THE SIZE AND DISTRIBUTION OF BENEFITS FROM THE ADOPTION OF BIOTECH SOYBEAN

VARIETIES

N. Kalaitzandonakes, J .Alston and J. KruseUn of Missouri, UC Davis and WAEES

Research Objectives

Measure the global economic impacts from the adoption of biotech corn, soybeans, cotton & canola over the years 1996-2009

To measure the distribution of benefits and costs between

Technology suppliers

Producers and consumers in the various countriesfarmers who adoptedfarmers who did not adoptconsumers

Adoption of Biotech Crops

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Global Adoption across Key Biotech Crops(in million hectares and % of total, data for 2011)

Source: Klive James, ISAAA 2011, percentages based on FAO and USDA data

Adoption of biotech crops across main commodity producers and crops

Soybean Corn Cotton CanolaUS 94% 88% 94% 88%Argentina 100% 86% 99%Brazil 83% 67% 32%Paraguay 98%Uruguay 99%Canada 46% 58% 80%India 88%China 72%Australia 99% 9%

Source: various, national ministries of agriculture and ISAAA

Measurement of economic impact

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A Commodity-Market Model with a Parallel Shift

S1

Q1

P1

D

S0

Price

Quantity0Q0

P0

k

Producer share of both benefits and costs

= /(+)

Consumer share of both benefits and costs

= /(+)

and are the elasticities of demand

and supply

(A) Home Country Production, Consumption & Trade

(B) Excess Supply, Demand, & Trade

(C) ROW Production, Consumption & Trade

CA,0 CA,1 QA,0 QA,1 QT0 QT1 QB,1 QB,0 CB,0 CB,1

P0

P1

P0

P1

SA,0

SA,1

SB,0

SB,1

DA,0

ESA,0

ESA,1

EDB,0

EDB,1

Price Price Price

ROW QuantityTraded QuantityHome Country Quantity

a

c

e

b

d k

j

f

g

h

i

QT0

QT1

QT0

QT1

00 0

Figure 2: A Supply and Demand Model of Impacts of Innovation by an Exporter

A Commodity-Market Model with a Parallel Shift and Global Trade

Distribution of benefits – gains of adopters

Market Benefits ($/ha)

Area (ha)

Total Crop Area

0Adopters

GM HectaresNon-AdoptersConventional

Hectares

Yield Gain

Variable Cost Savings

Non-pecuniary Benefits

Gross (market) Benefits

$/ha

Distribution of Benefits – tech supplier gains

Market Benefits ($/ha)

Area (ha)

0

AdoptersGM Hectares

Non-AdoptersConventional

Hectares

Adopter Net Benefits

Technology Suppliers

Gross (market) Benefits,

$/ha

GM Seed Premium,

$/ha

Total Crop Area

Distribution of Benefits –consumer gains

Market Benefits ($/ha)

Area (ha)

0

AdoptersGM Hectares

Non-AdoptersConventional

Hectares

Consumer Benefits

Adopter Net Benefits

Technology Suppliers

Gross (market) Benefits,

$/ha

Price Impact,

GM Producers,

$/ha

GM Seed Premium,

$/ha

Total Crop Area

Market Benefits ($/ha)

Area (ha)

0

AdoptersGM Hectares

Non-AdoptersConventional

Hectares

Consumer Benefits

Adopter Net Benefits

Gross (market) Benefits

$/ha

Technology Suppliers

Consumer Benefits & Costs to Non-Adopters

GM Seed Premium,

$/ha

Price Impact,

GM Producers, $/ha

Price Impact Non-GM

Producers, $/ha

Does not include impacts of induced price changes for other

crops

Distribution of benefits – consumer gains

Measurement of farm level impacts – key challenges

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Evidence of farm level impacts from Market Research

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Pricing of technology and variable farm costs for US biotech and conventional soybean production

Yields performance of biotech and conventional soybeans in the US

3

9

6

9

10

10

12

12

12

15

11

16

18

15

19

26

0 25 50 75 100

1999

2000

2001

2002

2003

2004

2005

2006

Percent of Respondents

Much better than non-trait Somewhat better than non-trait

Q In terms of yield potential, would you say the yields on your [trait] are:

Comparison Of Yield Potential Between Roundup Ready Soybeans And Non-Roundup Ready Soybean Acres -- 1999 to 2006

RR soybean yields are:

Percent Very/ Somewhat

15%

24%

17%

25%

28%

25%

31%

38%

2

1

2

6

6

7

60

58

61

21

24

18

11

11

12

0 25 50 75 100

Overall (n=446)

NCE (n=196)

NCW (n=240)

Percent of Respondents

Greater than 5 bushels less/acre 1 to 5 bushels less/acreSame yeild/acre 1 to 5 bushels more/acreGreater than 5 bushels more/acre

Q.1 In terms of yield potential, would you say the yields on your [trait] are:Q.2 How many [more/fewer] bushels per acre do you get with [trait] than non-[trait]?

Yield Difference Between Roundup Ready Soybeans And Non-Roundup Ready Soybean Acres 2006

RR soybean yields are ___ compared to non-RR soybean acres.

*Within an acceptable range (-20 to +20 bushels per acre)

Average* Bushels Per

Acre

+1.5

+1.5

+1.4

Adoption of Biotech Soybeans and US of no-till

Q.1 In evaluating the entire Roundup Ready soybean system, taking into account any differences in convenience, labor, peace of mind, etc., do you believe the Roundup Ready soybean system has a _____ than non-Roundup Ready soybeans?

Q.2 If you had to assign a dollar figure to the [added/lower] value of the Roundup Ready soybean system, [above/below] the value of non-Roundup Ready soybeans, how much would you say the [added/lower] value would be on a per-acre basis? In other words, how much [more/less], per acre, would you say the Roundup Ready soybean system is worth to you compared to other programs?

Adoption of Biotech Soybeans and non-pecuniary value

Adoption of Biotech Soybeans and non-pecuniary value

% Greater value Dollar value

Adoption of Biotech Soybeans and sources of non-pecuniary value

What farm level impacts do we account for?

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Results – global economic impacts of RR soybeans

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Price impacts from adoption of biotech soybeans across commodities (% change relative to baseline)

Producer and consumer surplus from adoption of biotech soybeans 1996-2009

Producer and consumer surplus from adoption of biotech soybeans 1996-2009

Tech supplier gross benefits from adoption of biotech soybeans in the US

What did we learn?

Measurement of economic benefits from adoption of biotech soybeans and other crops complicated by sparse data on farm level impacts

Many impacts remain difficult to measure and may explain divergence of adoption and measured impacts found in many studies

Global impacts from adoption of biotech crops are very large – close to $60 billion between 1996 and 2009 in the case of soybeans