Agriculture Reference
In-Depth Information
in a developing country, we might differentiate between export-oriented commercial
farmers and domestic subsistence farmers. Thus, we proceed by considering the full list
of affected groups likely to share common interests. Our goal is to achieve a disaggrega-
tion into groups that share common welfare impacts in order to highlight vertical as well
as horizontal interactions as well as the key political consortia involved in policy nego-
tiations for agricultural biotechnology.
Consumers
Consumers' attitudes toward an agricultural commodity reflect the economic benefit
(utility) they derive from the use of that commodity or derivative products made using
that commodity, which largely considers perceptions about intangible product charac-
teristics. Such intangible characteristics include the characteristic of “genetic modifica-
tion” use of recombinant DNA technology to produce the genetic characteristics of the
crop variety. Consumers may also consider the fact that the technology was provided by
a large multinational corporation and thus have a negative attitude toward the product
for that reason as well.
The welfare analyses reviewed in Table 27.1 reveal that consumers in the United
States benefit only marginally from the price reductions resulting from the increased
productivity due to GM crops. For example, the largest single-point estimate of con-
sumer benefit, revealed by Qaim and Traxler (2005), indicates that U.S. consumers
received 53 percent of the U.S.$1.23 billion in total benefits (or U.S. $652 million) from
the herbicide-tolerance trait in soybeans. Although this is a large value in total, for
each of the 300 million U.S. consumers, it comes down to just US$ 2.17 per person.
Several scholars have pointed out that, because consumers do not perceive this small
amount as a real benefit, they are, thus, not inclined to actively support policies favor-
ing the introduction of crop biotechnology, especially when accompanied by other
perceptions that there may also be risks associated with the technology (Paarlberg,
2001; among others). Indeed, under such conditions it appears quite reasonable for
average food consumers to remain “rationally ignorant”—in the political sense pro-
posed by Stigler (1971)—of the benefits that they derive from agricultural biotech-
nology and to be unmotivated to mount any significant collective action regarding
policies relative to this issue. Instead, consumers exercise their influence individually
and largely out of their default position of “rational ignorance” when making pur-
chasing decisions in the marketplace and on rare occasions when voting, such as in
California's Proposition 37.
The results in Table 27.1 present earlier estimates on consumer welfare in the adoption
of GM technology, ending with results for 2001. As the rate of adoption increased, the
impact on supply increased as well, resulting in the substantial impact on the prices of
soybeans and corn reported earlier. However, the large reductions in the prices of com-
modities translate to much lower reductions in the price of the final goods bought by
consumers in developed countries.4 The impact on food prices in developing countries,
where the degree of processing is lower, is likely to be higher.
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