'Bt cotton' benefits, costs and impacts in China

Despite growing evidence that Bacillus thuringiensis (Bt) cotton reduces use of insecticides, cuts farmers production costs, and increases yields in the United States (Perlak et al., 2001), key countries that criticize biotechnology continue to doubt its usefulness, particularly for small farmers in developing countries. Examples of such countries include China (Pray, Huang, Ma, & Qiao, 2001; Huang, Hu, Rozelle, Qiao, & Pray, 2002), South Africa (Ismael et al., 2001), and Mexico (Traxler, Godoy-Avila, Falck-Zepeda, & EspinozaArellano, 2001). A recent article in the journal of Genetic Resources Action International (GRAIN, 2001) argues that Bt cotton does not have any positive impact on yields and implies that bollworms are becoming a problem in China and are resistant to Bt cotton. Alternatively, research presented in this article documents the impact of Bt cotton in China using three years of farm-level surveys. It builds upon earlier research where we examined the impact of Bt cotton in China using 1999 data from 283 farmers in Hebei and Shandong Provinces (Pray et al., 2001; Huang, Hu, et al., 2002; Huang et al., in press; Huang, Rozelle, et al., 2002). These recent articles demonstrated that adoption of Bt cotton led to positive and significant economic and health benefits for poor, small farmers. However, Chinas rural economy is evolving rapidly. As a result, the rural environment may have changed so much in recent years that the benefits and costs from Bt cotton to Chinese farmers may also have changed. Although the commercialization of cotton markets began in the late 1990s, most cotton was still purchased by the State Cotton and Jute Corporation in 1999 at a price fixed by the government. Since 2000, the government has allowed the price of cotton to fluctuate with market conditions. Cotton mills are now allowed to buy cotton directly from growers. On the input side, the New Seed Law passed in 2000 gave legitimacy to private seed companies and allowed them to operate in many provinces. These changes led to sharp changes in the price of cotton, increased Bt cottonseed availability, and changed pricing strategies for Bt cottonseed. In the context of Chinas changing agricultural economy, the overall goal of this research is to review the findings of our earlier efforts that analyzed the effect of Bt cotton adoption in 1999 and the results of two follow-up surveys conducted in 2000 and 2001. Reports from government officials indicate that adoption of Bt cotton is spreading rapidly in the major cotton growing regions of China. Our survey data on yields and econometric analysis indicate that the adoption of Bt cotton continued to increase output per hectare in 2000 and 2001 and that the yield gains extended to all provinces in our sample. More importantly, Bt cotton farmers also increased their incomes by being reducing use of pesticides and labor. However, Bt cottons success has attenuated its benefits. Rising yields and expanding area has begun to push cotton prices down. As a result, consumers are now enjoying some of the gains that accrued previously to producers. Finally, data from the survey shows that Bt cotton continues to have positive environmental impacts by reducing pesticide use. We provide evidence that farmers have fewer health problems because of reduced pesticide use. We conclude with evidence that China is not unique and that there are lessons for other developing countries in their experience. Jikun Huang, Ruifa Hu, Cuihui Fan Center for Chinese Agricultural Policy, Institute of Geographic Sciences and Natural Resources, Chinese Academy of Sciences