AEM_3350_lecture_8_Sp.__09SharingTheBenefits

AEM_3350_lecture_8_Sp.__09SharingTheBenefits - SHARING THE...

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Unformatted text preview: SHARING THE BENEFITS: Division of technology-based benefits among: Farmers Technology Providers & Consumers Group & Zip: BIOTECH FDS 6_11_01 ie., how much of the ie., how much of the benefit can I expect to capture? Begin with overview of history of technological change in agriculture Market Basket: Retail Market Basket: Farm Meat: Retail Meat: Farm Fruits & Vegetables (fresh): Retail Fruits & Vegetables (fresh): Farm 300 250 Index Value 200 150 100 50 0 1980 1990 2000 FOOD EXPENDITURES AS FOOD EXPENDITURES AS PERCENT OF PERSONAL EXPENDITURES All Food At Home 25 20 15 10 5 0 1930 1960 1990 2005 (out of almost 2 million farmers) 60 Percent of Farms Percent of Land Percent 50 40 30 20 10 0 0-49 50-99 100-259 260-999 10001999 Farm Size (acres) 2000+ (percent of total) GMO ADOPTION: US (% crop acreage) 90 Soybeans Corn Cotton 80 Percent of Crop A reage c 70 60 50 40 30 20 10 0 1 996 1 997 1 998 1 999 2000 2001 2002 2003 2004 GMO ADOPTION: REST OF WORLD (% crop acreage) Canola (Canada) Soybeans (Argentina) 1996 3 1997 30 1998 60 61 1999 70 91 82 99 2005 Others (crops only) China: Bt cotton (66%), rice (just approved) Brazil: RR soybean (44%) Europe (France, Spain (10%), Portugal): Bt corn 1999 India: Bt cotton (1.3 m hectacres) ESTIMATES OF ON-FARM GMO BENEFITS (Single Traits) CORN (European Corn Borer) Cost = $6-12/acre Net Benefits: 4-8% yield increase little effect on pesticide cost Net: $3-16/acre w/25% infestation problem = $3.92-4.94/acre w/40% infestation problem = $6.62-7.50/acre Infestation varies among and within regions In all cases, early results may not reflect long-term prices and returns ESTIMATES . . . (continued) SOYBEANS (Herbicide Resistance) Cost: $10/acre average Net Benefits: reduced cultivation $1/acre lower herbicide costs $7-11/acre net benefit $6/acre average different conclusions on yield effect Adoption by Region (1997) Corn Belt Lake States Southeast Delta Northern Plains 16.9 8.7 18.3 33.4 12.8 ESTIMATES . . . (continued) COTTON (Bt) Cost: $30/acre technology fee Net Benefits: Net: $13-65/acre higher yields (20% in southeast) lower pesticide costs in southeast Effects vary by year, some adopt for insurance against major loss. Reduced management needs. • Bt Cotton Benefits : China 2001 1.5 m ha ( $ 502/ha ) India 2001 $ 76/ha ( 25% over conventional ) Mexico 1998 37,000 ha or 15% ( $ 626/ha) South Africa 2001 adopted 92 % small farmers ( $25­50/ha ) Distribution of Benefits Distribution of Benefits Considerations Short term : Farmers face risk with higher costs of new technology yet uncertainty due to weather. Hence, farmers typically pay only $ .25 ­ .50 per $ expected benefit Long term : Because farming is competitive higher profits from new technologies leads to higher production and hence lower prices – so that net benefits in a competitive market eventually are passed on to consumers Share of benefits from Bt Share of benefits from Bt Cotton USA Mexico China 1998 1998 1998 Farmers 46 90 83 Tech Co. 34 8 12 Seed co. 9 2 5 Consumers 7 ­ ­ Importers 4 ­ ­ Bt Eggplant in India Bt Eggplant in India Summary of Crop Yields from field trials Category Yield (Q/acre) Bt hybrid 220.8(+117%) Non­Bt counter 101.9 part Competitor’s 106 hybrid Popular OPV 75.5 Profits from partial budget Profits from partial budget analysis for OPV growers Cost/return OPV to Bt OPV to Bt OPV hybrid (Rs/ha) (Rs/ha) i Pesticide 5165 savings (40%) ­7405 ii Yield benefits 32115 (48%) 78243 iii Sub­total returns Seed prices 37280 70838 1 1163 2 0 12004 (max WTP) 36117 58383 iv v Net returns (iii­iv1) 6625 (average WTP) ...
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This note was uploaded on 09/21/2009 for the course AEM 3350 taught by Professor Lesser,w. during the Spring '08 term at Cornell.

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