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GMO Crops: To Grow or Not to Grow?
Marshall A. Martin
Professor and Associate Head
Department of Agricultural Economics
Purdue University
Crop Production Clinic
Madison County, Indiana
December 7, 2000
Organization of Today’s Presentation
• GMO crops
Organization of Today’s Presentation
• GMO crops • Public attitudes
towards GMO crops
Organization of Today’s Presentation
• GMO crops • Public attitudes
towards GMO crops• Economics of
transgenic corn adoption
Organization of Today’s Presentation
• GMO crops • Public attitudes
towards GMO crops• Economics of
transgenic corn adoption
• Crop segregation
Organization of Today’s Presentation
• GMO crops • Public attitudes
towards GMO crops• Economics of
transgenic corn adoption
• Crop segregation• The Starlink case
What is a GMO crop?
• Transfer of a gene from a soil bacteria that codes for a protein
What is a GMO crop?
• Transfer of a gene from a soil bacteria that codes for a protein
• Protein becomes a toxin and kills selected insects
Insect Control with Biotechnology
• Insect resistant crops commercially available, e.g., Bt corn, cotton, and potatoes
Insect Control with Biotechnology
• Insect resistant crops commercially available, e.g., Bt corn, cotton, and potatoes
• Transgenic corn for rootworm control under development
Crop Applications of Biotechnology
• Herbicide tolerant crops, e.g., Roundup Ready corn and soybeans
U.S. Crop Biotechnology Adoption
(USDA Survey) 1999 2000 2000
US US IN Corn 33% 25% 11%
Soybeans 57% 54% 63%
Technology Adoption Rates
0
20
40
60
80
100
1 3 5 7 9 11 13 15 17 19
Years
- %
_
Biotechnology Critics
What are the public concerns?
Monarch Butterfly
• Cornell and Iowa State University laboratory studies of adverse Bt corn pollen impact
Monarch Butterfly
• Cornell and Iowa State University laboratory studies of adverse Bt corn pollen impact
• Recent field studies suggest minimal adverse impact
Undesired Gene Flow
• Cross pollination
Undesired Gene Flow
• Cross pollination
• Organic farmer concerns
Undesired Gene Flow
• Superweeds
Food Safety
• Allergenicity
Food Safety
• Allergenicity
• Unknown diseases orfuture health consequences
Structure of Agriculture
•Corporate control of the food system
Structure of Agriculture
•Corporate control of the food system
•Ownership of intellectual property rights
Many Europeans uneasy about biotechnology
• Strong environmental movement
Many Europeans uneasy about biotechnology
• Strong environmental movement• No coherent regulatory system
Many Europeans uneasy about biotechnology
• Strong environmental movement• No coherent regulatory system• Weak public trust in government
since mad cow disease (BSE)
Many Europeans uneasy about biotechnology
• Strong environmental movement• No coherent regulatory system• Weak public trust in government
since mad cow disease (BSE)• EU consumers perceive no
benefits with potential risk
Many Europeans uneasy about agricultural biotechnology
• Strong environmental movement• No coherent regulatory system• Weak public trust in government
since mad cow disease (BSE)• EU consumers perceive no
benefits with potential risk• Protectionist farm policies
Many Europeans uneasy about agricultural biotechnology
• Strong environmental movement• No coherent regulatory system• Weak public trust in government
since mad cow disease (BSE)• EU consumers perceive no
benefits with potential risk• Protectionist farm policies• Strong support for
labeling
U.S. Consumer Attitudes towards Food Biotechnology
• About 3/4 Americans have heard of biotechnology
U.S. Consumer Attitudes towards Food Biotechnology
• About 3/4 Americans have heard of biotechnology
• About 1 out of 3 consumers know that GMO foods are now in our supermarkets
U.S. Consumer Attitudes towards Food Biotechnology
• About 3/4 would buy a GMO food if less pesticide use
U.S. Consumer Attitudes towards Food Biotechnology
• About 3/4 would buy a GMO food if less pesticide use
• About 3/4 support FDA labeling of biotechnology foods with health and nutrition information
My Biotechnology Research
• Economics of Corn Insect Control
– graduate student research
– ID-219 (extension pub)
– Review of Agricultural Economics 21(2):1999
– AgBioForum, 3(1):2000
– 1998, 1999, & 2000 AAEA Selected Papers
European Corn Borer
• $1 billion annual damage in U.S.
European Corn Borer
• $1 billion annual damage in U.S.
• Physiological damage
European Corn Borer
• $1 billion annual damage in U.S.
• Physiological damage
• Mechanical damage
European Corn Borer Infestation
Multi-State Study
• Indiana
• Illinois
• Iowa
• Kansas
Decision Analysis Model
• A decision tree
Date Event
Fall-Winter Seed choice
Apr 1 - June 15 Planting
June 7 1st gen. ECB
August 6 2nd gen. ECB
September 2 3rd gen. ECB
Data
• Collaborative arrangements
– Indiana: Bledsoe and Obermeyer
– Illinois: Steffey
– Iowa: Hellmich
– Kansas: Buschman and Higgins
Data
• Scouting and spraying costs
Data
• Scouting and spraying costs
• Spraying efficacy
Data
• Scouting and spraying costs
• Spraying efficacy
• Corn planting dates
– Probability distribution
– Yield losses for late planting
Data
• Scouting and spraying costs
• Spraying efficacy
• Corn planting dates
– Probability distribution
– Yield losses for late planting
• ECB yield damage by planting date
Data
• Probability of number of ECB given plant
date and infestation
Data
• Probability of number of ECB given plant
date and infestation
• Probability of number of ECB per plant
given infestation
Data
• Probability of number of ECB given plant
date and infestation
• Probability of number of ECB per plant
given infestation
• Overall probability of infestation
Results – Indiana and Iowa
• Returns to spraying less than per acre scouting costs
Results – Indiana and Iowa
• Returns to spraying less than per acre scouting costs
• Compare Bt corn to non-Bt without a spraying program
Results - Indiana
Results - Indiana
• Risk Neutral
Revenue 30% 40%
$300 $4.53 $6.24
$350 $5.28 $7.29
$400 $6.04 $8.33
$450 $6.79 $9.37
Results - Indiana
• Risk Averse
Revenue 30% 40%
$300 $5.12 $6.99
$350 $6.09 $8.31
$400 $7.11 $9.67
$450 $8.17 $11.09
Results - Iowa
Results - Iowa
• Risk Neutral
Revenue 40% 60%
$300 $6.55 $10.32
$350 $7.64 $12.04
$400 $8.74 $13.76
$450 $9.83 $15.48
Results - Iowa
• Risk Averse
Revenue 40% 60%
$300 $7.30 $11.26
$350 $8.68 $13.33
$400 $10.10 $15.45
$450 $11.57 $17.64
Conclusions
• Value of Bt corn increases from east to west in Corn Belt
Conclusions
• Value of Bt corn increases from east to west in Corn Belt
• Very valuable where SWCB are present
Conclusions
• Value of Bt corn increases from east to west in Corn Belt
• Very valuable where SWCB are present
• Resistance may occur if farmers do not comply with EPA 20% refuge requirement
Corn Rootworm Control
Corn Rootworm Larvae Damage
Western Corn Rootworm Variant in Northern Indiana
Soil Insecticides
• One-time proactive application to protect roots
Benefits Limitations• Simplicity • Efficacy variability • Known cost • No adult control ($13-$17/acre) • Environmental concerns?
• Secondary pests • Grower exposure to chemicals
Transgenics
• Insertion of Cry gene from Bacillus thuringiensis into corn genome-root expression leads to root protection
Benefits Limitations
• Simplicity • Resistance development
• Consistency/efficacy • Refuge requirements
• Reduced insecticide use • GMO marketing concerns
and chemical exposure
Root ProtectionS o i l I n s e c t i c i d e Z o n e
T r a n s g e n i c Z o n e
C o r n R o o t s
P r o t e c t e d Z o n e ( S i z e V a r i e s Y e a r t o Y e a r )
C o r n R o o t s / P r o t e c t e d Z o n e
Indiana Research Siteshttp://www.aes.purdue.edu/AgResearch/AgCenters.html
Indiana: 1990-1999 (excluding 1996)
8.809.4510.34
-Lorsban
-1.16-1.31-1.14
-
1.681.531.702.84Untreated
130.82131.47132.36122.02
Corn RootwormTreatment
ForceCounter
Average Root Rating
Root Rating Difference ofTreated vs. Untreated
Average Yield(bushels/acre)
Bushel Difference of Treated vs. Untreated
Conclusions
• Based on cost to the producer, yield benefits, efficacy/consistency, simplicity, and environmental implications, transgenics potentially hold the most economic value for producers
Conclusions
• Based on cost to the producer, yield benefits, efficacy/consistency, simplicity, and environmental implications, transgenics potentially hold the most economic value for producers
• But must have a refuge management plan
Some Considerations Before Adopting Transgenic Corn
Adopting a Transgenic Crop:Production Considerations
• Technology fee
Adopting a Transgenic Crop:Production Considerations
• Technology fee
• Pest infestation
probabilities
Adopting a Transgenic Crop:Production Considerations
• Technology fee
• Pest infestation
probabilities
• Yield drag
Adopting a Transgenic Crop:Production Considerations
• Technology fee
• Pest infestation
probabilities
• Yield drag
• Reduction in pesticide
costs
Adopting a Transgenic Crop:Environmental Considerations
• Refuge requirements
Adopting a Transgenic Crop:Environmental Considerations
• Refuge requirements
• Impacts on beneficial
insects
Adopting a Transgenic Crop:Environmental Considerations
• Refuge requirements
• Impacts on beneficial
insects
• Tillage system
adjustments
Adopting a Transgenic Crop:Marketing Considerations
• Potential premiums or
discounts
Adopting a Transgenic Crop:Marketing Considerations
• Potential premiums or
discounts
• Market segregation costs
Adopting a Transgenic Crop:Marketing Considerations
• Potential premiums or
discounts
• Market segregation costs
• How much premium?
How much premium needed to segregate?
• Recent Midwest commercial farmer survey (Norm Larson of AFS Services)
Premium per Bushel
• < $0.10 2%
• $0.10 - $0.20 22%
• $.020 - $0.30 28%
• $0.30 - $0.40 26%
• $0.40 - $0.50 11%
• >$0.50 12%
What does it take to segregate your crop?
• Seed source
What does it take to segregate your crop?
• Seed source• Planting considerations
What does it take to segregate your crop?
• Seed source• Planting considerations• Harvesting considerations
What does it take to segregate your crop?
• Seed source• Planting considerations• Harvesting considerations• Storage challenges
What does it take to segregate your crop?
• Seed source• Planting considerations• Harvesting considerations• Storage challenges• Hauling and shipping
What does it take to segregate your crop?
• Seed source• Planting considerations• Harvesting considerations• Storage challenges• Hauling and shipping• Beyond the farm gate
The Starlink Case
• Aventis request to EPA- April ’97
The Starlink Case
• Aventis request to EPA- April ’97
• EPA approved- May ’98 for domestic feed and industrial use only
The Starlink Case
• Aventis request to EPA- April ’97
• EPA approved- May ’98 for domestic feed and industrial use only
• Grower agreements required
The Starlink Case
• Aventis request to EPA- April ’97
• EPA approved- May ’98 for domestic feed and industrial use only
• Grower agreements required
• Acres planted– 2,000 in ’98– 248,000 in ’99– 340,908 in ‘00
U.S. Starlink Corn Acres: 2000
• Iowa 134,910
• Nebraska 41,529
• Minnesota 35,691
• S.Dakota 34,290
• Kansas21,390
• Illinois 17,466
• INDIANA 3,564
• U.S. 340,908
Indiana Starlink Corn Acres: 2000
• La Porte 594• Starke 507• Marshall 339• Knox 288• Jasper 279• Delaware 189• Lake 180• Bartholomew 171• Owen 141• Randolph 108
The Starlink Case• Sept ’00 found in taco shells and
recalls initiated
The Starlink Case• Sept ’00 found in taco shells and
recalls initiated• Oct ’00 processors stop using
Cry9c corn
The Starlink Case• Sept ’00 found in taco shells and
recalls initiated• Oct ’00 processors stop using
Cry9c corn• Nov ’00 disruption in grain
industry
The Starlink Case• Sept ’00 found in taco shells and
recalls initiated• Oct ’00 processors stop using
Cry9c corn• Nov ‘00 disruption in grain
industry• Nov ’00 USDA/Aventis
agreement to locate and purchase Starlink corn
The Starlink Case• Sept ’00 found in taco shells and
recalls initiated• Oct ’00 processors stop using
Cry9c corn• Nov ’00 disruption in grain
industry• Nov ’00 USDA/Aventis
agreement to locate and purchase Starlink corn
• Nov ’00 new data submitted to EPA
The Starlink Case• Sept ’00 found in taco shells and
recall s initiated• Oct ’00 processors stop using Cry9c
corn• Nov ‘00 disruption in grain industry• Nov ’00 USDA/Aventis agreement
to locate and purchase Starlink corn• Nov ’00 new data submitted to EPA• Dec ’00 report from SAP says
“medium risk” with Cry9c and “low probability” of risk to consumers
The Starlink Case• Sept ’00 found in taco shells and recall
starts
• Oct ’00 processors stop using Cry9c corn
• Nov ‘00 disruption in grain industry
• Nov ’00 USDA/Aventis agreement to locate and purchase Starlink corn
• Nov ’00 new data submitted to EPA
• Dec ’00 report from SAP says “medium risk” with Cry9c and low probability of risk to consumers
• EPA action expected in a few weeks
Questions