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Adoption of Bio Engineered Crops

Adoption of Bio Engineered Crops

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Adoption of Bioengineered Crops.
By Jorge Fernandez-Cornejo andWilliam D. McBride,with contributions from Hisham El-Osta,Ralph Heimlich,Meredith Soule,Cassandra Klotz-Ingram,Stan Daberkow,Rachael Goodhue,and Corinne Alexander. Agricultural Economic Report No. 810.
Abstract
Use of crop biotechnology products,such as genetically engineered (GE) cropswith input traits for pest management,has risen dramatically since commercialapproval in the mid-1990s. This report addresses several of the economic dimen-sions regarding farmer adoption of bioengineered crops,including herbicide-tolerant and insect-resistant varieties. In particular,the report examines:(1) theextent of adoption of bioengineered crops,their diffusion path,and expected adop-tion rates over the next few years; (2) factors affecting the adoption of bioengi-neered crops; and (3) farm-level impacts of the adoption of bioengineered crops.Data used in the analysis are mostly from USDA surveys.
Keywords:
Biotechnology,technology adoption,genetic engineering,pestmanagement,financial effects,tillage,herbicide-tolerant crops,Bt crops,corn,soybeans,cotton.
Acknowledgments
The authors would like to thank Robbin Shoemaker,Kitty Smith,Susan Offutt,Utpal Vasavada,Margriet Caswell,George Norton,and William Lin for theirhelpful comments and suggestions. We are also grateful to Dale Simms for hisvaluable and prompt editorial assistanceand Wynnice Pointer-Napper for the coverdesign,document layout,and final charts.
Note:
The use of brands or firm names in this publication does not imply endorse-ment by the U.S. Department of Agriculture.1800 M Street,NWWashington,DC 20036-5831May 2002
 
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 Adoption of Bioengineered Crops / AER-810
Economic Research Service/USDA
Contents
Summary
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iv
Introduction
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1Factors Shaping Adoption of Bioengineered Crops . . . . . . . . . . . . . . . . . .1Producer Profitability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2Consumer Preferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2Other Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3Objectives and Roadmap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
The Extent of Adoption of Bioengineered Crops
. . . . . . . . . . . . . . . . . . . .4Herbicide-Tolerant Crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4Insect-Resistant Crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Box 1.
USDA Survey Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Diffusion of Bioengineered Crops
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8Modeling the Diffusion of GE Crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8Empirical Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9Out-of Sample Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Factors Affecting the Adoption of Bioengineered Crops
. . . . . . . . . . . . .13Modeling Crop Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13Effect of Farm Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16Effect of Other Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Box 2
. Previous Research on the Factors Affecting AgriculturalTechnology Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Microeconomic Impact of Adopting Bioengineered Crops
. . . . . . . . . . .20Econometric Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20Field-Level Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20Whole-Farm Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20Empirical Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21Field-Level Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21Whole-Farm Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23Interpretation of Results on Adoption and Net Returns . . . . . . . . . . . . . .24Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Box 3.
Previous Research on the Economic Impact of GECrop Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Adoption and Pesticide Use
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26Pesticide Use Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26Pesticide Measurement Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27Impact of Adoption on Pesticide Use . . . . . . . . . . . . . . . . . . . . . . . . . . . .27Pesticide Toxicity and Persistence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28Soil Losses and Runoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Conclusions
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
References
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
 
Economic Research Service/USDA
 Adoption of Bioengineered Crops / AER-810
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Appendix I. A Dynamic Diffusion Model for GE Crops . . . . . . . . . . . . . . .38Appendix II. An Empirical Tobit Model To Examine the FactorsInfluencing Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46Appendix III. Using Whole-Farm Data To Model the Financial Impactof Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52Appendix IV. A Simultaneous Adoption Model for Herbicide-TolerantSoybeans and No-Till . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58

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