GMO Crops: To Grow or Not to Grow?

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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

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Organization of Todays Presentation

• GMO crops

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Organization of Todays Presentation

• GMO crops
• Public attitudes towards GMO crops

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Organization of Todays Presentation

• GMO crops
• Public attitudes towards GMO crops
• Economics of transgenic corn adoption

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Organization of Todays Presentation

• GMO crops
• Public attitudes towards GMO crops
• Economics of transgenic corn adoption
• Crop segregation

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Organization of Todays Presentation

• GMO crops
• Public attitudes towards GMO crops
• Economics of transgenic corn adoption
• Crop segregation
• The Starlink case

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What is a GMO crop?

• Transfer of a gene from a soil bacteria that
  codes for a protein

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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

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Insect Control with Biotechnology

• Insect resistant crops commercially available,
  e.g., Bt corn, cotton, and potatoes

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Insect Control with Biotechnology

• Insect resistant crops commercially available,
  e.g., Bt corn, cotton, and potatoes
• Transgenic corn for rootworm control under
  development

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Crop Applications of Biotechnology

• Herbicide tolerant crops, e.g., Roundup Ready
  corn and soybeans

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U.S. Crop Biotechnology Adoption

• (USDA Survey)
  
  1999 2000 2000
  
  US US IN
  
• Corn 33 25 11
• Soybeans 57 54 63

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Biotechnology Critics

• What are the public concerns?

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Monarch Butterfly

• Cornell and Iowa State University laboratory
  studies of adverse Bt corn pollen impact

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Monarch Butterfly

• Cornell and Iowa State University laboratory
  studies of adverse Bt corn pollen impact
• Recent field studies suggest minimal adverse
  impact

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Undesired Gene Flow

• Cross pollination

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Undesired Gene Flow

• Cross pollination
• Organic farmer concerns

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Undesired Gene Flow

• Superweeds

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Food Safety

Allergenicity
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Food Safety

Allergenicity

Unknown diseases or
future health consequences
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Many Europeans uneasy about biotechnology

• Strong environmental movement

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Many Europeans uneasy about biotechnology

• Strong environmental movement
• No coherent regulatory system

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Many Europeans uneasy about biotechnology

• Strong environmental movement
• No coherent regulatory system
• Weak public trust in government since mad cow
  disease (BSE)

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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

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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

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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

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U.S. Consumer Attitudes towards Food Biotechnology

• About 3/4 Americans have heard of biotechnology

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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

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U.S. Consumer Attitudes towards Food Biotechnology

• About 3/4 would buy a GMO food if less pesticide
  use

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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

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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

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European Corn Borer

• 1 billion annual damage in U.S.

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European Corn Borer

• 1 billion annual damage in U.S.
• Physiological damage

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European Corn Borer

• 1 billion annual damage in U.S.
• Physiological damage
• Mechanical damage

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European Corn Borer Infestation
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Multi-State Study

• Indiana
• Illinois
• Iowa
• Kansas

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Decision Analysis Model

• A decision tree

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Data

• Collaborative arrangements
• Indiana Bledsoe and Obermeyer
• Illinois Steffey
• Iowa Hellmich
• Kansas Buschman and Higgins

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Data

• Scouting and spraying costs

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Data

• Scouting and spraying costs
• Spraying efficacy

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Data

• Scouting and spraying costs
• Spraying efficacy
• Corn planting dates
• Probability distribution
• Yield losses for late planting

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Data

• Scouting and spraying costs
• Spraying efficacy
• Corn planting dates
• Probability distribution
• Yield losses for late planting
• ECB yield damage by planting date

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Data

• Probability of number of ECB given plant date and
  infestation

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Data

• Probability of number of ECB given plant date and
  infestation
• Probability of number of ECB per plant given
  infestation

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Data

• Probability of number of ECB given plant date and
  infestation
• Probability of number of ECB per plant given
  infestation
• Overall probability of infestation

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Results Indiana and Iowa

• Returns to spraying less than per acre scouting
  costs

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Results Indiana and Iowa

• Returns to spraying less than per acre scouting
  costs
• Compare Bt corn to non-Bt without a spraying
  program

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Results - Indiana
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Results - Indiana

• Risk Neutral

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Results - Indiana

• Risk Averse

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Results - Iowa
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Results - Iowa

• Risk Neutral

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Results - Iowa

• Risk Averse

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Conclusions

• Value of Bt corn increases from east to west in
  Corn Belt

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Conclusions

• Value of Bt corn increases from east to west in
  Corn Belt
• Very valuable where SWCB are present

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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

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Corn Rootworm Control
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Corn Rootworm Larvae Damage
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Western Corn Rootworm Variant in Northern Indiana
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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

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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

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Root Protection
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Indiana Research Siteshttp//www.aes.purdue.edu/A
gResearch/AgCenters.html
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Indiana 1990-1999 (excluding 1996)
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Conclusions

• Based on cost to the producer, yield benefits,
  efficacy/consistency, simplicity, and
  environmental implications, transgenics
  potentially hold the most economic value for
  producers

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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

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Some Considerations Before Adopting Transgenic
Corn
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Adopting a Transgenic CropProduction
Considerations

• Technology fee

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Adopting a Transgenic CropProduction
Considerations

• Technology fee
• Pest infestation probabilities

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Adopting a Transgenic CropProduction
Considerations

• Technology fee
• Pest infestation probabilities
• Yield drag

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Adopting a Transgenic CropProduction
Considerations

• Technology fee
• Pest infestation probabilities
• Yield drag
• Reduction in pesticide costs

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Adopting a Transgenic CropEnvironmental
Considerations

• Refuge requirements

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Adopting a Transgenic CropEnvironmental
Considerations

• Refuge requirements
• Impacts on beneficial insects

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Adopting a Transgenic CropEnvironmental
Considerations

• Refuge requirements
• Impacts on beneficial insects
• Tillage system adjustments

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Adopting a Transgenic CropMarketing
Considerations

• Potential premiums or discounts

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Adopting a Transgenic CropMarketing
Considerations

• Potential premiums or discounts
• Market segregation costs

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Adopting a Transgenic CropMarketing
Considerations

• Potential premiums or discounts
• Market segregation costs
• How much premium?

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How much premium needed to segregate?

• Recent Midwest commercial farmer survey (Norm
  Larson of AFS Services)
• Premium per Bushel
• lt 0.10 2
• 0.10 - 0.20 22
• .020 - 0.30 28
• 0.30 - 0.40 26
• 0.40 - 0.50 11
• gt0.50 12

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What does it take to segregate your crop?

• Seed source

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What does it take to segregate your crop?

• Seed source
• Planting considerations

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What does it take to segregate your crop?

• Seed source
• Planting considerations
• Harvesting considerations

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What does it take to segregate your crop?

• Seed source
• Planting considerations
• Harvesting considerations
• Storage challenges

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What does it take to segregate your crop?

• Seed source
• Planting considerations
• Harvesting considerations
• Storage challenges
• Hauling and shipping

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What does it take to segregate your crop?

• Seed source
• Planting considerations
• Harvesting considerations
• Storage challenges
• Hauling and shipping
• Beyond the farm gate

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The Starlink Case

• Aventis request to EPA- April 97

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The Starlink Case

• Aventis request to EPA- April 97
• EPA approved- May 98 for domestic feed and
  industrial use only

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The Starlink Case

• Aventis request to EPA- April 97
• EPA approved- May 98 for domestic feed and
  industrial use only
• Grower agreements required

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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

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U.S. Starlink Corn Acres 2000

• Iowa 134,910
• Nebraska 41,529
• Minnesota 35,691
• S.Dakota 34,290
• Kansas 21,390
• Illinois 17,466
• INDIANA 3,564
• U.S. 340,908

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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

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The Starlink Case

• Sept 00 found in taco shells and recalls
  initiated

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The Starlink Case

• Sept 00 found in taco shells and recalls
  initiated
• Oct 00 processors stop using Cry9c corn

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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

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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

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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

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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

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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

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Questions