Productivity, Access, and Risk: the Keys to Biotechnology in Developing Countries

David Zilberman, University of CaliforniaGregory Graff, University of CaliforniaMatin Qaim, University of BonnCherisa Yarkin, University of California

Presumed Points of Failure

1. Productivity: Biotechnology aims to solve problems of the North; will not make a difference in the South.

2. Access: Biotechnology is controlled by corporations; will not be accessible on feasible terms to poor peasants.

3. Risks: Damage to environment and human health, contamination of native genetic materials, and loss of crop biodiversity

Productivity: Yield-Increasing Potential

Yield = potential output x (1 - damage) damage = f (pest, pest control)

Combination of high pest pressure and minimal existing use of pest control potential for yield-increasing effectAttractive features of pest-control agricultural biotechnologies

Simplicity of useReduction in use of chemicals or labor

Productivity: Evidence for Bt Cotton Gains

Bt cotton in:United States: yield effect 0 – 15%China: yield effect 10% South Africa: yield effect 20%-40%India: yield effect 60 – 80 %

In every country have reduction in chemical usage

The Impact of Bt Cotton in India

Bt cotton is used to provide resistance to the American bollworm (Helicoverpa armigera).The technology was developed by Monsanto and was introduced in collaboration with the Maharashtra Hybrid Seed Company (Mahyco).Field trials with these Bt hybrids have been carried out since 1997 and, for the 2002/03 growing season, the technology was commercially approved by the Indian authorities.

Our studyFor our analysis, we use data from on-farm field trials that were carried out during the 2001/02 growing season as part of the regulatory procedure.In 2001, field trials were carried out on 395 farms in seven states of India. These trials were initiated by Mahyco and supervised by the regulatory authorities.

Experimental design

Three adjacent 646 m2 plots were planted: the first with a Bt cotton hybrid, the second with the same hybrid but without the Bt gene (non-Bt counterpart), and the third with a different hybrid commonly used in the particular location (popular check).All three plots were managed by the farmers themselves, following customary practices. This setup allows reducing the effects of differences in agroecological conditions and managerial abilities when making technological comparisons.

The actual data sourceIn addition to the regular trial records, more comprehensive information was collected for 157 farms on agronomic aspects and farm and household characteristics. Observations from these 157 farms constitute the data basis for this analysis.They cover 25 districts in three major cotton-producing states—Maharashtra and Madhya Pradesh in Central India and Tamil Nadu in the South. Plot-level input and output data were extrapolated to 1 hectare to facilitate comparisons.

Results

Bt hybrids were sprayed three times less often against bollworms than the conventional hybrids. On average, insecticide amounts on Bt cotton plots were reduced by almost 70%, which is consistent with studies from other countries.At average pesticide amounts of 1.6 kg/ha (active ingredients) on the conventional trial plots, crop damage in 2001/02 was about 60%. Bt does not completely eliminate pest-related yield losses.

Results II

Average yields of Bt hybrids exceeded those of non-Bt counterparts and local checks by 80% and 87%, respectively.

2001/02 was a season with high bollworm pressure in India, so that average yield effects will be somewhat lower in years with less pest problems.

Insecticide Use and Crop Losses with and without Bt Technology

Bt

Non-Bt

counterpart

Popular

check

Sprays against bollworm 0.62* (1.28) 3.68 (1.98) 3.63(1.98)

Sprays against sucking pests 3.57 (1.70) 3.51(1.66) 3.45(1.62)

Amount of insecticide (kg/ha) 1.74* (1.86) 5.56 (3.15) 5.43(3.07)

Toxicity class I 0.64*(1.10) 1.98 (1.78) 1.94(1.78)

Toxicity class II 1.07*(1.27) 3.55 (2.66) 3.46(2.60)

Toxicity class III 0.03 (0.08) 0.03 (0.08) 0.03(0.08)

Active ingredient (kg/ha) 0.48*(0.55) 1.55 (0.96) 1.52(0.95)

Yield (kg/ha) † 1,501*(857) 833(572) 802(571)

* Me an values are different from those of non-Bt counterparts and popular checks at a 5% significance

level.

† Yield levels refer to the amount of seed cotton before ginning.

Yield and pesticides use comparisons

Region Pest

pressure

Availability

of chemical

alternatives

Adoption of

chemicals

Yield

effect of

GM crops

Developed countries Low-med high high low

L.Am (commercial) medium medium high low -med

China medium medium high low- med\

L.Am(non-commercial) medium low -med low med -high

South & So. east Asia high low -med low -med high

Africa high low low high

Predicted yield effects of pest controlling Biotech

Access

•Intellectual Property Rights (IPR)•Registrations

Access: Biotechnologies in the South

Most IP is generated by research in the North

Transfer of public sector’s rights to the private sector provides incentives for development and commercialization

Companies have little incentive to invest in applications specific to the South

Access: Biotechnologies in the South

Companies are willing to give technologies for use in South; good PR

Companies worry about liability, transaction costs

Universities with rights to technology will also be open to transferring to South applications

Needed institutional mediation: IP clearinghouse

Access: Objectives of clearinghouse for IPR

Reduce search costs to identifying set of technologies accessibleReduce transaction cost for the commercialization of innovations

Increase transparency about ownership of IPRProvide mechanisms to manage negotiation of access to IPR

Improve technology transfer mechanisms and practices (mostly in public sector institution)

Non-member organizations

Member organizations

Non-member IP users

Pooled sub-licensing

Assignment, license, or option for full or limited fields of use

Single patent sub-licensing

“Re-packaging”

IP providers:

IP users:

Member organization IP users

Non-member IP users

Direct licensing transactions

Access: Model of a clearinghouse for IPR

Access: Reducing Regulatory Constraints

Registration should be efficient. Excessive requirements may be used as a source of political economic rent seeking.

Borders are arbitrary. Countries can take advantage of regulatory clearances granted elsewhere and concentrate on addressing unique local problems and risks.

Countries should develop regional alliances for regulation and establish mechanisms for easy transfer of regulatory information.

Environment

•Risks•Agricultural biodiversity

Environment: Sound Basis for Risk Analysis

Is the Precautionary Principle a sound basis for risk analysis?

There are always trade-offs between risks and benefits, and between risks and risks.

In Africa, does risk of “genetic contamination” exceed risk of starvation?

Agricultural biotechnology should be evaluated in comparison to pesticides and other real alternatives.

In tropics, increased productivity would reduce pressure for deforestation.

Gmo’s are not perfect- Gmo’s have problems-resistance buildup, damage to secondary pests, genetic contamination.Refugia, monitoring of impacts, restriction of use in some locations can address these problems partially-but alternatives have problems and risks that have to be considered.Agricultural biotech is in its infancy- built up of human capital and accumulation of -will lead to eliminations of many bug and lead to better technologies

Environment: Sound Basis for Risk Analysis

Risks and benefits should be quantified.

Sound reliability factors—i.e. confidence intervals—should be used to standardize risk estimates.

Environment: Relative to Modern Breeding Biotech Can Enhance Crop Biodiversity

Main premise: Agbiotech allows minor modification of existing varieties and under appropriate institutional setup can be adopted while preserving crop biodiversityConventional breeding involves often massive genetic changes, and adjustments to accommodate biodiversity are costly and Well functioning IPR system can lead to crop biodiversity preservationField data support this claim

Table 1. Number of available varieties for different GM technologies in selected countries (2001/2002)

Country TechnologyArea under

technology (ha)

Number oflocal

varieties/hybrids a

Number ofimported

varieties/hybrids

USA RR soybean 22 million >1,100 0

Bt corn 7 million >700 0

Bt cotton 2 million 19 0

Argentina RR soybean 10 million 45 11

Bt corn 0.7 million 15 6

Bt cotton 22,000 0 2

China Bt cotton 1.5 million 22 5

India Bt cotton 40,000 3 0

Mexico Bt cotton 28,000 0 2

South Africa Bt cotton 20,000 1 2

Environment: Biodiversity scenarios in the field

Strong IPRs, strong breeding sector, and low transaction costs. (US) Private technology owner will license the innovation to different seed companies, who incorporate it into many or all crop varieties, so that crop biodiversity is preserved.

Strong IPRs, strong breeding sector, but high transaction costs. (EU) If an agreement cannot be reached, companies will bypass breeding sector, directly introduce GM crop varieties that are not locally adapted.

Environment: Biodiversity scenarios in the field

Weak IPRs and a strong breeding sector. (China) Many different GM varieties are available Farmers and consumers are beneficiaries. SR social optimum.

Weak IPRs and a weak breeding sector. (Africa) If foreign GM crop varieties are even introduced, are done directly without adaptation. A loss of local crop biodiversity.

Biotech Could Enhance Crop Biodiversity

Conventional breeding led to wholesale replacement of land races with elite line monocultures

Biotechnology could provide precise improvements to traditional land races

Could lead to reintroduction of new “technologically competitive” land races - ”Jurasic garden”

ConclusionsAgbiotechnology has significant potential for

developing countries; the challenge is to realize that potential:

Productivity: yield effect of biotechnology tends to be larger in developing countries

Access: institutions can reduce IP and regulatory costs for developing countries

Risks: crop biodiversity can be preserved and could even be restored with biotechnology

Ag bio tech is only part of the solution

Ag biotech is more than Gmo’s. It will evolve- alternative molecular approaches will be developed-but

knowledge will not be accumulated without experienceDevelopment may be dependent on public and private sector funding

Ag biotech must be pursued as part of a portfolio of technology and knowledge tools aiming to enhance productivity and environmental sustainability of agriculture.

Consider

250 million Americans are the “guinea pigs” for agricultural biotechnology. Northern countries also took the risk with cars and with modern chemicals.

Africa missed the Green Revolution; will it also miss the Gene Revolution?