IP Issues and Traceability in the Marketplace Dr. Gary M. Beil Minnesota Crop Improvement Association Crop Biotechnology Update Conference September 21-22, 2005

It is estimated that: 389 farms account for 10% of the agricultural production in the US Just over 1% of the farms in the US account for nearly 50% of the total agricultural production More than 50% of the food consumed in the US is produced outside of the US Current IP Issues Background Information

MCIA now operates in global agri-food industrial sector: Changed the demand for how MCIA’s core competencies are applied to this sector MCIA staff has had to receive additional academic and technical training in order to apply these core competencies to meet the demands of this complex global food sector MCIA has had to expand the portfolio of service products we offer to our customers Current IP Issues MCIA – An Example of a Service Provider in Transition

As we talk about the key growth areas for MCIA in the future, we seem to speak a new language – new terms are replacing the traditional jargon of our trade: Organic handlers and organic producers JAS and EU accreditation Livestock accreditation Insourcing Accreditation and auditing services ISO accreditation Current IP Issues MCIA – An Example of a Service Provider in Transition

Technology remains a vital part of who we are and what we do. But we now have to apply what we do in different ways: Moved from verifying seed purity to trait identity No longer single trait identity Stacking and complementing traits will become standard issue We will move from traits benefiting producers to traits benefiting consumers Current IP Issues MCIA – An Example of a Service Provider in Transition

MCIA’s opportunities must be focused on selling third party independent verification services and other related products required by the complex global agri-food industry our clients operate in today. MCIA’s business horizon changed from a focus on the seed portion of the food distribution chain to serving all segments of the global agri-food industry Current IP Issues MCIA – An Example of a Service Provider in Transition

Three signs at the Flagship Athletic Club (FAC) tell the story: 1.“FAC bans guns from these premises.” 2.“No cellular telephones are allowed in the club.” 3.“FAC is a wireless internet facility.” Traceability in the Marketplace

Traceability has become investment worthy Food producers have built systems to track grain in a cereal box back to the farm. Apples used in juices are now traced back to the orchard. Major fast food restaurants can trace the grain used in buns back to the farm. Traceability in the Marketplace

What is Traceability? ISO Definition: “The ability to trace the history, application or location of an entity by means of recorded information.” In the food chain: “The ability to trace and follow a food, feed, food-producing animal or substance through all stages of production and distribution.” In production systems: “The ability to trace the history of the product through the supply chain to or from the place and time of production, including the identification of the inputs used and production operations undertaken.” Traceability in the Marketplace

Traceability is electric connectivity with all phases of the food chain TRACEABILITY MUST INCLUDE: 1.A logical chain of events that can be connected 2.Process Management - A process that can be managed and supply credible information 3.Process Verification - Credible independent verification of the process Traceability in the Marketplace

Traceability is electric connectivity with all phases of the food chain TRACEABILITY MUST INCLUDE: 1.A logical chain of events that can be connected 2.Process Management - A process that can be managed and supply credible information 3.Process Verification - Credible independent verification of the process Traceability in the Marketplace

Traceability is electric connectivity with all phases of the food chain TRACEABILITY MUST INCLUDE: 1.A logical chain of events that can be connected 2.Process Management - A process that can be managed and supply credible information 3.Process Verification - Credible independent verification of the process Traceability in the Marketplace

Why Traceability? What is driving production agriculture to traceability? GOVERNMENT MANDATES Europe – Regulation EC/178/2002 defines traceability as the ability to trace and follow food, feed and ingredients through all stages of production, processing and distribution. Applicable from January 1, 2005 Importers similarly affected: Must be able to identify from whom product was exported in country of origin At a minimum, businesses must be able to: Identify the immediate supplier of the product Identify the immediate recipient of the product (except final retailer) e.g. one step back – one step forward

Traceability in the Marketplace Traceability Drivers FOOD SAFETY Reduce the risk of contamination of our food supply Increase the ability to react to inferior product performance Increase the probability of Safe Quality Food supplies

Traceability in the Marketplace Traceability Drivers MANAGEMENT OF RISKS A way to manage (minimize) liability Reduce business risks

Traceability in the Marketplace Traceability Drivers TERRORISM Identification of pathways Early detection and rapid response Development of control mechanisms

Traceability in the Marketplace Traceability Drivers BENEFITS FOR PRODUCERS Application of Process Management procedures can result in more efficient production Provides vehicle to differentiate food products Will you sell more product? Difficult to assess Add costs Premiums?? Larger Question – Will you be able to sell your product without some sort of traceability?

Traceability in the Marketplace TRACEABILITY SYSTEMS Product Based Process Based

Traceability in the Marketplace TRACEABILITY SYSTEMS Product Based Systems Seed Certification AOSCA/MCIA IP Grain Program Grain Testing Procedures PCR and other Genetic Tests Strip Tests Certificate of Analysis Any document that describes the product and stays with the product through the chain

Traceability in the Marketplace TRACEABILITY SYSTEMS Process Based Systems ISO Based Quality Management systems Development of a Quality Manual Audit Procedures 3 rd Party Verification AOSCA/MCIA audited grain traceability program HACCP Based systems Hazard Analysis and Critical Control Point (Continued on next slide)

Traceability in the Marketplace TRACEABILITY SYSTEMS Process Based Systems (Continued) “Safe Quality Foods” – SQF Applies HACCP and ISO type procedures to the food distribution system EUROPGAP Certification – a process to assure producers are producing under Good Agricultural Practices (GAP) Food Cert-NL – certifies individual growers under EUROGAP standards AIB – process verified in the baking industry State “GAP” programs

IP Issues and Traceability in the Marketplace Dr. Gary M. Beil Minnesota Crop Improvement Association Crop Biotechnology Update Conference September 21-22, 2005 END