Iowa Public Television


Rural Iowa Community Grows Biotech Industry

posted on September 19, 2003

A new study says consumers generally support modifying plant genetics so crops will provide inexpensive medicine. But the survey also found consumers are less comfortable with the idea of genetically modifying animals for the same purpose.

The survey by the Pew Initiative on Food Biotechnology says 81 percent of those polled think pharmaceutical farming is a good idea. But only 49 percent favor modification of animals for medicine.

For many, the "bioengineering" of animals presents moral, ethical and social issues. But for others, including some whole communities, biotech presents a bright new future. Nancy Crowfoot provides this update.


Rural Iowa Community Grows Biotech Industry

This endangered species, a banteng, native to Southeast Asia, was the product of cloning.

The genetic technology has also produced cows whose milk contains a human protein for possible use in medical treatments.

Livestock byproducts, such as bovine trachea ... and pig pancreas are processed for health supplements. Genetically modified grain containing proteins found in breast milk has a possible use in infant formula.

These are just a few of the agricultural-based biotechnology activities occurring at several private companies that have sprouted up over the last 25-years in the northwest Iowa community of Sioux Center.

Locating in this rural community of 65-hundred, 40-miles from the nearest metropolitan area, was a conscious decision of each company. The reason, they say, is because the community has a strong connection to agriculture and a large, thriving livestock industry.

Jan Schuiteman, CEO, Trans Ova Genetics, Sioux Center, Iowa: "There is still an attitude that livestock is welcome here. We have that livestock structure here, we have a lot of the infrastructure to support animal biotechnology all the way from feed sources to veterinarians."

Dr. Jan Schuiteman started out as a veterinarian in northwest Iowa. In 1980, he and his partners founded Trans Ova Genetics, an embryo transfer business to replicate multiple calves from valuable beef and dairy cows.

The business has grown to include the cloning of cattle for certain proteins that can be used by the pharmaceutical industry. There is also an occasional cloning job for a zoo.

Allan Kramer, Siouix Pharm & Sioux Biochemical, Sioux Center, Iowa: "The Midwest, we are blessed with having a large amount of the trachea. Every day we go through 40,000 pounds of trachea, which is one-third of the U.S. slaughter capacity of bovine trachea every day."

Allan Kramer has crafted one portion of his multi-faceted business from another industry's byproducts. At 25-to-85-cents a pound for trachea, he has truckfuls of tissue on the dock. He uses enzymes to digest the trachea into a liquid, extracts the sugar, processes and dries it.

The end product is chondroitin sulfate,a substance used in a human health supplement to treat joint pain.

Some of his other projects are in the test phase. For example: processing genetically modified grain for the pharmaceutical business. This particular grain is not grown by his farm neighbors, but he hopes to soon be able to offer Iowa farmers the opportunity to grow GMO, self-pollinating, wheat or barley.

In some parts of the world, activities involving GMOs and animal cloning would generate hordes of protesters to the doorsteps of such businesses. But Sioux Center not only tolerates the biotech activities ...the mayor, also the CEO and President of a bank, says the community welcomes it.

Dale Den Herder, Mayor & CEO and President, American State Bank, Sioux Center, Iowa: "People are really getting comfortable with what's happening. You know, they're already used to Roundup Ready Soybeans.

"Actually Trans Ova has been around for quite a while and they were not cloning early on. We trust that theyÂÂÂ're going to do what is right."

There may be trust today, but Dale Den Herder admits when local veterinarians ... including Trans Ova's Dr. Schilteman ... established the first biotech company in town and approached him for a bank loan 25 years ago, he understood little about the science. The work included production of swine vaccines ... and the banker was concerned about collateral.

Dale Den Herder, Mayor and CEO and President of American State Bank, Sioux Center, Iowa: "When you have a company that produces something in little bottles, you know, country bankers aren't used to that. We're used to cattle and hogs as collateral. How do you collateralize a bunch of bottles of stuff? Fact is, they were turned down by another bank and they came to us and we made the loan."

Whatever the initial risk, it has paid off many times over. That first company, NOBL Laboratories, was sold in 1997 to an international pharmaceutical giant, which has kept part of the operation in Sioux Center.

One who profited from the sale of NOBL Labs, went on to establish two other biotech companies in town.

And in the summer of 2002, an employee of one of those operations, quit to establish his own biotech venture.

Gene Veltkamp, President, Jabacin Technologies, Sioux Center, Iowa, April 2003: "We think there's going to be a niche to help companies take their byproducts and further process them and develop new markets that right now are not being marketed."

However, the markets never developed. A couple of months after this itnerview first aired, the company ran into marketing problems with its distrbutor. Gene Veltkamp says he is now working with his lenders to liquidate the business and take care of debts. He had received a state economic development grant and money from Sioux Center's revolving loan fund to create jobs.

Even so, there are now four biotech companies in Sioux Center, employing 200 people.

And the mayor and city council want more of the same. They unanimously approved allowing the city to purchase 105 acres of farmland just north of town for existing biotech companies to expand or to entice new biotech firms to move to the community.

Trans Ova Genetics has discussed expanding. But the company CEO also favors recruitment of additional biotech companies. He says creating a cluster of such businesses would benefit the entire region.

Jan Scheiteman, CEO, Trans Ova Genetics, Sioux Center, Iowa: "The biotechnology cluster is a real future opportunity to look at really, value-added agriculture in a different way. Use this technology in agriculture and find ways to make value-added agriculture opportunities that can benefit producers and this whole region also."

But to make that happen, Schuiteman says, would take more than private investment-- which created a volatile debate in the Iowa legislature. When Market To Market first aired this story last spring, the legislature had adjourned without passing a financial aid package to help the biotech company.

The governor called the lawmakers back for a special session to try again. Still no specific allocatin for Trans Ova, but the General Assembly did create a multi-million dollar economic development fund for companies to apply for assistance.

In late August, Trans Ova was awarded $9 million dollars from the development fund and another $6 million in tax credits and other assistance. But the dollars came too little, too late for one of Trans Ova's biotech partners wanting to expand to be near Trans Ova. That firm, Hematech, accepted the incentives from South Dakota ... abnd announced it will build a 44,000 square foot lab and purification facility in Sioux Falls.

As for Trans Ova, officials say as early as next year, there are plans to increase the number of production farms for its cattle. It will be part of the company's $36 million dollar plan to expand over the next five to eight years.

For Market To Market, I'm Nancy Crowfoot.


Tags: agriculture biotechnology genetic engineering industry Iowa news rural technology