The Political Economy of Regulation of Biotechnology in Agriculture - The Oxford Topic of Food, Politics, and Society - page 674

Retailers
A retailer's profits are highly dependent upon the reputation of its brand, which is a
function of consumers' perceptions. Accounts from the retail sector in Europe clearly
indicate the strong effect that consumers' attitudes toward biotech foods clearly have
had on retailers' policy positions (Kane, 2001). Thus, although retailers are in most cases
agnostic about the methods by which the products they sell are produced, they do care
about how those products are perceived and valued by consumers (Sato, this volume).
Since the major food retailers tend to be fairly large chains—such as Walmart or Kroger
in the United States and Carrefour in Europe—their decisions can strongly influence the
production decisions of food manufacturers and agricultural suppliers up the value chain.
These large private-sector actors can dictate product standards. Price-sensitive producers
may seek to stop adoption of a technology if they are worried that major domestic retail-
ers or foreign export markets decide not to purchase products that use that technology.
For example, potato growers effectively ended the development of GM Bt potatoes in
the United States and eventually across the globe in response to the decision in 1999 by
McDonalds Corporation to not purchase GM potatoes (Kaniewski and Thomas 2004).
Farmers
Farmers' attitudes toward any agricultural technology, including crop varieties with
genetically engineered traits, reflect the net present value of the economic benefits they
expect to realize as a result of the technology's impact on their own farm operations'
costs (both monetary and “nonpecuniary” costs) and revenues. Costs can be directly
affected by adopting the technology. Revenues are a result of the operation's yields,
which, again, can be affected by adopting the technology, and the prices they are able
to garner, which are affected by other farmers adopting the technology as well as public
policies toward the technology. We disaggregate agricultural producers into the sub-
groups that may be affected differently by the regulation of agricultural biotechnologies.
1. Early adopting farmers. The literature (Feder, Just, and Zilberman, 1985) suggests
that early adopters are the ones that can afford, have much to gain from, and have
access to the technology. Initial adopters gain from cost saving and yield effects of
the GM technology, and in the early period do not suffer much from price reduc-
tion associated with large volume of adoption. They are likely to be supporters of
the technology.
2. Late-adopting or nonadopting farmers in markets where GM crops have already
been introduced. Although early adopters of the technology profit, at least tempo-
rarily, due to the lower costs and higher yields they enjoy, late or nonadopters may
suffer losses. The increased output from adoption of yield-increasing technolo-
gies expands supply and puts downward pressure on prices. Late and nonadopters
are squeezed between falling market prices for their output and the higher costs
of continuing to use the older technology, a phenomenon known as “Cochrane's
Treadmill” (Cochrane, 1993).