ICABR conference

Hiroyuki TakeshimaResearch FellowDevelopment Strategy and Governance DivisionIFPRIH.takeshima@cgiar.orgPressure Group Competition and GMO Regulations in Sub-Saharan Africa Insights from the Becker ModelTakeshima, Hiroyuki & Guillaume Grure. (2011). Journal of Agricultural & Food Industrial Organization 9(1), Article 7.Difference b/w EU and US6.4.2 US - vast farmland, needs to cut the time spent per unit of land => came out GM crops EU - not much need to cut the time => not much need for GM crops1Background2Influential role played by lobbyists(Paarlberg, 2008; Graff, Hochman & Zilberman, 2009; Grure & Sengupta, 2009)=> linkages between anti-GMO lobbying and seemingly irrational GMO regulation policies in these countriesDespite studies suggesting positive effects of GMOs (Qaim 2001; Aerni 2006; Paarlberg 2006; Demont et al., 2009; Bout & Grure, 2011) progress in SSA has been slow => Due to the influence of anti-GMO lobbyists (Pinstrup-Anderson & Schioler, 2001; Paarlberg, 2008) including private importers or retailers (Cohen & Paarlberg, 2002; Grure & Sengupta, 2009)Demont et al. herbicide resistant riceBouet & Gruere Bt cotton2Questions3Why anti-GMO pressure groups effective ?Why anti-GMO lobbying can be effective in influencing GMO policies in SSA, while pro-GMO lobbying cannot ?Two possible reasons4Diffuse beneficiaries, low potential return from lobbying relative to costs (Pray & Naseem, 2007; Graff, Hochman & Zilberman, 2009)Already unfavorable conditions even in the absence of lobbying - unfavorable conditions make anti-GMO lobbying more effectivebeneficiaries of GMO crops, potentially including small farmers, may be more diffuse than anti-GMO groups, and the potential return from lobbying for them is lower than the cost of lobbying (Pray & Naseem, 2007; Graff, Hochman & Zilberman, 2009)

conditions in SSA are already unfavorable for the introduction of GMO even in the absence of lobbying, and such unfavorable conditions make anti-GMO lobbying more effective than pro-GMO lobbying

4Unfavorable conditions5Unsuitability of foreign varieties to specific local production environmentWeak formal seed sector capacity in SSA countriesInsufficient institutional and biosafety regulatory capacity (Pray & Naseem, 2007)Small market sizes and their lack of biosafety regulatory system (Takeshima, 2010)varieties developed using the technologies applied in foreign countries may not be suitable for specific local production

weak formal seed sector capacity in SSA countries

insufficient institutional and biosafety regulatory capacity (Pray & Naseem, 2007)

small market sizes and their lack of biosafety regulatory system (Takeshima, 2010)

5Why does it matter?6Different ways to support:If 1st reasons => support for lobbying the policy makers by SSA producers who are often impoverished and diffused, and may have little capacity to organize and effectively lobbyIf 2nd reason => lobbying may not be the sole reason for GMO policies in SSA countriesunderstand what causes the anti-GMO lobbying to be more effective than pro-GMO lobbying6Interaction b/w interest groups on opposite sides7Conceptualization of the workings of lobbyingBoth anti- and pro-GMO groups can compete in influence on GMO policiesBecker, G. (1983). A Theory of Competition Among Pressure Groups for Political Influence. The Quarterly Journal of Economics 98(3) : 371400.Competing influence of pressure groups SSA policy makers goals are not all precisely determined => appropriate for our studySo many ways to deal with the second reason

Need for conceptualization of the workings of lobbying and what determine its effectiveness, especially when both anti- and pro-GMO groups can compete in influence for favorable GMO policies

Revisit one of the old seminal paper

Becker (1983) => focuses on competing influence of pressure groups and that SSA policy makers goals are not all precisely determined => appropriate for our study

7Contribution to the literature8roles played by the political pressure groups for designing GMO policies in SSA countrieshow such roles may depend on exogenous factors for both anti- and pro- GMO lobbyistswhat they may imply for the appropriate support for SSA countriesuse Beckers model by showing how the model can be used to illustrate the case of the lobbying for anti- or pro-GMO policiesunderstanding the actual roles played by the political pressure groups for designing GMO policies in SSA countries, how such roles may depend on exogenous factors for both anti- and pro- GMO lobbyists, and what they may imply for the appropriate support for SSA countriesusing Beckers model by showing how the model can be used to illustrate the case of the lobbying for anti- or pro-GMO policies*this study does not intend to discuss Beckers model itself

8GMO policies9a set of discrete decisions at various regulatory stagescommittee to further discuss issues associated with GMObiosafety bills and/or regulations on the development, testing and possible commercialization of GMO cropsfinancial support to such development, confined field trialsventure capital fund to finance biotech enterprisesmoratorium on imports of GMO productsban research, laboratory experiment and field trial of GMOLobbyists' target authorities at each stage, including individual competent authorities (regulatory committees) (Newell 2007)a set of discrete decisions at various regulatory stages- setting up a committee to further discuss issues associated with GMO- introducing and enacting specific biosafety bills and/or regulations on the development, testing and possible - commercialization of GMO crops- providing financial support to or approving such development, testing and confined field trials- set up a venture capital fund to finance biotech enterprises- moratorium on imports of GMO products- ban research, laboratory experiment and field trial of GMO for certain years or indefinitelyLobbysts target authorities at each stage, including individual competent authorities (regulatory committees) (Newell 2007)

9Exogenous factors10Lobbying effectiveness depend on exogenous factorsagro-ecological and socio-economic conditionspotential productivityenvironmental impactssegregation costs (Grure and Sengupta, 2009)external cost for domestic consumers willing to avoid GMO products (Lapan and Moschini, 2004)othersLobbying effectiveness depend on exogenous factorsagro-ecological and socio-economic conditionspotential productivity growth associated with the use of GMOthe environmental impacts they may havecosts for traders of segregating non-GMO products from GMO products (Grure and Sengupta, 2009)external cost for domestic consumers willing to avoid GMO products (Lapan and Moschini, 2004)

10Becker model11Two homogeneous lobbying groups s and ts : subsidized, t: taxedRs = Zs - Zs0 (redistribution to s)Rt = Zt0 - Zt (redistribution away from t) F(Rt) Rt, F* = dF/dRt 1 and F** = d2F/dRt2 0G(Rs) Rs, G* 1 and G** 0

RtF(Rt)RsG(Rs)DWDWBecker model12nt * F(Rt) = It (ps, pt, x): influence functionns * G(Rs) = Is (ps, pt, x)

Is + It = 0: political budget constraintp = p(m, n), m = an: pressure p depends on the size n and each members contribution aZs = Zs0 + Rs as, Zt = Zt0 Rt at:Full income of each member

Becker model13Solved for equilibrium values of as and at as , as depend on F* and G*

=> Each member max income whendRs / das = 1dRt / dat = -1Theorem from Beckers model14Marginal DW => F* , G* => => Pressure from s , pressure from t Equilibrium subsidy

Competition among pressure groups favors efficient methods of subsidy / taxation lower DW

Exogenous factor (DW) affects Lobbying efforts Lobbying effectiveness 14Beckers theorem and GMO lobbying15Lobbying effectiveness depends on DWUnfavorable conditions for GMOs =>Anti-GMO lobbying becomes effectiveAnti-GMO may be actually efficientFavorable conditions for GMOs => anti-GMO policy => DW pro-GMO policy => DW Lobbying effectiveness depends on DWAnti-GMO lobbying becomes effective if the conditions are already unfavorable to GMOAnti-GMO policy in such conditions may be actually efficientWhen the conditions are favorable for GMO, anti-GMO (pro-GMO)policy may increase (decrease) the DW

15What conditions ?16Nature of GMO technology, Environmental and commercial risksPerceptions by producers and consumersInstitutional constraintsthe nature of GMO technology, the levels of environmental and commercial risksperceptions by producers and consumersinstitutional constraints

16Favorable condition17Sufficient capacity developing appropriate GMO varieties disseminating GMO varieties Greater GMO benefits reduction in production costs a large number of producers => promoting GMO is an efficient way to support producers (i.e., a low DW for subsidizing pro-GMO lobbyists). => Anti-GMO policy - less efficient way to allocate benefits to anti-GMO consumers and importers

Sufficient capacity in both developing and disseminating appropriate GMO varieties a significant reduction in production costs can be achieved for a large number of producers and thus promoting GMO is an efficient way to support producers (i.e., a low DW for subsidizing pro-GMO lobbyists). Anti-GMO policy, on the other hand, may be a less efficient way to allocate benefits to anti-GMO consumers and importers

17Favorable condition18sufficient formal seed sector capacity Low segregation cost better tracking systems, identity preservation along the supply chains, strong enforcement of the biosafety regulatory frameworkNon-GMO may be provided to importers at a lower costa high DW for subsidizing anti-GMO lobbyists

Anti-GMO group may insteadlobby for preferential agreements for importing non-GMO from SSA countriescooperate with GMO promotion in SSA countriessufficient formal seed sector capacity, the cost of segregating GMO from non-GMO may be lower because of better tracking systems, identity preservation along the supply chains, and stronger enforcement of the biosafety regulatory framework. Non-GMO may be provided to importers at a lower cost (i.e., a high DW for subsidizing anti-GMO lobbyists)Importers, traders and consumers in importing countries may then instead lobby for receiving some forms of preferential agreements for importing non-GMO from SSA countries, while cooperating with the policy makers for promoting GMO in SSA countries.

18Unfavorable conditions19Low domestic capacity to develop GMOs pro-GMO policy is inefficient way to support producer (cost reduction is minimal) a high DW for subsidizing pro-GMO lobbyists

Aversion to GMOAlternative sources for non-GMO Weak institutional capacity High segregation costs Greater chance of regulatory response from importing countries=> anti-GMO policies may be more efficient way to support anti-GMO consumers in importing countries or anti-GMO traders, than promoting GMO and segregating them from non-GMOLow domestic capacity to develop GMOs => pro-GMO policy is inefficient way to support producer (cost reduction is minimal) - a high DW for subsidizing pro-GMO lobbyistsHigh degree of aversion to GM in importing countries and importing countries have alternative sources for non-GMO institutional capacity is weak - segregationcosts become higher, further raising the chance of regulatory response from importing countriesanti-GMO policies may be more efficient way to support anti-GMO consumers in importing countries or anti-GMO traders, than promoting GMO and segregating them from non-GMO

19Size of lobbying group20Another Beckers theoremsmaller size of lobbyist group = more efficientHowever, biotech companies are also small, and yet generally not active in lobbying in Africa

anti- GMO lobbying > pro-GMO lobbying it is likely that the situation in SSA is already unfavorable for GMO, less likely that the anti-GMO lobbyists are making the situation unfavorable for GMOAnother Beckers theorem smaller size of lobbyist group more efficientHowever, biotech companies are also small, and yet generally not active in lobbying in Africa

=> when we see more anti- GMO lobbying than pro-GMO lobbying, it is likely that the situation in SSA is already unfavorable for GMO, and it is less likely that the anti-GMO lobbyists are making the situation unfavorable for GMO

20Situations in SSA21Potential domestic gains large (Qaim, 2001; Aerni, 2006; Paarlberg, 2006; Demont et al., 2009, Bout and Grure, 2011)

Damages of losing export to GMO sensitive countries small (Anderson & Jackson, 2005; Paarlberg, 2006; Grure & Sengupta, 2009)

Consumer perceptions by consumers in various SSA countries - favorableBt maize / cotton,Golden Rice in Nigeria (Adeoti & Adekunle, 2007)GMO Banana in Uganda (Kikulwe et al., 2010)Bt maize in Kenya (Kimenju and De Groote, 2008) Bt white maize in South Africa (Vermeulen et al., 2005)

=> Favorable conditions in terms of GMO potentialsLarge potential domestic gains associated with GMO adoption (Qaim, 2001; Aerni, 2006; Paarlberg, 2006; Demont et al., 2009, Bout and Grure, 2011)

Small damages of losing export to GMO sensitive countries (Anderson and Jackson, 2005; Paarlberg, 2006; Grure and Sengupta, 2009)

favorable perceptions by consumers in various SSA countriesBt maize, Bt cotton and Golden Rice in Nigeria (Adeoti and Adekunle, 2007) GMO Banana in Uganda (Kikulwe et al., 2010) Bt maize in Kenya (Kimenju and DeGroote, 2008) - Bt white maize in South Africa (Vermeulen et al., 2005)

=> Conditions may be favorable in terms of the potential of GMOs

21Institutional constraints unfavorable conditions in SSA22GM R & Dregulatory capacitygeneral law enforcement capacity (Binenbaum et al., 2003; Pray and Naseem, 2007)GM R&D Capacity in SSA23Only Republic of South Africa (RSA) and Egypt domestic GM research (Takeshima, 2010)Backcrossing varieties initially developed for use in the United States or other early-adopting countries (Takeshima, 2010)Biological characteristics of staple crops (cassava etc) less known (Falck-Zepeda & Cohen, 2006)Difficulty in applying GM to such crops - these technologies are developed in temperate zones (Naylor et al 2004)Patented technology - costly for African countries to develop GMOdepend on developed countries partners for necessary technologies, than Asia or Latin America (Herdt, Toenniessen and OToole, 2007)GMO crops suitable for local production environment - takes longer (Eicher, Maredia & Sithole-Niang, 2006; Takeshima, 2010)very few countries except Republic of South Africa (RSA) and Egypt have the capacity for research using genetic engineering (Takeshima, 2010)GMO crops and commodities are obtained by backcrossing8 varieties initially developed for use in the United States or other early-adopting countries (Takeshima, 2010).Lack of knowledge on their biological characteristics of staple crops in SSA, such as cassava (Falck-Zepeda & Cohen, 2006)SSA countries often face difficulty in applying genetic engineering to such crops, particularly as these technologies are developed in temperate zones (Naylor et al 2004).Patented technology - costly for African countries to develop GMO as they are more dependent on partners in developed countries for providing necessary technologies, than Asia or Latin America (Herdt, Toenniessen and OToole, 2007)GMO crops suitable for local production environment therefore takes longer (Eicher, Maredia & Sithole-Niang, 2006; Takeshima, 2010)

23Regulatory Capacity in SSA24Needed to minimize environmental, agronomic, and food and feed safety risks, ensure safe use by all (Birner & Linacre 2008)Minimize gene flow in confined field trials, testingRegulation on GMO imports / labeling (Grure & Rao 2007)Testing of sample, monitoring and tracking Lack institutional capacity to identify the best regulatory systems while involving various stakeholders (Wafula & Clark 2005)draft and enact their biosafety bill (Cohen & Paarlberg 2004)few public research institutions in SSA can afford the costs of biosafety assessments (Herdt, Toenniessen & OToole 2007)A functioning regulatory framework is needed for handling GMO at multiple stages, in order to minimize the potential environmental, agronomic, and food and feed safety risks associated with GMO, and ensure their safe use by all (Birner and Linacre, 2008).a framework approving of confined field trials so that GMO varieties are tested in the facilities where gene flow is minimizedRegulation on GMO imports and in some case labeling (Grure and Rao, 2007); testing of sample, monitoring and often tracking of GMO products; SSAs lack institutional capacity to identify the best regulatory systems while involving various stakeholders (Wafula and Clark, 2005), and draft and enact their biosafety bill (Cohen and Paarlberg, 2004)few public research institutions in SSA can usually afford the costs of biosafety assessments (Herdt, Toenniessen and OToole, 2007) further limiting their capacity to supply new GMO

24Law enforcement capacity25required to punish illegal use of patented technologiesillegal entry of GMO cross porous bordersillegal methods of producing GMO by farmerspotential non-compliance with labeling regulationstransaction costs for negotiating license with patent holders discourages patent holders to provide technologies local law does not recognize patent (Cohen & Paarlberg 2002)Illegally export of patented technologies to neighboring countries due to frequent transboundary movement of crops in SSA (Binenbaum et al 2003; Eicher et al 2006; Ushewokunze-Obatolu 2005)Royalty-free humanitarian licensing - still requires market segmentation clear definition of beneficiariesdifficult where non-commercial markets cannot be sharply delineated by regiondifficult to exclude spillovers to non-targeted markets (Brewster et al., 2007)required to punish the illegal use of patented technologies, the illegal entry of GMO cross porous borders, the use of illegal methods of producing GMO by farmers, or the potential non-compliance with labeling regulationsweak institutional capacity raises the transaction costs associated with negotiating license with patent holders; in addition, weak institutional capacity for patent law enforcement discourages patent holders to provide technologies as patent may not be claimed in poor countries if the local law do not recognize such claims (Cohen and Paarlberg, 2002, p.2)patent holders may be reluctant to provide the patented technologies if there is possibility that the technologies are illegally exported to neighboring countries due to frequent transboundary movement of crops in SSA (Binenbaum et al., 2003; Eicher, Maredia and Sithole-Niang, 2006; Ushewokunze-Obatolu, 2005)Enforcement of IPR protection may also not be required if royalty-free humanitarian licensing can be used but still requires market segmentation or clear definition of beneficiaries, which may not be successful where non-commercial markets cannot be sharply delineated by region, and difficult to exclude spillovers to nontargeted markets (Brewster et al., 2007).

25Other unfavorable factors26Weak formal seed sectorlimit the dissemination of commercial GMO that are authorizedHigh seed recycling rate in Nigeria - only purchase rice, maize and cowpea seeds in any given year (Takeshima et al., 2010)

Commercial risks associated with decisions to develop or commercialize GMO crops may be often more immediate than the benefits realized from the adoption of GMO, as anti-GMO groups can immediately respond to such decisionsConclusions27Sizeable opportunity cost of delayed adoption of GMO due to the constraints in regulatory capacity (Bayer, Norton & Falck-Zepeda, 2010) potential GMO benefits largely offset by institutional constraintsConditions highly unfavorable in SSAPro-GMO policy inefficient (DW )Anti-GMO policy efficient (DW )More anti-GMO lobbying than pro-GMO lobbying for pro-GMO policy27Applications for other countries (US, EU / Japan) ?28US - Favorable Vast land - greater benefits from GM on labor saving (?)=> pro-GM lobbying (?)

EU / Japan Unfavorable Small land - less benefit from labor saving GM tech (?)Japan - Dominance of rice (self-pollinating), small market for GM maize / soybean (?)=> anti-GM lobbying (?)Future directions29Different assumptionsDifferent modelsEmpirical approach?Key reference30Becker, G. (1983). A Theory of Competition Among Pressure Groups for Political Influence. The Quarterly Journal of Economics 98(3) : 371400.Takeshima H & G Grure. (2011). Pressure Group Competition and GMO Regulations in Sub-Saharan Africa Insights from the Becker Model. Journal of Agricultural & Food Industrial Organization 9(1), Article 7.