How Canadians Bankrolled the World's First Genetically Engineered Food Animal

Taxpayers have invested $8.2 million in the development of a rapid-growth salmon that first hit shelves last year.

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Mar 21 2018, 2:14pm

An AquAdvantage salmon behind a non-GE salmon of the same age / CP file photo

It was nearly a year ago, sometime after April, when hundreds of Canadians buying salmon in their local supermarkets got something they didn’t expect. It looked identical to other farmed Atlantic salmon—there were no labels suggesting something different. But it was AquaBounty AquAdvantage salmon—a genetically-engineered fish that grows to market size in less than half the time of conventional farmed salmon, thanks to the insertion of genes from two other fish.

About 4.5 tonnes were sold in all—a pittance compared to the over 120,000 tonnes of farmed Atlantic salmon typically produced annually in Canada—but it was a successful trial run for the global commercialization of the first genetically-engineered food animal ever approved for human consumption. And it was all brought to market by Massachusetts-based AquaBounty Technologies, a subsidiary of US biotech giant Intrexon.

This sale was possible because the Canadian federal government approved the GE fish in 2016, finding it “as safe and nutritious for humans…as conventional salmon.” A scientific review also concluded the environmental risks of GE salmon are negligible, as long as they are farmed on land and not in the ocean, given that it’s possible for GE fish to breed with wild fish.

But just as these conclusions were being reached, an Ipsos Reid poll found that 60 percent of Canadians—whose taxes have bankrolled the development and ongoing commercialization of this GE product—opposed genetically-engineering crops and food animals, with about half supporting an outright ban on all GE food. Almost 90 percent wanted to know what they were eating.

If the polling numbers were right, there was a massive disconnect between the government’s GE policy and what Canadians were comfortable eating.

Canadians have been doing much more than providing a first test market for GE salmon. Not only are they eating GE salmon without labelling, they have over decades invested at least $8.2 million to fund the development of AquaBounty GE salmon.

The question now: after decades of publicly-funded grants, tax-free loans, and royalty financing agreements, as GE salmon is poised to enter our food system whether people want it or not, what’s the return on investment for Canadians? With the future commercial success of this GE salmon in question, what’s in it for us?

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The research to create AquAdvantage salmon began in the early 1980s. Although the technology was developed in Canada, this novel lifeform is owned by an American company—a subsidiary of Intrexon, led by billionaire CEO Randal J. Kirk. With a personal wealth estimated by Forbes at about $3 billion (US), Kirk has acquired a stable of GE organisms and technologies in recent years—including disease-fighting mosquitos, an apple that never browns, and a service to clone dead family pets.

One thing that hasn’t changed since the 80s, even after Kirk’s company became the controlling AquaBounty shareholder in 2014—is that this pioneering GE food animal continues to reap big subsidies from Canadian taxpayers.

“The money behind this organization is considerable,” said PEI Green Party leader Peter Bevan-Baker last year, the province where AquaBounty’s Canadian subsidiary resides. “It’s my personal opinion that they should be able to fund all R&D [research and development] and all applications for whatever regulatory hoops they have to jump through, without any public funds being put in there.”

Without taxpayer funding over the years, AquaBounty salmon would not exist. The fish was invented by a scientist named Garth Fletcher—whose research team combined genes from Chinook salmon and an obscure cold-water fish to stimulate rapid growth. Fletcher’s pioneering research, focused on cold adaptation in fish, has received about $1.2 million in federal public funding since 1991.

By November 1999, AquaBounty Canada—by this point a US-owned subsidiary—had negotiated an interest-free loan for just under $3 million from Technology Partnerships Canada, a federal agency mandated to stoke economic growth and job creation. Repayment was to take the form of a small royalty on company revenues. (The financing was never repaid, because in 2014, the year the term of the agreement expired, AquaBounty had not generated any revenues from its fish.)

By far, the GE salmon’s biggest source of public support (at least $3.5 million to date) has been the Atlantic Canada Opportunities Agency (ACOA)—a Canadian federal agency that funds business development and promotes employment in Canada’s Atlantic region. The biggest was a 2009 grant for $2.8 million—repayable via a 10 percent royalty on any products that were commercialized from the project.

Less than two years later, the US department of Agriculture gave half a million dollars to AquaBounty Technologies to research methods to sterilize the fish—an important safety measure to ensure GE fish do not reproduce and colonize if they escape captivity. (Despite this, AquaBounty has never been successful in producing 100-percent sterile GE salmon.) The timing of the grant came under intense scrutiny by US environmental campaigners, who accused the US government of “bailing out” AquaBounty’s main investor at the time—billionaire oligarch Kakha Bendukidze from the former Soviet republic of Georgia.

Randall Kirk entered the picture increasingly after 2012; by early 2014, AquaBounty Technologies became a subsidiary of Kirk’s growing biopharma empire. (As of January 2018, Kirk personally owned 47 percent of Intrexon’s shares.)

Recent years have seen the company achieve a global precedent: its GE fish was approved as human food by both the US and Canadian government in 2015 and 2016 respectively—making it the first GE food animal ever approved for humans to eat.

Last year’s pilot sales project is just the beginning. The next step is to ramp up a hatchery in PEI to grow eggs—and establish on-land facilities (in PEI and the US) to grow the GE fish to maturity. To make just this latter bit happen, over a million federal and provincial dollars has been lent or given to AquaBounty since 2016, to kick-start its new facilities in PEI.

Bevan-Baker says federal agencies giving non-Canadian interests large sums of money is a systemic problem that goes beyond this one company. “This is very much business as usual here on Prince Edward Island,” he told VICE. “There doesn’t seem to be any distinction between a company that is Canadian or any other.”

Chris Palmer, PEI’s Minister of Economic Development and Tourism, rejects criticism of the province funding foreign-owned subsidiaries like AquaBounty Canada—a company he says has an annual payroll of over $900,000 per year in PEI. He cites other examples of other foreign subsidiaries that have been attracted to PEI with provincial funding—including Standard Aero (the second largest private sector employer in PEI), Electronic Arts and Sekisui Diagnostics. “Business today is global and PEI must compete globally for new companies, new investment and new jobs,” he said.

As for federal investments, an ACOA spokesman said a company receiving money can be foreign owned, as long as the funding recipient is based in Canada, and is providing benefits to Atlantic Canada. (In the case of AquaBounty Canada, 22 people are currently employed north of the border.) He added that ACOA is independent of any regulatory deliberations, including the federal process that resulted in the 2016 approval of the salmon.

Still, a question remains: with at least $8.2 million invested—a conservative estimate gleaned from public sources, not including the US grant—what is the payback on public expenditure? Is it a fair trade for jobs and local investment? Does the public come out even or in the hole?

AquaBounty Technologies spokesman Dave Conley says it’s too early to talk about a payback to taxpayers. “We can't calculate a ROI [return on investment] at this early stage of development,” he wrote by email. “We honour all our commitments, financial and otherwise.”

It’s possible that AquaBounty Canada could pay a royalty on the 4.5 tonnes it sold last year, repaying some of the 2009 ACOA grant—but that’s speculation, given that the terms of the financing are confidential.

But with AquaBounty Technologies listed as a public company on the NASDAQ—it’s the shareholders who stand to benefit if the salmon succeeds in the marketplace. Or even they could lose out. Late last year, the Canadian Biotechnology Action Network (a coalition of environmentalist, food security, and farm groups that oppose the commercialization of GE fish) reported that national retailers Sobeys, Loblaw, and Metro—which represent more than 50 percent of the Canadian food-retail market—have no plans to sell GE salmon. Walmart, Costco, Whole Foods, and nearly eighty other retailers in the US have made similar pledges. Even Canada’s biggest salmon farming association has come out against AquaBounty GE salmon, vowing not to grow them.

The prospect of mandatory labelling of GE animals is another looming risk. Canada is allowing the product to be sold without labels (labelling is mandatory only if there is a health or safety issue identified and associated with a food), but the issue is still being determined in the US. Meanwhile, at least 65 countries in the world demand mandatory labelling of GE food.

“We may have limited success in gaining consumer acceptance of our products,” reads AquaBounty Technologies’ 2016 annual report, referring to environmental campaigns pushing for mandatory labelling, retailer boycotts and other risks. “We may have limited success in gaining consumer acceptance of our products.”

And true to that risk assessment, CBAN Coordinator Lucy Sharratt is now calling for action on several fronts: mandatory labelling so that Canadians consumers know what they are eating, and greater transparency about how taxpayer funds are used to support companies like AquaBounty Canada.

“Mandatory labelling is just one step,” she said. “Questions need to be raised about the government investing in the development of GE products, and potentially receiving royalties from those products, which it also has a responsibility to regulate.”

Follow Chris on Twitter.

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