United States 

Department 

of Agriculture 

Economic 

Research 

Service 

Electronic 

Report 

Economic

Information

Bulletin

Number 11

April 2006

The First Decade of 

Genetically Engineered 

Crops in the 

United States

Jorge Fernandez-Cornejo 

Margriet Caswell
www.ers.usda.gov

Want to learn more about genetically engineered crops? 

Visit our website at www.ers.usda.gov.

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publications, databases, and other products at our 

website.

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National Agricultural Library

Cataloging Record:

Cover photos by Jack Dykinga (left) and Doug Wilson (right), 

courtesy of Agricultural Research Service, USDA. 

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Fernandez-Cornejo, Jorge

 The first decade of genetically engineered crops in the United States.

 (Economic information bulletin ; no. 11)

 1. Transgenic plants—Seeds—United States—Marketing.

 2. Diffusion of information—United States.

 3. Agricultural biotechnology—Public opinion—Economic aspects.

 I. Fernandez-Cornejo, Jorge. II. Caswell, Margiet F.

 III. United States. Dept. of Agriculture. Economic Research Service.

SB123.57
The First Decade of Genetically Engineered Crops in the United States/EIB-11

Economic Research Service/USDA

United States

Department

of Agriculture

www.ers.usda.gov

An Electronic Report from the Economic Research Service

April 2006

Economic

Information

Bulletin

Number 11

The First Decade of 

Genetically Engineered 

Crops in the United States

Jorge Fernandez-Cornejo and Margriet

Caswell, with contributions from Lorraine

Mitchell, Elise Golan, and Fred Kuchler

Abstract

Ten years after the first generation of genetically engineered (GE) varieties

became commercially available, adoption of these varieties by U.S. farmers is

widespread for major crops. Driven by farmers’ expectations of higher yields,

savings in management time, and lower pesticide costs, the adoption of corn,

soybean, and cotton GE varieties has increased rapidly. Despite the benefits,

however, environmental and consumer concerns may have limited acceptance of

GE crops, particularly in Europe. This report focuses on GE crops and their

adoption in the United States over the past 10 years. It examines the three major

stakeholders of agricultural biotechnology and finds that (1) the pace of R&D

activity by producers of GE seed (the seed firms and technology providers) has

been rapid, (2) farmers have adopted some GE varieties widely and at a rapid rate

and benefited from such adoption, and (3) the level of consumer concerns about

foods that contain GE ingredients varies by country, with European consumers

being most concerned.

Keywords: genetically engineered crops, agricultural biotechnology, seed industry,

research and development, adoption, crop yields, pesticide use, corn, soybeans, cotton

Acknowledgements

The authors wish to thank William Lin, Paul Heisey, Keith Wiebe, Marca

Weinberg, Utpal Vasavada, and Mary Bohman of ERS for the helpful comments

provided on earlier drafts of this report. We also thank Andrew Rude from the

Foreign Agricultural Service, Neil E. Hoffman from the Animal and Plant Health

Inspection Service, John W. Radin from the Agricultural Research Service, Daniel

Jones from the Cooperative State Research, Education, and Extension Service,

and Matthew C. Rousu from Susquehanna University. We also thank Lou King

for editorial assistance and Anne Pearl for graphics and layout.
Contents

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iii

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Rapid Change and Pace of R&D Activity Characterize 

the Seed Industry and Technology Providers . . . . . . . . . . . . . . . . . . . . .2

From the Laboratory to the Field . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Adoption of GE Crops by U.S. Farmers Increases Steadily . . . . . . . . . .8

U.S. Farmers Expect To Profit From Adopting GE Crops . . . . . . . . . . . .9

Adoption of GE Crops and Yields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Adoption and Net Returns, Household Income,

and Pesticide Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Consumer Demands Affects R&D, Adoption, and

Marketing of GE-Derived Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Adoption Offers Market Benefits to Many Stakeholders . . . . . . . . . . .19

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

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Summary

Over the past decade, developments in modern biotechnology have

expanded the scope of biological innovations by providing new tools for

increasing crop yields and agricultural productivity. The role that biotechnology will play in agriculture in the United States and globally will depend

on a number of factors and uncertainties. What seems certain, however, is

that the ultimate contribution of agricultural biotechnology will depend on

our ability to identify and measure its potential benefits and risks. 

What Is the Issue?

Ten years after the first generation of genetically engineered (GE) varieties

of major crops became commercially available, adoption of these varieties

by U.S. farmers has become widespread. United States consumers eat many

products derived from these crops—including some cornmeal, oils, sugars,

and other food products—largely unaware of their GE content. Despite the

rapid increase in the adoption of GE corn, soybean, and cotton varieties by

U.S. farmers, questions remain regarding the impact of agricultural biotechnology. These issues range from the economic and environmental impacts

to consumer acceptance.

What Did the Study Find?

This study examined the three major stakeholders in agricultural biotechnology: seed suppliers and technology providers, farmers, and

consumers.

Seed suppliers/technology providers. Strengthening of intellectual property rights protection in the 1970s and 1980s increased returns to research

and offered greater incentives for private companies to invest in seed development and crop biotechnology. Since 1987, seed producers have submitted

nearly 11,600 applications to USDA’s Animal and Plant Health Inspection

Service for field testing of GE varieties. More than 10,700 (92 percent) have

been approved. Approvals peaked in 2002 with 1,190. Most approved applications involved major crops, with nearly 5,000 for corn alone, followed by

soybeans, potatoes, and cotton. More than 6,600 of the approved applications included GE varieties with herbicide tolerance or insect resistance.

Significant numbers of applications were approved for varieties with

improved product quality, viral resistance, and enhanced agronomic properties such as drought and fungal resistance. 

Farmers. Adoption of GE soybeans, corn, and cotton by U.S. farmers has

increased most years since these varieties became commercially available

in 1996. By 2005, herbicide-tolerant soybeans accounted for 87 percent of

total U.S. soybean acreage, while herbicide-tolerant cotton accounted for

about 60 percent of total cotton acreage. Adoption of insect-resistant crops

is concentrated in areas with high levels of pest infestation and varies

across States. Insect-resistant cotton was planted on 52 percent of cotton

acreage in 2005—ranging from 13 percent in California to 85 percent in

Louisiana. Insect-resistant corn accounted for 35 percent of the total

acreage in 2005, following the introduction of a new variety to control the

corn rootworm. 

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The economic impact of GE crops on producers varies by crop and technology. Herbicide-tolerant cotton and corn were associated with increased

returns, as were insect-resistant cotton and corn when pest infestations were

more prevalent. Despite the rapid adoption of herbicide-tolerant soybeans,

there was little impact on net farm returns in 1997 and 1998. However, the

adoption of herbicide-tolerant soybeans is associated with increased offfarm household income, suggesting that farmers adopt this technology

because the simplicity and flexibility of the technology permit them to save

management time, allowing them to benefit from additional income from

off-farm activities. 

Genetically engineered crops also seem to have environmental benefits.

Overall pesticide use is lower for adopters of GE crops, and the adoption of

herbicide-tolerant soybeans may indirectly benefit the environment by

encouraging the adoption of soil conservation practices. 

Consumers. Most surveys and consumer studies indicate consumers have at

least some concerns about foods containing GE ingredients, but these

concerns have not had a large impact on the market for these foods in the

United States. Despite the concerns of U.S. consumers, “GE-free” labels on

foods are not widely used in the United States. Manufacturers have been

active in creating a market for GE-free foods. Between 2000 and 2004,

manufacturers introduced more than 3,500 products that had explicit nonGE labeling, most of them food products.

In the European Union and some other countries, however, consumer

concerns have spurred a movement away from foods with GE ingredients.

Despite the fact that some European consumers are willing to consume

foods containing GE ingredients, very few of these foods are found on

European grocery shelves. 

How Was the Study Conducted?

This report examined the three major stakeholders of agricultural biotechnology: GE seed suppliers and technology providers (biotech firms),

farmers, and consumers. To examine biotech and seed firms, we used information from the literature as well as from the database of USDA approvals

of field testing for new GE varieties. To study seed users, we drew on ERS

studies based on USDA farm surveys, and to review the consumer perspective, we summarized surveys of consumers’ attitudes from the literature.

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The First Decade of Genetically Engineered

Crops in the United States

Jorge Fernandez-Cornejo and Margriet Caswell,

with contributions from Lorraine Mitchell,

Elise Golan, and Fred Kuchler

Introduction

Over the past decade, developments in modern biotechnology have

expanded the scope of biological innovations by providing new tools for

increasing crop yields and agricultural productivity. Agricultural biotechnology is a collection of scientific techniques, including genetic engineering, that are used to create, improve, or modify plants, animals, and

microorganisms. Genetic engineering (GE) techniques allow a precise alteration of a plant’s traits (facilitating the development of characteristics not

possible through traditional plant breeding), and permit targeting of a single

plant trait (decreasing the number of unintended characteristics that may

occur with traditional breeding).1

The commercial success of GE crop varieties typically requires that

biotechnology-derived trait enhancements be incorporated into successful

cultivars (cultivated varieties with useful agronomic properties), the development of which requires significant knowledge of traditional plant

breeding and the availability of genetic material (germplasm). This complementarity has been related to various institutional arrangements between

seed and technology suppliers.

GE crops are often classified into one of three generations (Panos). Crops

with enhanced input traits, such as herbicide tolerance, insect resistance, and

tolerance to environmental stresses (like drought), represent the first generation. GE crops benefit farmers and may also offer environmental benefits.

Second-generation crops include those with added-value output traits, such

as nutrient enhancement for animal feed. Consumers will benefit directly

from these products when they are available on the market. The third generation includes crops that produce pharmaceuticals or improve processing of

bio-based fuels, and products beyond traditional food and fiber. At present,

adoption of GE crops is generally limited to those with first-generation traits,

which were tested on a large scale (field testing) in the 1980s to ensure that

the desired traits will perform under production conditions. Second- and

third-generation GE crops are in various stages of research and development. 

Ten years after the first generation of GE varieties became commercially

available, they have been widely adopted by U.S. farmers, driven by expectations of higher yields, savings in management time, and lower pesticide costs.

Despite these benefits, environmental and consumer concerns may have

limited acceptance of agricultural biotechnology, particularly in Europe. In the

United States, foods containing GE ingredients currently available in the U.S.

market do not require labels, since the U.S. Food and Drug Administration

has determined that these foods are “substantially equivalent” to their non-GE

counterparts (Shoemaker et al., 2003; FDA, 1992). Thus, U.S. consumers

have been eating foods that contain GE ingredients (corn meal, oils, sugars)

for the past 10 years while remaining largely unaware of their GE content. 

1In the United States, under guidelines

issued by USDA’s Animal and Plant

Health Inspection Service (as published in the Federal Register,

7CFR340: 340.1), genetic engineering

is defined as “the genetic modification

of organisms by recombinant DNA

techniques” (Fernandez-Cornejo and

McBride, 2000). A full biotechnology glossary is in USDA (2005).

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Rapid Change and Pace of R&D Activity

Characterize the Seed Industry and 

Technology Providers

The U.S. commercial seed market is the world’s largest—with an estimated

annual value of $5.7 billion per year in the late 1990s—followed by China

at $3 billion and Japan at $2.5 billion (Fernandez-Cornejo, 2004). Moreover,

the U.S. seed market is growing (in quantity and value), mainly because

farmers have been increasing purchases of seed and reducing the planting of

saved seed. Growth in the seed market has been particularly rapid for major

field crops—corn, soybeans, cotton, and wheat—that together constituted

two-thirds of the seed market value in 1997.

The U.S. seed industry began a transformation in the 1930s, with the introduction of commercially viable hybrid seeds. These hybrids were higher

yielding than nonhybrid varieties but degenerative, so farmers had to

purchase new seed every year to maintain the high yields. Further changes

were motivated by the strengthening of intellectual property rights (IPR)

protection, mainly during the 1970s and 1980s, which increased returns to

research and offered a greater incentive for private companies to invest in

seed development. The two principal forms of legal protection are plant

variety protection (PVP) certificates issued by the Plant Variety Protection

Office of USDA and patents issued by the U.S. Patent and Trademark

Office. Both grant private crop breeders exclusive rights to multiply and

market their newly developed varieties. However, patents provide more

control since PVP certificates have a research exemption allowing others to

use the new variety for research purposes. Agricultural biotechnology

patents, mostly dealing with some aspect of plant breeding, have outpaced

the general upward trend in patenting throughout the U.S. economy. During

1996-2000, 75 percent of over 4,200 new agricultural biotech patents went

to private industry (King and Heisey).

Enhanced protection of intellectual property rights brought rapid increases

in private research and development (R&D) investments and changes in

market concentration in the U.S. seed industry. R&D expenditures on plant

breeding for many major crops shifted from mainly public to mainly private.

Private spending on crop variety R&D increased fourteenfold between 1960

and 1996 (adjusted for inflation), while public expenditures changed little

(Fernandez-Cornejo, 2004). 

As the amount of private capital devoted to R&D in the seed industry grew

rapidly, the number of private firms engaged in plant breeding also grew,

until peaking in the early 1990s. Subsequently, the seed industry consolidated, with fewer firms capable of sustaining the research investment

needed to develop new seed varieties. Mergers and acquisitions created a

seed industry structure dominated by large companies with primary investments in related sectors, such as pharmaceutical, petrochemical, and food

(Fernandez-Cornejo, 2004).2

In the early 1980s, developments in biological sciences created an additional

incentive for private firms to increase their investment in R&D and seed

production. As the first products of crop biotechnology were tested on a

large scale in the 1980s, the seed industry’s structure underwent additional

2

The First Decade of Genetically Engineered Crops in the United States/EIB-11

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2Some firms evolved in the 1990s

toward developing “life sciences”

complexes organized around the development of products such as agricultural chemicals, seeds, foods and food

ingredients, and pharmaceuticals based

on applications of related research in

biotechnology and genetics. However,

most of those life sciences companies

have since divested their agricultural

operations after “failing to realize

adequate returns on their investments”

(Shoemaker et al., 2003, p.32;

Fernandez-Cornejo, 2004, p.42).
transformation. Companies sought to achieve economies of scale to offset

the high costs of biotechnology R&D through an extensive process of

mergers, acquisitions, and joint ventures. Chemical and seed businesses

combined to take advantage of strong demand complementarities between

products (Just and Hueth, 1993). For example, the herbicide glyphosate and

soybean seeds tolerant to glyphosate are sold by the same firm. As a consequence of the merger activity, the seed industry became more concentrated.

By 1997, the share of U.S. seed sales (including GE and conventional varieties) controlled by the four largest firms providing seed of each crop

reached 92 percent for cotton, 69 percent for corn, and 47 percent for

soybeans (table 1).

From the Laboratory to the Field 

A critical part of new variety development is field-testing to ensure that the

desired traits will perform under production conditions. The release of new

GE varieties of organisms into the environment is regulated through field

release permits and monitored by USDA’s Animal and Plant Health Inspection Service (APHIS) (see box, “Regulatory Oversight”). The number of

field releases of plant varieties for testing purposes provides a useful indicator of R&D efforts on crop biotechnology. 

By early April 2005, nearly 11,600 applications had been received by

APHIS since 1987 and more than 10,700 (92 percent) had been approved

(Virginia Polytechnic Institute and State University, 2005). Approvals

peaked in 2002 with 1,190 (fig. 1). Most applications approved for field

testing involved major crops, particularly corn with nearly 5,000 applications approved, followed by soybeans, potatoes, cotton, tomatoes, and wheat

(fig. 2). Applications approved between 1987 and early April 2005 included

GE varieties with herbicide tolerance (3,587), insect resistance (3,141),

improved product quality (flavor, appearance, or nutrition) (2,314), virus

resistance (1,239), and agronomic properties like drought resistance (1,043)

and fungal resistance (647) (fig. 3). 

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Table 1

Estimated U.S. seed market shares for major field crops, 1997

Company Corn Soybean Cotton

Pioneer Hi-Bred 42.0 19.0

Monsanto1 14.0 19.0 11.0

Novartis 9.0 5.0

Delta & Pine Land2 73.0

Dow Agrosciences/Mycogen 4.0 4.0

California Planting Seed Distributors 6.0

All-Tex 2.0

Four largest total 69.0 47.0 92.0

1Monsanto acquired DeKalb in 1997 and Asgrow in 1998.

2The merger proposed between Monsanto and Delta & Pine Land in 1998 was called off in

December 1999.

Source: Fernandez-Cornejo, 2004.
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Regulatory Oversight

Before commercial introduction, genetically engineered crops must conform to

standards set by State and Federal statutes (USDA, 2005). Under the Coordinated Framework for the Regulation of Biotechnology, Federal oversight is

shared by the U.S. Department of Agriculture (USDA), the U.S. Environmental

Protection Agency (EPA), and the U.S. Food and Drug Administration (FDA).

USDA’s Animal and Plant Health Inspection Service (APHIS) plays a central

role in regulating field-testing of agricultural biotechnology products. Through

either a notification or permit procedure, such products, which include genetically engineered plants, microorganisms, and invertebrates, are considered “regulated articles.” APHIS determines whether to authorize the test, based on

whether the release will pose a risk to agriculture or the environment. After

years of field tests, an applicant may petition APHIS for a determination of

nonregulated status in order to facilitate commercialization of the product. If,

after extensive review, APHIS determines that the unconfined release does not

pose a significant risk to agriculture or the environment, the organism is “deregulated.” At this point, the organism is no longer considered a regulated article

and can be moved and planted without APHIS authorization (USDA, 2004).

If a plant is engineered to produce a substance that “prevents, destroys, repels,

or mitigates a pest,” it is considered a pesticide and is subject to regulation by

EPA (Federal Register, November 23, 1994). FDA regulates all food applications of crops, including those crops that are developed through the use of

biotechnology, to ensure that foods derived from new plant varieties are safe to

eat. A more complete description of the EPA and FDA regulations of GE products may be found in EPA (2003) and FDA (1992, 2005). 

Though the current regulatory system is considered to be effective, USDA,

EPA, and FDA continuously look forward and make necessary changes to

address new trends and issues of the future. For example, USDA’s APHIS has

made updates in 1993 and 1997 and is currently considering the need for additional changes in the regulations (USDA, 2004). The National Academy of

Sciences also issued a report that made recommendations suggesting that regulation “could be improved further” by making the process more “transparent

and rigorous” by enhanced scientific peer review, solicitation of public input,

and “more explicit presentation of data, methods, analyses, and interpretations”

(NRC, 2003).

 

Figure 1

Permits for release of GE varieties approved by APHIS

Source: Virginia Polytechnic Institute and State University, 2005.

1987 89 91 93 95 97 99 

0

200

400

600

800

1,000

1,200

2000 01 03 
APHIS approvals for field testing also provide an indication of products that

are in development and that may come “through the pipeline” in the future

(table 2). In addition to crops with improved pest management traits,

approvals include crops with traits that provide viral/fungal resistance,

favorable agronomic properties (resistance to cold, drought, salinity, more

efficient use of nitrogen), enhanced product quality (delayed ripening,

increased protein and oil content, modified starch content, nutraceuticals

(added vitamins, iron, antioxidants such as beta-carotene), and pharmaceuticals. Additional information may be found in Runge and Ryan and in Pew

Initiative on Food and Biotechnology (2001). 

After extensively field-testing a GE variety, an applicant may petition

APHIS to deregulate (grant nonregulated status) the variety. If, after extensive review, APHIS determines that the new variety poses no significant risk

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The First Decade of Genetically Engineered Crops in the United States/EIB-11

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552

724

747

843

358

4,968

2,560

Corn

Soybeans

Potato

Cotton

Tomato

Wheat

Other

Figure 2

Total number of permits approved by APHIS, by crop

Source: Virginia Polytechnic Institute and State University, 2005.

1,043

1,239

2,314 3,141

647

716

3,587

550

Herbicide tolerance

Insect resistance

Product quality

Virus resistance

Agronomic properties

Fungal resistance

Marker gene

Other

Figure 3

Total number of permits approved by APHIS, by GE trait

Source: Virginia Polytechnic Institute and State University, 2005.
to agriculture or the environment, permission is granted (see box, “Regulatory Oversight”). As of April 2005, APHIS had received 103 petitions for

deregulation and had granted 63 (fig. 4). Thirty-six percent of the released

varieties have herbicide-tolerance traits, 27 percent have insect-resistance

traits, and 17 percent have product-quality traits (fig. 5). 

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Table 2

Biotech crops currently available and in development in the United States

Input traits Output traits

Crop Herbicide Insect Viral/fungal Agronomic Product quality11 Nutraceuticals;

tolerance resistance resistance properties9 pharmaceuticals;

industrial13

Corn C C5 DD D D

Soybeans C D D D

Cotton C C6 D D

Potatoes W7 DD D D

Wheat C2 D

Other field crops1 C3 D4 DD D D D

Tomato, squash, melon D D W12 D D

Other vegetables D D

Papaya C8

Fruit trees D D

Other trees D10 D

Flowers D

C = Currently available; D = In various stages of development and testing; W = Withdrawn from the market.

Sources: Virginia Polytechnic Institute and State University; USDA, APHIS; Colorado State University; Shoemaker et al.; Pew.

1Includes barley, canola, peanuts, tobacco, rice, alfalfa, etc.

2Monsanto discontinued breeding and field-level research on its GE Roundup Ready wheat in 2004.

3Canola.

4Barley, rice, sugar beets.

5Bt corn to control the corn borer commercially available since 1996; Bt corn for corn rootworm control commercially available since 2003. 6Bt cotton to control the tobacco budworm, the bollworm, and the pink bollworm, commercially available since 1996.

7Bt potatoes, containing built-in resistance to the Colorado potato beetle, were commercially introduced in 1996 and withdrawn in 1999. 8In the mid 1990s, researchers at Cornell University and at the University of Hawaii developed two virus-resistant varieties of GE papaya. First 

commercial plantings were made in 1998. The new varieties were proved successful in resisting a viral epidemic and were planted on more than

30 percent of Hawaii’s papaya acreage in 1999.

9Resistance to cold, drought, frost, salinity; more efficient use of nitrogen; increased yield.

10Modified lignin content (for example, to reduce cost of paper making from trees).

11Includes delayed ripening; increased protein, carbohydrate, fatty acid, micronutrient, oil, and modified starch content; enhanced flavor and texture (fruits and vegetables); color (cotton, flowers); fiber properties (cotton); gluten content; natural decaffeination; and low phytase. 12Tomato genetically engineered to remain on the vine longer and ripen to full flavor after harvest; currently withdrawn from the market

(Colorado State University, 2004).

13Includes increased vitamin, iron, beta-carotene content; antibodies, vaccines; specialty machine oils.
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Source: Virginia Polytechnic Institute and State University, 2005.

Figure 5

Petitions for deregulation approved by APHIS, by GE trait

6

9

13

21

2

28 Herbicide tolerance

Insect resistance

Product quality

Virus resistance

Agronomic properties

Other

Source: Virginia Polytechnic Institute and State University, 2005.

11

5 9

5

7

8

17 1 Corn

Soybeans

Cotton

Potato

Tomato

Rapeseed

Rice

Other

Figure 4

Petitions for deregulation approved by APHIS, by crop
Adoption of GE Crops by U.S. Farmers

Increases Steadily

Farmers are more likely to adopt new practices and technologies if they

expect to benefit from them. Benefits are usually thought of in monetary

terms, but can also include ease of operation, time savings, lower exposure

to chemicals, and other factors. Farmers choose technologies and practices

they expect to yield the greatest benefit based on their own preferences,

farm characteristics, demand for their product, and costs.

Farmers’ expectations of higher yields, savings in management time, and

lower pesticide costs have driven a rapid increase in the adoption of GE

crop varieties in the United States and several other countries. An estimated

200 million acres of GE crops with herbicide tolerance and/or insect resistance traits were cultivated in 17 countries worldwide in 2004, a 20-percent

increase over 2003. U.S. acreage accounts for 59 percent of this amount,

followed by Argentina (20 percent), Canada and Brazil (6 percent each), and

China (5 percent) (ISAAA, 2004).3 

GE varieties of soybeans, corn, and cotton have been available commercially in the United States since 1996, and the rate of adoption by U.S.

farmers has climbed in most years since then (fig. 6). For the most part,

farmers have adopted herbicide-tolerant (HT) varieties—which help control

weeds by enabling crops to survive certain herbicides that previously would

have destroyed them along with the targeted weeds—at a faster pace than

insect-resistant (Bt) varieties. 

Weeds are such a pervasive pest for soybeans, corn, and cotton that over 90

percent of U.S. planted acreage for each crop has been treated with herbicides in recent years. The acreage share for HT soybeans has expanded

more rapidly than that for HT varieties of cotton and corn, reaching 87

percent of U.S. soybean acreage in 2005. 

3Also, there has been an upward trend

in the adoption of “stacked gene” varieties (with traits of herbicide tolerance

and insect resistance) in the case of

cotton and corn. 

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*Data for each crop category include varieties with both HT and Bt (stacked) traits.

Source: Fernandez-Cornejo (2005).

Figure 6

Adoption of genetically engineered crops grows steadily in the U.S.*

0

10

20

30

40

50

60

70

80

90

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

100

Percent of acres

HT Soybeans HT Cotton

Bt Corn

Bt Cotton

HT Corn
Insect-resistant crops contain a gene from the soil bacterium Bacillus

thuringiensis (Bt) that produces a protein toxic to specific insects. Acreage

shares for Bt cotton and corn are lower than those for HT soybeans and

cotton, and adoption is more concentrated in areas with a high level of

infestation of targeted pests (insect infestation varies much more widely

across locations than does weed infestation). Farmers planted Bt cotton to

control tobacco budworm, bollworm, and pink bollworm on 52 percent of

U.S. cotton acreage in 2005. Bt corn, originally developed to control the

European corn borer, was planted on 35 percent of corn acreage in 2005, up

from 24 percent in 2002. The recent increase in acreage share may be

largely due to the commercial introduction in 2003/04 of a new Bt corn

variety that is resistant to the corn rootworm, a pest that may be even more

destructive to corn yield than the European corn borer (Comis). 

Other GE crops planted by U.S. farmers over the past 10 years include HT

canola, virus-resistant papaya, and virus-resistant squash (table 2). In addition, Bt potato varieties were introduced in 1996 but withdrawn from the

market after the 2001 season, and a tomato variety genetically engineered to

remain on the vine longer and ripen to full flavor after harvest was introduced in 1994 but was withdrawn from the market after being available

sporadically for several years. 

U.S. Farmers Expect To Profit From 

Adopting GE Crops

According to USDA’s Agricultural and Resource Management Surveys

(ARMS) conducted in 2001-03, most of the farmers adopting GE corn,

cotton, and soybeans indicated that they did so mainly to increase yields

through improved pest control (fig. 7). Other popular reasons for adopting

GE crops were to save management time and make other practices easier

and to decrease pesticide costs. These results confirm other studies showing

that expected profitability increases through higher yields and/or lower costs

(operator labor, pesticides) positively influence the adoption of agricultural

innovations. 

Adoption of GE Crops and Yields

Currently available GE crops do not increase the yield potential of a hybrid

variety. In fact, yield may even decrease if the varieties used to carry the

herbicide-tolerant or insect-resistant genes are not the highest yielding cultivars.4 However, by protecting the plant from certain pests, GE crops can

prevent yield losses compared with non-GE hybrids, particularly when pest

infestation is high. This effect is particularly important for Bt crops. For

example, before the commercial introduction of Bt corn in 1996, the European corn borer was only partially controlled using chemical insecticides.

Chemical use was not always profitable, and timely application was difficult. Many farmers accepted yield losses rather than incur the expense and

uncertainty of chemical control. For those farmers, the use of Bt corn

resulted in yield gains rather than pesticide savings. On the other hand, a

recently introduced Bt corn trait selected for resistance against the corn

rootworm, previously controlled using chemical insecticides, may provide

substantial insecticide savings.5

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4This yield decrease occurred mostly

in early years. HT or Bt genes were

introduced into high-yielding cultivars

in later years.

5Entomologists estimate that the corn

rootworm causes up to $1 billion in

corn yield losses and insecticide

expenditures annually in the U.S.

(Comis).
Many field tests and farm surveys have examined the yield and cost effects

of using GE crops (table 3). The majority of the results show GE crops

produce higher yields than conventional crops. 

A 2002 ERS study found that increases in cotton yields in the Southeast

were associated with the adoption of HT and Bt cotton in 1997—a 10-

percent increase in HT cotton acreage led to a 1.7-percent increase in yield

and a 10-percent increase of Bt cotton acreage led to a 2.1-percent increase

in yield. Increases in soybean yields associated with the adoption of HT

soybeans were statistically significant but small (Fernandez-Cornejo and

McBride, 2002).6

A more recent ERS study using 2001 survey data found that, on average,

actual corn yield was 12.5 bushels per acre higher for Bt corn than for conventional corn, an increase of 9 percent (Fernandez-Cornejo and Li, 2005).7

Adoption and Net Returns, Household Income,

and Pesticide Use 

The impacts of GE crop adoption on U.S. farmers vary by crop and technology. Many studies have assessed the effects of the adoption of GE crops

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Figure 7

Farmers’ reasons for adopting GE crops

17% 63%

17%

3% HT soybeans

11%

15%

7% HT corn

67%

9%

6%

6% Bt corn

79%

15%

23%

3% Bt cotton

11%

26%

3% HT cotton

60%

59%

Increase yields Decrease pesticide input cost

Save management time and Other

make other practices easier

Source: Compiled by USDA’s Economic Research Service using data from 2001, 2002, and 2003 Agricultural Resource Management Survey.

6The study used an econometric model

that takes into consideration that farmers’ adoption of GE crops and pesticide

use decisions may be simultaneous and

that farmers are not assigned randomly

to the two groups (adopters and nonadopters) but that they make the adoption choices themselves. Therefore,

adopters and nonadopters may be systematically different. Differences may

manifest themselves in farm performance and could be confounded with differences due to adoption. This selfselectivity may bias the results, unless

corrected. To account for simultaneity

and self-selectivity, the model uses a

two-stage econometric model. 

7In addition, results using an econometric model with the 2001 data showed a

small but statistically significant yield

increase associated with farmers who

adopted Bt corn relative to those using

conventional corn varieties. (FernandezCornejo and Li, 2005).
on returns and pesticide use, and the results of these studies are summarized

in table 3. ERS researchers found that:

Planting HT cotton and HT corn was associated with increased producer

net returns, but HT corn acreage was limited.8 The limited acreage on

which HT corn has been adopted is likely to be acreage with the greatest

comparative advantage for this technology. The positive financial association with adoption may also be due to low premiums for HT corn seed relative to conventional varieties in an attempt to expand market share

(Fernandez-Cornejo and McBride, 2002).

Adoption of Bt cotton and corn was associated with increased returns

when pest pressures were high. The adoption of Bt cotton had a positive

association with producer net returns in 1997, but the association was negative for Bt corn in 1998. This suggests that Bt corn may have been used on

some acreage where the (ex post) value of protection against the European

corn borer was lower than the premium paid for the Bt seed. Because pest

infestations vary from one region to another and from one year to another,

the economic benefits of Bt corn are likely to be greatest where pest pressures are most severe. Farmers must decide to use Bt corn before they

know what the European corn borer pest pressure will be that year, and

damage caused by the European corn borer varies from year to year. Some

farmers may have incorrectly forecast infestation levels, corn prices, and/or

yield losses due to pest infestations, resulting in “overadoption.” Also,

producers may be willing to pay a premium for Bt corn because it reduces

the risk of significant losses if higher-than-expected pest damage does occur

(Fernandez-Cornejo and McBride, 2002). 

Despite the rapid adoption of HT soybeans by U.S. farmers, no significant

association with net farm returns was evident in 1997 or 1998. The lack

of increased profitability for some farmers who adopted HT soybeans

suggests that factors other than those included in traditional farm returns

calculations may be driving adoption for these farmers. In particular, weed

control may become simpler and require less management time, which

allows growers of HT soybeans to control a wide range of weeds and makes

harvest easier and faster. One important alternative use of management time

is off-farm employment by farm operators and their spouses (FernandezCornejo and McBride, 2002).

Adoption of HT soybeans is associated with increased household income.

Recent ERS research showed that adoption of HT soybeans was associated

with a significant increase in off-farm household income for U.S. soybean

farmers. On-farm household income is not significantly associated with

adoption but total farm household income is significantly higher for

adopters, suggesting that most managerial time saved by adopters is used in

off-farm work (Fernandez-Cornejo et al., 2005).

Adoption of GE crops is associated with reduced pesticide use. Pesticide

use rates (in terms of active ingredient) on corn and soybeans have declined

since the introduction of GE corn and soybeans in 1996 (fig. 8). In addition, ERS research suggests that, controlling for other factors, pesticide use

declined with adoption. There was an overall reduction in pesticide use

associated with the increased adoption of GE crops (Bt and HT cotton, HT

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8Net returns equal revenues minus

variable costs, which include pesticide

and seed costs. Seed costs paid by

adopters of GE varieties include a

technology fee paid by farmers to

biotechnology developers and premiums to seed firms.
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Table 3

Summary of primary studies on the effects of genetically engineered crops on yields,

pesticide use, and returns

Data Effects on

Crop/researchers/ source

date of publication Yield Pesticide use Returns 

Herbicide-tolerant soybeans

Delannay et al., 1995 Experiments Same na na

Roberts et al., 1998 Experiments Increase Decrease Increase

Arnold et al., 1998 Experiments Increase na Increase

Marra et al., 1998 Survey Increase Decrease Increase

Fernandez-Cornejo et al., 20021 Survey Small increase Small increase Same

McBride & El-Osta, 20022 Survey na na Same 

Duffy, 2001 Survey Small decrease na Same

Herbicide-tolerant cotton

Vencill, 1996 Experiments Same na na

Keeling et al., 1996 Experiments Same na na

Goldman et al., 1998 Experiments Same na na

Culpepper and York, 1998 Experiments Same Decrease Same 

Fernandez-Cornejo et al., 20001 Survey Increase Same Increase 

Herbicide-tolerant corn

Fernandez-Cornejo

and Klotz-Ingram, 1998 Survey Increase Decrease Same

McBride & El-Osta, 20022 Survey na na Increase

Bt cotton

Stark, 1997 Survey Increase Decrease Increase

Gibson et al., 1997 Survey Increase na Increase

ReJesus et al., 1997 Experiments Same na Increase

Bryant et al., 19993 Experiments Increase na Increase

Marra et al., 1998 Survey Increase Decrease Increase

Fernandez-Cornejo et al., 20001 Survey Increase Decrease Increase

Bt corn

Rice and Pilcher, 1998 Survey Increase Decrease Depends on infestation 

Marra et al., 1998 Survey Increase Decrease Increase

Benbrook, 2001 Survey Increase na Decrease

McBride & El-Osta, 20022 Survey na na Decrease

Duffy, 2001 Survey Increase na Same

Pilcher et al., 2002 Survey Increase Decrease na

Baute, Sears, and Schaafsma, 2002 Experiments Increase na Depends on infestation

Dillehay et al., 20044 Experiments Increase na na

Fernandez-Cornejo & Li, 20055 Survey Increase Decrease na

na = not analyzed in the study.

1Results using 1997 data.

2Results using 1998 data.

3Results are for 1996 and 1998. Results were different in 1997 when pest pressure was low.

4Results using 2000-2002 data.

5Results using 2001 data.

6Net returns equal revenues minus variable costs.
corn, and HT soybeans combined, using 1997/1998 data), resulting in a

significant reduction in potential exposure to pesticides (Fernandez-Cornejo

and McBride, 2002). Overall pesticide use on corn, soybeans, and cotton

declined by about 2.5 million pounds, despite the slight increase in the

amount of herbicides applied to soybeans. In addition, glyphosate used on

HT crops is less than one-third as toxic to humans, and not as likely to

persist in the environment as the herbicides it replaces (Fernandez-Cornejo

and McBride, 2002).

More recently, using 2001 data, ERS found that insecticide use was 8

percent lower per planted acre for adopters of Bt corn than for nonadopters

(Fernandez-Cornejo and Li, 2005).9

The ERS results generally agree with field-test and other farm surveys that

have examined the effects of using GE crops (table 3). The majority of

those results show that pesticide use for adopters of GE crops is lower than

for users of conventional varieties.

Adoption of HT soybeans appears to be associated with conservation

tillage. The environmental impact of conservation tillage is well documented.10 The use of conservation tillage reduces soil erosion by wind and

water, increases water retention, and reduces soil degradation and water and

chemical runoff. 

According to USDA survey data, about 60 percent of the area planted with

HT soybeans was under conservation tillage in 1997, compared with only

about 40 percent of the acres planted with conventional soybeans (fig. 9).

Differences in the use of no-till between adopters and nonadopters of HT

soybeans are even more pronounced: 40 percent of acres planted with HT

soybeans were under no-till, twice the corresponding share of acreage

planted with conventional soybeans. As a result, adoption of HT crops may

indirectly benefit the environment by encouraging farmers to use soil

conservation practices.

9In addition, using an econometric

model with the 2001 data, the ERS

study showed a moderate but statistically significant insecticide reduction

associated with farmers who adopted

Bt corn relative to those using conventional corn varieties (a 4.11-percent

decrease in insecticide use was associated with a 10-percent increase in Bt

corn adoption).

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Figure 8

Pesticide use in major field crops

1995 1996 1997 1998 1999 2000 2001 2002

Herbicides, 

 Lb/acre-year 

Insecticides,

Lb/acre-year 

Cotton herbicides

Soybean herbicides

Corn insecticides

Corn herbicides

3.00

2.50

2.00

1.50

1.00

0.50

 0

0.24

0.20

0.16

0.12

0.08

0.04

 0

Source: NASS surveys.

10Conservation tillage includes any

tillage and planting system that leaves

at least 30 percent of the soil surface

covered with crop residue. It includes

no-till, ridge-till, and mulch-till

(Conservation Technology Information

Center, 2004). 
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Figure 9 

Soybean area under conservation tillage* and no-till, 1997

Herbicide-tolerant varieties Conventional varieties

Conservation tillage

No-till

*Conservation tillage acres includes acres under no-till, ridge till, and mulch-till systems.

Source: Fernandez-Cornejo and McBride (2002).

Percent of acres

Conventional tillage

0

20

40

60

80

100
Consumer Demand Affects R&D, Adoption, and

Marketing of GE-Derived Products

Investments in biotechnology-related research and development (R&D), the

adoption of GE seeds, and the marketing of GE-derived products are all

affected by consumer demand. While several surveys indicate that some

U.S. consumers are concerned about GE food (table 4), these concerns have

not had a large impact on the market for foods containing GE ingredients in

the United States. In the European Union and a few other countries,

consumer concern has resulted in substitution away from GE ingredients.

While opinion surveys give some indication of whether or not consumers

are concerned about foods containing GE ingredients, they give little indication of the level of concern. Some researchers have attempted to quantify

this concern through studies in which consumers are asked how much they

would be willing to pay for foods made with GE ingredients, and for foods

without GE ingredients. Researchers then use these data to measure

whether or not there is a difference between these two hypothetical prices.

In most of these studies (table 5), consumers indicated that they were

willing to pay more on average for GE-free foods or to avoid foods

containing GE ingredients. However, in many of the studies, at least some

consumers did not require a discount to buy foods containing GE ingredients, while some expressed that they would not be willing to buy foods

containing GE ingredients at all.11 Some respondents were willing to pay

more for certain characteristics, such as improved nutrition and environmental benefits (Li et al., 2001; Lusk, 2003, Bocaletti and Moro, 2000). 

While surveys and willingness-to-pay studies provide some insight into

consumer opinion, they often do not reflect how consumers will behave in a

real market situation when purchasing goods and services. Each food

product has many characteristics, such as taste, color, and ripeness. The

presence of a biotech-derived component is only one attribute. Empirically,

it is difficult to determine what percentage of the price a consumer is paying

for a specific characteristic. There are no published studies that indicate

how many consumers have actually paid a premium to purchase non-GE

goods, but there is some empirical evidence of the types of goods that are

currently offered for sale to consumers. In the United States, many products

contain GE ingredients, and the demands for these products apparently have

been unaffected by negative opinions about biotechnology expressed in

surveys. A few specialty brands are marketed as “GE free,” but they represent a small percentage of supermarket sales.12 In some other countries,

however, strong consumer demand for non-GE products has limited the

availability of GE items (see box, “Biotech Product Differentiation: A Tale

of Two Markets”).

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11The amount that consumers indicate

that they are willing to pay for a particular characteristic in a hypothetical

situation is sometimes different from

the amount that they actually pay

when shopping (Lusk, 2003).

12In addition, organic foods are available. Use of any GE techniques bars a

crop from being certified as organic.

Although organic foods still have a

small market share (1-2 percent ) of

total U.S. food sales, their sales have

been rising at a rate of 20 percent

annually (Dimitri and Greene, 2002).
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Table 4

Surveys on consumer perceptions of foods containing GE ingredients

Country/ Population Surveyed by Details

United States Pew Initiative/Mellman 27 percent favor introduction of GE foods; 47 percent 

Group, 2003, 2004 oppose. However, 64 percent disagree with the 

statement, “genetically modified foods should not be 

allowed to be sold even if the Food and Drug

Administration believes they are safe,” and 28 percent 

feel that those foods should not be allowed, even if the 

FDA feels they are safe.

United States Gallup, 2001 52 percent support the application of biotechnology;

38 percent oppose the use of biotechnology in food 

production.

United States Hallman, 2004 47 percent approved or leaned toward approval of the 

use of GE to make plant-based foods, 41 percent 

disapproved or leaned toward disapproval, and 12 

percent were unsure.

United States IFIC, 2005 50 percent said likely to buy and 45 percent said not 

likely to buy GE produce modified to taste better or 

fresher; 64 percent said likely to buy and 32 percent 

said not likely to buy GE produce modified to require 

fewer pesticide applications.

Beijing, China Hu and Chen, 2004 67 percent were concerned about biotechnology.

Nanjing, China Zhong et al., 2002 40 percent would buy GE foods; 17 percent would not;

34 percent don’t know.

Beijing, China, Ho and Vermeer, 2004 40 percent were willing or rather willing to consume 

Shiajiazhuang, foods containing GE-based ingredients, 51 percent

China were neutral, and 9 percent were rather unwilling or 

very unwilling to consume the foods.

Flemish speakers Verdurme and Viaene, 15 percent opposed to GE foods; 34 percent perceived 

in Belgium 2003 small risks and small benefits; 26 percent perceived 

moderate risks and moderate benefits; and 23 percent 

perceived large benefits.

United Kingdom 2003 GE Public Debate 86 percent preferred not to eat GE foods; 8 percent 

Steering board happy to eat GE foods.

Source: Compiled by USDA’s Economic Research Service.
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Table 5

Willingness to pay for foods that do not contain GE ingredients1

Country Food Study Willingness-to-pay premium

United States Vegetable oil Tegene et al., 2003 In experimental auctions, consumers willing to 

pay 14 percent more for non-GE food.

United States Potatoes Loureiro and Hine, ` Customers willing to pay 5 percent more for 

2002 non-GE food.

United States Golden rice Lusk, 2003 Customers willing to pay 93 cents for GE 

“golden rice” with added vitamin C, 65-75 

cents for regular rice.

United Kingdom All foods Burton et al., 2001 Customers indicated willingness to increase 

food budgets by 26-129 percent to avoid GE 

foods.

Italy * Bocaletti and Moro, Consumers willing to pay a positive amount for

2000 GE attributes; 66 percent did not require a 

premium to consume GE foods.

United States, France, Beef fed with Lusk et al., 2003 U.S. consumers willing to pay $2.83 and $3.31

Germany, and United GE feed per lb. to avoid GE; European consumers 

Kingdom $4.86 to $11.01.

United States, Breakfast cereal Moon and Survey found 56 percent of UK consumers 

United Kingdom Balasubramanian, 2001 willing to pay a premium to avoid GE 

compared with 37 percent of U.S. consumers.

Norway, United Vegetable oil Chern et al., 2002 Norwegian students were willing to pay $1.51 

States, Japan, Taiwan (55-69 percent premium) per liter for non-GE 

vegetable oil, U.S. students were willing to pay

$1.13 (50-62 percent premium), Japanese 

students were willing to pay $0.88 (33-40

percent premium), and Taiwanese students 

were willing to pay $0.45 cents (17-21 percent 

premium).

China Rice Li et al., 2002 80 percent of consumers did not require a 

premium to purchase GE rice and on average 

were willing to pay a 38-percent premium on 

GE rice and a 16-percent premium for GE 

soy oil.

Norway Bread Grimsrud, et al., 2004 Consumers required discounts of 37-63 

percent to buy GE bread; One-fourth willing 

to buy with no discount.

Australia Beer Burton and Pearse, 2002 Younger consumers would pay $A 0.72 less 

and older consumers $A 0.40 less for beer 

made with GE barley.

Canada * West et al., 2002 83 percent of consumers ascribed a lower 

value to several GE foods.

France * Noussair et al., 2004 35 percent of consumers were unwilling to 

purchase GE foods, and 42 percent were 

willing to purchase them if they were less 

expensive.

United States Oil, chips, Rousu et al., 2004 Consumers reduced their demand by an averand potatoes age of 7-13 percent for each food product 

having 1 percent and 5 percent tolerance 

levels for GE material relative to GE-free food.

1See also Lusk et al. (2005), who summarize a set of 25 studies including 57 GE valuation studies and report that, on average, consumers are

willing to pay a positive premium for GE-free foods.

*This study did not focus on a specific food item.

Source: Compiled by USDA’s Economic Research Service.
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Biotech Product Differentiation: A Tale of Two Markets

The introduction of genetically engineered (GE) crops has led food manufacturers to make a choice for each of their products: either pursue a non-GE

strategy and market and produce a non-GE product or source inputs based on

cost and quality, or market and produce an undifferentiated product. 

If all manufacturers were to pursue a non-GE strategy, farmers would eventually abandon GE technologies and consumer choice would be restricted to

potentially higher cost non-GE products. If manufacturers were to pursue an

undifferentiated strategy, then farmers’ use of the technology would be determined by production costs and consumers would be faced with markets in

which they could not differentiate between GE and non-GE foods. If manufacturers pursue both strategies, some farmers would continue to use the technology while others would grow conventional crops to supply non-GE markets.

In this scenario, consumers would have a choice between GE and non-GE

food, at least for some products. 

In the United States, where unlabeled foods may contain GE ingredients, the

data show that manufacturers have been active in creating a market for GEfree foods. From 2000 to 2004, manufacturers introduced over 3,500 products that had explicit non-GE labeling, mostly food products, with annual

totals ranging from 854 in 2003 to 631 in 2004. This is in addition to organic

foods (organic crops may not be grown using GE techniques) (Dimitri and

Greene, 2002). 

In the European Union and Japan, where unlabeled foods cannot contain GE

ingredients, manufacturers have chosen a non-GE marketing strategy. Very

few products labeled as containing GE ingredients are found on European or

Japanese grocery store shelves.

The data also show that there have been limited attempts to market GE products in the United States. There were far fewer new GE products introduced

than new non-GE products, and most of the GE products were introduced in

the 1990s. GE products included tomatoes (advertised as better tasting with a

longer shelf life), canola oil (advertised as heat stable), shrimp (advertised as

gourmet-quality), beef (low-fat), dietary supplements, cigarettes (low-nicotine),

and a drain cleaner. 

Annual non-GE new product introductions in the United States

0

200

400

600

800

1,000

2000 2001 2002 2003 2004

Beverages Health & 

beauty aids

Household 

products

Pet

foods

Food

Number of new products

Source: Productscan Online.
Adoption Offers Market Benefits 

to Many Stakeholders 

In addition to farmers, seed suppliers, technology providers, and consumers

also benefit from the adoption of GE crops in the United States. Biotechnology developers and seed firms benefit by charging technology fees and

seed premiums to adopters of GE varieties. U.S. and foreign consumers may

benefit indirectly from GE crops through lower commodity prices that result

from increased supplies.13

ERS estimated the total market benefit arising from the adoption of three

GE crops in the United States—HT soybeans, Bt cotton, and HT cotton—in

1997 (Price et al., 2003).14 Estimated benefits to farmers, seed producers,

and consumers were around $210 million for Bt cotton, $230 million for HT

cotton, and $310 million for HT soybeans. This estimate includes the

change in total welfare in both the seed input and commodity output

markets. The distribution of these benefits among consumers, farmers,

technology providers (biotech firms), seed firms, and consumers and

producers in the rest of the world (ROW) is shown in figures 10-12. The

distribution of benefits varies by crop and technology because the economic

incentives to farmers (crop prices and production costs), the payments to

technology providers (biotech firms) and seed firms, and the effect of the

technology on world crop prices are different for each crop and technology.

For example, adoption of HT cotton benefits mainly consumers while Bt

cotton benefits farmers and technology providers. Seed firms are by far the

largest beneficiaries in the case of soybeans. 

These results should be interpreted carefully, since the estimates are based

on only a few years of data. Moreover, estimated benefits and their distribution depend particularly on the analytical framework, supply and demand

elasticity assumptions,15 crops considered, and year-specific factors (such

as weather). In particular, the benefits attributable to HT soybeans and their

distribution are very dependent on the soybean supply elasticity. Table 6

shows estimates of the benefits of Bt cotton and HT soybeans and their

distribution obtained by other researchers. 

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13Consumers may also benefit directly

when GE products of the second and

third generation are commercialized. 

14The study estimated the economic

gains for various stakeholders associated with adoption by incorporating the

potential yield enhancements and savings in pest control costs into models

that derive each crop’s supply shift

resulting from biotechnology. Given

domestic and export demands, counterfactual world prices and quantities

demanded of the commodities—those

that would have prevailed in the market if biotechnology had not been

introduced—are determined from market equilibrium conditions. Producer

and consumer surpluses in the U.S.

and international markets and monopoly profits accruing to the biotech

developers and seed firms are then calculated (Price et al., 2003). 

15Elasticity measures the responsiveness of one economic variable to a

change in another (e.g., price and

quantity demanded). It is unit free and

always expressed in percentage terms.

57.1%

4.1%

4.6%

1.6%

32.6%

Source: Price et al., 2003.

Figure 10

Stakeholders’ shares of the estimated total world benefit

from adopting herbicide-tolerant cotton, 1997

Consumer

U.S. farmers

Biotech firms

Seed firms

Net ROW
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Source: Price et al., 2003.

14.1%

28.9%

29.2%

6.1%

21.8%

Figure 11

Stakeholders’ shares of the estimated total world benefit

from adopting Bt-cotton, 1997

Consumer

U.S. farmers

Biotech firms

Seed firms

Net ROW

6.4% 5.3%

20%

40.4%

27.8%

Source: Price et al., 2003.

Consumer

U.S. farmers

Biotech firms

Seed firms

Net ROW

Figure 12

Stakeholders’ shares of the estimated total world benefit

from adopting herbicide-tolerant soybeans, 1997
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Conclusion 

The role that biotechnology plays in agriculture in the United States and

globally depends on a number of factors and uncertainties. As the USDA

Advisory Committee on Biotechnology and 21st Century Agriculture report

indicates, “agricultural biotechnology sits at the crossroads of other debates

on the future of American and world agriculture, on international trade relations, on biological diversity and the development of international instruments related to its preservation and exploitation, on the role of the

multinational corporations, and on how best to build public confidence in

rapidly evolving emerging technologies in general” (p.2.). One thing seems

certain, however: the ultimate contribution of agricultural biotechnology

will depend on our ability to identify and measure its potential benefits and

its risks as well as their distribution. 

Table 6

Benefits of GE techniques and their distribution (from estimates in related studies)

Study Year Total Share of the total benefits

benefits U.S. farmers Innovators U.S. consumers Net ROW 

$ million Percent

Bt cotton

Falck-Zepeda et al. (1999) 1996 134 43 47 6 

Falck-Zepeda et al. (2000b) 1996 240 59 26 9 6

Falck-Zepeda et al. (2000a) 1997 190 43 44 7 6

Falck-Zepeda et al. (1999) 1998 213 46 43 7 4

Frisvold et al. (2000) 1996-98 131-164 5-6 46 33 18

EPA (2000)1 1996-99 16.2-45.9 n.a. n.a. n.a. n.a.

Price et al. (2003) 1997 210 29 35 14 22

Herbicide-tolerant soybeans

Falck-Zepeda et al. (2000a) 1997-Low elasticity2 1,100 77 10 4 9

1997-High elasticity3 437 29 18 17 28

Moschini et al. (2000) 1999 804 20 45 10 26

Price et al. (2003) 1997 310 20 68 5 6

n.a. = Not applicable.

ROW = Rest of the world.

1Limited to U.S. farmers.

2Assumes a U.S. soybean supply elasticity of 0.22.

3Assumes a U.S. soybean supply elasticity of 0.92.

Source: Price et al., 2003.
22

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Economic Research Service/USDA

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