Economic and socio-environmental impacts of insect resistance technology in Brazil:

historical analysis, perspectives and future challenges

Executive Summary

Conselho de Informações sobre Biotecnologia (CIB) [Council for Information on Biotechnology] is a non-governmental organization and a non-profit civil association with no party-political connota-tion. Its purpose is to disseminate technical-scientific information on biotechnology, increasing the fa-miliarity of various sectors of soci-ety with the subject.

Agroconsult is a consultancy firm specialized in agribusiness in Bra-zil. Since 2000, it has served the entire value chain: farmers, coop-eratives, associations, industries, financial institutions and interna-tional organizations. It is formed by a multidisciplinary team that analyzes scenarios and trends in short and long terms. In addition to market knowledge, its team is con-stantly in the field.

Executive Summary2018

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1 Soybean data obtained based on the area estimated by Agroconsult as well as on the adoption of the IR technology, through samples carried out during the Safra Rally. Maize data obtained based on the area estimated by Agroconsult and on the par-ticipation of the technology offered by APPS. Area of cotton obtained based on the area estimated by Agroconsult and on the percentage of adoption of the technology offered by companies in the sector.

INTRODUCTIONThe advent of transgenic crops has been one of the main technological advances in the agricultural sector in the last two decades. In particular, the insertion of genes that enable plants to produce proteins with insecticidal activity against major pests - one of the most impactful problems affecting crops - has provided farmers with an additional tool to deal with the complex process of integrated pest management.

In Brazil, the introduction of this technology occurred in 2005, with the approval and launch of a cotton variety. Insect resistant (IR) maize was approved in the country in 2007 and soybeans in 2010. Due to its efficiency, there was intense adherence by farm-ers to technology. Today, the rate of IR plants adoption in the country reaches 62% for soybeans, 79% for maize and 83% for cotton (data from the 2017/18 harvest) .

Currently, the area cultivated with insect resistant varieties reaches 36 million hectares, making Brazil one of the largest global players in the adoption of such technology. The factors that best explain the success of the technology are those observed directly on farms. Among them, the benefits of control efficiency and resistance to pest attack can be cited. There is also greater simplification and flexibility in crop management, reduc-tion of productive risk - here understood as greater security for the farmer throughout the crop cycle in relation to economic damages caused by pests - and less use of in-secticides .

The combination of those factors can also provide advantages in terms of productivity and margin for the farmer, with the potential to positively impact the other sectors of the economy. Taking the gains obtained in the field as a starting point, this work aims precisely to quantify the benefits that transgenic plants resistant to insects have pro-vided to the Brazilian agribusiness, from the authorization of its planting until the pres-ent moment (2017/18 harvest), emphasizing its impacts in the economic, social and en-vironmental spheres. In addition, based on the agricultural growth scenario expected for the next ten years (2018/19 through 2027/28 harvests), the future impact of that technology on the control of target insects is also estimated.

The discussion over the next few years is especially relevant because we are at a time when there are reports of population growth of insects resistant to Bt proteins, which would jeopardize the efficiency of technology. In light of the risks pointed out, the im-portance of coordinated actions among farmers, the industry and the government is discussed so that the technology remains sustainable in medium and long terms. It is vital to preserve the efficiency of Bt plants so that they continue providing gains in the productive sector and maintain positive externalities in terms of wealth generation, job creation, more efficient use of resources and reduction of environmental impacts.

It should be emphasized that the results presented here express the gains related to the transgenic usage and minimize those that would be more related to the quality of the genetic material (germplasm).

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IMPACTS ARISING FROM THE ADOPTION OF INSECT RESISTANCETECHNOLOGY IN BRAZIL: HISTORICAL OVERVIEW

2 The period of historical analysis of soybeans includes the harvest years 2013/14 until 2017/18; for the maize, the harvest years 2009/10 until 2017/18; and, for cotton, the 2017/18 harvest.

3 The production of maize in summer in 2017/18 was 25.37 million tons, according to data from Agroconsult. The gross value of coffee production in 2018 is R$ 24.34 billion, according to data from the Ministério da Agricultura, Pecuária e Abastecimento (MAPA) [Ministry of Agriculture, Livestock and Food Supply], published in June 2018, and represents all the revenue generated by the sale of the product - the calculation is based on the total production volume and the average price received by farmers.

4 It is important to emphasize that the total cost difference between IR cultivars and non-IR cultivars also includes other costs (fertilizers, labor, operation, maintenance, storage, processing, internal transport, tax, interest and insurance) besides seeds and pesticides, which explains why the total cost difference is not only the result of differences between the cost of seeds and the cost of pesticides.

The results obtained until the 2017/18 harvest2 indicate that the IR technology was re-sponsible for an additional production volume of 55.4 million tons of grain, being 4.55 million tons of soybeans; 50.8 million tons of maize and 46 thousand tons of cotton. Considering the average price of soybeans, maize and cotton in each harvest, the in-crease in production corresponds to an additional revenue of R$ 25.1 billion. For com-parison purposes, the additional physical volume generated represents more than dou-ble (2.2 times) the current production of summer maize (2017/18 harvest). In financial terms, the impact is equivalent to all the value generated by the coffee crop in 2018, which ranks 5th in the ranking of crops with the highest Valor Bruto da Produção (VBP) [Gross Value of Production] in Brazil3.

From the cost point of view, there is an additional investment of R$ 3.5 billion. Although expenditures on insecticide acquisition fell by R$ 17.1 billion, additional investment in seeds - including the payment of royalties for use of technology - amounted to R$ 19.6 billion4. Even so, the economic benefit provided by technology, measured here by the increase in total profits the farmers had, reaches R$ 21.5 billion. It is worth enough to cover about 8.4 million hectares of soybeans - all of the states of Paraná and Goiás in the 2017/18 harvest - or 13.8 million hectares of winter maize (more than the entire area to be planted in the 2018/19 harvest).

The accumulated results up to the 2017/18 harvest indicate that, in the last years, for each additional R$ 1.00 invested in the acquisition of technology - including seeds and royalties -, the sector obtained a profit in the operating margin of R$ 1.10.

The economic benefit recorded over the years is a consequence of the impacts that insect resistant cultivars provide on productivity and costs. The composition of those factors varies annually, depending on climatic conditions, commodity price behavior, insecticide prices, pest pressure and exchange rates. From the economic benefit accu-mulated by farmers until the 2017/18 harvest, in the sum of the crops analyzed, 100% is due to the productivity gain. In recent years, however, it has been observed that cost reduction has also added even more value to technology users.

To better understand the economic benefit, the 2017/18 harvest can be mentioned, in which the productivity gain from the use of IR technology allowed an additional income of R$ 4.7 billion to farmers. In the same year, the total cost dropped by R$ 68 million. In that case, the economic benefit was doubly positively influenced due to the increase in productivity, which is reflected in the increase in revenue as well as in the fall in produc-tion cost, resulting in a profit or economic benefit of R$ 4,8 billion in the 2017/18 harvest.

It is worth remembering that the cost weakened only in the 2016/17 and 2017/18 har-vests. In previous years, even with the drop in the use of insecticides, other expendi-tures outweighed that benefit so that only productivity gain positively influenced profit.

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NOTE 1(fertilizers, labor, operation, maintenance, storage, processing, internal transport, tax, interest and insurance), besides seeds

and the cost of pesticides.

NOTE 2 The period of soybean analysis includes the harvest years 2013/14 through 2017/18; for maize, the harvest years 2009/10 until 2017/18; and, for cotton, the 2017/18 harvest.

costs of insecticides (-R$ 4.9 million) and seeds (+ R$ 4.8 billion), but also by costs such as operations, maintenance, storage, among others. Thus, the decrease in the total cost

cost of insecticide and the cost of the seed.

TABLE 1 ECONOMIC AND FINANCIAL BENEFITS ARISING FROM THE USE OF INSECT RESISTANCE TECHNOLOGY: HISTORICAL ANALYSIS BY CROP

FIGURE 1 ECONOMIC AND FINANCIAL BENEFITS ARISING FROM THE USE OF INSECT RESISTANCE TECHNOLOGY: HISTORICAL ANALYSIS

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ECONOMIC AND SOCIAL IMPACTS: MACROECONOMIC OUTLOOKThe increase in total revenue from agricultural activity not only influences the dynamics of soybeans, maize and cotton, but also the sectors that make up its value chain in a direct and indirect way, generating impacts on the economic aggregates. In order to estimate the contribution of technology to the results of the agricultural sector and its effects on macroeconomic indicators over the years, this study has used the Matriz Insumo-Produto (MIP) [Input-Output Matrix] tool, taking into account the impacts on the value of produc-tion, that is, on the additional income of each crop5.

From the point of view of the Gross Domestic Product (GDP), the adoption of IR technolo-gy in soybeans, maize and cotton crops represents R$ 2.8 billion (Attachment 11). This val-ue is equivalent to the GDP of the municipality of Lucas do Rio Verde (Mato Grosso), one of the ten largest poles producing grains in the country6. In addition, it is worth remembering the importance of agriculture to sustain the performance of the Brazilian GDP in recent years. In 2017, for example, the country’s GDP grew by 1.0% in relation to the previous year, reaching R$ 6.56 trillion. Agriculture accounted for 0.7 percentage point of this growth. That is, without considering the agricultural sector, the total GDP would have grown only 0.3%, which makes the effects highlighted here still more relevant.

The benefit of the IR technology for a greater dynamism of the economic activity of the country can also be measured by the contribution in the Valor Bruto da Produção (VBP) [Gross Value of Production]7. From 2008/09 to 2017/18, the performance of insect resis-tant varieties was responsible for an additional injection of R$ 45.3 billion in the economy. The figure is similar to the VBP of activities related to livestock - cattle, pigs, poultry, milks and eggs - from the entire Southeast region of Brazil8.

The increase in grain production also promotes gains in the Brazilian trade balance and contributes to generating monetary reserves. Considering the annual participation of ex-ports in the total production of each crop analyzed, there was an increase of 16.7 million tons of grains exported by the country (2.6 million tons of soybeans, 14.1 million tons of maize and 26 thousand tons of cotton). In monetary terms, this corresponds to US$ 3.8 billion (R$ 11.1 billion), without considering the value addition in the production of bran, oil and other derivative products. This amount is equivalent to 83% of the total value collect-ed from maize exports in 2017, or to all the value obtained from the external sales of the juice, fibers and textile products in the same year9.

By stimulating the dynamism of the economy, the benefits provided by technology also resonate in the social sphere, with the generation of 49,281 jobs in various sectors of the economy. In the analyzed period, this corresponds to approximately R$ 2.2 billion paid in wages to workers in the various sectors of the economy - that is, 2.27 million minimum wages, considering the official reference value for 2018 (R$ 954 per month). The results reinforce the several analyzes that point to the high levels in the Human Development Index (HDI) and its rapid evolution in the municipalities relevant for the production of soy-beans, maize and cotton in the country. It is important to emphasize, thus, the strategic nature of agricultural activity in regional development, directly influencing the quality of life, education level and income of the population.

5 In summary, the MIP identifies the different interdependence relations among the various sectors of the economy and, therefore, their coefficients establish the degree of interconnection. Thus, the tool measures the chained impacts generated throughout the Brazilian economy, from a particular shock in a specific sector. The matrix used is available on the NEREUS / USP website and was developed based on the work of Guilhoto & Sesso Filho (2010).

6 Municipal GDP data taken from the survey by the Instituto Brasileiro de Geografia e Estatística (IBGE) [Brazilian Institute of Geography and Statistics] and available until 2015. Grain production data by municipality based on the Pesquisa Agrícola Municipal [Municipal Agricultural Survey] published by IBGE.

7 The VBP corresponds to the monetary expression of the sum of the value of all the goods and services produced in the country and it is equivalent to the total turnover of the economy.

8 The VBP of the livestock in the states in the Southeast region is estimated at R$ 44.3 billion in 2018 and recorded the value of R$ 47.5 billion in 2017, according to data published by MAPA.

9 According to figures from the agribusiness trade balance released by MAPA in 2017, maize exports totaled US$ 4.57 billion; those of juice, US$ 2.14 billion, and those of fibers and textile products reached US$ 1.79 billion.

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Finally, the incorporation of the IR characteristic in the soybeans, maize as well as in cotton

that over the years analyzed, the increase in performance provided by technology resulted in an additional tax collection of R$ 731 million. With this amount, it would be possible to sustain the expenditures of the Programa Nacional de Acesso ao Ensino Técnico e Emprego (Pronatec) [National Program for Access to Technical Education and Employment]10, at the levels in 2017, for about two and a half years.

TABLE 2 BENEFITS FOR THE BRAZILIAN ECONOMY ARISING FROM THE USE OF INSECT RESISTANCE TECHNOLOGY: HISTORICAL ANALYSIS BY CROP

NOTE The period of soybean analysis includes the harvest years 2013/14 through 2017/18; for the maize, the harvest years 2009/10 until 2017/18; and, for cotton, the 2017/18 harvest.

10 e Tecnológica (EPT) [Professional and Technological Education] courses, through programs, projects as well as technical and

Portal da Transparência [Transparency Portal], in 2017, R$ 283 million were spent on the program (amounts paid).

FIGURE 2 BENEFITS FOR THE BRAZILIAN ECONOMY ARISING FROM THE USE OF INSECT RESISTANCE TECHNOLOGY: HISTORICAL ANALYSISC

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11 Considering a standard portfolio of pesticide use adopted for each crop in Brazil, resulting from the profile of agrochemicals applied in each state, Agroconsult consulted the information on the amount of active ingredient contained in each product, ac-cording to data available in the Sistema de Agrotóxicos Fitossanitários (Agrofit) [System of Phytosanitary Agrochemicals] main-tained by the Ministério da Agricultura, Pecuária e Abastecimento (MAPA) [Ministry of Agriculture, Livestock and Food Supply].

12 The consumption of insecticide in 2017 was 135 thousand tons of commercial products and 64 thousand tons of active ingredient, according to data from the Sindicato Nacional da Indústria de Produtos para Defesa Vegetal (Sindiveg) [National Union of Products Industry for Plant Protection].

13 As farmers usually use more than one phytosanitary product in some applications, the reduction in the amount of product applied is not proportionally reflected in the number of operations with machinery. The decrease in the number of applications may vary and there may be a reduction of one or two operations, depending on the state and crop, and in some locations the impact is zero.

14 Estimates related to the equivalence in consumption consider that a car runs on average 15 thousand km per year and consumes about one liter of fuel every ten kilometers driven. These indicators were adopted in studies conducted by PG Economics. Fleet data by municipality from the base of the Departamento Nacional de Trânsito (Denatran) [National Traffic Department], with reference in December 2017.

15 According to data from the Agência Nacional de Petróleo (ANP) [National Petroleum Agency], in 2017, the consumption of diesel oil in Brazil was 54.8 billion liters. Of this amount, agriculture and livestock represented 1.3%, which corresponds to a demand of 712.4 million liters. https://anuario2018.somosplural.com.br/oleo-diesel/.

16 The soybean area of the state of Mato Grosso in the 2018/19 harvest is estimated at 9.8 million hectares according to Ag-roconsult data.

ENVIRONMENTAL IMPACTSA significant part of the benefits attributed to insect resistance technology can be ana-lyzed from the environmental point of view. The first aspect is related to the reduction of the amount of chemical pesticides used to control caterpillars. According to estimates by Agroconsult, there is a reduction in the insecticide dosage applied per hectare (in-cluding related adjuvants) of up to 15% for soybeans, 10% for summer maize, 14% for winter maize and 6% for cotton. As a result, the amount of active ingredient applied fell in all crops, and the reduction per unit area was more significant for soybeans11. In order to measure the environmental benefits obtained by reducing the volume of active in-gredient applied to crops, Agroconsult used the indicators of the EIQ tool.

The cultivation of IR plants contributed to reducing the volume of insecticides applied to crops by 122 thousand tons, which corresponds to removing 49 thousand tons of different active principles used to control the technology target pests from the envi-ronment. These figures correspond to 90% of the insecticide consumption in Brazil in 2017, in terms of product, and 77% in terms of active ingredient12. As a consequence, the reduction in environmental impact, calculated for soybeans, maize and cotton, was 14%. On a disaggregated basis, the contribution of each crop was 12% drop in soybeans, 19% in maize and 4% in cotton.

The reduction of the application of insecticides to control caterpillars also influences the use of machinery to spray these products, with an impact on fuel consumption13. In the period analyzed, there was a saving of 144 million liters of fuel resulting from the adoption of the IR technology, equivalent to removing 96 thousand cars from the streets for a year - a fleet similar to that of the municipality of São Caetano do Sul in Greater São Paulo14. Of this amount, 21% referred to soybeans, 76% to maize and 3% to cotton. The savings correspond to 20.4% of the estimated diesel consumption by the entire agricultural sector in 201715.

Considering the productivity differential between the systems that adopt the IR tech-nology and those that do not use it, another environmental benefit is related to the smaller extension of planted area. In other words, what additional area would have to be planted to maintain production levels achieved in the last few years if there were no IR varieties? The answer, according to the figures, is that 9.9 million more hectares should have been planted in the country between 2009 and 2017 - the equivalent of the total area of soybeans to be planted in the state of Mato Grosso in the 2018/19 harvest16.

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The combined benefits of reduced insecticide application and crop area savings have a di-rect impact on the Greenhouse Gas (GHG) emissions from each crop17. By reducing the use of insecticides – and, consequently, the use of machinery -, the adoption of IR technology led to a reduction of GHG emissions in soybeans, maize and cotton crops by 2.6 million tons of CO2 equivalent. This is the same as planting 18.6 million native trees18.

Additionally, the area savings also reflect on GHG emissions, since processes that emit such gases in the crop are no longer adopted. Thus, IR technology, given the differential of pro-ductivity and, consequently, the cultivated area savings, allowed a reduction of 12.9 million tons of CO2 equivalent throughout the harvests analyzed19, corresponding to the planting of 91.9 million of native trees. Therefore, the reduction of total emissions amounts to 15.5 mil-lion tons of CO2 equivalent. According to data from the Sistema de Estimativas de Emissões de Gases de Efeito Estufa (SEEG) [Greenhouse Gas Emissions Estimate System], this reduc-tion represents 27.7% of the total emissions for the category of agricultural soils calculated for soybeans, maize and cotton in 201620.

TABLE 3 ENVIRONMENTAL IMPACTS ARISING FROM THE USE OF INSECT RESISTANCE TECHNOLOGY: HISTORICAL ANALYSIS BY CROP

NOTE The period of soybean analysis includes the harvest years 2013/14 through 2017/18; for the maize, the harvest years 2009/10 until 2017/18; and, for cotton, the 2017/18 harvest.

17 The quantification of GHG emissions in this work uses the premises defined by the GHG Protocol for Agriculture, considered the most used method in the world by companies and governments for the development of greenhouse gas inventories of products and projects. The calculations were estimated based on the Calculation Tool of the GHG Agricultural Protocol, a cal-culator developed jointly by the World Resources Institute (WRI), the Empresa Brasileira de Pesquisa Agropecuária (Embrapa) [Brazilian Agricultural Research Corporation] and the State University of Campinas (Unicamp) with the objective of account-ing for agricultural GHG emissions using specific methodologies for the Brazilian reality.

18 The Instituto Brasileiro de Florestas (IBFlorestas) [Brazilian Forest Institute] considers that 7.14 trees can offset 1 ton of CO2 equivalent. Native species from the Atlantic Forest were used as reference. https://www.ibflorestas.org.br/component/content/article.html?id=219:afinal-quanto-carbono-uma-arvore-sequestra

19 Emissions per hectare originating exclusively from the crop (referring to the item “agricultural soils”) according to data estimated by SEEG. Emission data per hectare for cotton from Evaluation of the life cycle of cotton production in the Brazilian cerrado (K. R. Costa‘, J. F. PicolP, L. G. S. Hilara^ M. T. Scachetti\ A. C. G. Donke^ N. D. Suassuna^ M. A. B. Morandf, M. I. S.F. Mat-suura^ < https://www.alice.cnptia.embrapa.br/bitstream/doc/1064204/1/2016AA31.pdf>).

20 Total emissions for the category of agricultural soils calculated for soybeans, maize and cotton in 2016 total 55.9 million tons of CO2, according to SEEG data.

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FIGURE 3 BENEFITS FOR THE BRAZILIAN ECONOMY ARISING FROM THE USE OF INSECT RESISTANCE TECHNOLOGY: HISTORICAL ANALYSIS

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21 Soybean production in 2017/18 was 118.88 million tons, according to data from Agroconsult.

22 The sugarcane VBP in 2017 was R$ 72.09 billion according to MAPA data published in June 2018.

23 The soybean area planted in 2017/18 was 35.15 million hectares and the planted area of maize in 2017/18 was 11.65 million hectares, according to data from Agroconsult.

POTENTIAL BENEFITS OF TECHNOLOGY FOR THE NEXT TEN YEARS

The expected results in the sphere of farmers for the next ten years indicate that IR technology will be responsible for an additional production volume of 107.1 million tons of grain. This total should consist of 20.3 million tons of soybeans, 86.1 million tons of maize and 730 thousand tons of cotton (Attachment 19). In comparative terms, the vol-ume equals 90% of the total soybeans produced in the 2017/18 harvest in Brazil21.

Considering the average price of the three crops in each harvest, the increase in pro-duction corresponds to an additional revenue of R$ 70.5 billion, similar to the value gen-erated in 2017 by the sugar cane crop, which occupies the 2nd position in the ranking of the highest BPV crops in Brazil22. The expected economic benefit (additional profit) amounts to R$ 86.3 billion, of which R$ 15.8 billion (18%) will occur as a consequence of the decrease in production costs, while R$ 70.5 billion (82%) will come from the ex-pected yield increase in the IR cultivars in comparison to the conventional technology.

It is important to highlight that, in the analysis of the next ten years, the economic benefit (profit) is expected to be influenced both by the increase in revenue - a con-sequence of the increase in productivity – and the drop in production costs, much of which is impacted by insecticide expenditure, which tends to be higher than seed costs.

The expected economic benefit is enough to cover about 33.6 million hectares of soy-beans - almost the entire area planted with the crop in the 2017/18 harvest in Brazil - or 55.3 million hectares of winter maize (five times the area planted with this crop in the 2017/18 harvest)23. In addition, the projected results for the next ten years indicate a benefit in the operating margin for the industry of R$ 1.43 for each additional R$ 1.00 invested in technology acquisition - including seeds and royalties.

Expectations for farmers

TABLE 4 ECONOMIC AND FINANCIAL BENEFITS ARISING FROM THE USE OF INSECT RESISTANCE TECHNOLOGY: IMPACTS EXPECTED FOR THE NEXT TEN YEARS BY CROP

NOTE 1 It is important to emphasize that the total cost difference between IR cultivars and non-IR cultivars also includes other costs (fertilizers, labor, operation, maintenance, storage, processing, internal transport, tax, interest and insurance) besides seeds and pesticides, which explains why the difference in total cost is not only the result of differences between the cost of seed and the cost of pesticides.

NOTE 2 The next ten years refer to the period between the harvests of 2018/19 and 2027/28.

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24 Municipal GDP data taken from the IBGE survey and available up to the year 2015. Grain production data by municipality based on the Municipal Agricultural Survey published by IBGE.

As previously seen, the results related to the farmers income, costs and profits cause impacts beyond the agricultural sector, generating effects on the macroeconomic aggregates and on society as a whole. Regarding the GDP, the continuity of adoption and the efficiency of the IR technology represent R$ 4.6 billion of the value generated by the economy. This value is equivalent to the GDP of the municipality of Sorriso (MT), the country’s main grain producer24.

Expected effects in the economic and social spheres

FIGURE 4 ECONOMIC AND FINANCIAL BENEFITS ARISING FROM THE USE OF INSECT RESISTANCE TECHNOLOGY: IMPACTS EXPECTED FOR THE NEXT TEN YEARS

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can also be measured by the contribution in the VBP, in which the adoption of the tech-nology tends to bring an additional injection of R$ 128.4 billion in the Brazilian economy in the next ten years. The amount is similar to the VBP generated by the soybean crop in 201725.

The increase in grain production, as a consequence of the use of IR technology, will also bring gains in the Brazilian trade balance and contribute to the generation of monetary reserves. Agroconsult estimates that, in the next ten years, there will be an increase of 42.7 million tons of grains exported by Brazil (13.0 million tons of soybeans, 29.2 million tons of maize and 419 thousand tons of cotton). In monetary terms, this corresponds to US$ 10.8 billion (R$ 37.9 billion), without considering the addition of value of the produc-tion of bran, oil and other derivative products. It is equivalent to all the value obtained with the external sales of the chain of forest products (paper, pulp and wood) in 201726.

In the social sphere, IR technology will be responsible for supporting 81,033 jobs in var-ious sectors of the economy. For the next ten years, this corresponds to the payment of approximately R$ 6.6 billion in additional wages, or 6.87 billion minimum wages, con-

mainly, but not exclusively, irrigate the economy of the most dynamic agricultural re-gions in the country.

Lastly, tax revenue estimated as a counterpart to the growth of income and of the prod-

ten years. With such amount, it would be possible to sustain the expenditures of the Programa para Redução da Emissão de Gases de Efeito Estufa na Agricultura (ABC Pro-gram) [Program to Reduce the Emission of Greenhouse Gases in Agriculture], according to the allocation provided for in the Agricultural and Livestock Plan 2018/19.

25 The VBP of the soybean crop is R$ 125.05 billion in 2017 according to data published by MAPA.

26 -taled US$ 11.5 billion.

TABLE 5 BENEFITS FOR THE BRAZILIAN ECONOMY ARISING FROM THE USE OF INSECT RESISTANCE TECHNOLOGY: IMPACTS EXPECTED FOR THE NEXT TEN YEARS BY CROP

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In the environmental sphere, by maintaining the technical coefficients of the 2017/18 har-vest, the positive impacts in the next decade will be even more significant than those observed in recent years. Regarding the volume of insecticide, it is estimated that the IR technology will provide a reduction of 294 thousand tons from 2018/19 to 2027/28, which corresponds to not applying 98 thousand tons of different active principles used for the control of technology-target pests. To compare, this amount is 2.2 times the current an-nual consumption of insecticides in Brazil and 1.5 times the use of active ingredient with insecticidal effect27. The most important crop is maize, accounting for 78% of the total reduction. Soybeans and cotton should account for falls of 18% and 4%, respectively.

As a result of the reduction in the amount of active ingredient applied to the crops, the environmental impact will be reduced by 12%, considering the toxicological aspects relat-ed to farm workers, the final consumer as well as to an ecological component. The largest fall in environmental impact occurs for maize (29%), whereas soybeans and cotton tend to show falls of 4% each.

27 The consumption of insecticide in 2017 was 135 thousand tons in commercial products and 55.4 thousand tons of active ingredient, according to data from the Sindicato Nacional da Indústria de Produtos para Defesa Vegetal (Sindiveg) [National Union of the Industry of Products for Plant Protection].

PERSPECTIVES OF ENVIRONMENTAL GAINS

FIGURE 5 BENEFITS FOR THE BRAZILIAN ECONOMY ARISING FROM THE USE OF INSECT RESISTANCE TECHNOLOGY: IMPACTS EXPECTED FOR THE NEXT TEN YEARS

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The reduction in the number of insecticide applications for caterpillar control results in a decrease in the use of fuels. Thus, the adoption of insect resistance technology will be responsible for decreasing the use of fuel in 520 million liters - that is, almost 3/4 of the amount of diesel consumed by every agricultural sector for the period of one year28. Savings are equivalent to removing 347 thousand cars from circulation for one year29. It is a fleet that would occupy the 18th position in the ranking of Brazilian municipalities with the largest number of automobiles, one position above the city of Sorocaba (SP), where 300 thousand cars are currently circulating. Maize will account for 44% of the total fall, 47% can be attributed to soybeans and 9% to cotton.

Another important factor related to environmental benefits concerns the effect of pro-ductivity gains on the extension of planted area. The area savings generated by the use of IR technology are estimated at 19.6 million hectares, of which 13.6 million hectares correspond to maize. In other words, if no IR technology were in place, 19.6 million hect-ares of conventional crops would have to be planted from 2018 to 2027 to maintain the level of production to be achieved with the use of insect resistant varieties. This is the equivalent of twice the total area of soybeans to be planted in the state of Mato Grosso in the 2018/19 harvest30.

The combination of the lower applied dose of insecticides - and the consequent reduc-tion in fuel use - and the savings in planted area have a direct impact on greenhouse gas emissions. The forecast is a total reduction of 35.6 million tons of CO2 equivalent due to the use of IR cultivars. Maize will be responsible for the largest contribution, around 16.5 million tons of CO2 equivalent. This amount represents 63.7% of the total emissions of agricultural soils from the soybeans, maize and cotton crops, which currently total 55.9 million tons of CO2

31. Of the total expected reduction, 6.4 million tons refer to the de-crease in emissions related to insecticide applications, while the decrease of the other 29.2 million tons results from the planted area savings.

The expected reduction in CO2 emissions as a result of the use of IR technology can help the country to meet the targets set by the Paris Agreement32, since agriculture is the second largest contributor to the emission of greenhouse gases in Brazil (22% of the country’s total emissions). In addition, the emissions avoided due to the reduction in the use of insecticide are equivalent to the planting of 45.8 million native trees33.

TABLE 6 ENVIRONMENTAL IMPACTS ARISING FROM THE USE OF INSECT RESISTANCE TECHNOLOGY: IMPACTS EXPECTED FOR THE NEXT TEN YEARS BY CROP

NOTE The next ten years refer to the period between the harvests of 2018/19 and 2027/28.

28 According to data from the Agência Nacional de Petróleo (ANP) [National Petroleum Agency], the consumption of diesel oil in Brazil in 2017 was 54.8 billion liters. Of this amount, agriculture and livestock represented 1.3%, which corresponds to a demand of 712.4 million liters. https://anuario2018.somosplural.com.br/oleo-diesel/.

29 Estimates related to the equivalence in car consumption consider that a car runs on average 15,000 km per year and con-sumes about 1 liter of fuel every 10 km driven. These indicators were adopted in studies conducted by PG Economics.

30 The soybean area of the state of Mato Grosso in the 2018/19 harvest is estimated at 9.8 million hectares according to Agroconsult data.

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FIGURE 6 ENVIRONMENTAL IMPACTS ARISING FROM THE USE OF INSECT RESISTANCE TECHNOLOGY: IMPACTS EXPECTED FOR THE NEXT TEN YEARS

31 According to data from the Sistema de Estimativa de Gases de Efeito Estufa (SEEG) [Greenhouse Gas Emission Estimate System].

32 International commitment approved by 195 countries, including Brazil, which aims to achieve goals to reduce emissions of greenhouse gases. Brazilian targets are to reduce greenhouse gas emissions by 37% below 2005 levels by 2025; and, subse-quently, reduce greenhouse gas emissions by 43% below 2005 levels by 2030.

33 The Instituto Brasileiro de Florestas (IBFlorestas) [Brazilian Forest Institute] considers that 7.14 trees can offset 1 ton of CO2 equivalent. Native species from the Atlantic Forest were used as reference. https://www.ibflorestas.org.br/component/content/article.html?id=219:afinal-quanto-carbono-uma-arvore-sequestra

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CONCLUSIONIn recent years, there have been reports of increased populations of Bt toxin-resistant target insects, putting into question the effectiveness of the technology in the control of these pests. As the productivity gain from insect resistant seeds is directly related to the reduction of the productive risk, since technology seeks to reduce the potential damages caused by the target pests, the loss of efficacy tends to reflect on the crop performance (with the fall of the productivity differential) and also on pest management (with the application of other pesticides to control insects). In a scenario of increasing insect population not controlled by IR technology, the economic, social and environ-mental benefits provided by technology are at risk: they decrease over time and can even be lost.

In order to try to minimize or reverse the situation, companies have been investing in research and development to identify new proteins or actives with insecticidal proper-ties that are effective against pests. In addition, companies have been focusing on the development of materials that incorporate more than one gene (stacking) so that each one produces different insecticidal proteins, with unique and independent modes of action, as a resistance management tool, aiming at a greater durability of technologies. However, the process of developing a novel IR transgenic is slow and costly. Accord-ing to information provided by the Conselho de Informações sobre Biotecnologia (CIB) [Council for Information on Biotechnology], the average cost of approving a new trans-genic event amounts to US$ 136 million and takes about 13 years, from the start of the project to commercial release. Thus, although new insect resistance technologies are under development, the involvement of farmers in the preservation of the current IR cultivars is fundamental to keep the benefits longer.

In countries with a tropical climate like Brazil, there are multiple harvests throughout the year and the presence of pests that feed on several hosts. Therefore, the country meets conditions that favor the multiplication of insects, accelerating evolutionary biological processes that can lead the pests to develop resistance to the control mechanisms. Thus, it is especially necessary that Brazilian farmers respect the recommendations for the use of technology, observing the techniques of integrated pest management and, especially, adopting the area of refuge.

The adoption of the refuge area is considered the most important best practice for in-sect resistance management. Its main objective is to reduce the evolution potential of the insect resistance process, thus, helping to maintain the effectiveness of technology in pest control over the years. Farmers not adopting the refuge or not doing the correct management contribute to the increase of the population of resistant insects and to the loss in the efficiency of the control of the target pests, generating negative externalities for themselves as well as for the other farmers in the region, including those who imple-ment the refuge correctly35.

The difficulty in making farmers aware of the importance of the refuge stems from the fact that its adoption brings clearer benefits in the future. If only the immediate benefits are evaluated, one can choose not to adopt the recommendation to plant the refuge fearing that the good practice will cause economic losses and/or operational difficul-ties. Without the long-term perspective, farmers are not able to measure the harm that this attitude can bring to the business, since plants would lose their protection against pest insects.

In addition to the time dimension, the decision on whether or not to implement the ref-uge area also takes into consideration questions that involve the so-called dilemma of collective action, a concept conceived by Olson36, in 1999. In short, problems of collec-tive action arise as individuals seek to maximize their own utility and deviate from coop-erative behavior. The option for desertion is favored by the fact that the agent does not perceive the importance of his individual contribution to the collective good.

35 The size of the refuge should amount to a percentage of the total area to be planted on the property. The percentage varies according to the crop. Currently, the Comitê de Ação à Resistência a Inseticidas (IRAC) [Insecticide Resistance Action Committee] recommends that the area of refuge be 20% for soybeans and cotton and 10% for maize.

36 Mancur Olson, an American economist who, in 1971, proposed the use of economic models for the analysis of social groups and collective action.

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In addition, their transgression is often not even identifiable by the others due to the fact it is very reduced, given the population as a whole. In the end, the decision to priv-ilege individual interests ends up being predominant, making the result for the collec-tive good insufficient or disastrous. To circumvent the situation and favor cooperative behavior, Olson proposes the creation of negative and positive selective incentives through monitoring mechanisms.

Being so, it is worth mentioning that it is urgent to define a regulatory framework on the adoption of the refuge area in Brazil, which has been under discussion since 2014. Although some practices are recommended, discussed and evaluated by the Ministry of Agriculture, they do not have the strength of law and, therefore, there is no supervision on the adoption of the refuge. So, the path to the future depends on the actions to be taken now. Unless we seek to consolidate the benefits that technology can generate, we will risk those advantages, generating losses for both the economy and society and increasing environmental damage.

The results presented by the study have shown the financial, economic, social and en-vironmental benefits derived from the use of IR technology. The gains verified since the introduction of insect resistant plants in Brazil are evident and are the reason for the success of its adoption.

In general, it has been observed that IR technology:

• increases crop productivity,

• reduces the use of insecticides and fuel consumption in agricultural pesticide appli-cations,

• boosts farmer profitability,

• contributes to the dynamism of the economy and to the generation of wealth in the country,

• encourages the creation of jobs and wage increase,

• raises tax collection,

• decreases GHG emissions,

• minimizes environmental impacts and

• contributes to less area use.

The scenario shows that the expected benefits for the next decade should outweigh the results that have been achieved since the release of IR technology to date. In some regions, however, there are some major signals that the system needs to address the problem of pest resistance, raising a warning about the potential damage that this can bring to the agricultural sector and the economy as a whole.