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gmo

  1. 1. 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
  2. 2. Organization of Today’s Presentation <ul><li>GMO crops </li></ul>
  3. 3. Organization of Today’s Presentation <ul><li>GMO crops </li></ul><ul><li>Public attitudes towards GMO crops </li></ul>
  4. 4. Organization of Today’s Presentation <ul><li>GMO crops </li></ul><ul><li>Public attitudes towards GMO crops </li></ul><ul><li>Economics of transgenic corn adoption </li></ul>
  5. 5. Organization of Today’s Presentation <ul><li>GMO crops </li></ul><ul><li>Public attitudes towards GMO crops </li></ul><ul><li>Economics of transgenic corn adoption </li></ul><ul><li>Crop segregation </li></ul>
  6. 6. Organization of Today’s Presentation <ul><li>GMO crops </li></ul><ul><li>Public attitudes towards GMO crops </li></ul><ul><li>Economics of transgenic corn adoption </li></ul><ul><li>Crop segregation </li></ul><ul><li>The Starlink case </li></ul>
  7. 7. What is a GMO crop? <ul><li>Transfer of a gene from a soil bacteria that codes for a protein </li></ul>
  8. 8. What is a GMO crop? <ul><li>Transfer of a gene from a soil bacteria that codes for a protein </li></ul><ul><li>Protein becomes a toxin and kills selected insects </li></ul>
  9. 9. Insect Control with Biotechnology <ul><li>Insect resistant crops commercially available, e.g., Bt corn, cotton, and potatoes </li></ul>
  10. 10. Insect Control with Biotechnology <ul><li>Insect resistant crops commercially available, e.g., Bt corn, cotton, and potatoes </li></ul><ul><li>Transgenic corn for rootworm control under development </li></ul>
  11. 11. Crop Applications of Biotechnology <ul><li>Herbicide tolerant crops, e.g., Roundup Ready corn and soybeans </li></ul>
  12. 12. U.S. Crop Biotechnology Adoption <ul><li> ( USDA Survey ) 1999 2000 2000 US US IN </li></ul><ul><ul><li>Corn 33% 25% 11% </li></ul></ul><ul><ul><li>Soybeans 57% 54% 63% </li></ul></ul>
  13. 13. Biotechnology Critics What are the public concerns?
  14. 14. Monarch Butterfly <ul><li>Cornell and Iowa State University laboratory studies of adverse Bt corn pollen impact </li></ul>
  15. 15. Monarch Butterfly <ul><li>Cornell and Iowa State University laboratory studies of adverse Bt corn pollen impact </li></ul><ul><li>Recent field studies suggest minimal adverse impact </li></ul>
  16. 16. Undesired Gene Flow <ul><li>Cross pollination </li></ul>
  17. 17. Undesired Gene Flow <ul><li>Cross pollination </li></ul><ul><li>Organic farmer concerns </li></ul>
  18. 18. Undesired Gene Flow <ul><li>Superweeds </li></ul>
  19. 19. Food Safety • Allergenicity
  20. 20. Food Safety • Allergenicity • Unknown diseases or future health consequences
  21. 23. Many Europeans uneasy about biotechnology <ul><li>Strong environmental movement </li></ul>
  22. 24. Many Europeans uneasy about biotechnology <ul><li>Strong environmental movement </li></ul><ul><li>No coherent regulatory system </li></ul>
  23. 25. Many Europeans uneasy about biotechnology <ul><li>Strong environmental movement </li></ul><ul><li>No coherent regulatory system </li></ul><ul><li>Weak public trust in government since mad cow disease (BSE) </li></ul>
  24. 26. Many Europeans uneasy about biotechnology <ul><li>Strong environmental movement </li></ul><ul><li>No coherent regulatory system </li></ul><ul><li>Weak public trust in government since mad cow disease (BSE) </li></ul><ul><li>EU consumers perceive no benefits with potential risk </li></ul>
  25. 27. Many Europeans uneasy about agricultural biotechnology <ul><li>Strong environmental movement </li></ul><ul><li>No coherent regulatory system </li></ul><ul><li>Weak public trust in government since mad cow disease (BSE) </li></ul><ul><li>EU consumers perceive no benefits with potential risk </li></ul><ul><li>Protectionist farm policies </li></ul>
  26. 28. Many Europeans uneasy about agricultural biotechnology <ul><li>Strong environmental movement </li></ul><ul><li>No coherent regulatory system </li></ul><ul><li>Weak public trust in government since mad cow disease (BSE) </li></ul><ul><li>EU consumers perceive no benefits with potential risk </li></ul><ul><li>Protectionist farm policies </li></ul><ul><li>Strong support for labeling </li></ul>
  27. 29. U.S. Consumer Attitudes towards Food Biotechnology <ul><li>About 3/4 Americans have heard of biotechnology </li></ul>
  28. 30. U.S. Consumer Attitudes towards Food Biotechnology <ul><li>About 3/4 Americans have heard of biotechnology </li></ul><ul><li>About 1 out of 3 consumers know that GMO foods are now in our supermarkets </li></ul>
  29. 31. U.S. Consumer Attitudes towards Food Biotechnology <ul><li>About 3/4 would buy a GMO food if less pesticide use </li></ul>
  30. 32. U.S. Consumer Attitudes towards Food Biotechnology <ul><li>About 3/4 would buy a GMO food if less pesticide use </li></ul><ul><li>About 3/4 support FDA labeling of biotechnology foods with health and nutrition information </li></ul>
  31. 33. My Biotechnology Research <ul><li>Economics of Corn Insect Control </li></ul><ul><ul><li>graduate student research </li></ul></ul><ul><ul><li>ID-219 (extension pub) </li></ul></ul><ul><ul><li>Review of Agricultural Economics 21(2):1999 </li></ul></ul><ul><ul><li>AgBioForum, 3(1):2000 </li></ul></ul><ul><ul><li>1998, 1999, & 2000 AAEA Selected Papers </li></ul></ul>
  32. 34. European Corn Borer <ul><li>$1 billion annual damage in U.S. </li></ul>
  33. 35. European Corn Borer <ul><li>$1 billion annual damage in U.S. </li></ul><ul><li>Physiological damage </li></ul>
  34. 36. European Corn Borer <ul><li>$1 billion annual damage in U.S. </li></ul><ul><li>Physiological damage </li></ul><ul><li>Mechanical damage </li></ul>
  35. 37. European Corn Borer Infestation
  36. 38. Multi-State Study <ul><li>Indiana </li></ul><ul><li>Illinois </li></ul><ul><li>Iowa </li></ul><ul><li>Kansas </li></ul>
  37. 39. Decision Analysis Model <ul><li>A decision tree </li></ul>
  38. 40. Data <ul><li>Collaborative arrangements </li></ul><ul><ul><li>Indiana: Bledsoe and Obermeyer </li></ul></ul><ul><ul><li>Illinois: Steffey </li></ul></ul><ul><ul><li>Iowa: Hellmich </li></ul></ul><ul><ul><li>Kansas: Buschman and Higgins </li></ul></ul>
  39. 41. Data <ul><li>Scouting and spraying costs </li></ul>
  40. 42. Data <ul><li>Scouting and spraying costs </li></ul><ul><li>Spraying efficacy </li></ul>
  41. 43. Data <ul><li>Scouting and spraying costs </li></ul><ul><li>Spraying efficacy </li></ul><ul><li>Corn planting dates </li></ul><ul><ul><li>Probability distribution </li></ul></ul><ul><ul><li>Yield losses for late planting </li></ul></ul>
  42. 44. Data <ul><li>Scouting and spraying costs </li></ul><ul><li>Spraying efficacy </li></ul><ul><li>Corn planting dates </li></ul><ul><ul><li>Probability distribution </li></ul></ul><ul><ul><li>Yield losses for late planting </li></ul></ul><ul><li>ECB yield damage by planting date </li></ul>
  43. 45. Data <ul><li>Probability of number of ECB given plant date and infestation </li></ul>
  44. 46. Data <ul><li>Probability of number of ECB given plant date and infestation </li></ul><ul><li>Probability of number of ECB per plant given infestation </li></ul>
  45. 47. Data <ul><li>Probability of number of ECB given plant date and infestation </li></ul><ul><li>Probability of number of ECB per plant given infestation </li></ul><ul><li>Overall probability of infestation </li></ul>
  46. 48. Results – Indiana and Iowa <ul><li>Returns to spraying less than per acre scouting costs </li></ul>
  47. 49. Results – Indiana and Iowa <ul><li>Returns to spraying less than per acre scouting costs </li></ul><ul><li>Compare Bt corn to non-Bt without a spraying program </li></ul>
  48. 50. Results - Indiana
  49. 51. Results - Indiana <ul><li>Risk Neutral </li></ul>
  50. 52. Results - Indiana <ul><li>Risk Averse </li></ul>
  51. 53. Results - Iowa
  52. 54. Results - Iowa <ul><li>Risk Neutral </li></ul>
  53. 55. Results - Iowa <ul><li>Risk Averse </li></ul>
  54. 56. Conclusions <ul><li>Value of Bt corn increases from east to west in Corn Belt </li></ul>
  55. 57. Conclusions <ul><li>Value of Bt corn increases from east to west in Corn Belt </li></ul><ul><li>Very valuable where SWCB are present </li></ul>
  56. 58. Conclusions <ul><li>Value of Bt corn increases from east to west in Corn Belt </li></ul><ul><li>Very valuable where SWCB are present </li></ul><ul><li>Resistance may occur if farmers do not comply with EPA 20% refuge requirement </li></ul>
  57. 59. Corn Rootworm Control
  58. 60. Corn Rootworm Larvae Damage
  59. 61. Western Corn Rootworm Variant in Northern Indiana
  60. 62. Soil Insecticides <ul><li>One-time proactive application to protect roots </li></ul><ul><li>Benefits Limitations </li></ul><ul><li>• Simplicity • Efficacy variability </li></ul><ul><li>• Known cost • No adult control </li></ul><ul><li>($13-$17/acre) • Environmental concerns? </li></ul><ul><li>• Secondary pests • Grower exposure to </li></ul><ul><li> chemicals </li></ul>
  61. 63. Transgenics <ul><li>Insertion of Cry gene from Bacillus thuringiensis into corn genome-root expression leads to root protection </li></ul><ul><li>Benefits Limitations </li></ul><ul><li>• Simplicity • Resistance development </li></ul><ul><li>• Consistency/efficacy • Refuge requirements </li></ul><ul><li>• Reduced insecticide use • GMO marketing concerns </li></ul><ul><li>and chemical exposure </li></ul>
  62. 64. Root Protection
  63. 65. Indiana Research Sites http://www.aes.purdue.edu/AgResearch/AgCenters.html
  64. 66. Indiana: 1990-1999 (excluding 1996)
  65. 67. Conclusions <ul><li>Based on cost to the producer, yield benefits, efficacy/consistency, simplicity, and environmental implications, transgenics potentially hold the most economic value for producers </li></ul>
  66. 68. Conclusions <ul><li>Based on cost to the producer, yield benefits, efficacy/consistency, simplicity, and environmental implications, transgenics potentially hold the most economic value for producers </li></ul><ul><li>But must have a refuge management plan </li></ul>
  67. 69. Some Considerations Before Adopting Transgenic Corn
  68. 70. Adopting a Transgenic Crop: Production Considerations <ul><li>Technology fee </li></ul>
  69. 71. Adopting a Transgenic Crop: Production Considerations <ul><li>Technology fee </li></ul><ul><li>Pest infestation probabilities </li></ul>
  70. 72. Adopting a Transgenic Crop: Production Considerations <ul><li>Technology fee </li></ul><ul><li>Pest infestation probabilities </li></ul><ul><li>Yield drag </li></ul>
  71. 73. Adopting a Transgenic Crop: Production Considerations <ul><li>Technology fee </li></ul><ul><li>Pest infestation probabilities </li></ul><ul><li>Yield drag </li></ul><ul><li>Reduction in pesticide costs </li></ul>
  72. 74. Adopting a Transgenic Crop: Environmental Considerations <ul><li>Refuge requirements </li></ul>
  73. 75. Adopting a Transgenic Crop: Environmental Considerations <ul><li>Refuge requirements </li></ul><ul><li>Impacts on beneficial insects </li></ul>
  74. 76. Adopting a Transgenic Crop: Environmental Considerations <ul><li>Refuge requirements </li></ul><ul><li>Impacts on beneficial insects </li></ul><ul><li>Tillage system adjustments </li></ul>
  75. 77. Adopting a Transgenic Crop: Marketing Considerations <ul><li>Potential premiums or discounts </li></ul>
  76. 78. Adopting a Transgenic Crop: Marketing Considerations <ul><li>Potential premiums or discounts </li></ul><ul><li>Market segregation costs </li></ul>
  77. 79. Adopting a Transgenic Crop: Marketing Considerations <ul><li>Potential premiums or discounts </li></ul><ul><li>Market segregation costs </li></ul><ul><li>How much premium? </li></ul>
  78. 80. How much premium needed to segregate? <ul><li>Recent Midwest commercial farmer survey (Norm Larson of AFS Services) </li></ul><ul><li>Premium per Bushel </li></ul><ul><li>< $0.10 2% </li></ul><ul><li>$0.10 - $0.20 22% </li></ul><ul><li>$.020 - $0.30 28% </li></ul><ul><li>$0.30 - $0.40 26% </li></ul><ul><li>$0.40 - $0.50 11% </li></ul><ul><li>>$0.50 12% </li></ul>
  79. 81. What does it take to segregate your crop? <ul><li>Seed source </li></ul>
  80. 82. What does it take to segregate your crop? <ul><li>Seed source </li></ul><ul><li>Planting considerations </li></ul>
  81. 83. What does it take to segregate your crop? <ul><li>Seed source </li></ul><ul><li>Planting considerations </li></ul><ul><li>Harvesting considerations </li></ul>
  82. 84. What does it take to segregate your crop? <ul><li>Seed source </li></ul><ul><li>Planting considerations </li></ul><ul><li>Harvesting considerations </li></ul><ul><li>Storage challenges </li></ul>
  83. 85. What does it take to segregate your crop? <ul><li>Seed source </li></ul><ul><li>Planting considerations </li></ul><ul><li>Harvesting considerations </li></ul><ul><li>Storage challenges </li></ul><ul><li>Hauling and shipping </li></ul>
  84. 86. What does it take to segregate your crop? <ul><li>Seed source </li></ul><ul><li>Planting considerations </li></ul><ul><li>Harvesting considerations </li></ul><ul><li>Storage challenges </li></ul><ul><li>Hauling and shipping </li></ul><ul><li>Beyond the farm gate </li></ul>
  85. 87. The Starlink Case <ul><li>Aventis request to EPA- April ’97 </li></ul>
  86. 88. The Starlink Case <ul><li>Aventis request to EPA- April ’97 </li></ul><ul><li>EPA approved- May ’98 for domestic feed and industrial use only </li></ul>
  87. 89. The Starlink Case <ul><li>Aventis request to EPA- April ’97 </li></ul><ul><li>EPA approved- May ’98 for domestic feed and industrial use only </li></ul><ul><li>Grower agreements required </li></ul>
  88. 90. The Starlink Case <ul><li>Aventis request to EPA- April ’97 </li></ul><ul><li>EPA approved- May ’98 for domestic feed and industrial use only </li></ul><ul><li>Grower agreements required </li></ul><ul><li>Acres planted </li></ul><ul><ul><li>2,000 in ’98 </li></ul></ul><ul><ul><li>248,000 in ’99 </li></ul></ul><ul><ul><li>340,908 in ‘00 </li></ul></ul>
  89. 91. U.S. Starlink Corn Acres: 2000 <ul><li>Iowa 134,910 </li></ul><ul><li>Nebraska 41,529 </li></ul><ul><li>Minnesota 35,691 </li></ul><ul><li>S.Dakota 34,290 </li></ul><ul><li>Kansas 21,390 </li></ul><ul><li>Illinois 17,466 </li></ul><ul><li>INDIANA 3,564 </li></ul><ul><li>U.S. 340,908 </li></ul>
  90. 92. Indiana Starlink Corn Acres: 2000 <ul><li>La Porte 594 </li></ul><ul><li>Starke 507 </li></ul><ul><li>Marshall 339 </li></ul><ul><li>Knox 288 </li></ul><ul><li>Jasper 279 </li></ul><ul><li>Delaware 189 </li></ul><ul><li>Lake 180 </li></ul><ul><li>Bartholomew 171 </li></ul><ul><li>Owen 141 </li></ul><ul><li>Randolph 108 </li></ul>
  91. 93. The Starlink Case <ul><li>Sept ’00 found in taco shells and recalls initiated </li></ul>
  92. 94. The Starlink Case <ul><li>Sept ’00 found in taco shells and recalls initiated </li></ul><ul><li>Oct ’00 processors stop using Cry9c corn </li></ul>
  93. 95. The Starlink Case <ul><li>Sept ’00 found in taco shells and recalls initiated </li></ul><ul><li>Oct ’00 processors stop using Cry9c corn </li></ul><ul><li>Nov ’00 disruption in grain industry </li></ul>
  94. 96. The Starlink Case <ul><li>Sept ’00 found in taco shells and recalls initiated </li></ul><ul><li>Oct ’00 processors stop using Cry9c corn </li></ul><ul><li>Nov ‘00 disruption in grain industry </li></ul><ul><li>Nov ’00 USDA/Aventis agreement to locate and purchase Starlink corn </li></ul>
  95. 97. The Starlink Case <ul><li>Sept ’00 found in taco shells and recalls initiated </li></ul><ul><li>Oct ’00 processors stop using Cry9c corn </li></ul><ul><li>Nov ’00 disruption in grain industry </li></ul><ul><li>Nov ’00 USDA/Aventis agreement to locate and purchase Starlink corn </li></ul><ul><li>Nov ’00 new data submitted to EPA </li></ul>
  96. 98. The Starlink Case <ul><li>Sept ’00 found in taco shells and recall s initiated </li></ul><ul><li>Oct ’00 processors stop using Cry9c corn </li></ul><ul><li>Nov ‘00 disruption in grain industry </li></ul><ul><li>Nov ’00 USDA/Aventis agreement to locate and purchase Starlink corn </li></ul><ul><li>Nov ’00 new data submitted to EPA </li></ul><ul><li>Dec ’00 report from SAP says “medium risk” with Cry9c and “low probability” of risk to consumers </li></ul>
  97. 99. The Starlink Case <ul><li>Sept ’00 found in taco shells and recall starts </li></ul><ul><li>Oct ’00 processors stop using Cry9c corn </li></ul><ul><li>Nov ‘00 disruption in grain industry </li></ul><ul><li>Nov ’00 USDA/Aventis agreement to locate and purchase Starlink corn </li></ul><ul><li>Nov ’00 new data submitted to EPA </li></ul><ul><li>Dec ’00 report from SAP says “medium risk” with Cry9c and low probability of risk to consumers </li></ul><ul><li>EPA action expected in a few weeks </li></ul>
  98. 100. Questions

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