The Political Economy of Regulation of Biotechnology in Agriculture - The Oxford Topic of Food, Politics, and Society - page 669

Empirical Welfare Analysis Estimates of Agricultural
Biotechnology Innovations on a Core Set of Primary
Interest Groups
There is a vast literature on the distributional impacts of commercially adopted agricul-
tural biotechnologies (see National Research Council (NRC), 2010; Brooks and Barfoot,
2013; Bennett et al., 2013), which provides an essential starting point for our political-
economic analysis. Virtually all of the uses of recombinant DNA technology in crop
agriculture have been for controlling insect and weed pests even though several differ-
ent uses of the technology have been explored.
Economists have estimated the economic impacts of these pest-control traits. Qaim
and Zilberman (2003) modeled GM varieties with pest-control genetic traits, dem-
onstrating that they may reduce cost when they replace costly alternatives and may
increase yields when alternatives do not exist or are less effective. The GM varieties are
adopted by farmers when they are likely to be more profitable than alternatives, given
prevailing prices of inputs and outputs.
Table 27.1 (adapted from NRC, 2010) overviews estimates from 15 studies of the distri-
bution of economic benefits from the adoption of pest-control traits in cotton, soybeans,
and corn, primarily in the United States, between 1996 and 2004. The results suggest sig-
nificant overall economic gains due to the technology—in some crops more than a bil-
lion dollars annually. Yet, the shares of these benefits that accrue to different groups vary
across countries and time.
The companies that innovate and sell the technology are estimated to capture
from 6 to 68 percent, with an average of 33 percent, of the total economic value gen-
erated by these new crop technologies. Thus, even though companies like Monsanto,
Pioneer-DuPont, and Syngenta own patents and charge farmers royalty fees for use of
the technology, they are only able to capture a minority portion of the total economic
value they helped to create.
The farmers' share of total economic benefit generated by the technology varies
widely across these studies, ranging between 4 and 77 percent, with the average being
around 30 percent. The relative share of total benefits estimated to go to domestic con-
sumers, largely in the form of lower prices, again, varies widely, from 4 to 53 percent,
with the average being 22 percent. Finally, the share of total economic value created by
the technology going to consumers in the rest of the world, due largely to the technol-
ogy lowering global commodity prices, varies from 4 to 28 percent, with an average of
18 percent. The absolute values of the total annual benefits have likely increased since
adoption levels and overall food prices have both increased in the intervening 10 years
since these studies were conducted.
Aggregate global analysis by Brookes and Barfoot (2013) suggests that, in 2011, total
benefit to farmers globally from growing GM crops was U.S.$19.8 billion, divided
equally between yield gains and cost savings. Fifty-one percent of these farm benefits