An estimated 4 to 5 million smallholder farmers in China have rapidly adopted the technology, increasing from only a few thousand hectares in 1997 to 1.5 million hectares in 2001 (Huang et al 2001, Pray et al 2002, James 2001a). Mean yields have increased 5 to 10% in multiple year comparisons with non-Bt varieties. Bt cotton has resulted in a drastic reduction in formulated chemical insecticide usage - 20,000 tons in 1999, 25,000 in 2000 and 78,000 tons in 2001, lowering the farmers’ insecticide costs significantly and reducing the labor required for controlling insects (Huang et al 2002, Pray et al 2002). For China, the overall economic advantage of Bt cotton, compared with non-Bt cotton ranged from $357/hectare in 1999 to $550/hectare in 2000, to $502/hectare in 2001, (Pray et al 2002) with an average of $470/hectare. 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 two-thirds, were the major contributors to decreased production costs and increased profitability. The increase in yield of Bt cotton in China leads to increased revenue, which is partially offset by the slightly higher price of Bt seed.

In 1999, some pessimistic critics voiced concern that an increase in supply of cotton, resulting from higher yields of Bt cotton, would result in lower cotton prices which in turn would result in losses rather than profits for Bt cotton farmers in China. In 2000 an increased supply of cotton was associated with a significant price decrease of approximately 30% in cotton prices 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 in China still increased their income by approximately $500/hectare compared to non-Bt cotton in 2001 (Pray et al 2002).

It is noteworthy that in all 3 years (1999 to 2001), farmers growing non-Bt cotton in China, with costed labor, were actually making a loss of anywhere from $6/hectare to $183 to $225/hectare, whilst Bt farmers were enjoying substantial profits of up to $500 (Pray et al 2002). To place the economic advantage of Bt cotton in China into context, in 1999 cotton farmers with an average per capita income of $250/annum were generating $350/hectare in net income which translates to an actual additional income of $140 from their average 0.4 hectare planting of Bt cotton; i.e. increasing the income of an average, small, poor farmer by more than 50%. Considering that Chinese cotton producers are small resource-poor farmers, 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.

At a national level, the economic benefit of Bt cotton in China in 2001, based on adopted area of Bt cotton and net revenue/hectare, was approximately $140 million for 1999, $495 million for 2000, and $750 million for 2001. Of this total of $1.4 billion over three years, about half, $700 million can be attributed to the Bt cotton developed by the Chinese public sector which has invested R&D expenditures of the order of $100 million plus annually on biotechnology for all crops, including cotton (Pray et al 2002). This represents an excellent return on R&D investments for the Chinese government and should provide it with the incentive to implement the government’s intent to quadruple its annual R&D budget in crop biotechnology to $450 million by 2005.

In terms of distribution of benefits, the data for China clearly show that in 1999, 83% of total benefits accrued to farmers with a small percentage (15%) to the private sector developer of the technology (Pray et al 2002, 2001). Thus, Bt cotton has been an excellent investment for small, resource-poor Bt cotton farmers in China who captured 83% of the total benefits. 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. Bt cotton has significantly impacted the economics of growing cotton in China and the impressive economic gains clearly demonstrate that smallholders adopting this technology can gain significant economic benefits.