Bt Cotton

Distribution of economic surplus to Bt cotton stakeholders

One of the “corporate” concerns often voiced by the critics of biotechnology relates to their perception that, the developers of transgenic crops (usually, but not exclusively private sector transnational corporations) are the major or sole beneficiaries from transgenic crops. Analysis of the distribution of economic surplus from Bt cotton in the US, Mexico and China is summarized in Table 59. The data in Table 59 show the distribution of benefits to the various stakeholders associated with Bt cotton – farmers, technology developers, seed suppliers, consumers, and global society at large as represented by the category “Rest of the World” in Table 59.

(To view Table 59, click here)

Seven studies featuring Bt cotton in the US in 1996, 1997 and 1998, Mexico in 1997 and 1998, and China in 1999 are summarized in Table 59. The first study (Falck-Zepeda et al 2000b) indicates that of the total economic surplus generated through the use of Bt cotton in the USA in 1996, the relative economic advantages to the various stakeholders were as follows: the largest share of the economic surplus went to US farmers (59%), the developer of the technology (21%), the seed supplier (5%), US consumers (9%), with the balance of 6% as economic surplus to the rest of the world. Note also that the share of the surplus to the technology developer and the seed supplier is gross revenue, with R & D marketing and other costs not deducted, whereas the share to the farmers and consumers are net gains. This under-estimates the relative gains to farmers and consumers versus the technology developer and seed supplier.

The second study for the US in 1997 (Falck-Zepeda et al 2000a) also shows that farmers were the major beneficiaries 42% versus 35% for the technology developers. Similarly, the 1998 survey for the US (Falck-Zepeda et al 1999) shows that farmers captured 46% and technology developers 34%. The two studies conducted in Mexico in 1997 and 1998 (Traxler et al 2001) also show that farmers were the major beneficiaries capturing 61% and 90% of the surplus in 1997 and 1998 compared with 31% and 8 % respectively for the technology developers. In the 1999 Chinese study, Pray et al (2001) provides information on economic advantages to small farmers in China acquiring Bt cotton from two different developers of technology: one source is the public sector (CAAS) and the other the private sector (Monsanto/Delta Pine Land). In the case of the Bt cotton developed by both public sector and private sector, the farmers’ share of surplus (Table 59) was 83% (Pray et al 2001).

Taking into account all seven case studies on the distribution of benefits to Bt cotton stakeholders in three countries, there is no evidence (Table 59) to support the perception of the critics of biotechnology that the transnational corporate developers of transgenic crops are the major or sole beneficiaries from transgenic crops. On the contrary, the summary of relative benefits expressed as percentage share of economic surpluses in Table 59 confirms that not only were farmers significant beneficiaries in all studies but were consistently the major beneficiaries, receiving 49 to 90% of the surplus, in all seven studies with an average share of two thirds (66%) of the economic surplus. The studies to-date indicate that the relative economic advantages are not dissimilar to farmer/input supplier benefit ratios that apply to conventional agricultural products and are not heavily in favor of the developers of transgenic crops as some critics have suggested.

Summary topics:

• Agronomic Benefits
• Environmental Benefits
  • Reduction in use of cotton insecticides
  • Less insecticides in aquifers and the environment
  • Farmer exposure to insecticide and health implications
  • Reduced production risks and enhanced opportunities to grow Bt cotton
  • Increased populations of beneficial insects
  • Reduced risk for wildlife
  • Reduced fuel and raw material consumption, and pollution
• Social benefits
  • Social implications of saving water by reducing number of insecticide sprays
• Economic benefits
  • China
  • USA
  • India
  • Others

Related topics:

• The cotton crop
• Global distribution of cotton in developing and industrial countries, by area, production, consumption, imports, and exports
• Number of cotton farmers worldwide and size of farms
• Insect pests of cotton
• Crop losses due to insect pests of cotton and the cost of control
• Global insecticide usage on cotton
• The use of Bt genes in cotton
• Assessment of environmental risk and Insect Resistance Management (IRM) strategies
• Global adoption of Bt cotton
• Bt cotton experience to date
• Summary: Agronomic, Environmental, Social and Economic Benefits
• Future global potential for Bt cotton: opportunities and challenges
• Highlights

Summary Report on the Global Status of Commercialized Biotech/GM Crops - [View the 2004 report]

Transgenic Crops - [Click Here]

Extensive Study on Bt Cotton - [Click Here]

Download the complete copy of the ISAAA Briefs on Global Status/Review of GM Crops - [Click Here]

SciDev.Net's dossier on GM crops - [Click here]

Global Status of Approved Genetically Modified Plants -  [Click here]

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