Biotechnology and International Competitiveness: Implications for Southern U.S. Agriculture: Discussion

Journal of Agricultural and Applied Economics, Aug 2005 by Fletcher, Stanley M, Nadolnyak, Denis A

Agricultural biotechnology is an important issue in the United States and worldwide because its acceptance by consumers, as well as producers, remains problematic. The United States currently is the world's leader in both agbiotech research and production. In 2004, the United States planted 47.6 million hectares of genetically modified (GM) crops, with Argentina planting 16.2 million hectares followed by 5.4 million hectares for Canada, 5 million hectares for Brazil, and 3.7 million hectares for China (Nature Biotechnology). However, strict regulations and standards imposed by some governments on trade in GM crops pose threats to U.S. agriculture and the biotech-research industry.

U.S. agriculture is more dependent on agbiotechnology than any other country in the world because the United States had 57% of the GM-planted acreage in 2004. Therefore, it is particularly vulnerable to the GM crop trade barriers that have been imposed by the European Union (EU) and other countries. The issues of agricultural biotechnology can be broadly classified as follows:

1) issues of producer acceptance of biotechnology;

2) issues of consumer acceptance of food that contains GM ingredients;

3) trade-related issues of regulation and labeling imposed by foreign governments;

4) environmental and food safety concerns;

5) long-term welfare, distributional, and structural effects of agricultural biotechnology in the industrialized countries and in the developing world.

Producer Acceptance of Biotechnology

Producer acceptance of GM crops has been confirmed by extremely high adoption rates in the United States, as well as in some Latin American and Asian countries. Surprisingly, however, little conclusive research on the actual producer benefits has been done. On the one hand, some U.S. farmers estimate yield increases from planting Bt corn at 15% and a cost savings of $25 per acre. On the other hand, many farmers fear low prices that result from overproduction plus the substantially higher costs of GM seed and technology fees, the cost associated with testing, segregation, certification of non-GMs, the risks of liability brought about by cross-pollination and contamination, and the loss of markets, both foreign and domestic.

Complaints have been voiced about the overly complicated nature of GM crop production. Farmers often find themselves caught in the middle of a debate between chemical manufacturers, seed companies, agribusiness concerns, grain exporters, foreign and domestic consumers, and governments around the world. The rapid acceptance of GM crops by production agriculture shows that farmers may want to have these products as part of their planting options for the future. But the uncertainty over marketability, cross-pollination, certification, and liability has been driving farmers away from the technology. These factors have been responsible for the 20% drop in GM crops' planted acres in the United States in 2000 compared with 1999. Currently, however, the GM planted acreage is increasing, as the paper by Marchant and Song points out.

To the American farmer, the debate over genetically modified crops is not an issue of science, environment, or health. Instead, it is an issue of economics. Can U.S. farmers afford to grow a crop that they may not have a market for in the fall? Or, can they deal with the concerns over on-farm segregation and the risk of liability caused by pollen contamination? Consumer resistance in Europe, Asia, New Zealand, Australia, Canada, Mexico, South Africa, and the growing resistance in the United States makes farmers doubt that many market opportunities will remain available for GM products.

It is important to remember that, while farmers have no control over market prices and regulations, they control their plantings of GM crops. Persistence of uncertainty about the GM crop markets may easily lead to shrinking production volumes and reversion to non-GM crop production. However, this scenario probably will not occur given that the source for seed is controlled by the private sector in most cases. If a farmer wanted to switch back to a non-GM crop, the seed may not be available.

Consumer Acceptance of Food That Contains GM Ingredients

Consumer attitudes are formed largely under the influence of the media, controlled by many interest groups that can be identified as the stakeholders in the GM controversy debate. Perhaps because these groups have vastly divergent interests, empirical studies find great variety in the consumer attitudes toward agricultural biotechnology and GM-containing foods in particular. The protagonists in the GM crop debate tend to overlook either good or bad aspects of GM crops in agriculture. The reason for such behavior is that they have agendas and, therefore, must ignore anything that contradicts their position. The most important players who are in opposition to influencing the public opinion are as follows:

Private sector:

- The life science companies (e.g., DuPont, Monsanto, and Syngenta). Life science companies try to promote as many GM foods as they can and encourage as much positive publicity.