BIOTECH'S PALACE ON THE PRAIRIE.

Remote Canadian City Commits to Commercializing Science

On the wind-swept treeless Canadian prairie, originally tamed by tough farm immigrants, sleek university offices and laboratories loom above a rare tree-lined river. This scene effectively captures the heart and soul of Saskatoon, Saskatchewan, a quiet city of 200,000 people commonly referred to as Canada's agricultural biotech capital. A big part of that designation is world-renowned Innovation Place, an economic development alley of 21 buildings adjacent to the University of Saskatchewan, which supports a growing research and development community.

Old and new realities collide here in an eerie contrast, offering a reflection on how the business of agriculture is changing around the globe and its impact on isolated regions.

INSPIRING INVESTMENTS

For rural centers struggling with outward migration, Saskatoon beckons as a jewel of inspiration. The newness of its buildings and technologies casts an enchanting "buzz" over what would otherwise be an ordinary, isolated prairie-bound city.

Local agriculture leaders attribute biotech's stature to the excellence of the research infrastructure and an enticing mix of science and academics. The community boasts three crucial ingredients:

* the largest agricultural university in Canada, including the only western veterinary school;

* a prominent area research facility, now called the Plant Biotech Institute, which dates to the early 1900s; and

* offices of Agri-Food Canada, including a national hub for research on oilseeds and natural biological controls.

As a result, smaller but equally important research centers have developed, says Peter McCann, president of Ag-West Biotech Inc., drawing international visitors to this critical mass of science and business. The creation of basic and applied sciences, some of it leading edge, creates a healthy environment for economic development.

In a small office in the animal science department, for example, Andrew van Kessel, one of the Animal Biotech Centre's three collaborative scientists, discusses how interaction with the Plant Biotech Institute is helping them study better feeding and housing strategies. Understanding "pro-biotics" will enhance and likely eventually replace continually fed antibiotics in the livestock industries, large-scale confinement housing and concepts like segregated early weaning (SEW) are the latest frontier for prairie hog operations.

"When we move to a biosecurity environment, we limit the transfer of organisms," he says. "When the biosecurity breaks, they are very naive animals, and then there is a problem. The ideal animals out in the real world would be very vulnerable. What we need to find is a middle ground. We need to define what normal intestinal flora we can allow or promote that gets close to the ideal model and still allows for protection against pathogens."

The scientists also are mapping chromosomes for specific characteristics such am carcass fat deposition, the likely future of livestock breeding and selection. At the Veterinary Infectious Disease Organization -- which was spun off from the university and now is publicly funded but privately operated -- biotechnology is helping accelerate the development of livestock vaccines, Director Lorne Babiuk explains.

And, of course, Saskatoon is the birthplace of canola, a crop that was adapted from non-nutritive rapeseed in the 1970s. Plant breeder Keith Downey, known locally and international Iv ax "Dr. Canola" or the "father of canola" -- and who still works post-retirement at Agri-Food Canada -- links the traditional plant development of the crop with the growth in molecular and gene-based techniques.

"Canola is one of very few crops that respond to gene transfer," he says. "The commercial companies saw that they had an opportunity to get a pay back on commercializing the research in this area. Once you have something working in one crop, you can transfer that to another crop with a slight change in protocol."

That essentially is what happened with herbicide-tolerant canola, now planted on 77 percent of the acreage in western Canada. The race is on to reduce the levels of saturated and poly-unsaturated fats in vegetable oil crops, Downey adds, with biotechnology fueling the contest.

EVOLVING EXPERTISE

Bright as the prospects appear, Saskatoon, like much of the agribusiness world, is still poised on the brink of what will be an arduous evolution into building a sustainable, long-term new economy that spins ideas and investment capital into practical, workable profitable production. Government-funded but run as a private corporation, Ag-West Biotech gets to the heart of this process by working to create the glue between research and business.

"Our mandate is to help new technology get developed in small and medium-sized businesses," says Holly Rask, former manager of communications who

now works for an association of pulse crops farmers. "We work to convert technology development at the university and Agri-Food Canada and help small and medium-sized businesses get those into a commercial base."

To encourage an entrepreneurial Approach to science, Ag-West recently Sponsored a business plan competition to award a $100,000 investment grant, By sponsoring seminars, Ag-West also helps connect the research and business communities. The board of directors includes financial and law expertise, as well as private and public leaders, to help in business formation.

Once businesses are established, some funding is directed to marketing efforts to help them expand nationally and internationally. Communication also plays a prominent role through networking and public speaking, printed newsletters and the Internet (www.agwest.sk.ca). These tools promote not only the community, local companies and products, but public science knowledge as well.

Krista Broten is coordinator of Ag-West's educational lab, a two-hour tour for learning the basic science behind biotech, including DNA fingerprinting, and discussing related issues such as the human genome project. More than 6,000 have visited the lab since it opened in 1997. Of them, roughly 50 percent have been school groups and 25 percent farmers. The rest were food writers, industry and the general public.

Broten also takes her show on the road to events like pork expos and children's festivals as well as schools. The level of awareness about biotech has grown rapidly, she concludes.

"Anything that is in the media, there are questions about it the next day," she observes. "The younger kids know a lot more about biotech than they used to. A lot of teachers talk about it and use it in their classrooms. A lot of farmers who come in have used the technology but don't understand the science behind it."

INNOVATION INDUSTRY

In its 11-year run, Ag-West has seen a new industry sprout up out of this tough land traditionally relegated to dryland farming. During that time. tenancy has more than doubled at Innovation Place, which now boasts 120 research organizations, 2,000 employees and $200 million in annual safes revenue. More buildings are erected annually, with $35 million worth of new construction added in the last year alone. Local leaders compare it to the research triangle in the Raleigh/ Durham area of North Carolina.

"Innovation Place is driven by industry needs rather than central government planning and includes significant investment on the part of industry, both local and international," Ag-West's McCann explains.

Facilities are owned by Saskatchewan Opportunities Corp., the province's economic development investment agency, but fully 80 percent of the tenants are private companies ranging from large multinationals like BASE Aventis, Monsanto and DuPont to smaller companies. Economic and farm trade associations also are housed here, along with a 13,700-square-foot bioprocessing plant available for use on a fee-for-service basis.

By contrast, Saskatchewan has lost 15,000 farmers in the last year alone, leaving few who depend solely on production for their income. Acreage in pulse crops, or dry peas and lentils, has exploded 800 percent in the last 10 years, representing "the new canola."

Diversification, not unlike that occurring across the United States' Central Plains, includes experimentation with organic production (still less than 1 percent of production), more crop rotation, "value-added" processes such as cleaning and bagging seeds, and the growth of integrated livestock feeding operations. Some traditional crops are being used to replace nonrenewable resources, such as canola for an industrial lubricant or feed grains as a source of ethanol, McCann says.

Despite a dramatic shift in farm numbers and cropping patterns, the remaining farmers are highly committed, knowledgeable and extremely adaptive. In other words, they fit with the new biotech products, says John Cross, president of

Philom Bios, one of Saskatoon's biotech success stories. The mid-sized company markets a phosphorous inoculant.

A "knowing-doing gap" can occur between the researcher and the customer or between the seller and the retailer or at other joints in the food production chain, Cross points out. Recognizing needs is key to marketing new products to farmers.

"Farmers want to buy, not to be sold," he says. "They want professionals who will endorse their buying decision. Technology is a tool. All new technology is risky."

Indeed, risk factors heavily in the new farm economy. From that standpoint, Saskatoon has built its biotech castles on shifting sand, as the huge swings in crop production practices and rural populations attest. But here in the halls of science, intelligence and investment, the lure of an Americanized entrepreneurial approach to farming is attractive.

"The answer is to stop the `featherbedding' of farmers, which leaves them in a very comfortable place but creates mass supplies," McCann says, referring to traditional farm subsidies. "Ag biotech will help farmers by providing higher value, highly specialized alternatives to bulk commodity crops. This will help them break out of the cycle of low farm incomes, resulting from depressed prices for commodity crops in international markets."

MAKING A SMOOTH TRANSITION

Farm Economist Peter Phillips derides the "mantra of a dying industry" and labels the new agriculture one of "creative destruction." "It is even more true now than in the late 1930s when the phrase was born," Phillips says. "New capital will destroy old capital. New technology makes old technology less competitive. And some of that capital gets stranded."

His answer is one that parallels the goals of Freedom to Farm in the United States: "Slow the transition. Rather than trying to sustain the small farmers, help them get out."

Putting more comprehensive measurements on the fallout of the biotech explosion, for agribusiness as well as farmers, is the objective of one of his current studies. He wants to evaluate the cost-benefit of introducing genetically modified crops, as well as the distribution of those benefits.

In general, farmers gain slight yield improvements and fuel savings because of tillage changes, he says. About 30 percent of the benefits go to the early adapters of any new technology, Phillips says, but over time, the economic advantages decline.

Another concern for the long-term sustainability of biotech is that so far consumers have gained little, if anything, from it, he adds. Shifting research from the public to large competitive private research programs has resulted in a race for gross returns. This environment might tend to benefit individual companies rather than the agriculture sector as a whole, he says.

"Biotech is just now yielding positive net returns after five years," he concludes. "The industry might be simply shifting market share rather than creating value. Some companies are merely cannibalizing other product lines. We need to focus on making the pie bigger rather than just dividing the existing pie."

In Saskatoon, and throughout the surrounding farm landscape, the bold beginnings of a publicly supported biotech revolution are likely to unfold in slow, deliberate commercial adoption. In that process, some of the initial capital is likely to get stranded. After all, Canada's biotech capital is where the punishing realities of a dry, cold, unforgiving land meet the shiny excitement of Innovation Place.

INNOVATION PLACE

* Formed jointly by the government of Saskatchewan and the University of Saskatchewan in 1977; now owned by the Saskatchewan Opportunities Corp., the province's economic development investment agency.

* Comprises 21 buildings containing 120 businesses and organizations with 2,000 employees.

* Contributes $157.9 million to the city of Saskatoon and $197.3 million to the province of Saskatchewan.

* Represents 20 percent of the city's gross income when combined with the university.

* For more information, go to www.innovationplace.com.

Candace Krebs is a freelance journalist based in Enid, Okla.