The Political Economy of Regulation of Biotechnology in Agriculture - The Oxford Topic of Food, Politics, and Society - page 671

went to farmers in developing countries. They also estimate that the innovating compa-
nies gained around 20 percent of the total global benefits created (about U.S.$4 billion).
Brookes and Barfoot (2011) suggest that the adoption of GM crops has increased the out-
put of those crops significantly, but they do not assess the impact on commodity prices.
Barrows, Sexton, and Zilberman (2013) estimate output effects of GM crop technol-
ogy, including the resulting price effects. In particular, they suggest that global output of
corn increased between 3 and 19 percent, output of cotton increased by up to 55 percent,
and output of soybeans increased between 12 and 42 percent. They estimate that the
decline in the commodity price of corn due to biotechnology was 13 percent, the decline
in the commodity price of cotton was 33 percent, and the decline in the commodity price
of soybeans 38 percent. This drastic reduction in prices significantly affected consumers
of corn, cotton, and soybeans, including other producers in the value chain for whom
these commodities represent major input costs. Yet, for final consumers, since the cost
of raw inputs make only a small contribution to the final retail price of food, these reduc-
tions in the commodity prices of corn, cotton, and soybeans have a relatively small
impact—around a 3 or 4 percent reduction—on retail food costs to consumers in the
United States.3 However, the reduction in commodity prices due to biotechnology argu-
ably has a much larger relative impact on consumers in developing countries, in part due
to the fact that a much larger share of household budgets go toward food consumption.
Sexton and Zilberman (2011) argue that, had rest of the world adopted available GM
corn and soybean traits, the price effect would have been much greater than it was under
the partial adoption—largely taking place by North and South American farmers—and
much of the commodity price hikes that have occurred since 2008 would have been
less severe. Furthermore, if Bacillus thuringiensis (Bt) and Roundup Ready varieties of
wheat and rice had been adopted, the yield effects would have been of a similar order of
magnitude as was experienced in corn, cotton, and soybeans, and much of the global
rise in commodity prices would have been avoided altogether.
Considering the Impacts of Agricultural Biotechnologies
Across the Full Range of Relevant Interest Groups
Following the challenge recognized by Oates and Portney (2003) that identifying and
characterizing the relevant interest groups is essential to fully understand the alignment
of forces that give shape to a policy outcome, we began our analysis with the typical wel-
fare analyses reviewed in the previous section. These analyses provide a general sense
of the economic impacts of agricultural biotechnologies, at least on the primary groups
involved, such as the innovating companies, farmers growing GM crops, and consum-
ers of the products that result from GM crop commodities. But it may be necessary to
identify and characterize other groups external to these market relationships or to dis-
tinguish particular subsets within consumers, farmers, or input suppliers, which have
decidedly different interests when it comes to agricultural biotechnologies. For example,