Agriculture Reference
In-Depth Information
6
The study used an econometric model that takes into consideration that farmers' adoption of GE
crops and pesticide use decisions may be simultaneous and that farmers are not assigned
randomly to the two groups (adopters and non- adopters) but that they make the adoption
choices themselves. Therefore, adopters and nonadopters may be systematically different.
Differences may manifest themselves in farm performance and could be confounded with
differences due to adoption. This self- selectivity may bias the results, unless corrected. To
account for simultaneity and self-selectivity, the model uses a two-stage econometric
model.
7
In addition, results using an econometric model with the 2001 data showed a small but
statistically significant yield increase associated with farmers who adopted Bt corn relative
to those using conventional corn varieties. (Fernandez-Cornejo and Li, 2005).
8
Net returns equal revenues minus variable costs, which include pesticide and seed costs. Seed
costs paid by adopters of GE varieties include a technology fee paid by farmers to
biotechnology developers and premiums to seed firms.
9
In addition, using an econometric model with the 2001 data, the ERS study showed a moderate
but statistically significant insecticide reduction associated with farmers who adopted Bt
corn relative to those using conventional corn varieties (a 4.11-percent decrease in
insecticide use was associated with a 10-percent increase in Bt corn adoption).
10
Conservation tillage includes any tillage and planting system that leaves at least 30 percent of
the soil surface covered with crop residue. It includes no-till, ridge-till, and mulch-till
(Conservation Technology Information Center, 2004).
11
The amount that consumers indicate that they are willing to pay for a particular characteristic in
a hypothetical situation is sometimes different from the amount that they actually pay when
shopping (Lusk, 2003).
12
In addition, organic foods are available. Use of any GE techniques bars a crop from being
certified as organic. Although organic foods still have a small market share (1-2 percent ) of
total U.S. food sales, their sales have been rising at a rate of 20 percent annually (Dimitri
and Greene, 2002).
13
Consumers may also benefit directly when GE products of the second and third generation are
commercialized.
14
The study estimated the economic gains for various stakeholders associated with adoption by
incorporating the potential yield enhancements and savings in pest control costs into models
that derive each crop's supply shift resulting from biotechnology. Given domestic and
export demands, counterfactual world prices and quantities demanded of the commodities—
those that would have prevailed in the market if biotechnology had not been introduced—
are determined from market equilibrium conditions. Producer and consumer surpluses in the
U.S. and international markets and monopoly profits accruing to the biotech developers and
seed firms are then calculated (Price et al., 2003).
15
Elasticity measures the responsiveness of one economic variable to a change in another (e.g.,
price and quantity demanded). It is unit free and always expressed in percentage terms.
