The Economic and Marketing Challenges of Horticultural Biotechnology - Transgenic Horticultural Crops: Challenges and Opportunities - page 176

In. spite. of. the. commercial. failure. of. horticultural. biotechnology,. there. exists.
ample. opportunity. for. welfare-improving. innovation. in. specialty. crops.. In. fact,.
given.the.agronomic.demands.of.specialty.crops.and.the.quality.demands.of.those.
who. consume. them,. the. capacity. for. genetic. improvements. in. horticultural. crops.
may. exceed. that. of. major. ield.crops.. Farmers. of. horticultural. crops. could.beneit.
not.just.from.the.herbicide-tolerant.and.insect-resistant.traits.introduced.into.major.
ield. crops. like. cotton,. maize,. soybean,. and.canola,.but. also. from. traits.to. protect.
against. plant. disease. 3-5 . Traits. that. extend. the. shelf. life. of. produce. or. boost. their.
nutrient.content.would.also.be.valuable,.as.would.traits.to.control.growth.in.orna-
mental.plants.and.make.lowers.last.longer. 2 .In.addition,.because.plant.breeding.is.
particularly.slow.and.cumbersome.for.specialty.crops,.the.capacity.to.introduce.an.
advantageous.trait.into.an.elite.cultivar.without.backcrossing.is.highly.beneicial. 2
In. spite. of. the. serious. potential. for. gains. to. producers. and. consumers,. horti-
cultural. crops. have. been. largely. overlooked. by. the. biotechnology. revolution,. and.
research.and.development.(R&D).for.these.crops.is.declining..The.failure.of.horti-
cultural.biotechnology.innovation.to.proceed.at.the.same.pace.as.agricultural.bio-
technology. is.largely.a. matter.of.economics..In.this. chapter,. we.explain. how.high.
ixed.costs.for.biotechnology.research,.diversity.in.horticultural.crops,.market.size,.
consumer.doubts.about.GM.foods,.consolidation.in.food.processing.and.marketing,.
and.government.regulation.of.genetic.plant.engineering.constrain.the.development.
of.new.specialty.crops..We.further.articulate.policies.to.help.spur.socially.beneicial.
innovation.in.horticultural.biotechnology.and.offer.predictions.for.where.horticul-
tural.biotechnology.may.succeed.
HIGH FIXED COSTS OF R&D
In.Schmookler's.seminal.topic,. Invention and Economic Growth , 6 .he.observed.that.
“invention. is. largely. an. economic. activity,. which,. like. other. economic. activities,.
is. pursued. for. gain.”. The. role. of. proits. in. determining. the. pace. and. direction. of.
technological. change. is. a. subject. that. has. motivated. vast. theoretical. and. empiri-
cal.literatures..Proits.are.central.not.just.to.endogenous.growth.models.but.also.to.
theories.of.induced.innovation.and.directed.technical.change. 7-10 .In.his.assessment.of.
the.adoption.of.hybrid.corn.seed.in.the.United.States,.Griliches.provided.early.evi-
dence.that.proitability.and.market.size.are.closely.tied.to.innovation.and.technology.
adoption. 11 .More.recently,.Kremer.argued.that.investment.in. cures.to.Third.World.
diseases.is.too.low.because.markets.for.such.cures.are.too.small. 12 .The.literature.on.
adoption.and.innovation.inds.that.adoption.and.innovation.activities.require.making.
risky.investments. 13,14 .The.likelihood,.timing,.and.scale.of.adoption.and.innovations.
are.affected.by.risk.considerations..Increased.variability.and.riskiness.tend.to.reduce.
economic.activity. 15,16
The. challenges. to. innovation. in. horticultural. biotechnology. are. fundamentally.
economic,.and.they.are.derived.from.the.proitability.and.risk.management.decisions.
made.by.irms.throughout.the.supply.chain,.which.affect.the.rate.and.direction.of.
innovation..They.are.not.altogether.different.from.the.challenges.the.medical.world.
faces.in.overcoming.Third.World.diseases:.The.potential.for.welfare.gains.is.tremen-
dous,.and.yet.the.relevant.R&D.is.substantially.lacking..As.we.will.see.in.subsequent.