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Genomics and Biology. Biotechnology and genomics.
Economic cost of adopting GM crops


Numerous reports from organizations either in favour or critical of GM foods have been published, and numerous claims for increased or decreased profitability of agricultural practices including GMOs can be found in world literature.

A review of the United States National Centre for Food and Agricultural Policy concludes that biotechnology is having, and will continue to have, a significant impact on improved yields, reduced grower costs and reduced pesticide use. GM Bt cotton seems to have relevant benefits for smallholder farmers in many areas around the world. On the other hand, some report lower yields, continuing dependency on chemical sprays, loss of exports and critically reduced profits for farmers as a consequence of using biotechnology.

A United States Department of Agriculture report on the economic consequences of GM crops summarized a positive impact of the adoption of Bt cotton on net farm returns, but a negative impact in the case of Bt maize. An improvement of returns has also been seen with herbicide-tolerant maize, whereas no significant impacts were observed with herbicide-resistant soybean.

A very detailed study by the European Commission on the economic impact of GM crops on agriculture found that a quick adoption by farmers in the USA was the result of strong profitability expectations. However, there was no conclusive evidence on the farm-level profitability of GM crops.

The most immediate and tangible ground for farmer utility of GM crops appears to be the combined effect of performance and convenience of GM crops in particular, herbicide-tolerant varieties. These crops allow for greater flexibility in growing practices and, in given cases, for reduced or more-flexible labour requirements. For insect-resistant crops like Bt maize, yield losses are more limited than for conventional maize. However, the cost-efficiency of Bt maize depends on a number of factors, especially growing conditions.

Profitability of GM crops should be analyzed within a long-term time frame. Firstly, there are important yearly fluctuations in yields and prices and it is difficult to isolate the possible effects of biotechnology. Secondly, developments on the supply and on the demand sides of the food chain have to be jointly considered. A recent study analyzing international diffusion of gains in the use of GMOs shows the need for differentiation between crops and regions. In China, a region with a typically high baseline of pesticide use and cases of pesticide poisoning in farmers, a report showed that the use of Bt cotton substantially reduced the use of pesticides without reducing the output per hectare or the quality of cotton. This resulted in substantial economic and health benefits for small farmers.

There seems to be evidence of profitability of certain GM crops under specific situations, especially growth conditions which are significantly dependent on regional agro-ecological factors, especially the baseline of pest pressure and pesticide use. On the other hand, there seem to be situations where these factors would not provide for profitability of growing GM crops, or where other practices for planting may be more valuable because of various regional or market-related reasons.
 

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