Plant Biotechnology in China: Investment and Impacts

Jikun Huang, Ruifa Hu, Carl Pray, Scott Rozelle, Hans van Meijl, and Frank van Tongeren

Questions

• Should China continue to promote biotech and commercialize its GM food, particular the food crops such as rice?

• How much benefit China can gain from agricultural biotech development?

• How important are trade restrictions on GM products by other countries

Overall goal:

To provide an economy-wide

assessment of plant biotechnology

development in China

Outline of presentation

• Overview of China’s plant biotechnology research investment

• Bt cotton and GM rice: farm level impacts

• Bt cotton and GM rice: economy-wide impacts

• Concluding remarks

Agricultural plant biotechnology research expenditure in China, 1986-2003 （ million yuan in 2003 price ）

0

50

100

150

200

250

300

350

400

1986 1988 1990 1992 1994 1996 1998 2000 2002

Based on CCAP’s survey, 2003

Plant biotechnology researchers, 1986-2003

0

200

400

600

800

1000

1200

1400

1600

1800

2000

1986 1990 1995 2000 2003

Sci enti sts Total

Available GM plants in the public sector in China

• More than 20 GM plants have been approved for environmental release and/or field trials

• Four GM plants have been commercialized since 1997: cotton, tomato, sweet pepper and pertunia

Non-Bt cotton Bt cotton

Source: CAAS

抗虫转基因棉花获大面积推广抗虫转基因棉花获大面积推广

来源： 中国农科院

Bt cotton areas in China, 1996-2003 (thousand hectares)

0

500

1000

1500

2000

2500

3000

1996 1997 1998 1999 2000 2001 2002 2003

中国 More than 5 million farmers adopted Bt cotton in 2003

Case study: Bt vs Non-Bt Samples’ locations (1999-2001)

1999-2001:Samples – 1056 hhs

Hebei: 99- 2001

Jinagsu: 2001

Anhui: 2001

Shangdong:99-200

Henan:2000-2001

Case Study: Bt vs Non-Bt Cotton Inputs levels:

No significant different in:Fertilizer useIrrigationMachineryHarvest cost

Significantly different inPesticide useLabor useSeed price

Numbers of pesticide applications in Bt and non-Bt cotton in Hebei and Shandong in 1999

-- reduced by 13 applications

02468

101214161820

Bt Non-Bt

In 2000: by 12 applications In 2001: by 14 applications

3.23.4

1.9

2.93.1

3.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

(ton

/ha)

1999 2000 2001

Non-Bt Bt

Cotton yield (ton/ha): Bt vs non-Bt cotton

MethodologiesYield Model

(1) Y = f (X) G(Z), Y : yieldX: conventional inputs, farm-specific factors and others G(Z): a damage abatement functionZ: the pesticides and Bt cotton variety

(2) Y = a in Xi

ki [ 1 - exp(- c Z)],

(3) a = a0 + a1 Bt

(4) c = c0 + c1 Bt

Pesticide Use Model• Pesticide use= f (Yield loss, Price, Farm size, Age, Education,

Village leader dummy, Training dummy, Seed dummies, Bt cotton dummy, others)

Major findings on Bt cotton impacts

in 1999-2001 (per hectare)

• Reduce pesticide use: 34 kg 923 yuan

• Increase yield: 9.6% 930 yuan

• Increase seed cost: 570 yuan

• Reduce labor input: 41days 574 yuan

• Increase net income: 1283-1857 yuan (US$

155-225)A net increase of about 30% … this is a HUGE increase in productivity!

Percentage (%) of poisonings reported as numbers of farmers interviewed in Hebei and Shandong in 1999

0

5

10

15

20

25

But Bt cotton is more than productivity-enhancing …

Percentage (%) of poisonings reported as numbers of farmers interviewed in Henan in 2000

0

5

10

15

20

25

30

GM rice: Pre-production(2001-2003)

123 households, 512 plots

Hubei: 2001-2003

Fujian: 2002-2003

Bt rice: environmental release in 2002

2002 年 5 月 8 日播种， 6 月 1 日插秧，抗虫转基因水稻恢复系株系及其配制的杂交稻组合各18 个；恢复系及杂交稻组合的对照分别为明恢86 及Ⅱ优明 86 ；转基因材料与对照在横竖二个方向间隔种植如国际象棋棋盘，每个方块为正方形，边长为 3m 。

Source: Zhu Zhen

Bt rice

Non-Bt rice

5.609

6.9756.282

8.25

6.226

7.621

6.6347.033

5.8815.863

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

(ton

/ha)

2002 Fuj i an 2003 Fuj i an 2001 Hubei 2002 Hubei 2003 Hubei

Non-GM rice GM rice

Yields of GM and non-GM rice ： (ton/ha)

30

5.6

38.5

8.2

15.3

1.7

19.4

3.2

19.7

3

0

5

10

15

20

25

30

35

40

(kg/

ha)

2002 Fujian 2003 Fujian 2001 Hubei 2002 Hubei 2003 Hubei

Non-GM rice GM rice

Pesticide uses (kg/ha) ： GM and non-GM

rice

Of those farmers that used GM rice, 62% used ZERO pesticides

Major findings on GM rice impacts (per hectare)

• Reduce pesticide use: 16.9 kg 270 yuan

• Increase yield: 4-8 % 406 yuan

• Increase seed cost: ?? yuan

• Reduce labor input: 8.4 days 168 yuan

• Increase net income: 676-844 yuan (US$

82-102)

Percentage (%) of poisonings reported as numbers of farmers interviewed in Fujian and Hubei in 2002-2003

0

5

10

15

20

25

30

35

2002 2003

An economy-wide impacts

– Price

– Supply and demand

– Trade

– Economy welfare

Scenarios

– A = [not shown]

– B = Commercialise Bt Cotton +

Commercialise GM rice + trade

patterns not affected by GM

adoption

– C = B + Trade ban on GM rice by Japan, Korea, SE Asia, and EU.

Scenario B: Bt cotton + GM riceImpacts on Welfare (EV, million US$) in 2010

0

1000

2000

3000

4000

5000

6000

Bt cotton GM rice Total

Comparing scenarios B and C Rice net export changes (million US$, relative to baseline)

020406080

100120140160180200

B: GM cotton & Rice C: ban

But share of export is only about 1% of production

Comparing Scenarios A, B, and C

Impacts on Welfare (EV, million US$) in 2001

0

1000

2000

3000

4000

5000

6000

Bt cotton Bt cotton + GM rice Trade ban

Concluding remarks• China has gained significantly from

commercialising Bt cotton through its direct impact on cotton sector and indirect impact on textile industry

• China could even gain much more from commercialising GM food crops (i.e. GM rice)

• Most of the gains from Chinese biotech are realised independently from foreign trade

Concluding remarks• Should China continue to promote biotech and

commercialize its GM food? – Yes.

The average forgone income of postponing GM rice would be about US$ 2.5 billion per year in 2002-05

• How much benefit China can gain from agricultural biotech development? – US$ 5 billion in 2010

(1 from bt cotton and 4 from GM rice)

• How important are trade restrictions on GM products by other countries?

– Minor. Policy makers should put less weight on the international dimension in making their decisions