Jack Kaskey is reporting for Bloomberg News that International Paper Co., the world’s largest paper and pulp maker, is following Monsanto Co.’s lead in terms of genetically modified crops, and plans to create genetically modified forests.The tree is the Australian eucalyptus, only it’s designed to survive the typical freezes that occur in the southern part of the United States. But before International Paper’s ArborGen, along with their partners in the joint venture—MeadWestvaco Corp. and New Zealand’s Rubicon Ltd., can start selling the trees in the United States, they must get approval from the U.S. Department of Agriculture (USDA). If the USDA grants permission to sell the trees, they would be the “first genetically engineered forest trees outside China []” to be sold.
Clearly, being able to produce plantations of genetically engineered trees could give the Memphis, TN-based International Paper a decisive advantage over its competitors—particularly given the declining number of available timberlands. ‘“There is a potential to explode once they get these trees approved,’ said David Knott, who manages $1.3 billion as chief executive officer of Dorset Management in Syosett, New York.”
ArborGen Chief Executive Officer Barbara Wells is hopeful that the USDA’s Animal and Plant Health Inspection Service will approve sales of the genetically-modified eucalyptus trees by late 2010. According to the Bloomberg article, this particular type of tree could just be the start as the company is working on trees that will grow faster and be “easier to pulp[.]” Currently, disease-resistant plum and papaya trees can be sold in the U.S., but the ArborGen eucalyptus would be the “first engineered forest tree sold in the U.S. . . . [While] China has planted about 1.4 million biotech black poplars since commercialization in 2002.”
Of course, International Paper can expect to hear the same concerns Monsanto faced when it first introduced genetically engineered crops. Essentially, the opposition is concerned that the new, engineered genes could contaminate natural forests.
ArborGen’s opposition is prepared with their arguments against approval. Neil J. Carman, a member of the Sierra Club’s genetic engineering committee who is based out of Austin, Texas, called the forests ‘“ . . . Frankenforests[.]” Carman is concerned over the impact the tree could have in terms of water consumption and potential increased fire risks. In 2007 the Sierra Club won a court order requiring Monsanto to remove alfalfa plants from the market while the USDA undertook an environmental impact study. ArborGen counters that since their trees are engineered to be infertile and have impaired pollen production, along with the fact they will be grown on plantations, there shouldn’t be any worries about genes spreading.
A cold-tolerant eucalyptus could potential provide a sustainable source of hardwood for pulp. International Paper points out this could be very beneficial domestically if timber becomes a viable biofuel source, which would put more demand on production. ArborGen’s also plans to seek approval “to sell loblolly pine, used for lumber and paper, engineered to mature in 18 years rather than 26.”
The financial rewards from the development of this technology are very promising for ArborGen. According to Kaskey’s story, “Approval would set ArborGen on a path to sell 275 million engineered seedlings a year by 2018, assuming its first five modified trees are permitted, contributing to after-tax cash flows of as much as $700 million, according to an April report commissioned by Rubicon.” In the meantime, the stakeholders will be waiting for the USDA to issue a ruling.
To read the Bloomberg News story click here.
Posted: 08/31/09
