Agriculture Reference
In-Depth Information
A
DOPTION
O
FFERS
M
ARKET
B
ENEFITS TO
M
ANY
S
TAKEHOLDERS
In addition to farmers, seed suppliers, technology providers, and
consumers also benefit from the adoption of GE crops in the United States.
Biotechnology developers and seed firms benefit by charging technology fees
and seed premiums to adopters of GE varieties. U.S. and foreign consumers
may benefit indirectly from GE crops through lower commodity prices that
result from increased supplies.
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ERS estimated the total market benefit arising
from the adoption of three GE crops in the United States—HT soybeans, Bt
cotton, and HT cotton—in 1997 (Price et al., 2003).
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Estimated benefits to
farmers, seed producers, and consumers were around $210 million for Bt
cotton, $230 million for HT cotton, and $310 million for HT soybeans. This
estimate includes the change in total welfare in both the seed input and
commodity output markets. The distribution of these benefits among
consumers, farmers, technology providers (biotech firms), seed firms, and
consumers and producers in the rest of the world (ROW) is shown in figures
10-12. The distribution of benefits varies by crop and technology because the
economic incentives to farmers (crop prices and production costs), the
payments to technology providers (biotech firms) and seed firms, and the
effect of the technology on world crop prices are different for each crop and
technology. For example, adoption of HT cotton benefits mainly consumers
while Bt cotton benefits farmers and technology providers. Seed firms are by
far the largest beneficiaries in the case of soybeans. These results should be
interpreted carefully, since the estimates are based on only a few years of data.
Moreover, estimated benefits and their distribution depend particularly on the
analytical framework, supply and demand elasticity assumptions,
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crops
considered, and year-specific factors (such as weather). In particular, the
benefits attributable to HT soybeans and their distribution are very dependent
on the soybean supply elasticity. Table 6 shows estimates of the benefits of Bt
cotton and HT soybeans and their distribution obtained by other researchers.
Biotech Product Differentiation: A Tale of Two Markets
The introduction of genetically engineered (GE) crops has led food
manufacturers to make a choice for each of their products: either pursue a
non-GE strategy and market and produce a non-GE product or source inputs
based on cost and quality, or market and produce an undifferentiated
product.
