Send in the clones

The FDA's approval of food from cloned animals will bring a controversial issue into the limelight (and the supermarket).

WASHINGTON (Fortune) -- As early as Tuesday, the FDA is likely to issue U.S. food producers an approval to begin selling meat and dairy from cloned animals and their offspring.

The agency's expected go-ahead is controversial among some consumer groups who question the long-term safety of consuming meat and milk from clones. Executives at the two largest privately-held U.S. companies in the farm animal cloning business, however, believe the ruling is a small, positive step in the age-old evolution of selective animal breeding. It also opens up a potential $20 billion market for farm animal cloning.

For the past five years, the FDA has maintained a voluntary moratorium on cloning livestock for the U.S. food supply. The ban gave the agency's researchers time to conduct tests and gather safety data on the effects of consuming meat and dairy produced by cloned animals or their progeny. In December of 2006, FDA released a draft of its animal clone safety assessment, concluding that "meat and milk from clones of adult cattle, pigs, goats and their offspring are as safe to eat as food from conventionally bred animals."

FDA officials say their assessment has been peer-reviewed by a number of independent cloning and animal health experts, who agree that livestock cloning is not only safe, but "poses no unique risks to animal health when compared to other assistive reproductive technologies currently in use in U.S. agriculture," said director of FDA's center for veterinary medicine, Stephen F. Sundlof, in a statement in late 2006. The U.S. agency is not alone in its endorsement of cloning. The FDA's European Union counterpart, as well as regulators in Australia and New Zealand, have made similar approvals.

Having ruled on the issue of safety, the FDA is now poised to set forth cloning process guidelines and standards to be used by farmers, livestock breeders and scientists.

Executives at companies involved in the animal cloning business admit they are battling great opposition. In a recent Pew Research poll, more than 64 percent of Americans are uncomfortable with animal cloning and 43 percent say they believe food from cloned animals is unsafe. Much of the opposition, cloners believe, is founded on a number of misconceptions. "There's a tremendous lack of knowledge about the technology," Mark Walton, president and CEO of ViaGen, an Austin, Texas-based gene bank and cloning service founded in 2002. "Much of what people have heard about cloning is from sci-fi and horror movies. And the hero is never a clone."

Perhaps the biggest misconception about livestock cloning is that clones are animals that have been genetically modified. They are not. Clones are unaltered genetic copies. "What cloning allows some ranchers to do is replicate their best animals to achieve more consistent quality traits," says Karen Batra, a spokesperson for the National Cattlemen's Beef Association. "As breeders we're always looking for opportunities to give consumers better products. Whether it's more flavorful, less fatty, or more tender meat, consumers value that." Batra concedes that it will take a broad consumer education program to allay concerns.

Another erroneous, but widely held belief: The FDA's sanction means that consumers will be eating steak and drinking milk that comes directly from cloned cattle. ViaGen's Walton points out that this isn't likely, since his company charges farmers roughly $13,500 to produce a single cloned bull or cow. Says David Faber, president of Trans Ova Genetics: "These animals will be the rock stars of the barnyard. No one is interested in producing one of these to be eaten. They are simply breeding stock." Trans Ova, based in Sioux Center, Iowa, charges around $15,000 per cloned bull or cow.

Still, there is broad concern that the FDA doesn't know enough about the long-term health effects of consuming meat and milk from the progeny of clones. "It's a new technology and we don't think all the science is there," says Chris Waldrop, director of the Consumer Federation of America's Food Policy Institute. "We don't have enough information to make a decision."

Joseph Mendelson, legal director for Washington's Center for Food Safety agrees, adding that his organization has ethical and animal welfare concerns too. "It takes a number of attempts to make a clone. Some animals are born with deformities, or they're sick and have to be euthanized. Administrative agencies need to look at that."

Consumer groups aren't the only detractors of clone food products. Dean Foods (DF, Fortune 500), one of the country's biggest milk producers, Whole Foods Market Inc., (WFMI, Fortune 500) and ice-cream maker Ben & Jerry's have all said they won't sell milk or other products from cloned animals. Critics find it particularly worrisome that the FDA has said it won't require labeling for products of cloned animals and their offspring. The Department of Agriculture does however prevent meat and pork from the progeny of clones to be labeled organic.

Congress has expressed apprehension too. As part of the recent spending bill signed into law by President Bush, Congress urged the FDA not to act on the cloning matter until a full study had been conducted on the possible domestic and foreign trade implications.

In the meantime, ViaGen and Trans Ova Genetics are waiting for their big opportunity. These days, both companies eke out an existence cloning champion rodeo bulls, prize-winning pigs, and horses for equestrian event breeders (who pay as much as $150,000 for a perfect clone). "It's a small market now," says ViaGen's Mark Walton. "But FDA's rules will really open this market up. I see it becoming at least a $20 billion business worldwide."

Would Walton feed meat or pork from offspring of clones to his family? "I have," says Walton. "We had loins from the progeny of cloned boars in the freezer here at ViaGen. I took some home and cooked it. And you can't tell it apart." Soon, it will be the American consumer's turn to decide.

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