Falck zepeda et al ravello icabr june 2013 final updated

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Presentation at the 2013 ICABR meeting in Ravello, Italy. Details experiences with two surveys conducted on GM maize in Honduras. Identifies impacts on yields and profits, issues, traits related to …

Presentation at the 2013 ICABR meeting in Ravello, Italy. Details experiences with two surveys conducted on GM maize in Honduras. Identifies impacts on yields and profits, issues, traits related to the adoption of a GM product in a small resources poor country.

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  • 1. “Adoption Impacts and Access to Innovation in Small Resource Poor Countries: Results from a Second Round Survey and Institutional Assessment in Honduras” José Falck Zepeda1, Denise McLean2, Patricia Zambrano1, Arie Sanders2, Maria Mercedes Roca2, Cecilia Chi-Ham3 1 IFPRI 2 Zamorano University 3 UC Davis PIPRA Paper presented at the 17th ICABR meeting, Ravello Italy, June 21 2013 © 2013 UC-Davis and IFPRI
  • 2. Honduras: High reliance on agriculture Agriculture Value Added 25 % of GDP 20 Sub-Saharan Africa World Honduras United States 15 10 5 0 2000 2002 2004 2006 2008 2010 Agricultural sector 13% of GDP1 Agribusiness and related sector  40-45%2 GDP 1 World Bank, 2011 2 http://www.hondurasopenforbusiness.com/SITEv2/files/pdf/Oportunidades_de_inversion_Agroin dustria.pdf
  • 3. Honduras: Limited resources for agricultural production especially land Arable Land % of Land Area 25 20 Sub-Saharan Africa World Honduras United States 15 10 5 0 2000 2002 2004 87% of territory corresponds to hillsides susceptible to erosion Graphs: WorldBank Development Indicators (2013) Map: National System of Environmental Indicators, SINIA 2006 2008
  • 4. Honduras: Low productivity of major staple crops Kilograms / hectare Cereal Yield 8000 7000 6000 5000 4000 3000 2000 1000 0 Sub-Saharan Africa World Honduras United States 2000 2002 2004 2006 2008 2010 Honduras’ Productivity: 1/3 of world averages and 1/7 of US yields
  • 5. Corn is an essential part of Honduran diet Top commodity available for consumption  739 kcal/person/day Basic grains represent up to 60% of Honduran diet 48% of total demand is for human consumption Production Value, Top Commodities (2011) Value [1000 Int$] Value [1000 Int$] 1 Coffee, green 303357 8 Tomatoes 56580 2 Cow milk, whole 230723 9 Oranges 54126 3 Chicken Meat 222122 10 Beans, dry 51791 4 Bananas 204849 11 Pineapple 39416 5 Cattle Meat 165830 12 Eggs 36661 6 Sugar cane 164766 13 Melons 33139 7 Palm oil 139218 14 Corn 32068 Corn in Honduras is grown mostly for food/feed 1FAO Statistics Division, 2012, 2Ministry of Agriculture and Livestock, 2012
  • 6. Corn supply in Honduras increasingly dependent on imports Corn Production and Trade 8000 600 6000 400 4000 200 2000 0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Corn production Corn imports Nearly 40% of corn is imported and thus high concerns for corn price volatility in international markets Corn exports Population (thousands) Tons (thousands) 800 0 Population total Honduras Agriculture Ministry Jacobo Regalado: “From the million ton we need we are only producing 600 thousands. We are still importing 400 thousands(…) The idea is to accelerate the pace to substitute those 400 thousands with local production”. Hondudiario, March 19, 2012
  • 7. Honduras: The problem with production intensification  Damage by lepidopteran insects can be as high as 40-70%  Increasing issues with other pests and diseases  Heavy damage due to aflatoxins / mycotoxins  Need to explore new control alternatives amenable to smallholder´s producers  Smallholder producers:  Little access to technology, pest control alternatives and credit  Knowledge limitations: to determine damage and to make correct chemical applications….
  • 8. GMOs in Honduras 8th Latin American country adopting GMOs since 20021 -USA* -Brazil* -Argentina* -South Africa* -Canada* -Uruguay x1.5 -Philippines x3 -Spain x5 -Chile x7 -Honduras -Portugal x.8 -Czech Republic x .7 -Poland x3 -Egypt x9 -Slovakia x0.4 -Romania x2 • By 2011, 72 thousand ha with hybrids and GM  15% area planted1 • GM estimated around 25-30 thousand ha BT (MON810), RR (NK603), Herculex 1 ,YGVTPro (MON89034) traits approved for commercialization 1ISAAA, 2012 Only country in Central America cultivating GMOs for food
  • 9. WHY GMOs adopted in Honduras?
  • 10. Honduras: promotional environment favoring biotechnology adoption Favorable policy, economic and social conditions facilitated adoption • Honduras trade is essentially tied to the United States • Historically strong presence of agricultural multinationals interested in increased agricultural productivity UN Statistics Division, 2011. WTO Statistics, Trade Profiles, 2012 Strategic interest in aligning agricultural policies with the major economic and trade partners
  • 11. Honduran government specific policy support for easing a transition towards biotechnologies  Established Biosafety Framework and Regulations  Incorporated biotechnology in National Food Self Sufficiency Strategy  Coordinated a joint agricultural and environmental political agenda 1996/98: 1998: 2006: 2008: 2001/12: Biosecurity Regulation with Emphasis in Transgenic Plants National Committee of Biotechnology and Biosecurity (NCBB) CAFTA-DR Phytozoosanitary Law modification Cartagena Protocol Ratification Law for the Protection of New Varieties of Plants USAID GAIN Report 2012. ‘To facilitate the process to incorporate hybrids and transgenic seeds in 25% of the area planted at the national level by 2014’ Honduras Agricultural and Livestock Ministry goal Public Agricultural and Food Sector Strategy Honduras: A case study to understand biotechnology adoption in small resource poor developing countries
  • 12. Honduras in the Latin American innovation sphere Small markets Non-selective importers of technology Selective importers of technology Tool users Innovators El Salvador, Guatemala, Honduras, Nicaragua, Panamá Costa Rica, Uruguay - Medium markets Bolivia, Ecuador Large markets Paraguay, Peru Venezuela Colombia, Chile Argentina, Mexico Brazil Notes: 1) Source: Trigo, Falck-Zepeda and Falconi (2010), 2) Non-adopters are listed in italic text.
  • 13. Which policies are important? Public sector investments in biotechnology applications Intellectual property management Biosafety regulations Food/feed safety and consumer protection Support for public sector participation and tech transfer including seed systems Non-adopters Bolivia Ecuador Guatemala Perú Venezuela 0 0 0 0 + 0 0 - 0 - 0 0 0 0 0 0 0 Argentina Brazil Costa Rica Honduras + + + 0 0 - 0 0 0 0 + 0 0 0 + + + - Mexico Uruguay + + 0 0 0 0 0 0 + + Adopters Notes: 1) Source: selected countries from Trigo, Falck Zepeda and Falconi (2010), 2) + signifies promotional policies, 0 denotes neutral policies, - reflects preventive policies, 3) Brazil was categorized as having a preventive biosafety policy in the Trigo et al. paper, but is reclassified here as neutral based on recent developments in the country.
  • 14. HOW HAS GM CORN WORKED IN HONDURAS?
  • 15. 2008 GM maize crop cycle in Honduras: Results from our first survey  GM maize provided excellent     target pest control Bt yield advantage 856-1781 Kg ha-1 yield Bt maize yields preferred even by risk averse producers 100% higher seed cost than conventional hybrid Institutional issues important Falck-Zepeda, J., A. Sanders, C. Rogelio Trabanino, & R. Batallas-Huacon. Caught Between Scylla and Charybdis: Impact Estimation Issues from the Early Adoption of GM Maize in Honduras. AgBioForum, 15(2), 138-151. Available on the World Wide Web: http://www.agbioforum.org. Photos credit: © Sanders and Trabanino 2008
  • 16. The 2013 (second) survey to observe experiences of conventional & GM corn farmers Economic, social and agronomic impacts Farmers by corn type Size Total < 7 hectares > 7 hectares Conventional only 58 25 83 GM only 39 57 96 Both types of corn 11 19 30 Total 108 101 209 o We chose a representative sample of corn farmers from the main corn producing state in Honduras
  • 17. Disclosure:  Results presented here are preliminary  These may change with further work
  • 18. Major maize producing areas in Honduras
  • 19. Olancho: The main metric tons producing state in - 180,000 corn - 35,000 planted hectares >30 % national corn production Honduras - 12,000 hectares with GM  >40% GM corn production - 10,000 farmers - A range of different corn production systems We captured diversity within the commercial corn production chain
  • 20. Our findings: In average GM corn farmer seem to be using less pesticides Number of applications Conventional Both types, conventional plot GM Both types, GM plot < 7 ha > 7 ha < 7 ha > 7 ha < 7 ha > 7 ha < 7 ha > 7 ha Insecticides 1.7 1.9 1.6 1.3 1.9 2.0 1.0 1.1 S Herbicides 2.6 2.7 1.7 1.5 2.7 2.1 1.7 1.6 S Fungicides 1.0 1.5 1.2 1.5 1.0 1.3 1.0 1.0 NS Fertilizers 2.2 2.3 2.4 2.3 1.9 2.6 2.3 2.6 NS S: Significant, NS: Not significant GM corn producers from sample made one insecticide and herbicide application less
  • 21. GM and conventional corn farmers seem to have a similar environmental impact measured by the EIQ Environmental Impact Quotient Conventional < 7 ha > 7 ha Both types, conventional plot GM < 7 ha > 7 ha < 7 ha > 7 ha Both types, GM plot < 7 ha > 7 ha Insecticides 5.2 6.3 4.3 11.0 4.6 8.2 3.1 6.1 NS Herbicides 24.3 29.6 27.1 28.6 42.6 12.5 24.6 16.0 NS Fungicides 3.0 3.7 14.5 10.4 7.1 7.1 7.1 9.4 NS Fertilizers 23.7 27.4 36.6 41.6 36.2 16.9 25.5 22.6 NS S: Significant, NS: Not significant EIQ: J. Kovach et al, IPM Program, Cornell University, New York State Agricultural Experiment Station Geneva, New York 14456
  • 22. GM corn farmers seem to be obtaining higher yields & profits Cost structure in corn production Conventional < 7 hectares Total costs (US$/ha) Yield (ton/ha) Price (US$/ton) Income (US$/ha) Profit (US$/ha) 1 At small scale 717.1 2.8 273.7 748.5 32.1 > 7 hectares 749.7 3.4 294.4 1018.6 269.9 GM < 7 hectares 1209.1 5.4 352.3 1929.7 722.5 > 7 hectares 1460.8 5.5 394.5 2189.1 730.4 * * * * *1
  • 23. 120 121 129 131 132 143 152 155 169 170 173 174 182 200 212 217 222 230 Cook’s D 0.053 0.385 0.033 0.039 0.020 0.022 0.021 0.688 0.054 0.028 1.230 0.036 0.020 2.381 0.030 0.032 0.060 0.033 0.032 0.020 0.022 0.026 84 20 Robust standardized residuals 116 6.500 5.200 7.475 4.543 9.100 2.507 2.839 6.500 3.250 1.817 5.200 7.800 1.083 6.045 0.975 8.060 0.195 5.200 7.800 1.300 9.100 6.500 170 131 212 99 200 42 230 120 133 88 93 9689 199 394 110 214 186 191 145 92 155 204 166 198 216 125 11260 127 2115985 115 136 103 206 117141 203 208 106 135 158 157 91161 111 185 140 215 100 171101 5686 5121 184 176 122 174 137 164 182 132130 20114 78140 233 10468 213 109 7790 154 107 183 144 153 232 175 11168 129 76 173 0 Yield 42 84 99 116 152 -20 Observation ID 40 Of Cook’s D, the issue of outliers and sampling biases…our data shows it’s present 0 500 1000 Robust_distance 1500 “The classical instrumental variables (IV) estimator is extremely sensitive to the presence of outliers in the sample. This is a concern as outliers can strongly distort the estimated effect of a given regressor on the dependent variable. Although outlier diagnostics exist, they frequently fail to detect atypical observations since they are themselves based on non-robust (to outliers) estimators. Furthermore, they do not take into account the combined influence of outliers in the first and second stages of the IV estimator” Desbordes and Verardi, Stata Journal 2012 2000
  • 24. Production function approach Variable Robust Regression (MMRegression 85% efficiency, ROBREG) Robust Coef. SE Robust Regression ( MSREGRESS) Instrumental Variables ( IVREG2) Coef. Coef. Robust SE SE GM corn user (1=Yes) 1.254 0.319 *** 1.157 0.387 *** 1.453 0.329 *** Located in Juticalpa/Catacamas (1=Yes) 0.346 0.414 n.s. 1.303 0.199 *** 0.336 0.304 n.s. -0.014 0.007 ** -0.026 0.005 *** -0.010 0.006 n.s. Total income 0.251 0.105 ** 0.189 0.075 ** 0.216 0.078 *** Total area in production (ha) 0.002 0.001 * -0.002 0.002 n.s. 0.002 0.001 n.s. Time cultivating GM maize Total area cultivated with maize (ha) -0.004 0.006 n.s. 0.004 0.002 * -0.004 0.004 n.s. Seed quantity planted (kg/ha) -0.002 0.016 n.s. 0.117 0.020 *** -0.005 0.015 n.s. AI insecticide (Kg/ha) 1.030 0.593 * 2.156 1.139 * 0.718 0.561 n.s. AI herbicide (Kg/ha) 0.070 0.064 n.s. 0.084 0.114 n.s. 0.158 0.070 ** AI fertilizer used (Kg/ha) 0.009 0.004 ** 0.017 0.002 *** 0.005 0.002 ** AI other pesticides(Kg/ha) 3.268 1.758 * 1.736 0.555 *** 1.516 0.883 * Cost labor per day ($/ha) -0.008 0.006 n.s. -0.006 0.006 n.s. -0.004 0.006 n.s. Seed planted squared 0.000 0.000 n.s. -0.002 0.000 *** 0.000 0.000 n.s. AI insecticide squared -0.261 0.133 ** -2.090 0.736 *** -0.167 0.143 n.s. AI herbicide squared -0.003 0.002 n.s. 0.016 0.009 * -0.006 0.003 ** AI fertilizer squared 0.000 0.000 ** 0.000 0.000 *** 0.000 0.000 n.s. -3.978 2.040 * -1.207 0.290 *** -0.926 0.654 n.s. 3.592 0.846 *** 2.665 0.603 *** AI other pesticides squared Constant 4.822 1.365 ***
  • 25. Net income Second stage (2SLS net income) First stage, dependent variables is GM corn user) Variable Coef. Std. Err. Coef. Std. Err. GM corn user (1=Yes) 279.1 131.7 ** Located in Juticalpa/Catacamas (1=Yes) 166.3 123.9 n.s. 0.209 0.067 ** Time cultivating GM maize -7.1 2.7 *** 0.003 0.001 * Total income 96.7 34.4 *** 0.002 0.018 n.s. Total production area (ha) 1.1 0.3 *** 0.000 0.000 n.s. Total maize area (ha) 0.0 1.2 n.s. 0.002 0.001 ** AI insecticide (Kg/ha) 98.7 209.2 n.s. -0.183 0.130 n.s. AI herbicide used (Kg/ha) 46.5 26.4 * 0.001 0.017 n.s. AI fertilizer used (Kg/ha) -1.0 1.1 n.s. 0.000 0.001 n.s. 201.1 402.1 n.s. 0.002 0.209 n.s. Cost labor per day ($/ha) -8.5 2.8 *** 0.000 0.001 n.s. Seed planted squared 0.0 0.0 n.s. 0.000 0.000 n.s. AI insecticide squared -60.1 49.4 n.s. 0.035 0.033 n.s. AI herbicide squared -1.7 0.9 * 0.000 0.001 n.s. AI fertilizer squared 0.0 0.0 n.s. 0.000 0.000 n.s. -205.6 240.3 n.s. 0.071 0.155 n.s. 0.033 0.005 ** -0.275 0.032 ** 0.252 0.161 n.s. AI other pesticides (Kg/ha) AI other pesticides/fungicides used squared Price GM seed Year cultivating GM seed Constant 659.2 214.6 ***
  • 26. The 2013 (second) survey to observe experiences of conventional & GM corn farmers – summary of preliminary results  Average yield difference of 1.1- 1.4 tons/hectare  Positive net income gains of US$ 279 per hectare  Persistent institutional issues Access to productive inputs Access to markets Credit Technology information gaps Other traits not addressed by the technology may be important  Local varieties     
  • 27. THEN…WHY HAVE WE NOT OBSERVED FULL ADOPTION BY HONDURAN PRODUCERS?
  • 28. Access to inputs may restrict adoption GM Characteristic • • • • • • • Monthly income >500 US$ Access to technical assistance Access to credit Farmers applying fungicides Insecticide costs Fertilizer costs Cost of the use of machinery • • • • • • • 82 to 98% of farmers 16 to 30% of farmers 24 to 56% of farmers 58 to 50% of farmers 28 to 62 US$/ha 328 to 373 US$/ha 192 to 275 US$/ha Depending on plot size Farmers without information, credit or other inputs are less likely to adopt GM crops Conventional • • • • • • • 40 to 64% of farmers 11 to 0% of farmers 19 to 28% of farmers 4 to 8% of farmers 11 to 16 US$/ha 213 to 237 US$/ha 106 to 104 US$/ha
  • 29. Access to markets may limit profitability GM Characteristic • Closer to urban areas • Sell directly to industry • Transportation costs • Selling price • Agronomic cycle Conventional • 92 to 93% of farmers • 12 to 16% of farmers • • • • • • • • 45 to 80% of farmers 134 to 152 US$/ha 352 to 395 US$/ton 3-4 months Depending on plot size Farmers with smaller plots or in remote areas are less likely to adopt biotechnology 2 to 4% of farmers 17 to 40 US$/ha 274 to 294 US$/ton 4-5 months
  • 30. Farmers may prefer other traits Large/valley Black spot resistance High yield Heavy grain BT RR Price Drought resistance Preferred traits for production by production size & location Large/hills Small/valley Small/hills Black spot resistance Black spot resistance Black spot resistance High yield High yield High yield Heavy grain Heavy grain BT BT RR Price Farmers have greater Drought resistance preference for protection % germination against risk Full cob Gender/seed type Male/Conventional Male/GM Female/Conventional Female/GM All Preferred for production Conventional GM 0 13 0 18 20 0 0 12 20 43 Preferred for consumption Conventional GM 0 0 5 1 18 0 8 0 31 1 Local corn varieties make better tortillas Preliminary data from exploratory panel, 2013. Unpublished.
  • 31. Conclusions  For the sample of producers included in our survey, GM maize continues to perform as expected compared to a conventional     Positive yield advantage Higher net income Reduction in pesticide applications Unclear environmental impact (need more work)  For expansion of area with GM maize in Honduras, issue is not a technical issue but seems to be institutional  Additional work needed to examine     Production and financial risk Distribution of impact by size Impacts of institutional and governance issues on adoption Policies to support the smallest of the smallholders
  • 32. Jose Falck-Zepeda Patricia Zambrano Alan B. Bennett Cecilia Chi-Ham Denisse McLean Arie Sanders Maria Mercedes Roca Miljian Villalta Sandra Mendoza. Participatory research consultant Research funded by: