Adoption Impacts and Access to Innovation in Small Resource Poor Countries: Results from a Second Round Survey and Institutional Assessment in HondurasAdoption

“Adoption Impacts and Access to Innovation in

Small Resource Poor Countries: Results from a

Second Round Survey and InstitutionalAssessment in Honduras”

José Falck Zepeda, Denise McLean, Patricia Zambrano, Arie Sanders, Maria Mercedes Roca, Cecilia Chi-Ham

Paper presented at the 17th ICABR meeting, Ravello Italy, June 21 2013

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Sub-Saharan AfricaWorldHondurasUnited States

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Honduras: High reliance on agriculture

Agricultural sector 13% of GDP1

Agribusiness and related sector 40-45%2 GDP

1 World Bank, 20112 http://www.hondurasopenforbusiness.com/SITEv2/files/pdf/Oportunidades_de_inversion_Agroindustria.pdf

http://www.hondurasopenforbusiness.com/SITEv2/files/pdf/Oportunidades_de_inversion_Agroindustria.pdf

http://www.hondurasopenforbusiness.com/SITEv2/files/pdf/Oportunidades_de_inversion_Agroindustria.pdf

Graphs: WorldBank Development Indicators (2013) Map: National System of Environmental Indicators, SINIA

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Honduras: Limited resources for agricultural production especially land

87% of territory corresponds to hillsides susceptible to erosion

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Honduras: Low productivity of major staple crops

Honduras’ Productivity: 1/3 of world averages and

1/7 of US yields

Corn is an essential part of Honduran diet

1FAO Statistics Division, 2012, 2Ministry of Agriculture and Livestock, 2012

Top commodity available for consumption 739 kcal/person/day

Basic grains represent up to 60% of Honduran diet

48% of total demand is for human consumption

Production Value, Top Commodities (2011)

Value [1000 Int$]

Value [1000 Int$]

1 Coffee, green 303357 8 Tomatoes 56580

2Cow milk, whole

230723 9 Oranges 54126

3 Chicken Meat 222122 10 Beans, dry 51791

4 Bananas 204849 11 Pineapple 39416

5 Cattle Meat 165830 12 Eggs 36661

6 Sugar cane 164766 13 Melons 33139

7 Palm oil 139218 14 Corn 32068

Corn in Honduras is grown mostly for food/feed

Corn supply in Honduras increasingly dependent on imports

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Nearly 40% of corn is imported and thus high concerns for corn price

volatility in international markets

Honduras Agriculture Ministry Jacobo Regalado:

“From the million ton we need we are only producing 600 thousands. We are still importing 400 thousands(…) The idea is to accelerate the pace to substitute those 400 thousands with local production”.

Hondudiario, March 19, 2012

Honduras: The problem with production intensificationDamage by lepidopteran insects can be as

high as 40-70% Increasing issues with other pests and

diseasesHeavy damage due to aflatoxins / mycotoxinsNeed to explore new control alternatives

amenable to smallholder´s producersSmallholder producers:

Little access to technology, pest control alternatives and credit

Knowledge limitations: to determine damage and to make correct chemical applications….

GMOs in Honduras8th Latin American country adopting GMOs since

20021

1ISAAA, 2012

Only country in Central America cultivating GMOs for

food

-USA*

-Brazil*

-Argentina*

-South Africa*

-Canada*

-Uruguay x1.5

-Philippines x3

-Spain x5

-Chile x7

-Honduras-Portugal x.8

-Czech Republic x .7

-Poland x3

-Egypt x9

-Slovakia x0.4

-Romania x2

• By 2011, 72 thousand ha with hybrids and GM 15% area planted1

• GM estimated around 25-30 thousand ha

BT (MON810), RR (NK603), Herculex 1 , YGVTPro (MON89034) traits approved for commercialization

WHY GMOs adopted in Honduras?

Honduras: promotional environment favoring biotechnology adoption

Favorable policy, economic and social conditions facilitated

adoption

UN Statistics Division, 2011. WTO Statistics, Trade Profiles, 2012

Strategic interest in aligning agricultural policies with the major economic and trade partners

• Honduras trade is essentially tied to the United States

• Historically strong presence of agricultural multinationals interested in increased agricultural productivity

Established Biosafety Framework and Regulations Incorporated biotechnology in National Food Self Sufficiency

Strategy Coordinated a joint agricultural and environmental political

agenda

‘To facilitate the process to incorporate

hybrids and transgenic seeds in 25% of the

area planted at the national level by 2014’Honduras Agricultural and Livestock Ministry goal

Public Agricultural and Food Sector Strategy

1996/98: Biosecurity Regulation with Emphasis in Transgenic Plants1998: National Committee of Biotechnology and Biosecurity (NCBB) 2006: CAFTA-DR Phytozoosanitary Law modification2008: Cartagena Protocol Ratification2001/12: Law for the Protection of New Varieties of Plants

USAID GAIN Report 2012.

Honduran government specific policy support for easing a transition towards biotechnologies

Honduras: A case study to understand biotechnology adoption in small resource poor developing countries

Honduras in the Latin American innovation sphere

Small markets

Medium markets

Large markets

Non-selective importers of technology

El Salvador, Guatemala, Honduras, Nicaragua, Panamá

Bolivia, Ecuador

Selective importers of technology

Costa Rica, Uruguay

Paraguay, Peru

Venezuela

Tool users

- Colombia, Chile

Argentina, Mexico

Innovators

Brazil

Notes: 1) Source: Trigo, Falck-Zepeda and Falconi (2010), 2) Non-adopters are listed in italic text.

Which policies are important? Public

sector investments in biotechnology applications

Intellectual property management

Biosafety regulations

Food/feed safety and consumer protection

Support for public sector participation and tech transfer including seed systems

Non-adopters

Bolivia 0 0 - - 0Ecuador 0 0 - - 0Guatemala 0 - 0 0 -Perú 0 - - 0 0Venezuela + - - 0 0

Adopters

Argentina + 0 0 + +Brazil + - 0 0 +Costa Rica + - 0 0 +Honduras 0 - 0 0 -

Mexico + 0 0 0 +Uruguay + 0 0 0 +

Notes: 1) Source: selected countries from Trigo, Falck Zepeda and Falconi (2010), 2) + signifies promotional policies, 0 denotes neutral policies, - reflects preventive policies, 3) Brazil was categorized as having a preventive biosafety policy in the Trigo et al. paper, but is reclassified here as neutral based on recent developments in the country.

HOW HAS GM CORN WORKED IN HONDURAS?

GM maize provided excellent target pest control

Bt yield advantage 856-1781 Kg ha-1 yield

Bt maize yields preferred even by risk averse producers

100% higher seed cost than conventional hybrid

Institutional issues important

Photos credit: © Sanders and Trabanino 2008

Falck-Zepeda, J., A. Sanders, C. Rogelio Trabanino, & R. Batallas-Huacon. Caught Between Scylla and Charybdis: Impact Estimation Issues from the Early Adoption of GM Maize in Honduras. AgBioForum, 15(2), 138-151. Available on the World Wide Web: http://www.agbioforum.org.

2008 GM maize crop cycle in Honduras: Results from our first survey

The 2013 (second) survey to observe experiences of conventional & GM corn farmers

Economic, social and agronomic impacts

Farmers by corn typeSize

Total< 7 hectares > 7 hectares

Conventional only 58 25 83

GM only 39 57 96

Both types of corn 11 19 30

Total 108 101 209

We chose a representative sample of corn farmers

from the main corn producing state in Honduras

Major maize producing areas in Honduras

Olancho: The main corn producing state in Honduras

- 180,000 metric tons

- 35,000 planted hectares >30 % national corn production

- 12,000 hectares with GM >40% GM corn production

- 10,000 farmers

- A range of different corn production systems

We captured diversity within the commercial corn production chain

Number of applications Conventional GM

Both types, conventional

plot

Both types, GM plot

< 7 ha > 7 ha < 7 ha > 7 ha < 7 ha > 7 ha < 7 ha > 7 ha

Insecticides 1.7 1.9 1.6 1.3 1.9 2.0 1.0 1.1 S

Herbicides 2.6 2.7 1.7 1.5 2.7 2.1 1.7 1.6 S

Fungicides 1.0 1.5 1.2 1.5 1.0 1.3 1.0 1.0 NS

Fertilizers 2.2 2.3 2.4 2.3 1.9 2.6 2.3 2.6 NSS: Significant, NS: Not significant

Our findings: In average GM corn farmer seem to be using less pesticides

GM corn producers from sample made one insecticide and herbicide application

less

Environmental Impact

QuotientConventional GM

Both types, conventional

plot

Both types, GM plot

< 7 ha > 7 ha < 7 ha > 7 ha < 7 ha > 7 ha < 7 ha > 7 ha

Insecticides 5.2 6.3 4.3 11.0 4.6 8.2 3.1 6.1 NS

Herbicides 24.3 29.6 27.1 28.6 42.6 12.5 24.6 16.0 NS

Fungicides 3.0 3.7 14.5 10.4 7.1 7.1 7.1 9.4 NS

Fertilizers 23.7 27.4 36.6 41.6 36.2 16.9 25.5 22.6 NSS: Significant, NS: Not significant

GM and conventional corn farmers seem to have a similar environmental impact measured by the EIQ

EIQ: J. Kovach et al, IPM Program, Cornell University, New York State Agricultural Experiment Station Geneva, New York 14456

Cost structure in corn production Conventional GM

< 7 hectares

> 7 hectares

< 7 hectares

> 7 hectares

Total costs (US$/ha) 717.1 749.7 1209.1 1460.8 *Yield (ton/ha) 2.8 3.4 5.4 5.5 *Price (US$/ton) 273.7 294.4 352.3 394.5 *Income (US$/ha) 748.5 1018.6 1929.7 2189.1 *Profit (US$/ha) 32.1 269.9 722.5 730.4 *1

1 At small scale

GM corn farmers seem to be obtaining higher yields & profits

Of Cook’s D, the issue of outliers and sampling biases

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Observation ID Yield

Cook’s D

42 6.500 0.05384 5.200 0.38599 7.475 0.033

116 4.543 0.039120 9.100 0.020121 2.507 0.022129 2.839 0.021131 6.500 0.688132 3.250 0.054143 1.817 0.028152 5.200 1.230155 7.800 0.036169 1.083 0.020170 6.045 2.381173 0.975 0.030174 8.060 0.032182 0.195 0.060200 5.200 0.033212 7.800 0.032217 1.300 0.020222 9.100 0.022230 6.500 0.026

“The classical instrumental variables (IV) estimator is extremely sensitive to thepresence of outliers in the sample. This is a concern as outliers can strongly dis-tort the estimated effect of a given regressor on the dependent variable. Althoughoutlier diagnostics exist, they frequently fail to detect atypical observations sincethey are themselves based on non-robust (to outliers) estimators. Furthermore,they do not take into account the combined influence of outliers in the first andsecond stages of the IV estimator” Desbordes and Verardi, Stata Journal 2012

Production function approach

Robust Regression (MM-Regression 85% efficiency, ROBREG)

Robust Regression ( MSREGRESS)

Instrumental Variables ( IVREG2)

Variable Coef.Robust SE Coef. Robust SE Coef. SE

GM corn user (1=Yes) 1.254 0.319*** 1.157 0.387*** 1.453 0.329***Located in Juticalpa/Catacamas (1=Yes) 0.346 0.414n.s. 1.303 0.199*** 0.336 0.304n.s.Proportion of income from non-ag sources (%) -0.011 0.005** -0.006 0.007n.s. -0.009 0.004**

Number of members in the household -0.066 0.068n.s. -0.102 0.061* -0.096 0.051*

Time cultivating GM maize -0.014 0.007** -0.026 0.005*** -0.010 0.006n.s.

Total income 0.251 0.105** 0.189 0.075** 0.216 0.078***

Total area in production (ha) 0.002 0.001* -0.002 0.002n.s. 0.002 0.001n.s.

Total area cultivated with maize (ha) -0.004 0.006n.s. 0.004 0.002* -0.004 0.004n.s.

EIQ index -0.039 0.019** 0.013 0.016n.s. -0.020 0.014n.s.

Seed quantity planted (kg/ha) -0.002 0.016n.s. 0.117 0.020*** -0.005 0.015n.s.

AI insecticide (Kg/ha) 1.030 0.593* 2.156 1.139* 0.718 0.561n.s.

AI herbicide (Kg/ha) 0.070 0.064n.s. 0.084 0.114n.s. 0.158 0.070**

AI fertilizer used (Kg/ha) 0.009 0.004** 0.017 0.002*** 0.005 0.002**

AI other pesticides(Kg/ha) 3.268 1.758* 1.736 0.555*** 1.516 0.883*

Cost labor per day ($/ha) -0.008 0.006n.s. -0.006 0.006n.s. -0.004 0.006n.s.

Seed planted squared 0.000 0.000n.s. -0.002 0.000*** 0.000 0.000n.s.

AI insecticide squared -0.261 0.133** -2.090 0.736*** -0.167 0.143n.s.

AI herbicide squared -0.003 0.002n.s. 0.016 0.009* -0.006 0.003**

AI fertilizer squared 0.000 0.000** 0.000 0.000*** 0.000 0.000n.s.

AI other pesticides squared -3.978 2.040* -1.207 0.290*** -0.926 0.654n.s.

Irrigation (1=Yes) -0.463 0.387n.s. -0.217 0.180n.s. 0.196 0.305n.s.

Finance (1=Yes) 0.150 0.227n.s. -0.069 0.131n.s. -0.187 0.198n.s.

Technical assistance (1=Yes) -0.170 0.480n.s. -0.404 0.238* -0.174 0.262n.s.

Constant 4.822 1.365*** 3.592 0.846*** 2.665 0.603***

Second stage (2SLS net income) First stage, dependent variables is GM corn user)

Variable Coef. Std. Err. Coef. Std. Err.

GM corn user (1=Yes) 279.1 131.7 **

Located in Juticalpa/Catacamas (1=Yes) 166.3 123.9 n.s. 0.209 0.067 **

Proportion of income from non-ag (%) -1.0 1.7 n.s. 0.001 0.001 n.s.

Number of members in the household -32.5 18.7 * -0.002 0.012 n.s.

Time cultivating GM maize -7.1 2.7 *** 0.003 0.001 *

Total income 96.7 34.4 *** 0.002 0.018 n.s.

Total production area (ha) 1.1 0.3 *** 0.000 0.000 n.s.

Total maize area (ha) 0.0 1.2 n.s. 0.002 0.001 **

EIQ index -6.3 7.6 n.s. -0.003 0.003 n.s.

Seed planted (kg/ha) -4.5 4.7 n.s. 0.002 0.004 n.s.

AI insecticide (Kg/ha) 98.7 209.2 n.s. -0.183 0.130 n.s.

AI herbicide used (Kg/ha) 46.5 26.4 * 0.001 0.017 n.s.

AI fertilizer used (Kg/ha) -1.0 1.1 n.s. 0.000 0.001 n.s.

AI other pesticides (Kg/ha) 201.1 402.1 n.s. 0.002 0.209 n.s.

Cost labor per day ($/ha) -8.5 2.8 *** 0.000 0.001 n.s.

Seed planted squared 0.0 0.0 n.s. 0.000 0.000 n.s.

AI insecticide squared -60.1 49.4 n.s. 0.035 0.033 n.s.

AI herbicide squared -1.7 0.9 * 0.000 0.001 n.s.

AI fertilizer squared 0.0 0.0 n.s. 0.000 0.000 n.s.

AI other pesticides/fungicides used squared -205.6 240.3 n.s. 0.071 0.155 n.s.

Irrigation (1=Yes) -102.9 181.1 n.s. -0.044 0.072 n.s.

Finance (1=Yes) -74.3 97.5 n.s. -0.051 0.047 n.s.

Technical assistance (1=Yes) 56.3 122.4 n.s. 0.046 0.062 n.s.

Price GM seed 0.033 0.005 **

Year cultivating GM seed -0.275 0.032 **

Constant 659.2 214.6 *** 0.252 0.161 n.s.

Net income

THEN…WHY HAVE WE NOT OBSERVED FULL ADOPTION BY HONDURAN PRODUCERS?

Characteristic

• Monthly income >500 US$• Access to technical

assistance• Access to credit• Farmers applying

fungicides• Insecticide costs• Fertilizer costs• Cost of the use of

machinery

GM

• 82 to 98% of farmers




• 28 to 62 US$/ha• 328 to 373

US$/ha• 192 to 275

US$/ha

Conventional





• 11 to 16 US$/ha• 213 to 237

US$/ha• 106 to 104

US$/ha

Access to inputs may restrict adoption

Farmers without information, credit or other inputs are less likely to adopt GM crops

Depending on plot size

Access to markets may limit profitability

Farmers with smaller plots or in remote areasare less likely to adopt biotechnology

Characteristic

• Closer to urban areas• Sell directly to industry• Transportation costs• Selling price • Agronomic cycle

GM



• 134 to 152 US$/ha

• 352 to 395 US$/ton

• 3-4 months

Conventional



• 17 to 40 US$/ha• 274 to 294

US$/ton• 4-5 months

Depending on plot size

Gender/seed typePreferred for production

Preferred for consumption

Conventional GM Conventional GMMale/Conventional 0 13 0 0Male/GM 0 18 5 1Female/Conventional 20 0 18 0Female/GM 0 12 8 0All 20 43 31 1

Farmers may prefer other traits

Local corn varieties make better tortillas

Preliminary data from exploratory panel, 2013. Unpublished.

Preferred traits for production by production size & locationLarge/valley Large/hills Small/valley Small/hills

Black spot resistance




High yield High yield High yield High yieldHeavy grain Heavy grain Heavy grainBT BT BTRR RRPrice PriceDrought resistance Drought resistance

% germinationFull cob

Farmers have greater preference

for protection against risk

ConclusionsGM maize continues to perform as expected

compared to a conventionalPositive yield advantageHigher net incomeReduction in pesticide applicationsUnclear environmental impact (need more work)

For expansion of area with GM maize in Honduras, issue is not a technical issue but seems to be an institutional

Additional work needed to examineProduction and financial riskDistribution of impact by sizeImpacts of institutional issues

Arie SandersMaria Mercedes RocaMiljian Villalta

Alan B. BennettCecilia Chi-HamDenisse McLean

Jose Falck-ZepedaPatricia Zambrano

Sandra Mendoza. Participatory research consultant

Research funded by:

Documents

Adoption Impacts and Access to Innovation in Small Resource Poor Countries: Results from a Second Round Survey and Institutional Assessment in HondurasAdoption