Agriculture Reference
In-Depth Information
crop worldwide, accounted for just over 1 percent of the commercial seed
market (most annual rice seed requirements are sourced from farmer-saved
seed). Apparent discrepancies between sales-based and farmer-purchase-based
estimates may be larger for major crops such as wheat and rice, for which seed
saving is widespread, than for such crops as corn, soybeans, or cotton, for
which a larger percentage of seed used is purchased from seed companies.
Furthermore, if the full market value of hybrid rice seed were accounted for,
particularly for China where it is subsidized, the estimated rice share of global
commercial seed might be higher.
The Market for Crop Genetic Traits
An alternative approach to partitioning the market, by GM traits, may be
of economic interest but is more difficult to undertake with available data.
Both large multinational companies that conduct research in agricultural
biotechnology and small biotechnology firms develop products in two broad
classes—GM traits that may be inserted into crop seed or research tools that
facilitate biotechnology procedures, such as gene discovery or genetic modi-
fication. Determining licensing revenue that these firms obtain from traits or
tools is generally not possible directly.
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Large multinational companies include
licensing revenue within their broadly defined “seed” category and will not
separate it from actual sales of seed. Neither overall sales nor specific revenue
from licensing are available for most small agricultural biotechnology firms,
and in general, it is not possible to estimate licensing revenues for research
tools.
The market value of technology fees and royalties, however, may provide
a rough estimate of the value of GM traits, although it is not identical to this
value. For some of the major crops, technology fees and royalties represent a
significant proportion of the cost of seed. Globally, by 2005, these fees and
royalties constituted about half the total market value of seed in the case of
cotton and about a quarter in the case of soybeans. These are crops for which
significant portions of world area (over 40 percent for cotton, and over 60
percent for soybeans) are planted to GM seeds (see James, 2007, for an
estimate of the distribution of GM crops worldwide). By 2005, only about 10
percent of the value of corn seed came from technology fees and royalties.
Historically, private-sector firms have been able to capture a greater return for
breeding effort devoted to corn through the use of hybridization, which guar-
antees the purchase of seed every year (Morris et al., 1998). The use of GM
