gmo crops: to grow or not to grow?

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