A. Introduction

China produces more cotton than any country in the world despite the fact that both India and the USA have larger areas of cotton. In 2001/02, China grew 4.8 million hectares of cotton with a high yield of 1,103 kg of lint per hectare to produce 5.3 million metric tons (MT), equivalent to 25% of world cotton production. China also consumes more cotton than any other country (5.4 million MT, equivalent to 27% of world consumption) and imported 100,000 MT compared with 50,000 MT of exports in 2000/01 (ICAC 2002a). Cotton is the most important cash crop in China but is subject to very heavy damage by the insect pest, cotton bollworm (Helicoverpa armigera). In the past, the area planted to cotton in China was as high as 6.7 million hectares, but severe damage due to cotton bollworm reduced this by 40% to about 4 million hectares in recent years. Loss due to cotton bollworm alone in 1992 (Jia 1998) was valued at the national level to be 10 billion RMB equivalent to US$1.2 billion (calculated at the official exchange rate of 8.27 RMB = US$1.00).

In the 1970s and early 1980s Chinese cotton farmers controlled bollworm and related pests with chlorinated hydrocarbons, such as DDT, until they were superceded by organophosphates in the mid 1980s (Stone 1998). Cotton bollworms developed resistance to organophosphates in the 1980s and to pyrethroids in the early 1990s, leading to very heavy but ineffective use of insecticides. Eventually, over-usage of insecticides resulted in unprofitability and led to a decline of cotton production in the more heavily infested bollworm areas in the Yellow River Valley. In the early 1990s, Chinese scientists initiated work on an alternative strategy of incorporating Bt as a transgene into cotton to confer resistance to cotton bollworm and related lepidopteran pests.

B. The Development of Bt Cotton

There are two developers and suppliers of Bt cotton in China. The first is the public sector Chinese Academy of Agricultural Sciences (CAAS) in collaboration with provincial academies and seed distribution organizations, and the second is Monsanto/Delta Pine Land from the international private sector. CAAS developed a range of Bt cotton products under the aegis of the well-publicized 863 High-Tech Program. Work on the Bt gene was first undertaken at the Biotechnology Centre of the CAAS in Beijing. By 1996 a total of 10 transgenic Bt cotton varieties had been developed and a total of 17 field trials were conducted occupying 650 hectares. In 1997, the Biosafety Committee of the Ministry of Agriculture approved commercialization of the first Bt cotton. The commercial plantings of the CAAS Bt cottons feature a modified Bt fusion gene, Cry1Ab/Cry1Ac, planted in the four provinces of Anhui, Shangdong, Shanxi, and Hubei (Jia 1998, James 1998). The cowpea trypsin gene, CpTi with a different mechanism of resistance compared to Bt, has also been incorporated as a stacked gene with Bt in some varieties. By 1999, the CAAS single gene Bt cottons, and the stacked Bt/CpTi cottons, designed to provide more durable resistance, were planted in nine provinces compared with four in 1998. It is estimated that at least 750,000 small farmers grew CAAS Bt cottons in 1999, most of which carried the single Bt gene. The single Bt cottons were planted in the nine provinces of Shangdong, Shanxi, Anhui, Jiangsu, Hubei, Henan, Hebei, Xinagjiang, and Lianoning. The CAAS cotton with stacked genes was planted in the four provinces of Shangdong, Shanxi, Anhui, and Hubei in 1999 (Jia 1999 personal communication). During 2000 and 2001 CAAS expanded its distribution and sales of Bt cotton varieties and currently has approval to sell 22 of its Bt cotton varieties in all the provinces of China. Governmental institutions have also developed new Bt cotton varieties by backcrossing the CAAS and other Bt varieties with their own locally adapted germplasm and these are being distributed and sold in many provinces.

The CAAS Bt cotton is being carefully monitored to develop the most effective means for achieving durable resistance within the context of a Bt management strategy. The Institute of Plant Protection has regularly sampled bollworms since 1997. Results indicate that field performance of Bt cotton is superior to non-Bt cotton with no indication that resistance to Bt is developing (Wu 2002). The multiple cropping system and the spatial distribution of Bt cotton planted on small farms in China surrounded by alternate host crops contribute to a natural “refuge.” Jia (1998) projects that the current cotton may provide adequate levels of resistance for up to 8 or 9 years from introduction in 1997, during which alternative strategies of control are being developed and implemented. One of the current alternative strategies being employed is the use of the Bt gene in conjunction with the CpTi gene, which encodes for an insecticidal protein with an independent mode of action from Bt. This strategy is being employed to provide better control and to delay resistance development.

The second supplier of Bt cotton in China is Monsanto/Delta Pine Land whose product is based on the variety 33B, which carries the Cry1A(c) gene. The product, which initially involved some collaboration with the Chinese, was approved for commercialization in 1997. However, unlike the Chinese Bt cotton, the Monsanto/Delta Pine Land product was initially grown in only one province, Hebei, with plans to expand to other provinces later. Approval is now in place for five Monsanto/Delta Pine Land Bt cotton varieties to be grown in the four provinces of Hebei, Shandong. Henan and Anuhi.

Taking into account the Bt cottons deployed by both CAAS and Monsanto/Delta Pine Land in China, there has been remarkable progress with both products since the Bt cottons were first deployed in 1997. Detailed and rigorous surveys have been conducted by an able team of Chinese and US members to assess the impact of Bt cotton in China. Surveys were conducted in 1999 (Huang et al 2002, Pray et al 2001), 2000 and 2001, and the five years of experience (1997 to 2001) with Bt cotton in China has been published (Pray et al 2002), and reported here.

C. Adoption of Bt Cotton

A multitude of public and private institutions, and companies are involved with Bt cotton development, distribution and sales in China, making characterization of adoption a challenging task. In addition, many farmers save seed, with both formal and informal seed-sales compounding the challenge of generating estimates of adoption. In practice, annual surveys of the kind conducted by Pray et al (2002) are the only practical means of generating an informative database to characterize adoption and assess the impact of Bt cotton on production. The surveys were initiated in 1999 involving 283 farmers in Hebei and Shandong provinces, expanded to include Henan Province in 2000, and further expanded to include Anuhui and Jiangsu in 2001. In several of these provinces cotton can suffer significant damage from bollworm and in provinces such as Hebei and Shandong adoption rates for Bt cotton quickly soared to 97% and 80% respectively in 2000, following their introduction in 1997.

The adoption rates for Bt cotton in China (Pray et al 2002) indicate that Bt cotton quickly escalated (Table 26) from less than 1% (<0.1 million hectares) in 1997, to 2% (0.1 million hectares) in 1998, 11% (0.4 million hectares) in 1999, 22% (0.9 million hectares) in 2000, and 31% (1.5 million hectares) in 2001. The initial 500,000 small farmers who adopted Bt cotton in 1998 derived significant and multiple benefits from the technology. Because farmers who adopted Bt cotton in 1998 were very satisfied with the experience, they were keen to continue the practice in 1999 and were joined by 1 million other small cotton farmers, which in turn led to the planting of 400,000 hectares of Bt cotton in 1999. This was equivalent to 11% of the Chinese national cotton area of 3.7 million hectares in 1999. The number of cotton farmers in China fluctuates annually, depending on the planted area of the cotton crop which ranged from 3.7 million hectares in 1999, to 4.8 million hectares in 2001 (Table 26). The estimated number of Bt cotton farmers in China has increased from a few thousand at its introduction in 1997 to 0.5 million in 1998, to 1.5 million in 1999, to 2.7 - 3 million in 2000, and 4 to 5 million in 2001 (Huang 2002). An important feature of Bt cotton in China is that it is produced by small farmers; the average cotton farm is less than one hectare and the cotton area less than 0.5 hectare. Contrary to popular opinion, government no longer influences farm decisions re cotton production, and cotton quotas were discontinued by the government in 1998. Farmers themselves now decide whether or not to plant Bt cotton, and they buy seed and sell cotton in a competitive market where the price of cotton is not regulated by government as was the case up until 1999. The new Seed Law passed in 2000 allows private companies to conduct business directly with farmers. Thus, Chinese cotton farmers are no different to millions of small farmers who produce cotton in other developing countries like India, except that the farm size is smaller in China and their numbers are larger (Pray et al 2002). The number of cotton farmers in China ranges from 9 to 13 million, whereas India has 4 million cotton farmers, or approximately one-third of the cotton farmers of China.

Bt cotton now occupies about one third of the total cotton area in China. It is widely adopted in the Yellow River Valley where some provinces like Hebei are almost exclusively Bt cotton, 80% in Shandong, about 30% adoption in Anhui and Henan, and even small areas in the Northwest province of Xinjiang where bollworm infestation is much lower, and where cotton is grown under irrigation. Estimates of adoption are probably conservative, particularly for the last two years, when farmers have become increasingly aware of the value of Bt cotton, and save/sell more of their own seed and acquire it through many more formal and informal channels.

D. Impact on Insecticide Use

Data in Table 27 indicate that in all three years, insecticide usage was reduced substantially on Bt cotton compared with non-Bt varieties. The average saving in formulated insecticide was 43.8 kg/ha equivalent to a 67% reduction in insecticides. At a national level this translates to a reduction of 20,000 tons of formulated insecticide in 1999 and 78,000 tons in 2001. Expressed in terms of reduction of the number of sprays at the farm level in 1999, the number of insecticide sprays decreased from 20 sprays for non-Bt to 7 sprays for Bt – equivalent to a two-thirds reduction, a saving of 13 sprays. In 2000 the reduction in number of sprays were 12 (21 sprays reduced to 9), and 14 sprays (28 sprays reduced to 14) in 2001 (Huang et al 2002).

In 2001, China used an estimated 16,000 tons of cotton insecticides (a.i) valued at $285 million at the farm level (Wood Mackenzie 2002), down by more than 10 %, compared with 2000, which coincided with an almost 10% increase in Bt cotton adoption from 22% in 2000 to 31% in 2001. The cost savings, discussed later, associated with reduced volume of insecticides and the labor savings from reduced number of sprays is substantial and is the major element contributing to the overall economic advantage of Bt cotton in China.

E. Yield Advantage of Bt Cotton

Taking into account all farms in the survey in 2001, Bt varieties yielded about 10% more than non-Bt varieties – 3,481 kg/hectare versus 3,138 kg/hectare, a difference of 343 kg/hectare in favor of Bt cotton. This difference is somewhat higher than the 8% yield advantage reported for 1999. Yield advantage is also an important contributor to the overall economic advantage of Bt cotton. Because Bt is omnipotent throughout the season, and is more effective than sprays, Bt cotton provides superior control resulting in higher yields, even compared to the most intensive of insecticide spray programs.

F. Health Benefits Associated with Bt Cotton

According to the survey data (Pray et al 2002) the reduction in insecticide usage on Bt cotton compared with non-Bt cotton, was associated with a decrease in the percentage of farmers reporting that they had become sick from spraying insecticides. The information in Table 28 shows that in 1999, 22% of farmers growing non-Bt cotton reported ill-effects, compared with 5% for Bt cotton – a fourfold decrease in favor of Bt cotton. Similarly, in 2000 there was a fourfold decrease from 29% poisonings for non-Bt cotton to 7% for Bt cotton. The difference was much lower in 2001 with non-Bt farmers reporting a 12% incidence of poisoning compared with 8% for Bt, 33% less poisonings for Bt cotton farmers. For the three year period 1999 to 2001 there was a consistent and significant decrease in the percentage of Bt cotton farmers suffering from pesticide poisonings, compared with non-Bt cotton farmers. In China, insecticides are applied to cotton with back-pack sprayers that are either hand or motor-powered. Given the demanding field conditions, avoidance of exposure to insecticides is difficult and the significant decrease in insecticide usage of 78,000 tons of formulated product in 2001 is a major achievement, not only in terms of health, but also in terms of the environment.

G. Economic Advantage of Bt Cotton

The data (Table 29) indicate that the overall economic advantage of Bt cotton, compared with non-Bt cotton ranges from $357/hectare in 1999 to $550 in 2000, to $502 in 2001, with an average of $470/hectare. It is noteworthy that in all 3 years, farmers growing non-Bt cotton were actually making a loss when labor is costed, whilst Bt farmers were enjoying substantial profits. To put economic advantage into context, in 1999 cotton farmers with an average per capita income of $250/annum were generating additional income of approximately $350/hectare equivalent to additional income of $140 for the average 0.4 hectare planting of Bt cotton. Considering that Chinese cotton farmers are small resource-poor producers, the Chinese experience with Bt cotton supports the thesis in the 2001 UNDP Human Development Report (UNDP 2001) that technology can contribute to the alleviation of poverty. In terms of distribution of benefits, the data clearly show that in 1999, 80 to 85% of total benefits accrued to farmers with a small percentage (15% to 20%) to the developers of the technology.

Taking all 3 years into account, savings on insecticides both in terms of lower cost for the reduced amount of product used and the substantial labor savings from reducing the number of sprays by one-half to two-thirds, is the major contributor to decreased production costs. The increase in yield of Bt cotton leads to increased revenue, which is offset by the higher price of Bt seed. For example, for 2001, labor savings, which are probably largely related to reduced number of insecticide sprays, provided savings of approximately $300, pesticide reduction approximately $100 savings, and increased yield $100 for a net economic advantage of $500/hectare. The additional cost of the Bt seed was approximately $60/hectare, whereas cost for fertilizer was higher for non-Bt cotton. Some critics voiced concern that Bt cotton would increase the supply of cotton and would result in losses rather than profits for Bt cotton farmers. Increased supply of cotton was associated with a significant price decrease of approximately 30% between 2000 and 2001 (4.42-4.45 yuan/kg to 3.02-3.04 yuan/kg). Despite this decrease in price, Bt cotton farmers still increased their income by approximately $500/hectare compared to non-Bt cotton farmers.

At a national level, the economic benefits of Bt cotton in China in 2001, based on adopted area of Bt cotton (Table 26) and net revenue/hectare (Table 29) was approximately $140 million in 1999, $495 million in 2000, and $750 million in 2001 (Table 30). Of this return of $1.4 billion over three years, about half, $700 million, can be attributed to the Bt cotton developed by the Chinese public sector (CAAS) which has invested R&D expenditures of the order of $100 million plus, annually on biotechnology for all crops, including cotton. This represents an excellent level of return on R&D investments for the Chinese Government and should provide the incentive to implement its intent to quadruple its R&D budget in crop biotechnology to $450 million by 2005. Bt cotton has also been an excellent investment for resource-poor small Bt cotton farmers in China who captured 80 to 85% of the total benefits in 1999. This represents a very high level of return for resource-poor small Bt cotton farmers who now suffer from less insecticide poisonings. It also represents an excellent investment for China as a nation, and for consumers who benefit from more affordable prices for cotton and a safer environment.

H. Highlights