e) Field Inspection; f) Field Inspection Report; g) Product Handling; h) and Labeling. Numerous sub-categories exist.

Being an international federation for official seed certifying agencies AOSCA has members in several regions of the world. However, the greatest concentration of AOSCA memberships occurs in North America. Forty-three members, including Illinois Crop Improvement Association, Inc., are located in the U.S. All are designated as state or multi-state official agencies. A single agency is recognized by the Canadian government. U.S. and Canada work well together in AOSCA.

All U.S. states are represented in the AOSCA system and are thus entitled to originate, administer or participate in AOSCA IP programs. In the event there is customer interest in IP activity in a state which chooses not to become engaged. AOSCA will designate a cooperating agency to carry out the activity. Thus, AOSCA IP programs can occur in any U.S. state. Only one official AOSCA seal (logo) is permitted to designate the result of an AOSCA approved IP program. Although AOSCA allows for multiple programs to meet client needs there is only one official seal.

As the U.S. government has chosen not to designate a single authority with respect to IP programs the agricultural industry frequently references the AOSCA IP system as being representative of the U.S. For example, major organizations for which I have personally provided AOSCA-based programmatic, research or consulting services include: American Soybean Association, Illinois Soybean Association, Illinois Department of Agriculture, Novecta ? a joint venture of the Illinois and Iowa Corn Growers Associations, Illinois Farm Bureau, and the University of Illinois. Most recently, U.S. government has begun to recognize Process Verified Programs. This effort may be used in conjunction with or independently of AOSCA. It increases the options available in the marketplace.

AOSCA IP program principles have been incorporated into many proprietary IP systems and their programs, i.e., INNOVASURE? - milling corn, and various food bean programs. In other cases products such as Nisshin S.K.'s Fresh Pure Green?, are marketed using the AOSCA IP logo. Some in the identity preservation industry (www.IdentityPreserved.com ) reference the AOSCA standards in company literature. Many have utilized AOSCA agency services in their proprietary IP program offerings.

AOSCA agencies frequently serve as an identity preservation educational resource. For example, three unique situations in which Illinois Crop Improvement Association (ICIA) has provided in-depth expertise relate to contract work performed for the AgGuild of Illinois, Illinois Soybean Association's research affiliate, and American Soybean Association.

In recent years, ICIA has been employed to conduct producer education programs for the farmer members of the AgGuild. The AgGuild is a group of elite soybean and corn producers who offer products produced and handled under stringent IP conditions. During 2003-04, ICIA developed a proprietary "AgGuild of Illinois Identity Preserved Grain Production Manual" and an "AgGuild Producer Certification Program" to guide the organization's future efforts to deliver quality IP soybeans and corn to buyers. More can be learned about the AgGuild from their web site, which is located at www.agguild.com.

From 2000-2002 ICIA was a subcontractor to the University of Illinois and/or Illinois Soybean Association to assist in the design of a soybean specific identity preserved program applicable to all soybeans produced in the state. ICIA was instrumental in developing and testing the system which was patterned after the AOSCA model. Other researchers have since developed a pilot electronic platform to manage this unique certification system for value-added soybeans. Administrative oversight of the program will be provided by the Illinois Department of Agriculture. The auditing functions will be provided by ICIA. Currently the Illinois Department of Agriculture marketing division has taken leadership to market this concept internationally. More can be learned from Mr. Terry English, International Marketing Representative. His email is tenglish@agr.state.il.us.

American Soybean Association:

In 2004, ICIA was engaged to author Chapter 1 ? "The IP Process" of an Identity Preserved and Food Grade promotional brochure targeting the international soy food processing and importing industries.

Two major concerns have been frequently expressed by current or potential purchasers of U.S. produced food beans. The expressed concerns relate to: 1) Contamination levels (a measure of GMO presence above acceptable levels); and 2) The future ability and willingness of U.S. producers to supply international IP food bean markets. Each concern and relevant issues are discussed independently.

Contamination Concerns:

Whereas the word "contamination" suggests imminent danger, illegality or unwholesomeness, I suggest we use the more appropriate term of "non-conforming product" when addressing GMO levels which exceed contract specifications but fall below legal thresholds. Might not this terminology be more socially acceptable?

Some have suggested that IOM food beans consistently have a greater percentage (ratio) of non-conforming product than do beans sourced from the U.S. and Canada as a whole. I do not claim this to be factual, however, let us first explore factors that may lead to non-conformity of product. Next, we will touch lightly on the issue of regionalization.

Factors which singly or in combination may lead to farm level non-conformity with respect to the presence of undesired GMO's in IP grain include:

1. Presence of volunteer GMO plants in fields selected to produce IP soybeans. Previous cropping history is important.
2. Inadequate field isolation protocols that may allow GMO plants to cross-pollinate or be physically mixed at harvest with IP soybeans.
3. Accidental mixing of undesired GMO planting seed with seed intended to produce IP soybeans.
4. Selection of seed stock for IP soybeans that contains unacceptable levels of GMO non-conforming seed.
5. Failure to adequately clean planting or harvesting equipment of undesired GMO seed or grain respectively.
6. Failure to adequately clean equipment, i.e. trucks, augers, elevators, wagons, etc. of undesired GMO products.
7. Failure to adequately clean on-farm storage bins of undesired GMO products.
8. Failure to maintain adequate records to identify and maintain integrity of IP soybeans from non-conforming product.

Might non-conformity levels differ due to regional geography? If a casual observer were to suggest that soybeans from one region differ in conformity from another, based on regionalism alone, I would be inclined to disagree. However, should human behavior of producers be less diligent, seed purity of adapted varieties less pure, testing methodologies different, or machines and equipment less suited for producing identity preserved crops in one geographical region than another I would then agree that conformity levels may differ. Any difference, however, would be attributed to the aforementioned factors, which may be expected to lead to non-conformity, and not regionalism per say

Will U.S. producers remain positioned to supply Asian food bean markets with non-GMO product? Unequivocally the answer is "YES." U.S. farmers and grain handlers have clearly demonstrated even in the face of the historical rapid adoption of biotechnology, that they can and will provide a consistent supply of wholesome food beans. This bodes well for the future. U.S. farmers and grain handlers possess the greatest degree of experience in the world thus assuring our trade partners of a continuing product and service pipeline of the highest caliber.

The soybean industry is dynamic and not static. Changes will evolve. "Give and take" will be required of buyers and sellers alike. Harmony will be maintained. A continuing consistent supply of high quality U.S. IP food beans will continue to be available to satisfy true market demand.

Changes are warranted and may be required in several areas of business practice. The specific nature of these proposed changes will evolve over time in the normal course of commerce. Candidate items for change include: a) IP system criteria should shift from a product to a process basis, and must accommodate modest quantities of non-conforming product; b) Time required to form partnerships between purchasers and suppliers must be compressed; c) Contract language and criteria must be more fully defined and mutually agreeable; and d) Contracts should be issued earlier in the production cycle and for multiple years. As world markets increasingly value unique services as a compliment to grain and oilseed crops, compensation levels merit review.

The impact of future technological introductions is unknown to us all. Might not new weed control technology evolve that will both displace the pre-imminence of RoundupR and be more acceptable in world markets? Might not new technology develop that will pose even greater concern than does RoundupR? Scenarios can be developed that would both assure or deny that consistent supplies of U.S. IP soybeans will be available for world markets, I am not qualified to speculate on the outcome but only to formulate the questions.

Most forward looking observers will likely agree with me that: 1) Worldwide food bean market demand will continue to grow, 2) U.S. soybean producers will continue to be the best positioned and most reliable in the world to supply the demand and 3) Japan - U.S. ties will be strengthened. However, some terms of commerce will require change for the system to operate smoothly over time. Buyers and sellers alike may gain future assurance and confidence about food bean quality and handling practices by relying upon AOSCA agency third-party assistance and IP programs.

With respect to the U.S. soybean markets, AOSCA agencies can service every state and region of the nation. Each agency is a designated official seed certifying agency and as such has considerable experience applicable to designing and managing IP systems. All agencies have the potential to serve as the single administrator for an AOSCA IP program that crosses state boundaries. AOSCA IP programs undergo peer review during the developmental stage. Last, but certainly not least, in importance is the fact that soybeans produced and handled under an official AOSCA IP program will qualify to be labeled with the trademarked AOSCA IP logo. The logo may be affixed to transfer documents, tags, or literature as specified in a given program

AOSCA IP programs are all based on substance and are comprehensive in nature. Programs are designed in conjunction with buyers and sellers interests and requirements in mind. Please consider how the utilization of an AOSCA IP program may benefit your soybean procurement program. You may rest assured that the U.S. IP system is sound, reliable and safe.

Dr. Thompson has held his current position of Chief Executive Officer of Illinois Crop Improvement Association, Inc. since 1996. ICIA is an international seed and grain industry leader providing a variety field and laboratory third party quality assurance services. During the previous 20+ years, he held a variety of technical and leadership appointments within the University of Illinois College of Agriculture, Champaign-Urbana. Thompson's academic specialty is in the area of vocational and technical education with emphasis in agricultural production and extension education. He has been actively engaged in international agriculture and business throughout his career. Since the introduction of biotechnologically developed seeds in 1996 he has devoted considerable time and effort in designing, researching and managing IP systems and programs and educating various groups about IP concepts. He was instrumental in the development and adoption of General Standards for the Identity Preserved (IP) Program for the Association of Official Seed Certifying Agencies and from its inception has chaired its peer review process.

Dr. Thompson can be contacted via e-mail at dthompson@ilcrop.com.
More can be learned about Illinois Crop Improvement Association, Inc. on their web site atwww.ilcrop.com.