Economic impact of dominant GM crops worldwide : a review.
Date: 2007-08-16
Institutions: Institute for Prospective Technological Studies
Subjects: EU Member State, agricultural product, economic consequence, third country, transgenic plant

T E C H N I C A L   R E P O R T   S E R I E S

Economic Impact
of Dominant
GM Crops Worldwide:
a Review

EUR 22547 EN

Institute for
Prospective
Technological Studies

The mission of the IPTS is to provide customer-driven support to the EU policy-making process by researching science-
based responses to policy challenges that have both a socio-economic as well as a scientific/technological dimension.

Economic Impact 
of Dominant GM 
Crops Worldwide: 
a Review

Authors:

Manuel Gómez-Barbero

Emilio Rodríguez-Cerezo
EUROPEAN COMMISSION

DG JRC-IPTS

Sustainability in Agriculture, Food and Health Unit

December 2006

EUR 22547 EN

European Commission

Directorate-General Joint Research Centre 

(DG JRC)

Institute for Prospective Technological 

Studies (IPTS)

Contact information

Address: Edificio Expo. c/ Inca Garcilaso, 

s/n. E-41092 Seville (Spain)

E-mail: jrc-ipts-secretariat@ec.europa.eu

Tel.: +34 954488318

Fax: +34 954488300

http://www.jrc.es

http://www.jrc.cec.eu.int

Legal Notice 
Neither the European Commission nor any 

person acting on behalf of the Commission is 

responsible for the use which might be made of 

this publication.

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European Union is available on the Internet.

It can be accessed through the Europa server

http://europa.eu.int

EUR 22547 EN

Catalogue number: LF-NA-22547-EN-C 
ISBN: 92-79-03879-6 

ISSN: 1018-5593

Luxembourg: Office for Official Publications 

of the European Communities

© European Communities, 2006

Reproduction is authorised provided the 

source is acknowledged

Printed in Spain

Foreword

JRC-IPTS  is  a  partner  in  the  research  project  “Sustainable  Introduction  of  GMOs  into  European 
Agriculture”  (SIGMEA)1  funded  by  the  Sixth  Framework  Programme  of  the  European  Commission  for 
2004-2007. The  objective  of  SIGMEA  is  to  set  up  a  science-based  framework,  strategies,  methods  and 

tools for assessing ecological and economic impacts of GM crops and for effective management of their 

development within European cropping  systems.  JRC-IPTS is the lead  body  for a work  package  dealing 

with the socioeconomic dimension of GM crops in Europe.

On 28 October 2004, within this framework of research activities, JRC-IPTS organised the scientific 

meeting “Economic Impact of Available GM crops: Methodologies and Results”. The meeting brought 

together  scientists  from  Europe,  America  and  Asia  to  review  the  existing  evidence  on  the  economic 

impacts of GM crops in developed and developing countries. Another goal of the meeting was to discuss 

the  variability  of  theoretical  economic  frameworks,  methodologies,  variables  and  hypothesis  used  in 

current studies.

Participants in this event were provided with a background document drafted by JRC-IPTS reviewing 

scientific literature in the subject to animate the discussion. Further review of this literature during the 

past  two  years  has  resulted  in  this  comprehensive  report  on  the  scientific  evidence  available  on  the 

economic impacts of GM crops. This is a valuable addition to a scientific debate that has focused often 

on  the  impact  on  human  health  and  the  environment,  and  rarely  on  the  agronomic  and  economic 

performance of GM crops.

Seville, December 2006 

Per Sørup

Head of SAFH Unit

EUROPEAN COMMISSION

DG JRC-IPTS

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SIGMEA gathers 44 parnerts and is coordinated by INRA (France) and NIAB (UK).

 
 
 
 
 
 
 
 
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Acknowledgements

The  following  scientists  and  European  Commission  staff  participating  in  the  scientific  meeting 

“Economic Impact of Available GM crops: Methodologies and Results” of 28 October 2004 in Seville are 

acknowledged for their valuable comments on the first draft of this report:

Matty Demont (Catholic University Leuven, Belgium), Jorge Fernández-Cornejo (Economic Research 

Service-USDA, US), Ruifa Hu (Chinese Academy of Sciences, China), Stephan Lemarie (INRA-UMR GAEL, 

France), Klaus Menrad (University of Applied Sciences, Germany), Matin Qaim (University of Hohenheim, 

Germany),  Peter  W.B.  Phillip  (University  of  Saskatchewan,  Canada),  Gonzalo  Sanz-Magallón  Rezusta 

(Universidad San Pablo-CEU, Spain), Jean Ferriere (DG TRADE, European Commission), Philippe Corbisier 

(DG  JRC-IRMM,  European  Commission),  Andrew  Barnad  (DG  ENTR,  European  Commission),  Stephen 

Langrell  (DG  JRC-IHCP,  European  Commission),  Katja  Neubauer  (DG  SANCO,  European  Commission) 

and Jarka Chloupkova (DG AGRI, European Commission).

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Table of contents

Foreword 

Acknowledgements 

1.  Introduction 

2.  GM Crops: Evolution and Current Status of Adoption Worldwide 

2.1  Global areas of GM crops in industrialised and developing countries 
2.2  Dominant GM crops and traits 
2.3  Adoption rates for the main GM crops 

3.  Economic  Impact  of  Dominant  GM  Crops:  Ex  post  Analyses  after 

Adoption 
3.1  Sources of farm-level economic impact 
3.2  Herbicide Tolerant soybean (HT soybean) 

3.2.1	 The	crop	
3.2.2	 Farm-level	economic	impacts	of	HT	soybean:	The	US,	Argentina	

and	Romania	

3.2.3	 Aggregated	economic	welfare	produced	by	HT	soybean	and	its	

distribution	

3.2.4	 Impact	on	the	use	of	agricultural	inputs	

3.3  Insect-resistant cotton (Bt cotton) 

3.3.1	 The	crop	
3.3.2	 Farm-level	impacts	of	Bt	cotton	in	China,	India,	South	Africa,	

Argentina,	the	US	and	Australia	

3.3.3	 Aggregate	economic	welfare	produced	by	Bt	cotton	and	its	

distribution	

3.4   Insect-resistant maize (Bt maize) 

3.4.1	 The	crop	
3.4.2	 Farm-level	economic	impacts	of	Bt	maize	in	the	US,	South	

Africa	and	Spain	

3.5  Herbicide Tolerant rapeseed/canola (HT rapeseed/canola) 

4.  Assessing  the  Economic  Impact  of  GM  Crops  before  Adoption:  Ex  ante 

Studies 
4.1  Ex  ante  analyses  for  the  EU:  Estimating  the  benefits  of  potential 

adoption 

4.2  Ex ante analyses in developing countries 

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5.  Market Segmentation, Identity Preservation and Coexistence: Impacts on 

Economic Balance of GM Crops 
5.1  Introducing  market  segmentation  and  identity  preservation  costs  in 

impact studies 

5.2  The  concept  of  coexistence  and  its  impact  on  the  economic  balance 

and adoption of GM crops 

6.  Summary and conclusions 

References 

31

31

32

35

39



 
 
1. Introduction

It  is  now  more  than  ten  years  since  the 

use  of  agricultural  inputs.  Results  produced 

first  genetically  modified 

(GM)  crops  were 

by  farm-level  studies  constitute  the  bases  for 

introduced  into  agriculture.  During  the  decade 

aggregate  studies.  These  studies  estimate  the 

1996-2005,  GM  varieties  with  novel  agronomic 

global  economic  welfare  generated  by  adoption 

traits (commonly known as “first generation GM 

of  GM  crops,  and  its  distribution  among  the 

crops”) have quickly been taken up in many areas 

economic  agents  (biotech  research  companies, 

of the world.

Reports  on  the  economic  impact  of  GM 

crops often appear outside the scientific literature 

and  with  little  chance  of  assessing  their  validity. 

However,  the  body  of  evidence  accumulated 

during this decade by many research institutions 

and published in scientific journals has grown to 

the point where a picture of the effects of dominant 

seed  suppliers,  farmers,  the  food/feed  industry, 

and consumers) or geographical regions. Chapter 

3  reviews  farm-level  and  aggregate  research 
performed  ex  post  for  the  four  main  dominant 
GM  crops  adopted  worldwide,  including  the 
only  case  of  ex  post  economic  impact  analysis 
available for the European Union (the case of GM 
maize grown in Spain).

GM  crops  worldwide  can  now  reasonably  be 

Chapter  4  is  particularly  relevant  for  the 

obtained,  and  this  is  the  purpose  of  this  review. 

European  Union,  where  GM  crops  have  not 

Results  from  this  research  will  also  help  identify 

been  adopted  to  any  significant  commercial 

the factors determining the adoption of GM crops 

extent  (except  for  GM  maize  in  Spain).  Chapter 

by farmers, and shed light on the changes in the 

4  reviews  research  on  the  potential  adoption  of 

use of agricultural inputs induced by GM crops, 

therefore  providing  indirect  evidence  of  their 

environmental impacts.

The report starts with a brief description of the 

dominant “first generation” GM crops worldwide 

GM  varieties  and  potential  economic  impact 
(ex  ante  studies).  Ex  ante  studies  have  a  strong 
modelling  component  and  sensitivity  analysis  of 

the main parameters is always fundamental to the 

correct interpretation of the results.

and rates of adoption by farmers (Chapter 2).

Finally,  in  Chapter  5  the  impact  on  the 

Next,  it  presents  (Chapter  3)  the  economic 
effects of crops already adopted (ex post studies). 
Studies analysing ex post the effects derived from 
the  adoption  and  diffusion  of  GM  crops  are  of 

economic balance of GM crops of issues such as 

market  segmentation,  identity  preservation  and 

measures  to  ensure  coexistence  with  non-GM 

crops is reviewed.

two  types.  The  first  type  deals  with  the  farm-

This review has been compiled by surveying 

level economic impacts. Farm-level analyses are 

peer-reviewed  articles  on  the  economic  impact 

largely based on surveying samples of commercial 

of  dominant  GM  crops.  Where  other  sources 

farmers,  and  provide  data  on  the  economic  and 

are used, this is indicated in the text. For ease of 

agronomic  performance  of  the  crop  and  on  the 

comparison, all original data has been converted 
to euros and hectares2.

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2 

Nominal exchange rates used: e1= $1.2; e1= CAD 1.56.

 
 
 
 
 
 
 
 
10

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2. GM Crops: Evolution and Current Status of Adoption 

Worldwide

2.1 Global areas of GM crops in 
industrialised and developing 
countries

The  first  significant  sowings  of  GM  crops 

took  place  in  1996  when  two  agronomic  input 

traits  (herbicide  tolerance  and  insect  resistance) 

became available for a few major crops. Some 1.7 

to 2.8 million hectares of GM crops were grown 

in  1996,  almost  exclusively  in  the  United  States 

(US). Since 1996, the adoption of GM crops has 

The  distribution  of 

the  area  between 

countries  has  been  always  very  asymmetrical. 

In  2005,  eight  countries  accounted  for  99%  of 

the global GM crop area. This year the US alone 

accounted  for  55%  of  total  area,  followed  by 

Argentina  (19%),  Brazil  (10%),  Canada  (6%), 

China (4%), Paraguay (2%), India (1%) and South 

Africa (1%). The remaining 2% was shared by the 

other 13 countries.

Currently,  Spain  is  the  only  country  in 

been  progressing  at  a  fast  pace,  compared  with 

the  European  Union  farming  a  GM  crop  for 

past innovations in plant varieties. Ten years later 
(2005), the area under GM crops has grown to 90 

million  hectares  in  21  countries,  of  which  7  are 

high-income  economies,  and  14  are  developing 
countries3  (James,  2005). The  global  area  under 
GM crops has increased every year, at an average 
rate of 15% since 2000 (see Table 1).

commercial purposes at a significant rate. Spanish 

farmers  started  in  1998  to  grow  a  type  of  GM 
maize  (called  Bt  maize4),  accounting  for  53  225 
hectares in 2005 (MAPA, 2005). France, Germany, 

Portugal  and  the  Czech  Republic  also  grew  Bt 

maize in 2005 but report very small areas, in any 
case under 1000 hectares (James, 2005).

Table 1: Global area under GM crops and grower countries

Year

Area (million hectares)

Countries

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2.8

12.0

27.8

39.9

44.2

52.6

58.7

67.7

81.0

90.0

US, China, Canada, Argentina, Australia and Mexico

US, China, Canada, Argentina, Australia and Mexico

US, China, Argentina, Canada, Australia, Mexico, Spain, France and South Africa 

US, Argentina, Canada, China, Australia, South Africa, Spain, France, Portugal, 
Romania and Ukraine
US, Argentina, Canada, China, South Africa, Australia, Romania, Mexico, Bulgaria, 
Spain, Germany, France, Portugal, Ukraine and Uruguay
US, Argentina, Canada, China, South Africa, Australia, Mexico, Bulgaria, Uruguay, 
Romania, Spain, Indonesia and Germany
US, Argentina, Canada, China, South Africa, Australia, India, Colombia, Honduras, 
Mexico, Bulgaria, Uruguay, Romania, Spain, Indonesia and Germany

US, Argentina, Canada, Brazil, China, South Africa, Australia, India, Colombia, Hondu-
ras, Mexico, Bulgaria, Uruguay, Romania, Spain, Indonesia, Germany and Philippines

US, Argentina, Canada, Brazil, China, South Africa, Australia, India, Colombia, Hon-
duras, Mexico, Paraguay, Uruguay, Romania, Spain, Germany and Philippines
US, Argentina, Canada, Brazil, China, South Africa, Australia, India, Colombia, 
Honduras, Mexico, Paraguay, Uruguay, Romania, Spain, Germany, Philippines, Iran, 
Portugal, France and Czech Republic

Sources: For the years 1996 and 1997 adapted from James (1997), for 1998 James (1998), for 1999 James (1999), for 2000 James 
(2000), for 2001 James (2001), for 2002 James (2002), for 2003 James (2003), for 2004 James (2004) and for 2005 James (2005)

11

3 

4 

According to the World Bank classification (high-income economies: GNI per capita= $10 666 or more; developing countries: 
the rest).
Bt maize is a GM crop that contains a gene derived from a soil bacterium (Bacillus thuringiensis), which produces a protein 
toxic for the European Corn Borer (ECB) and related maize pests.

 
 
 
 
 
 
 
 
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2.2 Dominant GM crops and traits

During 

the  first  decade  of  commercial 

GM  crops  (1996-2005),  two  agronomic  traits 

introduced  by  genetic  engineering  have  been 
dominant. These  traits  are  Herbicide  Tolerance5 
(referred to as HT crops in this paper) and insect 

rapidly  and  available  “stacked”  Bt/HT  crops 

(cotton  and maize)  now account for 11%  of  the 

total GM crop area.

While  “stacked” 

trait  crops  are  rapidly 

growing 

in 

importance, 

they  have  shorter 

historical  series  of  adoption  than  non-stacked 

resistance  (referred  to  as  Bt  crops  since  the 

crops,  and  it  is  hard  to  identify  their  economic 

gene  conferring  resistance  comes  from  the  soil 

impact  (it  is  often  unclear  in  studies  looking  at 

bacterium Bacillus thuringiensis).

Table  2  summarises  the  evolution  of  the 

agricultural  area  under  dominant  GM  crop-trait 

combinations.

Bt crop economic impact whether stacked Bt/HT 

varieties have been considered or not).

2.3 Adoption rates for the main GM 

By  2005,,  the  HT  trait  had  been  introduced 

crops

into  major  crops  and  commercial  HT  varieties 

were  grown  for  soybean,  maize,  cotton  and 

canola (a type of oilseed rape). About 71% of the 

global  GM  crop  area  in  2005  was  planted  with 

HT crops (Table 2).

In 2005, GM soybean accounted for 60% of 

the world’s soybean harvested area (Figure 1). All 

GM soybean varieties cultivated in the world are 
modified to tolerate herbicides (herbicide tolerant 

or HT soybean). HT soybean varieties accounted 

Insect resistant (Bt) crops were second after 

for 87% of the soybean grown in the US (James, 

HT  crops,  with  an  estimated  global  share  of 
18%. By 2005, insect resistance Bt genes6 were 
commercially  used  in  varieties  of  maize  and 

cotton.

Finally,  the  combination  (“stacking”)  of  the 

two traits, HT and Bt, in the same crop is growing 

2005), the main producer of soybean in the world. 

The other major producers of soybean are Brazil, 

Argentina,  China  and  India  (FAOSTAT,  2006). 

Argentina  (99%  adoption  rate)  and  Brazil  are 

also significant growers of HT soybeans. China is 

testing the crop in field trials.

Table 2: Evolution of dominant GM crops and traits

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2005

HT soybean
Bt Maize
HT Maize

Bt/HT Maize

Bt Cotton

Bt/HT Cotton

0.5
0.3
0.0

--

0.8

0.0

HT Cotton

<0.1

HT Canola 
(oilseed rape)

0.1

5.1
3.0
0.2

--

1.1

<0.1

0.4

1.2

15.0
7.0
2.0

--

1.0

--

--

2.0

21.6
7.5
1.5

2.1

1.3

0.8

1.6

3.5

(million hectares)

25.8
6.8
2.1

1.4

1.5

1.7

2.1

2.8

33.3
5.9
2.4

2.5

2.1

1.9

1.8

2.7

36.5
7.7
2.5

2.2

2.4

2.2

2.2

3.0

41.4
9.1
3.2

3.2

3.1

2.6

1.5

3.6

48.4
11.2
4.3

3.8

4.5

3.0

1.5

4.3

% total
60.44
12.56
3.78

7.22

5.44

4.00

1.44

5.11

54.4
11.3
3.4

6.5

4.9

3.6

1.3

4.6

Total

1.7

11.0

27.0

39.9

44.2

52.6

58.7

67.7

81.0

90.0

100

Source: For the period 1996-2003 adapted from ISAAA (2004); for 2004 James (2004) and for 2005 James (2005)

5 

6 

Herbicide Tolerance refers here to so-called total herbicides (glyphosate and gluphosinate) obtained by transgenesis (Genetic 
Modification, GM). Crop varieties tolerant to herbicides have also been generated by mutagenesis and/or selection.
Bt genes for insect resistance are a large family; several are used commercially for different pests; more than one Bt trait for 
different pests can be introduced into the same crop.

 
 
 
 
 
 
 
 
 
 
 
In  2005,  14%  of  maize  harvested  area  in 

Finally,  17%  of  the  global  area  devoted 

the  world  was  under  GM  varieties. The  US,  the 

to  canola  (oilseed  rape)  is  sown  with  GM  (HT) 

main  maize  producer  worldwide,  grew  about 

varieties.  GM  (HT)  canola  is  grown  exclusively 

50%  of  its  maize  area  with  GM  varieties  (either 

in Canada and the US. China and India are also 

Bt, HT or “stacked” Bt/HT) (James, 2005). Other 

main  growers  of  canola  but  there  are  no  GM 

main  maize  producing  countries  such  as  China, 

varieties authorised.

Brazil,  Mexico  and  India  have  not  licensed  any 

GM maize for cultivation.

Taking these data together, it is not surprising 

that  most  literature  on  the  economic  impacts 

The global adoption rate for GM cotton was 

of  GM  crops  focuses  on  the  four  arable  crops 

28%  of  the  total  cotton  area  in  2005.  Major 

mentioned  above.  Other  GM  crops  have  been 

cotton producers are China, the US and Pakistan. 

cultivated  but  their  adoption  is  insignificant. 

The  US  grew  about  79%  of  its  cotton  area  with 

The  present 

report  concentrates, 

therefore, 

GM  varieties  (either  Bt,  HT  or  Bt/HT)  in  2005 

on  reviewing  the  results  on  those  dominant 

(FAOSTAT,  2006,  Fernandez-Cornejo,  2005, 

combinations of crop/traits.

James, 2005). China cultivated Bt cotton in nearly 

66% of its cotton land area (3.3 million hectares) 

(James, 2005).

Figure 1: Global adoption rates for major GM crops in 2005

Source: FAOSTAT (2006) and James (2005)

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1

3. Economic  Impact  of  Dominant  GM  Crops:  Ex  post 

Analyses after Adoption

3.1 Sources of farm-level economic 

crops  (these  measures  are  being  discussed  by 

impact

Member States of the European Union).

The adoption of a GM crop involves potential 

on-farm effects both on the revenue side and on 

the  cost  side  compared  with  the  conventional 

counterpart.  The 

farm-level  profitability  of 

dominant  GM  crops  is  a  function  of  some  key 

variables such as:

•  differences in yield (Bt crops are expected to 

reduce yield losses attributed to pests);

• 

reductions in insecticide costs (some Bt crops 

are expected to reduce insecticide use);

• 

reductions 

in  weed  management  costs 

(HT  crops  are  expected 

to  save  costs 

through  simpler  and  more  flexible  weed 

management  regimes  based  on  a  single  or 

few herbicides);

•  differences in seed prices (GM seeds are more 

expensive than conventional counterparts);

•  differences  in  price  received  by  the  farmer 

between  the  GM  crop  and  its  conventional 

counterpart.

3.2 Herbicide Tolerant soybean

(HT soybean)

3.2.1	 The	crop

Soybean is one of the world’s most important 

and  fastest  expanding  crops  and  it  contributes 

considerably 

to  overall  human  nutrition. 

In 

2005,  the  crop  occupied  an  area  of  about  91 

million  hectares  in  the  world  (FAOSTAT,  2006). 
In  some  agro-climatic  conditions  soybean  is 

a  poor  competitor  with  weeds  and  therefore 

weed  control  becomes  a  critical  component  of 

profitable  soybean  production.  Although  there 

are  many  conventional  weed  control  options 

for  soybean  growers,  these  are  subject  to  some 

limitations in efficiency and cost (Carpenter and 

Gianessi, 1999).

The introduction of HT soybeans resulted in a 

novel way of weed control in this crop. The plants 

are genetically-engineered to tolerate the broad-

spectrum  herbicide  glyphosate.  The  technology 

The  adoption  of  GM  crops  may  also  have 

is  known  as  HT  soybean  or  “RoundupReady” 

an  effect  for  farmers  on  the  income  generated 

soybean. It allows the replacement of an array of 

by  off-farm  activities,  since  some  of  the  genetic 

herbicides by a single broad-spectrum herbicide 

modifications  (herbicide  tolerance)  are  designed 

that usually is less expensive and simplifies weed 

to simplify crop management, eventually allowing 

management.  Since  its  introduction  in  the  US 

farmers  to  use  more  time  in  off-farm  activities 

and Argentina  in  1996,  genetically  modified  HT 

(Fernandez-Cornejo, et al., 2005).

Novel  operating  costs  may  be  linked  to  the 

introduction  of  GM  varieties.  For  example,  the 
planting of refuges of non-GM plants in the case of 

Bt crops (to prevent the appearance of resistance 

in  pest  populations).  Also,  novel  potential  costs 

incurred  by  GM  farmers  are  mandatory  farm 

measures  to  ensure  coexistence  with  non-GM 

soybean has been adopted at a very rapid rate. In 
2005,  HT  soybean7  was  grown  on  54.4  million 
hectares, accounting for some 60% of both total 

soybean  harvested  and  global  GM  areas.  The 

adoption of HT soybean in the US, which is the 

main world producer, is widespread in soybean-

producing states accounting for up to 80% of the 

soybean crop. In Argentina, the rate of adoption 

7 

HT soybean is not a single variety. The transgene has been introduced into many previously existing soybean varieties adapted 
to local markets.

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is even higher, up to 98%-99% of total soybean 

They found higher yields for HT soybean adopters 

area.  In  2005,  Brazil  approved  a  bill  allowing 

but the difference was almost negligible.

the  sale  of  commercial  HT  soybean  seeds. This 

year,  Brazil  cultivated  9.4  million  hectares  of 

HT  soybeans  covering  41%  of  the  crop  area. 

Other  countries  growing  HT  soybeans  in  2005 

were  Paraguay,  Canada,  Uruguay,  South  Africa, 

Romania and Mexico (James, 2005).

An  exception  is  Romania,  where  soybean 

farmers  had  a  relatively  poor  weed  control 

situation (because of limited access to herbicides) 

and the introduction of HT soybean has resulted 

in  yield  increases  of  31%  on  average  compared 

with conventional soybean (Brookes, 2005).

3.2.2	 Farm-level	 economic	

impacts	 of	 HT	

soybean:	The	US,	Argentina	and	Romania

Crop price

Yields

No  price  differences  between  the  prices 

received  by  US  farmers  for  HT  or  conventional 

Scientists  do  not  find  statistically  significant 

soybean  are  reported  in  the  scientific  literature 

differences in yield between HT and conventional 

(Bullock  and  Nitsi,  2001,  Fernandez-Cornejo,  et 

soybean in the US or Argentina (Gianessi, 2005, 

al., 2002, Gianessi, 2005). The same situation is 

Qaim  and  Traxler,  2005).  Several  arguments 
are  given  to  explain  the  fact  that  HT  soybean 

reported  for  Argentina  although  in  this  country 
and  in  Romania  there  are  reports  of  small  price 

introduction  is  yield-neutral.  The  crop  is  not 

premia  for  HT  soybean  producers  due  to  lower 

specifically  designed  to  provide  better  yields, 

contamination  of  the  soybean  grain  with  weed 

but to cut costs and simplify weed management 

seeds (Brookes, 2005, Qaim and Traxler, 2005).

procedures.  Also,  in  the  case  of  Argentina,  the 

gene  for  herbicide  tolerance  had  not  yet  been 

introduced 

into  all 

top-yielding  varieties  of 

soybean  therefore  some  HT  soybean  varieties 

being used may not be the best adapted to local 

conditions where they are grown.

Fernandez-Cornejo  et  al.  (2002)  argue  that 

many factors other than the “herbicide treatment 

regime” vary widely among surveyed farmers and 

therefore yield differences may also be attributed 

to them (soil,  weather, irrigation, farm  practices, 

pest pressures, farmer education, etc.). To discern 

the  portion  of  yield  variability  that  can  be 
attributed specifically to the use of HT soybean, 

the authors used econometric models to analyse 

the  US  case.  The  models  use  data  from  the 

Agricultural Resource Management Study (ARMS) 

survey conducted in 1997. The results showed a 

small but positive correlation between yields and 

the  use  of  HT  soybean  in  the  US.  Using  survey 

data  from  Delaware  farmers  (116  individuals)  in 

Seed price

In  the  US,  seed  prices  for  HT  soybean  are 

higher  than  for  conventional  soybean  seeds  (the 

“technology fee”). The sale and use of HT soybean 

seeds is protected in the US by patents and a sales 

contract  with  farmers,  not  allowing  the  use  of 

farm-saved HT soybean seed. Fernandez-Cornejo 

and McBride (2000) found large price premia for 

HT  soybean  seeds  in  the  US,  ranging  between 
e24-e28 per hectare (for 1997). Bullock and Nitsi 
(2001) analyzed a sample of US farmers growing 

HT  soybean  and  reported  an  average  additional 
seed cost of e13 per hectare in 1999.

The  situation  is  quite  different  in  Argentina 

(Qaim  and Traxler,  2005),  where  under  national 

law plant varieties cannot be patented and farmers 

are allowed to use farm-saved seed of HT soybean 

(estimated  at  30%  of  all  soybean  planted). Also, 

some local seed companies received royalty-free 

1

the 2000 season, Bernad et al. (2004) conducted 

access to the technology in the late 1980’s from 

a  similar  analysis.  Most  farmers  cultivated  both 

GM and conventional soybeans at the same time. 

Monsanto and since then are exploiting their own 

HT  varieties.  The  consequence  of  this  situation 

 
 
 
 
 
 
 
 
 
 
 
 
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is  that  the  price  difference  between  HT  and 

farmers  (Qaim  and  Traxler,  2005).  The  increase 

conventional  soybean  seed  in  Argentina  is  very 
small (less than e3 per hectare in 2001) and this 
is an essential factor accounting for the adoption 

in  gross  margin  was  higher  for  the  group  of 

smaller farmers (less than 100 ha) than for larger 

farms in Argentina. The difference with the US is 

rate (99%) and economic impact of HT soybean 

explained by the low seed price of HT soybeans 

for Argentinean farmers (see below).

in Argentina.

Weed management costs

Savings  in  weed  management  costs  are 

reported for HT soybean growers when compared 

with  conventional 

soybean  weed  control 

In  Romania,  characterised  by  the  impact 

of  HT  soybean  on  yields  (up  31%),  increases  of 

gross  margin  of  130-180%  have  been  reported 

(Brookes, 2005).

programmes  based  on  herbicides  (Bernard,  et 

Explaining  adoption  in  the  US:  Off-farm  income 

al., 2004, Carpenter, 2001, Fernandez-Cornejo, 

and simplicity of use

et  al.,  2002,  Qaim  and  Traxler,  2005).  HT 

soybeans are tolerant to glyphosate, an herbicide 

effective for a broad range of weeds. It is usually 

cheaper than other herbicides and it replaces the 

use  of  a  combination  of  3-4  different  products 

(Carpenter,  2001,  Fernandez-Cornejo,  et  al., 

2002). The combination HT soybean/glyphosate 

results  in  fewer  tillage  operations,  and  reduces 

the time needed for harvesting. Therefore it has 

reduced labour and machinery costs (Qaim and 

Traxler, 2005).

Economic balance at farm level

The  question  therefore  is  whether  these 

lower costs on weed control and tillage currently 

outweigh  higher  seed  costs  and  the  fairly  small 

or  no  differences  in  yield.  Bullock  and  Nitsi 

(2001)  reported,  for  a  sample  of  US  farmers 

using HT soybean, that in most cases the cost of 

the technology was higher than the cost savings, 

therefore  negative  net  gains  were  derived  from 

the adoption of HT soybean (compared to the use 

of conventional seeds). Fernandez-Cornejo et al. 

(2002) did not find statistically significant effects 

of the adoption of HT soybean in the US on profits 

on-farm, using a large US national survey data.

The economic results at farm level for the US 

results  seem  at  odd  with  the  rate  of  adoption  of 

HT  soybean  (at  80%  of  total  US  soybean  area). 
Why  are  US  farmers  cultivating  HT  soybean 

and  increasing  the  HT  soybean  area?  Answers 

to  this  question  can  be  found  in  several  studies 

(Carpenter, 2001, Carpenter and Gianessi, 1999, 

Fernandez-Cornejo,  et  al.,  2003,  Gianessi, 

2005,  Weick  and  Walchli,  2002).  Farmers  may 

be  attracted  by  certain  HT  soybean  advantages 

such  as  easier  weed  control,  greater  flexibility, 

and increased free time for other activities. These 

advantages are not easily converted into monetary 

units and are often absent in calculations due to 

methodological complexities.

Increased free time can be devoted to off-farm 

activities  which  result  in  earnings  of  increasing 

importance  in  the  overall  economic  balance  of 

the farm (Nehring, et al., 2005). In fact, recent US 

research,  using  a  nationwide  survey  of  soybean 
farms, showed that the adoption of HT soybean is 

associated with a significant increase in off-farm 
household income, averaging e11 310 a year for 
adopters  of  HT  soybean  (Fernandez-Cornejo,  et 

al., 2005).

In  contrast,  Qaim  and  Traxler  found  that 

3.2.3	 Aggregated	 economic	 welfare	 produced	

the  technology  increased  farmers’  profitability 
on  average  by  e19  per  hectare  in  Argentina, 
representing  an  increase  of  8.5%  over  the  gross 

margin  obtained  by  conventional 

soybean 

by	HT	soybean	and	its	distribution

1

A 

few  aggregated  studies  have  been 

conducted with the objective of calculating how 

the introduction of GM crops changes economic 

 
 
 
 
 
 
 
 
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welfare and its distribution between regions and/

the  rest  (13%). This  average  distribution  pattern 

or  stakeholders.  Aggregate  analyses  take  into 

differs  in  Argentina,  where  HT  soybean  farmers 

account  effects  such  as  the  impacts  of  GM  crop 

capture 90% of the economic surplus created (as 

introduction on global supply and market prices, 

explained  in  the  previous  section,  this  is  due  to 

the  benefits  for  consumers  (if  prices  are  pushed 

the  low  price  premium  for  HT  soybean  seeds). 

down),  the  effects  on  prices  of  agricultural 

The  relatively  small  share  obtained  by  soybean 

inputs 

(seeds,  pesticides).  Published  studies 

farmers  at  global  level  (13%)  is  due  to  the  fact 

show  methodological  variations  regarding  data 

that farmers in the ROW, who are not adopters of 

sources,  model  assumptions,  levels  of  regional 

HT soybean technology, suffer a negative change 

aggregation,  assumed  price  elasticities  and 

in economic surplus that has to be deducted from 

developments over time.

the  gains  obtained  by  the  farmers  adopting  the 

Falck-Zepeda et al. (2000) did an early attempt 

to  estimate  the  economic  surplus  generated  by 

HT soybean the year after its introduction in the 

US (1997). A two-region model was used (US and 

Rest  of  the  World,  ROW)  to  estimate  economic 

surplus  generated  for  the  1997  season.  Data 
source  was  limited  to  a  small  area  representing 

about  15%  of  the  total  US  soybean  production. 
Total world surplus varies between e884 million 
and e364 million, depending on the assumptions 
used  for  US  supply  elasticity.  In  all  cases,  US 

farmers  adopting  the  HT  technology  captured 

the highest share of total welfare created (76% of 
e884 million and 29% of e364 million).

More  recently,  and  benefiting  from  the 

availability  of  additional  data  on  farm-level 

impacts,  Qaim  and  Traxler  (2005)  have  carried 

out  a  large  analysis  computing  the  aggregated 

effects  of  HT  soybean  over  the  1996-2001 

period, with a 3-region partial equilibrium model 

comprising the two main growers (Argentina and 

the  US)  and  the  Rest  of  the  World.  Most  of  the 

parameters used in the model were fed with 2001 
figures,  therefore  HT  soybean  adoption  rates  for 

Argentina,  US  and  ROW  were  set  at  90%,  68% 

and  0%  respectively.  For  2001,  aggregating  the 

three  regions,  the  total  welfare  gain  was  about 
e1 000  million.  On  average,  at  global  level, 
soybean  consumers  gained  the  highest  share  of 

the total surplus (53%) as a result of lower prices 

of  the  crop  in  world  markets.  Biotechnology 

technology.

3.2.4	 Impact	on	the	use	of	agricultural	inputs

The  use  of  inputs  in  agriculture  is  part  of 

the economic balance but is also regarded as an 

indirect  evidence  for  the  environmental  impact 

of crops. The main impact of the introduction of 

HT soybean in input use has been the change in 

the  patterns  of  use  of  chemical  herbicides.  HT 

soybean  adoption  has  led  to  the  reduction  of 

herbicides use (other than glyphosate) in the US 

and Argentina  (Fernandez-Cornejo,  et  al.,  2002, 

Qaim and Traxler, 2005). Glyphosate is classified 

internationally  as  a  toxicity  class  IV  pesticide, 

the  lowest  class  for  toxicity  (WHO,  1988).  The 

herbicides that glyphosate has replaced in soybean 

cultivation  belonged  to  toxicity  classes  II  and  III 

(Qaim  and Traxler,  2005,  Fernandez-Cornejo,  et 

al.,  2002).  The  economic  consequences  of  this 

substitution  (a  reduction  in  weed  control  costs) 

have been discussed above.

In  aggregate 

terms,  without  considering 

toxicity  classes,  the  total  amount  of  herbicides 

used was reduced slightly in the US (Fernandez-

Cornejo, et al., 2002, Nelson and Bullock, 2003). 

In Argentina, in contrast, aggregate herbicide use 

in  soybean  cultivation  has  increased  from  2.6 

to  5.5  litres  per  hectare.  One  reason  according 

to Qaim and Traxler (2005) is that up to 80% of 

HT  soybean  farmers  in  Argentina  have  adopted 

no-tillage  practices,  using  glyphosate  instead  of 

tillage for pre-sowing weed control.

1

and  seed  companies  were  next  (34%)  and 

soybean  farmers,  as  a  global  group,  captured 

 
 
 
 
 
 
 
 
 
 
 
 
Regarding the use of fuels, farmers cultivating 

and  cosmetics,  and  is  also  processed  into  meal 

HT soybeans in Argentina reduced its machinery 

cakes for animal feed.

use by 20% allowing to save 10 litres of fuel per 

ha  (from  53  litres  per  ha  used  by  conventional 

soybean farmers to 43 litres per hectare used by 

HT soybean farmers). This is again due to the fact 

that  80  %  of  HT  soybean  farmers  have  adopted 

also  “conservation  agriculture”  or  “no  tillage” 
strategies  vs  42%  of  conventional  soybean 
farmers.  This  reduces  the  number  of  tillage 

operations  and  the  fuel  consumption.  No  tillage 

is also adopted because of its effect in preserving 

soil from erosion and degradation.

Regarding  land  use,  the  introduction  of  HT 

soybean  varieties  has  coincided  in  time  with  a 

sizeable expansion of the land used for soybean 

production  in  Argentina  (Qaim  and  Traxler, 
2005),  a  situation  that  has  not  occurred  in  the 

US. There is no research on how much this effect 

can  be  attributed  specifically  to  the  availability 

of  HT  soybeans  and/or  to  the  global  increase 

in  demand,  but  it  has  been  suggested  that  the 

tolerance  to  herbicides  has  made  it  possible  to 

introduce  soybean  cultivation  in  Argentina  in 

land previously dedicated to pasture, where past 

attempts to cultivate had been hampered by weed 

infestations.

Cotton  is  attacked  by  a  number  of  insect 

pests, which constitute a major problem in most 

cotton  producing  areas.  Conventional  cotton 

production relies heavily on chemical insecticide 

use  to  such  an  extent  that  it  is  estimated  that 

25%  of  world  use  of  agricultural  pesticides  is 

consumed in cotton production. This has also led 

to the appearance of pest populations resistant to 

the most commonly used insecticides.

Bt  cotton  is  the  name  for  transgenic  cotton 

varieties  that  are  resistant  to  a  number  of  pests 

affecting 

this  crop.  Bt  cotton  was 

initially 

introduced in the US on 730 000 hectares and in 

small areas of Mexico and Australia in 1996. By 

2005, eight countries were growing Bt cotton on 

9.8 million hectares of land, accounting for 11% 

of global GM crop area. These countries are the 

US, Argentina,  South Africa,  Mexico,  Colombia, 

India,  China  and  Australia.  Pakistan  started  to 

cultivate Bt cotton after the entry into force of its 

biosafety  rules  in  2005,  and  expects  to  cultivate 

at  least  34 000  hectares  in  the  year  2006-2007 

(Rao, 2006).

Peer-reviewed 

literature  on  Bt  cotton 

performance  has  been  conducted 

in  many 

countries and time series, making it the GM crop 

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3.3 Insect-resistant cotton (Bt cotton)

for  which  the  most  solid  evidence  is  available 

3.3.1	 The	crop

Cotton  is  a  very  important  industrial  crop 

regarding economic performance and impacts.

for many countries in the world. It is the world’s 

3.3.2	 Farm-level	impacts	of	Bt	cotton	in	China,	

leading  non-food  crop  both  in  terms  of  the 
amount  of  land  cultivated  and  the  economic 

India,	South	Africa,	Argentina,	the	US	and	
Australia

turnover  it  generates.  Cotton  is  grown  in  warm 

areas  with  a  rainy  season  or  under  irrigation, 

China

the  main  producers  being  China,  the  US,  India 

and  Pakistan.  Thirty-five  million  hectares  were 

cultivated in 2005 and international cotton trade 

is  forecast  to  reach  7.9  million  tons  in  2005/06 

(FAOSTAT,  2006,  ICAC,  2004).  Cotton  is  mainly 
grown  for  fibre  production.  In  addition,  cotton 

seed is a by-product used to produce edible oils 

In 1997, the Chinese Ministry of Agriculture 

approved Bt cotton varieties to fight against pests 

and  the  rising  use  of  insecticides  by  farmers.  In 

2005, China grew 3.3 million hectares of Bt cotton 

occupying about 66% of the national cotton area. 

A  particularity  of  China  is  the  availability  of  Bt 

cotton varieties developed by the public research 

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20

sector  (CAAS8)  that  compete  in  the  market  with 
the  Bt  cotton  varieties  sold  by  private  multi-

national seed companies world-wide.

India

India  has  the  world’s  largest  area  devoted 

to  cotton  cultivation  (about  9  million  hectares 

Huang  et  al.  (2002)  surveyed  a  sample  of 

in  2005)  (FAOSTAT,  2006).  However,  severe 

282  cotton  farmers  in  two  different  Chinese 

insect pests problems had relegated India to third 

provinces in 1999 to assess the economic impact 

position  among  the  world’s  cotton  producers 

of adoption (see also Huang, et al., 2003). Several 

(Beyers and Thirtle, 2003). The Indian government 

varieties  of  Bt  cotton  (either  from  Monsanto 

considered biotechnology as part of the solution 

or  CAAS)  were  compared  with  a  conventional 

and  in  March  2002  approved  the  commercial 

variety. The  analysis  found  that,  on  average,  the 

release  of  Bt  cotton.  In  2005,  about  1.3  million 

yield of Bt cotton was higher than that of non-Bt 

hectares  were  sown  with  Bt  cotton  with  an 

cotton  (by  between  7  and  10%). Yield  increases 

adoption rate of 14% of the total cotton area.

where  highest  for  smallest  farms.  Bt  cotton 

farmers  benefited  from  cost  savings  due  to  the 
reduced cost of pesticide use (e27 per hectare for 
Bt  cotton  growers  against  e148  per  hectare  for 
non-Bt  growers). These  results  are  confirmed  in 
subsequent surveys in 2000 and 2001, carried out 

over the same and additional provinces (Huang, 
et  al.,  2004).  The  main  economic  impact  of  Bt 
cotton  was  to  reduce  the  cost  of  production  by 

20% to 33% depending on the Bt cotton variety 

and the location, mostly due to reduced pesticide 

expenditure.  The  net  income  and  returns  to 
labour of all Bt varieties were superior to the non-
Bt  varieties.  Among  farmers  growing  Bt  cotton, 

a  relevant  result  is  that  smaller  farms  and  farms 

which  had  lower  incomes  consistently  obtained 

larger increases in net income than larger farmers 

and those with higher incomes.

The  impact  of  Bt  cotton  introduction  in 

reducing  the  use  of  insecticides  by  Chinese 
farmers  is  well  documented.  Bt  cotton  farmers 
insecticides 
reported 
(6.6  applications  per  crop  on  average)  than 

fewer  applications  of 

conventional farmers (20 applications on average). 

Bt  cotton  farmers  used  5  times  less  quantity  of 

insecticide  per  hectare  (see  also  Huang,  et  al., 

2003, Pray, et al., 2001). Moreover, farmers using 
Bt  cotton  reported  fewer  incidence  of  pesticide 
poisonings (5-8%) than those using conventional 

cotton (12-29%) (Huang, et al., 2003).

Before  data  based  on  farmers’  commercial 

practices  became  available,  Qaim  (2003)  and 

Qaim  and  Zilberman  (2003)  carried  out  an 

analysis  based  on  field  trial  results  of  Bt  cotton 

in  India.  A  sample  of  157  farmers  from  three 

Indian  states  (Maharashtra  and  Madhya  Pradesh 

in  Central  India  and  Tamil  Nadu  in  the  South) 

participating in field trials were surveyed in 2001. 

The  average  yield  gains  of  Bt  cotton  were  up  to 

80%  and  87%  over  the  non-Bt  counterpart  and 

the  “popular  check”  (the  most  commonly  used 

local variety), respectively. These large yield gains 

were  partly  due  to  high  pest  pressure  in  2001. 

On average, less use of pesticide was reported for 

Bt  cotton  (three  applications  less)  corresponding 
to  savings  of  about  e25  per  hectare,  and  gross 
margins  on  Bt  cotton  plots  were  more  than  five 

times higher than on conventional plots.

Two  seasons  after  the  commercial  release 

of  Bt  cotton,  Morse  et  al.  (2005)  studied  the 

economic impact on-farm based on data collected 

for  a  total  of  7 793  cotton  plots  in  2002  and 
1 577 plots in 2003. All these plots are located in 

three sub-regions of Maharashtra State. A higher 

average  gross  margin  is  reported  for  Bt  cotton 

farmers  compared  with  conventional  cotton 

farmers (43% higher in 2002 and 73% higher in 

2003). Although Bt cotton provided clearly better 

average economic performance, the figures show 

some  local  variability.  For  example  in  2002,  in 

8 

China  Academy  of  Agricultural  Sciences.  In  1999,  the  Biotechnology  Research  Centre  of  the  CAAS  initiated  an  important 
research programme to develop Bt cotton.

 
 
 
 
 
 
 
 
 
 
 
 
the Marathwada sub-region, the gross margin for 

South  African  smallholders  in  two  consecutive 

Bt cotton was just 4% higher than that of non-Bt 

seasons  to  assess  the  on-farm  impacts  of  Bt 

cotton (see also Bennett, et al., 2006 for the same 

cotton. On average, during the first season, 1998-

research).

This  regional  variability  in  agronomic  and 

economic  performances  has  been  studied  in 

detail  recently  by  Qaim  et  al.  (2006). Variations 

between  regions  (pest  pressure,  agro-ecological 

conditions)  and  farmers  (pest  control  patterns) 

influence spatial differences in performance. The 

authors also point out that the current regulatory 

procedure  in  India,  under  which  every  single 

Bt  hybrid  needs  its  own  approval,  delays  the 

authorisation of additional varieties and therefore 

the Bt technology has not been introduced yet in 

the  cotton  varieties  best  suited  for  each  region 

(the “germplasm” effect on yields).

In 

India, 

the  Genetic 

Engineering 

Approval  Committee 

(GEAC)  authorised 

the 

commercialisation  of  Bt  cotton  on  condition  that 
seed companies9 ensured the planting of a refuge 
(of conventional cotton) around Bt-cotton fields, as 

a barrier to pollen flow, and to prevent the build-

up of resistance among insects. At least 20% of the 

1999, Bt cotton adopters did not experience any 

yield increase. The authors showed that this fact 

could  be  partly  explained  by  the  sowing  rate 
used  for  Bt  cotton  (seed  sown  per  hectare). The 
sowing rate was 22% lower for Bt cotton adopters 

than  for  non-adopters  due  to  the  high  price  of 

Bt  cotton  seeds  (twice  the  cost  of  conventional 

varieties).  Pesticide  costs  were  reported  to  be 

lower  for  the  Bt  cotton  adopter.  However,  these 

savings were not enough to achieve better gross 

margins  compared  with  conventional  cotton.  In 

the  second  season  (1999),  intense  rains  resulted 

in a generally poor crop yield. Yet, on average, Bt 

cotton  adopters  (second  and  first  year  adopters) 

achieved  40%  higher  yield  per  hectare.  Despite 

Bt cotton seed costs per hectare were 68% higher 

for adopters, higher yields combined with savings 

on pesticide costs allowed Bt cotton adopters to 

obtain a  economic advantage of 58%  over non-

adopters’ gross margins.

farmer’s  field  must  be  planted  with  conventional 

Argentina

cotton and a minimum of five rows of conventional 

cotton  have  to  be  sown  along  the  border  of 

every  field  irrespective  of  the  size  of  the  plot 

(Raghuram,  2003). These  are  important  measures 

to  prevent  insect  resistance  and  to  maintain  the 

Bt  cotton  yield  advantage  (Morse,  et  al.,  2005). 

However,  Raghuram  (2003)  points  to  difficulties 

for  smallholders  in  applying  these  measures  due 

to  their  small  field  sizes,  which  could  present  a 
barrier to adopting the technology.

South Africa

In South Africa, Bt cotton was introduced in 

1998  and  became  the  first  GM  crop  cultivated 

in Africa. In 2005, about 30 000 hectares of GM 

cotton were grown in this country (James, 2005). 
Thirtle  et  al.  (2003)  surveyed  a  sample  of  100 

Argentina grew Bt cotton for the first time in 

1998. In 2005, about 30% of the national cotton 

area was cultivated with either Bt or HT cotton (75 

000 ha) (FAOSTAT, 2006, James, 2005). Contrary 

to  the  situation  described  for  HT  soybeans  in 

Argentina, local and global seed companies have 

been  able  to  enforce  the  intellectual  protection 

rights  of  Bt  cotton  seeds,  and  purchase  of  Bt 

cotton  seeds  in  Argentina  is  accompanied  by  a 

contract prohibiting the use of farm saved seeds.

Qaim  and  de  Janvry  (2003)  surveyed  299 

cotton farmers in 1999-2000 and 2000-2001. In 

2001 the adoption of Bt cotton was still limited to 

5% of national cotton area. The objective was to 

analyse the corporate pricing strategy for Bt cotton 

seeds and its effect on adoption by farmers. At the 

same time, the on-farm impact of the adoption of 

Bt cotton was studied.

9 

In India, the Bt cotton varieties are the result of a joint venture between Monsanto and the national firm Mahyco.

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3

22

On  average,  Bt  cotton  yields  were  32%  to 

the  first  two  years  that  Bt  cotton  was  grown  in 

34% higher than those of conventional cotton for 

Mexico  (1997  and  1998).  In  the  first  year,  with 

the  two  seasons  studied.  Bt  cotton  also  reduced 

very  low  pest  infestation,  yields  were  similar.  In 

expenditure  on  insecticides  by  more  than  50% 

1998, Bt cotton had 20 % higher average yields, 

in  both  seasons.  The  number  of  insecticide 

and  higher  average  market  prices.  Total  costs, 

applications  needed  for  Bt  cotton  was  reduced 

were  significantly  lower  for  Bt  cotton  producers 

(2.3 and 2.4 fewer applications for each season). 

due  to  reduced  insecticide  costs,  offsetting  the 

Despite  the  better  performance,  the  average  Bt 
cotton  seed  price  of  e83  per  hectare  found  in 
the  survey  (four  times  the  price  of  conventional 

varieties) resulted in small net benefits to farmers, 

and at the same time did not maximise the profit 

of  the  seed  supplier.  In  Argentina,  the  main 

constraint on higher adoption rates for Bt cotton 

higher  seed  prices.  An  average  of  two  fewer 

pesticide applications was used on Bt cotton than 

on conventional cotton. Finally, Bt cotton farmers’ 

farmers’ 
profit  advantage  over  conventional 
amounted  to  e236  per  hectare  on  average  over 
the two growing seasons.

seems to be the price of Bt cotton seeds (farmers´ 

average willingness to pay for Bt cotton seed was 

US

estimated  to  be  less  than  half  the  actual  market 

price).  Another  finding  was  that  the  Bt  cotton 

seed price was almost 80% higher than the level 

that would maximise the monopolist’s profits.

Mexico

Bt  cotton  was  first  introduced  in  the  US  on 

730 000 hectares in 1996 (ISAAA, 2004). The US 

grew  about  2  770  000  hectares  of  either  Bt,  HT 

or  HT/Bt  cotton  in  2005  (James,  2005,  Meyer, 

et  al.,  2005).  This  is  slightly  above  50%  of  the 

national  cotton  area.  Despite  this  considerable 

importance,  there  is  a  lack  of  peer-reviewed 

Mexico  grew  Bt  cotton  for  first  time  in 
1996. In 2005, Mexico cultivated about 120 000 

articles  studying  performance  of  GM  cotton  in 

the  country. There  are  a  couple  of  governmental 

hectares of this crop (James, 2005). Adoption rates 

peer-reviewed  reports  which  give  figures  on 

of  the  crop  vary  widely  between  regions,  with 

agronomic  and  economic  performance  of  Bt 

regions  reaching  almost  full  adoption  (Comarca 

cotton (Fernandez-Cornejo and McBride, 2000, K. 

Lagunera)  and  others 

insignificant  adoption. 

Price, et al., 2003). Although the two reports apply 

This  pattern  reflects  variability  in  pests  attacking 

different  approaches  to  calculating  the  impact 

cotton, and regions where major pests are those 

of  adopting  Bt  cotton,  both  used  data  from  the 

best  controlled  by  Bt  cotton  (for  example  pink 

Agricultural  Research  Management  Nationwide 

bollworm) show high adoption rates.

Survey (ARMS) for the year 1997. For the relevant 

Our  survey  found  no  peer-reviewed  papers 

dealing with the impacts of Bt cotton in Mexico, 

but  a  book  chapter  by  Traxler  et  al.  (2003) 

studying  the  adoption  of  Bt  cotton  in  Comarca 

Lagunera (96% adoption of Bt cotton by the year 

2000).  To  calculate  yields  and  cost  reductions 

due  to  the  adoption  of  Bt  cotton,  Traxler  et  al. 

(2003) surveyed two types of farmers, larger farms 
(30-120  hectares)  and  ejidos  (2-10  hectares)  for 

regions,  both  reports  found  yield  advantages  for 

Bt  cotton  growers  or  derived  from  the  adoption 

of  Bt  cotton.  Fernandez-Cornejo  and  McBride 

(2002)  reported  that  an  increase  of  10%  in  the 

adoption  of  Bt  cotton  in  the  Southeast  increased 

yields by 2.1% and Price et al. (2003) found that, 
on average in the Southern Seaboard10, Bt  cotton 
growers  enjoyed  a  yield  advantage  of  21%  over 

non-adopters.  Using  ARMS,  the  two  studies  also 

10  The Southern Seaboard is the name given to an area spanning the States of Virginia, North Carolina, South Carolina, Georgia, 

Mississippi, Alabama and Louisiana.

 
 
 
 
 
 
 
 
 
 
 
 
found economic advantages for Bt cotton over the 

3.3.3	 Aggregate	economic	welfare	produced	by	

conventional crop. Fernandez-Cornejo reported a 

Bt	cotton	and	its	distribution

positive and statistically significant effect on farm-

level  benefits  of  adopting  Bt  cotton  (+2.2%)  and 

Price et al. showed that on average adopters’ pest 

control costs fell by 7% as a consequence of using 

Bt cotton.

There is no recent and comprehensive multi-

regional  analysis  on  the  aggregate  economic 

impacts generated by Bt cotton. Qaim (2003) made 

medium-term  economic  projections  showing 

welfare gains derived from the adoption of Bt cotton 

Wossink  and  Denaux 

(2006)  surveyed 

in India (for the period 2002-2005). Indian farmers 

a  sample  of  208  North  Carolina  cotton 

adopting Bt cotton were the main beneficiaries of 

farms 

to  quantify 

the  environmental  and 

adoption  (capturing  67%  of  generated  welfare), 

economic  efficiency  of  HT  and  “stacked”  Bt/

followed by seed companies (33%).

HT  cotton  compared  to  conventional  cotton. 

Data  envelopment  analysis  (DEA)  is  used  for 

quantification  and  pesticide  leaching  potential 

for  the  assessment  of  the  external  effects  of 

pesticide. A Tobit  regression  is  used  as  a  further 

step  to  identify  common  characteristics  in  the 
most  efficient  cotton  growers  found  using  DEA 

analysis.  Results  show  that  the  Bt/HT  cotton 

contributes  positively  and  significantly  to  both 

agronomic 

and 

environmental 

efficiency. 

However, the advantage of fewer applications of 

pesticides is offset by the high price of GM cotton 

seeds, which means that the use of GM varieties 

does not show a clear economic advantage. The 

authors,  however,  recognise  that  they  do  not 

include  labour  cost  in  their  analysis,  and  that 

labour costs might be reduced as a consequence 

of reduced spraying.

Australia

In  Australia, 

the  Australian  National 

Registration  Authority  approved  a  very  limited 

commercial  release  of  Bt  cotton  in  1996. About 

90% of the total cotton area is now GM cotton, 

300 000 hectares (Bt, HT and HT/Bt). Since then, 

there has been a drastic reduction in insecticide 

use  against  the  major  cotton  pests  (Fitt,  2003). 

According  to  this  author,  as  confirmed  in  our 

survey,  no  full,  relevant  economic  analysis  has 

yet  been  carried  out  on  the  performance  of  Bt 

cotton in Australia.

An  aggregate  study  (Falck-Zepeda,  et  al., 

2000)  calculated  the  total  increase  in  world 

surplus and its distribution from the introduction 

of  Bt  cotton  in  the  US  in  1996,  the  first  year  of 

adoption. They  modelled  the  introduction  of  Bt 

cotton  as  occurring  in  a  large,  open  economy 

with  no  technology  spillovers  and  influencing 

world  market  prices.  Bt  cotton  decreased  world 
trade cotton prices by e0.81 per kilogram, a small 
effect  due  to  the  minimal  proportion  of  world 

cotton  area  occupied  by  Bt  cotton  at  that  time. 
Total surplus created was e192 million, of which 
59% went to US farmers that adopted Bt cotton, 

26%  to  the  two  main  seed  companies  owning 

the  Bt  cotton  technology  and  US  consumers 
gained  e18  million  (9%).  Consumers  in  the  rest 
of the world achieved e30.2 million while non-
adopting  farmers  in  the  rest  of  the  world  lost 
e14.93  million  due  to  downward  pressure  on 
prices.  The  same  analysis  was  made  for  1997, 

the  second  year  of  planting  of  Bt  cotton  in  the 

US.  For  this  year  total  increase  in  world  surplus 
was  estimated  by  the  model  at  e152  million, 
compared  to  e192  million  in  1996.  The  1997 
welfare gains went mostly to US farmers growing 

Bt cotton (42%) and seed companies (44%).

Traxler  et  al.  (2003)  estimated  the  increase 

in  welfare  due  to  adoption  of  Bt  cotton  and  its 

distribution  in  Comarca  Lagunera  (Mexico).  For 

the  two  years  studied  (1997  and  1998),  a  total 
surplus  of  e5  million  was  produced,  of  which 
about 86% went to farmers and 14% to the seed 

companies.

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.
3

3.4  Insect-resistant maize (Bt maize)

US

3.4.1	 The	crop

Maize  insect  pests  are  a  major  problem 

worldwide. The  European  Corn  Borer  (ECB),  the 

Mediterranean corn borer and the South Western 

corn  borer  damage  maize  production,  resulting 

in  significant  yield  and  economic  losses.  These 

losses are difficult to manage because insecticide 

sprays are effective only in the narrow time span 

between egg hatch and larvae boring into stems. 

The  lack  of  effectiveness  and  additional  cost 

is  the  reason  why  many  maize  farmers  do  not 

spray insecticides specifically for controlling corn 

borers and tend to assume the yield losses.

Bt  maize  contains  a  gene 

that  confers 

protection  from  corn  borers.  Bt  maize  is  the 

second  GM  crop  in  terms  of  area  sown  (11.3 

million hectares or 12.56% of the global GM crop 

area in 2005) (James, 2005). Twelve countries were 

commercial growers of Bt maize in 2005, namely 

the  US,  Canada,  Argentina,  Honduras,  South 

Africa, Uruguay, the Philippines, Spain, Germany, 

the Czech Republic, Portugal, and France.

The  value  of  Bt  maize  is  the  expected 

reduction  in  yield  losses  due  to  pest  attacks. 

Yet  the  levels  of  infestation  in  a  given  area  vary 

greatly  between  crop  seasons,  depending  on 

many  factors,  some  of  them  not  under  farmers’ 

control.  Farmers  would  benefit  from  forecasting 

infestation  levels  before  planting,  but  this  is  not 

easy.  In  low  infestation  years,  the  value  of  the 

protection derived from Bt maize may not cover 

the extra seed price paid for the technology, while 

in heavy infestation years Bt maize growers could 

obtain  substantial  yield  increases  translated  into 

economic benefits.

No  peer-reviewed  articles  and  only  a  few 

reports  from  governmental  agencies  have  been 

found  in  our  literature  survey  for  the  main  Bt 

maize  growing  country,  the  US.  In  2005,  50% 

of  maize  cultivated  in  the  US  was  GM  maize, 

equivalent  to  16.5  million  hectares  (either  Bt, 

HT  or  “stacked”  HT/Bt  maize)  (James,  2005). 

Carpenter  and  Gianessi  (2001)  reported  that,  on 

average, Bt maize yields were higher than those 

of conventional maize in 1997, 1998 and 1999. 

However, for 1998-99 Bt maize farmers reported 

lower  income  per  hectare  than  conventional 

maize  farmers.  These  results  are  in  line  with 

those of Fernandez-Cornejo and McBride (2002), 

reporting that the adoption of Bt maize in US had 

a negative economic impact in 1998. Hyde et. al. 

(1999) (based on data from expert opinions) found 

that  the  mean  profitability  of  Bt  maize  varied 
systematically with ECB pressure in Indiana (US).

As  in  the  case  of  HT  soybean,  the  question 

arises of how then to explain the adoption of Bt 

maize  by  US  farmers.  Marra  et  al.  (2003)  have 

reviewed the role of risk, uncertainty and learning 

in the adoption of new agricultural technologies. 

They use the example of GM insect-resistant crops 

(Bt  crops),  where  uncertainty  comes  primarily 

from variable seasonal levels of pest infestations. 
This work concludes that farmers with “high levels 
of  absolute  risk  aversion”  contemplate  Bt  maize 
as  an  attractive  technology.  Farmer  advisers, 

extension  educators  and  academic  researchers 

suggested that farmers use Bt maize as “insurance” 

against crop losses in the long term. On the other 
hand, market uncertainties, maize output prices, 

the price paid for the technology (GM seeds) and 

seasons with low level infestations are economic 

risk factors when deciding to adopt Bt maize.

3.4.2	 Farm-level	economic	impacts	of	Bt	maize	

in	the	US,	South	Africa	and	Spain

South Africa

2

Bt  maize  economic  performance  at  farm  level 

has  not  been  studied  in  detail  (compared  with 

HT soybeans or Bt cotton) despite its importance 

in  terms  of  area  and  the  numerous  countries  in 

which Bt maize is grown.

In  1998,  the  government  of  South  Africa 
authorised  the  cultivation  of  yellow-grained  Bt 

maize  which  is  mainly  used  as  animal  feed  and 

as an input in the food industry. Three years later, 

in  2001,  white-grained  Bt  maize  hybrids  were 

 
 
 
 
 
 
 
 
 
 
 
 
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also  commercialised.  White  maize  is  the  basic 

seed distribution until new events and varieties of 

staple food in South Africa. Both Bt maize crops 

Bt maize were authorised by the EU in 2004.

had  been  developed  to  resist  the  African  maize 
stem borer (Busseola fusca) which causes harvest 
losses of an average of 10%. In 2005, South Africa 

cultivated  about  85  000  hectares  of  white  GM 

maize and 195 000 hectares of yellow GM maize 

(James,  2005).  Gouse  et  al.  (2005)  surveyed  33 

large-scale yellow maize producers to gather data 

for  the  1999/2000  and  2000/2001  production 

seasons.  Four  South  African  provinces  were 

analysed,  two  of  them  growing  irrigated  maize 

and two in dry land conditions. Those cultivating 

Bt  maize  achieved  yield  advantages  ranging 

from 7% to 12%. At first glance, irrigation or dry 

conditions do not seem to have an impact on the 

effect of Bt maize on yields. The yield advantages 

together  with  reduced  pesticide  costs  resulted 
in  income  advantages  ranging  from  e20  per 
hectare to e124 per hectare. Gouse et al. (2005) 
also surveyed 368 small farmers growing Bt and 

conventional white maize at the same time, using 

seeds distributed by seed companies as field trials. 

Six areas were analysed in the 2001/2002 season. 

Each farmer cultivated their own traditional maize 

(“popular  check”),  the  conventional  counterpart 

of  Bt  maize  and  Bt  maize.  On  average,  the 

survey  results  show  that  Bt  maize  had  a  large 

yield advantage over the two conventional seeds. 

Another  outcome  of  the  research  is  that  farmers 

were able to reduce pesticide costs except in one 

of the areas where little pesticide was used in the 

2001/2002  season. The  authors  could  not  carry 

out an estimation of economic performance since 

the seeds were distributed free by companies.

Spain

Bt  maize  is  the  only  commercial  GM  crop 

grown  in  the  European  Union  (EU),  and  Spain 

is  the  only  EU  Member  State  where  adoption  of 

Data from the Spanish Ministry of Agriculture 

show  that  Spanish  farmers  grew  about  53  225 

hectares  of  Bt  maize  in  2005,  representing  12% 

of  the  national  maize  area.  Regional  rates  of  Bt 

maize  adoption  are  quite  variable,  probably 

reflecting variability in maize borer pest pressure. 

In  some  regions  such  as  Catalonia,  Bt  maize 

now represents 43% of the maize area. Bt maize 

is  grown  mainly  in  the  Ebro Valley  (Aragon  and 

Catalonia  regions)  and  in  Albacete  (Castilla-La 

Mancha  region).  In  Spain,  all  Bt  maize  is  sold 

through  normal  marketing  channels  to  animal 

feed producers.

The  largest  and  most  updated  source  of 

empirical  data  for  on-farm  performance  of  Bt 

maize in Spain comes from a survey conducted by 

Gómez-Barbero et al. (manuscript in preparation). 

The authors surveyed 400 Spanish maize farmers 

to  compare  the  economic  performance  of  Bt 

maize 

in  commercial  conditions  versus 

its 

conventional  counterpart,  for  the  three-season 

period  2002-2004.  The  survey  was  carried  out 

in the Catalonia, Aragon and Castilla-La Mancha 

regions,  which  together  represent  85%  of  the  Bt 

maize area.

For  the  2002-2004  period  studied,  farmers 

using  Bt  maize  obtained  an  increase  in  their 

gross  margin  compared  with  farmers  growing 

conventional maize. Taking Spain as a whole, the 
gross margin difference averages e85 per hectare 
per growing season. This represents an increase of 

13% over the average gross margin obtained by a 

maize farmer in Spain, including subsidies. These 

benefits, however, vary widely in the three regions 

studied,  ranging  from  the  high  gross  margin 
differences  in  Aragon  (e125  per  hectare)  and 
Catalonia (e71 per hectare) to just e7 per hectare 
in Albacete (Castilla-La Mancha). No differences 

the  crop  has  taken  place  to  a  significant  extent. 

in  the  price  received  by  Spanish  farmers  for  the 

In 1998, Spanish farmers started the commercial 
cultivation  of  Bt  maize  growing  some  20  000 

Bt or conventional maize crop were found in the 
survey. Adoption  of  the  Bt  maize  technology  by 

2

to  25  000  hectares. Adoption  and  diffusion  was 

Spanish  farmers  was  not  correlated  with  farm 

voluntarily limited by seed companies by limiting 

size, according to the survey.

 
 
 
 
 
 
 
 
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The  survey  found  that  on-farm  economic 

3.5 Herbicide Tolerant rapeseed/canola 

gains  are  mainly  due  to  the  better  agronomic 

(HT rapeseed/canola)

yield  of  Bt  maize  compared  with  conventional 

maize.  The  average  yield  advantage  of  Bt  over 

conventional  maize 

in  Spain 

for 

the 

three 

seasons (2002/04) was 4.7%, with clear regional 

variations.  Yield  gains  are  high 

in  Aragon 

and  Catalonia,  but  not  in  Castilla-La  Mancha 

(probably  reflecting  differences  in  the  frequency 

and  intensity  of  attacks  of  the  ECB  pest  that 

causes  yield  reductions). The  survey  also  found 

reduced use of insecticides for Bt maize growers. 

Fifty-eight per cent of conventional maize farmers 

sprayed  insecticides  to  control  the  corn  borer, 

a  figure  that  is  reduced  to  30%  among  farmers 

using  Bt  maize.  On  average,  conventional 

maize growers in Spain applied 0.86 insecticide 
treatments a year to control corn borers, as against 

0.32 treatments a year for Bt maize growers.

The surplus economic welfare created by Bt 

maize introduction in Spain was captured mainly 

by  Spanish  Bt  maize  farmers  (roughly  75%) 

followed by seed companies (about 25%). Other 

sectors  such  as  industry  or  consumers  do  not 

capture economic benefits associated to Bt maize 

introduction in Spain because there has been no 

impacts on prices.

Oilseed 

rape 

is  an 

important  crop 

worldwide.  Breeding  developments  led  to  the 

production  of  rapeseed  low  in  both  erucic  acid 

in the oil and glucosinolates in the meal (double-

low  varieties). The  name  canola  was  established 

with the licensing of the first double-low variety 

of  rapeseed  in  Canada  in  1974. Although,  once 

established, canola is a good competitor with most 

weeds, young canola seedlings are very sensitive 

to early weed competition. GM herbicide-tolerant 
canola11 (HT canola) aims at more efficient weed 
control and easier prevention of weed resistance 

to  herbicides.  It  has  been  on  the  market  since 

1995. In 2005, Canada grew 4.2 million hectares 

of HT canola with an adoption rate of 82% over 
the total canola acreage (James, 2005).

Despite  the  substantial  area  cultivated  and 

high rate of adoption of HT canola in Canada, the 

peer-reviewed literature on the economic impact 

of  this  crop  is  limited.  Carew  and  Smith  (2006) 

used a model to estimate that the contribution of 

HT canola varieties to increased yields of the crop 

is about 6.8% at national level. Mayer and Furtan 

(1999)  looked  at  the  increase  in  welfare  from 

adoption. However, the economic consequences 

A previous study tried to estimate the impact 

of reduced herbicide use and possible increased 

of  Bt  maize  cultivation  in  Spain.  Demont  and 

yields are not based on direct data from surveys 

Tollens (2004) looked at the total welfare increase 

but on the authors’ estimates.

in Spain for each of the years from 1998 to 2003. 

The study, however, uses secondary data and data 

from  a  survey  performed  in  2002  by  Brookes 
(2002)  to  estimate  on-farm  effects.  The  study 
estimates that on average and annually, Bt maize 
adopters  captured  e1.2  million  (63%  of  the 
increase  in  welfare)  and  the  seed  industry  e0.6 
million (37%).

A book chapter by Phillips (2003) looks at the 

economic  welfare  effects  of  the  introduction  of 

HT canola in Canada by examining the aggregate 

direct impact and its distribution among farmers, 
seed  companies  and  markets  (processors  and 

consumers).  Using  several  sources  of  secondary 

data,  farmers’  net  aggregate  benefits  (farmer’s 

gross benefits minus negative change in producer’s 

11  Although herbicide tolerant canola (triazine tolerant canola) varieties obtained by “non-GM” (no transgenesis) breeding have 

been available since 1982, in the text we refer to GM herbicide tolerant canola.

 
 
 
 
 
 
 
 
 
 
 
 
price  for  canola  due  to  increase  production) 
was  estimated  at  e44.8  million  (e11.98  per 
hectare) for the year 2000. As for the distribution 

protection,  more  benefits  should  have  flowed 

to  farmers.  The  farmers’  share  of  generated 

welfare  rose  from  6%  in  1997  to  29%  in  2000. 

of  the  aggregate  economic  surplus  generated, 

Consumers  have  captured  little  from  HT  canola 

technology providers (seed companies) captured 

adoption by lower prices due to the structure of 

the highest share of total welfare every year in the 

demand and supply. Strong concentration in the 

period studied. However, their share dropped to 

supply chain and the fact that 80% of Canadian 

about 58% in 2000 (from 94% in 1997). Phillips 

canola production is exported seem to be major 

(2003)  explained  that  this  might  be  because 

factors explaining this.

when  proprietary  technologies  lost  their  patent 

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2

4. Assessing the Economic Impact of GM Crops before 

Adoption: Ex ante Studies

Ex  ante  evaluations  deal  with  forecasting 
the  economic  impact  of  GM  crops,  at  farm  or 

adoption  of  HT  sugar  beet.  Assuming  that  all 

UK  sugar  beet  growers  adopted  HT  sugar  beet, 

aggregate level, before they are actually adopted. 

average savings in weeding costs were estimated 

Evaluations of this kind have a strong modelling 

at  €217  per  hectare  and  year  or  €33.5  million 

component and a number of parameters have to 
be estimated in ex ante studies. In particular, yield 
effects and cost reductions at farm level have to 

a  year  nationally.  Estimations  were  based  on  a 

complete  cost  analysis,  using  data  mainly  from 

different  published  sources  such  as  the  British 

be estimated from experiences in field trials and/

Sugar annual national surveys.

or  other  countries.  This  research  is  particularly 

relevant for the European Union, where GM crops 

have not yet been adopted (except for Bt maize in 

Spain). Sensitivity analysis of the main parameters 

is  always  fundamental  to  the  soundness  of  this 

type of evaluation.

4.1 Ex ante analyses for the EU: 

Estimating the benefits of potential 
adoption

There  is  a  small  but  growing  number  of  ex 
ante  studies  addressing  the  potential  economic 
impacts  of  GM  crops  not  yet  approved  for 

commercial  cultivation  by  EU 

farmers,  but 

cultivated elsewhere in the world.

Desquilbet  et  al. 

(2001)  evaluated 

the 

benefits  derived  from  the  potential  adoption  of 

.  A  survey  was  done  to 
HT rapeseed in France. A survey was done to
rapeseed  in  France. A survey was done to
  rapeseed in France. A survey was done to

estimate  weed  control  costs  of  individual  farms 

growing  conventional  rapeseed.  For  the  HT 

rapeseed counterpart, the estimation of weeding 

costs  was  built  using  data  from  HT  rapeseed 

field trials carried out in France. For the baseline 

scenario  the  estimated  rate  of  adoption  of  HT 

rapeseed by French farmers was 75% of farmers. 

With  this  adoption  rate,  French  farmers  would 

save  €24  million  in  weeding  costs  per  season. 

The total gains from moving from the no adoption 

situation  to  75%  adoption  of  HT  rapeseed  in 
France were estimated at €38 million per season.

May  (2003)  analysed  ex  ante  the  economic 

consequences 

for  UK 

farmers  of  potential 

In  a  book  chapter,  Demont  and  Tollens 
(2004)  studied  ex  ante  the  aggregate  economic 
HT  sugar  beet 
welfare  derived  from  introducing  HT sugar beet

  and  its  distribution  between  different 
in  the  EU and its distribution between different

economic  agents/regions. An  equilibrium  model 

was  used  in  which  the  rate  of  adoption  of  HT 

sugar beet in the EU was assumed to be half the 

observed  rate  of  HT  soybean  adoption  in  the 

US. This  adoption  rate  was  then  applied  to  the 

producer  regions  covered  in  the  study  (EU  and 

ROW). The  global  accumulated  welfare  created 

was  €1 150  million  after  five  years  of  adoption. 

Welfare created was shared by ROW (53%), the 

EU  sugar  beet  growers  (30%)  and  technology 

developers/seed  suppliers  (17%).  Consumers  do 

not  capture  gains  in  the  form  of  lower  market 

prices as a result of the EU Common Agricultural 

Policy  which  establishes  intervention  prices.  EU 

sugar  beet  domestic  prices  do  not  decline  as  a 

consequence of the HT technology.

Gómez-Barbero 

and  Rodríguez-Cerezo 

(2005)  analysed 
Bt  cotton  in 
economic  impact  at  farm  level  of  Bt cotton in

the  potential  adoption  and 

.  A  survey  of  830  farmers  across 
Southern  Spain. A survey of 830 farmers across

all  cotton  production  areas  in  Andalusia  (9% 

of  all  cotton  farmers)  showed  that  58%  of  the 

responding  farmers  knew  about  GM  Bt  cotton. 

Within  this  group,  95%  were  willing  to  grow  Bt 

cotton.  Regarding  the  on-farm  economic  impact 
resulting from potential adoption, the assessment 

is  that  savings  on  direct  pest  control  costs 

would  be  achieved  by  reducing  the  number  of 

insecticide  treatments. This  analysis  was  applied 

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0

to  a  representative  Andalusian  cotton  farm, 

.  Huang 
four  varieties  of  insect-resistant GM rice. Huang
insect-resistant  GM  rice. Huang

where  a  reduction  of  2.6  insecticide  treatments 

et  al.  (2005)  compared  the  performance  of  GM 

is assumed. This would result in a cost saving of 

and conventional rice in China in 2002-2003 by 

€148.2 per hectare.

Flannery  et  al.  (2004)  carried  out  a  cost-

benefit  analysis  of  the  hypothetical  cultivation 

Ireland  (sugar  beet,  winter 
of  four  GM  crops  in  Ireland (sugar beet, winter

 including a cost 
wheat, spring barley and potato) including a cost

which  is  estimated  as  a  levy  of  up  to  €25  per 
hectare  of  GM  crop  cultivated12.  Findings  show 
a higher gross margin per hectare for all the GM 

crops  than  for  their  conventional  counterparts 

(reaching  €223  per  hectare  for  GM  HT  sugar 

beet).

4.2 Ex ante analyses in developing 

countries

Elbehri  and  Macdonald 

(2004)  used  a 

multiregional  general  equilibrium  model 

to 

estimate  the  potential  economic  impact  of  BtBt 

cotton  if  introduced  in  West  and  Central  Africa 

.  Cotton  is  a  major  source  of  export 
(WCA). Cotton is a major source of export

revenue  in  the  region  and  a  cash  crop  for 

many  farmers. The  model  is  run  under  different 
adoption  scenarios  and  the  status  quo  scenario 
(where transgenic cotton is used in other regions 
but  not  in  WCA).  Findings  show  that  the  status 
quo  scenario  reduces  WCA  economic  welfare 
substantially (about €70 million annually). Other 

scenarios  in  which WCA  adopts  Bt  cotton  show 

significant welfare gains ranging from €56 to €66 

million.

Although no GM rice has yet been released 
 is considering the release of 
on the market, China is considering the release of
China is considering the release of

using data obtained from GM rice preproduction 

field trials. Two GM rice varieties were analysed, 
GM  Bt  Xianyou  and  GM  CPTI  II-Youming  8613. 
Farmers  were  randomly  selected  (347  plots  in 

total) and left free to cultivate under their common 

practices,  without  monitoring  by  technicians. 

Findings  show  that  farm  households  adopting 

GM  rice  produced  higher  yields  (between  3.5% 

and  9%  depending  on  the  methodology  used 

and  the  GM  variety)  and  reduced  pesticide  use. 

The  same  pesticide  types  are  applied  both  by 

GM  and  non-GM  rice  farmers,  but  the  former 

reported fewer applications and less quantity (0.5 

times  per  season  compared  with  3.7  times  and 
80% less in terms of kilograms per hectare). The 

knock-on effects of fewer insecticide applications 

are  lower  expenditure  on  pesticide,  less  labour 

use and health benefits for adopters, documented 

by the reduction in the number of doctor’s visits 

for pesticide poisoning. The question whether this 

increase in revenues and decrease in costs will be 

converted  into  profit  gains  cannot  be  answered 

without  knowing  the  seed  pricing  policies  to  be 

applied by the GM seed developers. Even if GM 

rice  in  China,  as  it  appears,  proves  profitable  at 

farm  level,  the  fact  that  rice  is  a  food  for  direct 

human  consumption  raises  the  issue  of  market 

risks  when  analysing  ex  ante  the  impacts  of 

adoption.  This  issue  and  the  consequences  of 

market  segmentation,  identity  preservation  and 

coexistence between GM and non-GM crops will 

influence estimations of the economic balance of 
GM crops, as discussed in the following Chapter.

12 

Some EU member States are introducing a “Coexistence” fee in the form of a fixed levy per hectare of GM crop planted (see 
section 5)

13  Both varieties are resistant to rice stem borer. In the CpTI variety a modified cowpea trypsin inhibitor gene is introduced into 

rice.

 
 
 
 
 
 
 
 
 
 
 
 
 
5. Market  Segmentation, 

Identity  Preservation  and 
Coexistence:  Impacts  on  Economic  Balance  of  GM 
Crops

Most of the research done so far on the global 

HT wheat introduction in the US and  economic 

economic  impacts  of  GM  crop  introduction  has 

costs derived. They assumed that introduction of 

considered  a  global  market  with  no  significant 

segmentation and has not looked at costs incurred 

to  preserve  identity  between  GM  and  non-GM 

HT  wheat  will  be  accompanied  by  an  identity 
preservation  system14  and  will  create 
significant  market  segments:  one  composed 

two 

harvests  and  supply  chains.  These  seem  to  be 

of  non-GM  wheat  consumers  and  another  of 

reasonable assumptions for the crops and periods 

consumers  who  are  indifferent  to  whether  the 

of time studied. Domestic markets for these crops 

commodity is of GM origin or not. Many crucial 

in  producing  countries  are  not  segmented  and 

parameters  of  the  wheat  sector  model  run  by 

the  export  markets  for  identity-preserved  non-

Johnson  et  al.  (2005)  have  been  assumed  due 

GM  varieties  of  these  crops  remain  fairly  small 

to  the  lack  of  experience  with  commercial  HT 

at global level. Price differences at the farm gate 

wheat  cultivation.  For  example,  expected  yield 

for the non-GM counterparts of maize, soybean, 

increase  and  potential  savings  for  HT  wheat 

cotton  or  rapeseed  have  not  been  common,  or 

adopters  are  estimated  using  data  on  the  HT 

have not been enough to compensate farmers for 

soybean growers. The authors also assume a 1% 

switching  to  non-GM  varieties,  and  the  global 

tolerance threshold for the presence of HT wheat 

share  of  GM  varieties  area  cultivated  with  these 

in  conventional  wheat. Two  scenarios  for  wheat 

major crops has increased every year (as reviewed 

price are considered.

in  Chapter  2).  Finally,  dominant  GM  crops  are 

largely used for animal feed and not directly for 

human consumption.

5.1 Introducing market segmentation 
and identity preservation costs in 
impact studies

Recent 

research  describes  how 

these 

assumptions may change with the introduction of 

GM crops directly used for human consumption 
such  as  GM  wheat  or  GM  rice.  In  2002,  an 

application  for  genetically  modified  HT  wheat 

was submitted to the US and Canadian authorities 

for approval for commercial cultivation. In 2004, 

the  applicant  dropped  plans  for  release  of  this 

GM  wheat  due  to  strong  consumer  resistance. 
Johnson  et  al.  (2005)  tried  to  estimate  ex  ante 
the  aggregate  economic  welfare  generated  by 

The 

results  show 

that  producers  and 

consumers of non-GM wheat bear the extra costs 

of  segregation  and  identity  preservation.  These 

costs  are  substantial  and  depend  mainly  on  the 

tolerance threshold considered. For the base case 

assumption,  these  costs  outweigh  the  economic 

benefits  derived  from  the  introduction  of  GM 

wheat,  resulting  in  a  small  net  welfare  loss  at 

global level. The distribution of the welfare effect 

is  highly  dependent  of  wheat  prices,  but  in  all 

price scenarios, consumers who are indifferent to 

the origin of the wheat benefit from introduction 

paying  lower  market  prices.  Consumers  of  non-

GM wheat suffer losses because of the segregation 

costs.  The  authors  estimate  that  the  majority  of 

non-GM  wheat  consumers  will  be  outside  the 

US, therefore losses will be essentially for foreign 

consumers. In the “low price” scenario the welfare 

loss  is  largely  borne  by  US  taxpayers  and  by 

14  The  company  applying  for  HT  wheat  market  release  also  recognised  the  need  to  introduce  the  innovation  together  with  a 

manageable identity preservation system for producers and handlers.

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5

non-GM  consumers  in  foreign  countries. Wheat 

developments  on  labelling  and  traceability  of 

producers  have  small  net  benefits.  In  the  “high 

GMOs (a new framework that became operative 

price” scenario, wheat producers bear net losses, 

in 2004). The authors build a partial equilibrium 

absorbing  part  of  the  segregation  cost  together 

model of the EU agricultural food sector to look for 

with  consumers  of  non-GM  wheat.  Sensitivity 

the qualitative and quantitative economic impacts 

analysis applied to the “low cost” scenario shows 

of  possible  large-scale  adoption  of  GM  foods 

that US economic well-being is found to increase 

in  the  EU.  The  model  assumes  that  consumers 

as long as the GM wheat adoption rate increases.

consider GM foods as weakly inferior substitutes 

In summary, the authors conclude that given 

the  impact  of  tolerance  thresholds  in  global 

welfare  gains,  there  is  an  economic  rational  for 

providing  reasonable  tolerances  in  commercial 

transactions. They also conclude that because of 

the  different  attitude  of  US  consumers  towards 

biotechnology,  US  welfare  may  improve  with 

high  rates  of  HT  wheat  adoption  while  foreign 

welfare declines.

A  recent  study  has  considered  market 

segmentation and segregation costs when looking 

at  the  welfare  created  by  HT  soybean  adoption. 

Sobolevsky,  et  al.  (2005)  developed  a  partial 

equilibrium  model  for  the  US,  Argentina,  Brazil 

and ROW soybean markets. HT soybean products 

are  considered  as  weakly  inferior  substitutes  for 

conventional products in ROW markets. Different 

segregation  costs,  agricultural  policy  and  GM 

policy  scenarios  are  used.  This  paper  uses  Lin 

et  al’s  (2000)  estimate  of  soybeans  segregation 

costs  which  is  between  3.4%  and  10.3%  of  the 

average  US  producers’  price  for  soybeans.  The 

outcome  of  the  model  is  that  all  regions  gain 

from the adoption of HT soybean; although some 

economic  agents  within  them  may  lose  (e.g.  US 

farmers lose from the introduction of HT soybean 
where  there  is  no  US  domestic  price  support  to 

farmers, except in the scenario where segregation 

costs are equal to zero).

for conventional ones, and that segregation costs 

are borne by conventional and organic producers 

and  labelling  and  traceability  costs  imposed  on 

GM  products.  The  main  outcome  is  that  total 

EU welfare might decrease as result of GM food 

introduction mostly due to segregation costs and 

labelling costs. Surplus losses are borne by both 

suppliers  and  consumers.  Organic  producers 

are  likely  to  benefit  from  the  introduction  of 

GM  crops  as  they  receive  higher  prices  in 

most  scenarios.  However,  this  benefit  can  be 

outweighed by segregation costs if the tolerance 

of  the  unintended  presence  of  GM  content  in 

organic food is too low.

5.2 The concept of coexistence and its 
impact on the economic balance 
and adoption of GM crops

In the case of the EU, analyses of the possible 

economic  impacts  of  introducing  GM  crops  on 

agriculture  should  consider  in  addition  to  the 

recent regulatory developments on labelling and 
traceability,  the  novel  concept  of  coexistence 
between GM and non-GM agriculture developed 

by  the  EU.  The  issue  of  coexistence  relates  to 

segregation  measures  taken  at  farm  or  regional 

level  to  ensure  that  farmers  can  provide  EU 

consumers  with  a  choice  of  GM  or  non-GM 

harvests that comply with EU labelling standards 

Further  down  the  agricultural  production 

(allowing  for  a  maximum  of  0.9%  adventitious 

chain, Moschini et al. (2005) modelled the effects 

presence of GM crops in non-GM harvests).

of introduction in the EU of GM foods for direct 

human consumption that would be compared by 

2

consumers  with  conventional  or  organic  food. 
They consider the relatively recent EU regulatory 

In  2003, 

the 

European  Commission 

published  a  recommendation  on  guidelines  for 

the  development  of  national  strategies  and  best 
practices  to  ensure  coexistence  (2003/556/EC)15. 

15  Commission Recommendation of 23 July 2003 on guidelines for the development of national strategies and best practices to 
ensure the coexistence of genetically modified crops with conventional and organic farming (notified under document number 
C(2003) 2624)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
The  guidelines  recommend  that  those  farmers 

strips  of  non-GM  maize  plants  around  GM 

bringing in the innovation into a region should be 

maize  plots.  The  efficacy  of  these  measures  in 

the ones taking measures and changing practices if 

ensuring coexistence between GM and non-GM 

needed to ensure coexistence. Following this, the 

maize  production  in  real  agricultural  regional 

majority of EU Member States have begun drafting 

landscapes in the EU is described in the report.

coexistence rules and have targeted GM farmers 

as the ones taking the measures (if necessary) and 

incurring the costs. A similar framework does not 

exist for the moment in other areas of the world 

where GM crops are cultivated.

The  authors  attempt 

to  estimate 

the 

economic  consequences  of  such  measures 

for  farmers  wanting  to  grow  GM  maize.  The 

economic  consequences  of  mandatory  isolation 

distances (and of mandatory buffer strips) will be 

Since  coexistence  costs  are  a  relatively 

the  opportunity  costs  of  not  being  able  to  grow 

recent  concept, 

few  studies  have 

included 

GM  maize  in  part  of  the  farm.  This  cost  is  the 

them  when  looking  at  the  on-farm  economic 

difference in farmers’ gross margin between GM 

balance  of  GM  crops  in  Europe,  and  no  study 

maize  and  the  alternative  crop  planted,  which 

is  yet  available  on  how  coexistence  costs  will 

most likely will be conventional non-GM maize. 

influence future rates of adoption of GM crops by 

Gómez-Barbero et al. (manuscript in preparation) 

EU  farmers.  When  coexistence  costs  have  been 
analysed,  the  analysis  is  based  on  hypothetical 

have  empirically  estimated  this  difference  for 
Spain  (for  the  period  2002-2004)  at  an  average 

measures  since  most  EU  Member  States  have 

of  €84  per  hectare  at  national  level.  In  addition 

yet  to  define  their  options  in  technical  terms. 

to  this  opportunity  cost,  mandatory  isolation 

Moreover,  coexistence  costs  are  not  limited  to 

distances or buffer strips directly affect costs due 

those  of  additional  farming  practices:  some  EU 

to the need to source inputs (seeds) and organise 

Member  States  have  introduced  a  fixed  levy  on 

plantings for two crops instead of one.

each  hectare  of  cultivated  GM  crop  to  create 

compensation funds.

Non-technical coexistence measures are also 

being imposed by EU Member States on GM crop 

A  recent  report  by  Messéan  et  al.  (2006) 

growers. One is a fixed levy per hectare charged 

quantifies  coexistence  costs  for  a  number  of 

to GM crop farmers to cover possible economic 

GM  crops  in  Europe.  The  authors  first  identify 

losses of non-GM farmers. Another measure is a 

crop  by  crop  whether  coexistence  measures  are 

requirement  to  notify  neighbouring  farmers  and 

needed  to  achieve  levels  of  adventitious  GM 

the competent authorities of the intention to plant 

presence  in  conventional  harvests  below  legal 

GM  crops  in  advance  (typically  1-2  months). 

thresholds (0.9%), and then discuss the economic 

Some  Member  States  are  considering 

the 

consequences  of  such  measures.  Some  crops 

possibility  of  introducing  a  publicly  accessible 

such as sugar beet or cotton do not need adapted 
farming  practices  to  ensure  coexistence.  The 

these  notifications.  These 
register  containing 
measures are likely to weigh against GM varieties 

results for the only GM crop grown so far in the 

when farmers are considering whether to cultivate 

EU (maize) suggest that coexistence measures are 

them.  In  sum,  although  more  details  of  specific 

needed  and  a  number  of  technical  possibilities 

coexistence measures are awaited, there is a new 

are  offered.  The  main  measures  considered 

cost to be computed in the balance for GM crops 

are  the  cleaning  of  harvesting  machinery,  the 

in the EU and a new factor affecting the process 

introduction  of  isolation  distances  between  GM 

of adoption.

and  non-GM  fields  and  the  planting  of  buffer 

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6. Summary and conclusions

A  decade  after  the  first  GM  crop  was 

variability  in  yields,  even  in  the  absence  of 

commercially planted the GM crop landscape is 

significant increases in gross margin.

dominated by four major crops (soybean, cotton, 

maize  and  canola)  and  two  agronomic  traits 

(herbicide  tolerance  and  Bt  insect  resistance). 

The  American  continent  (US,  Argentina,  Brazil, 

Paraguay  and  Canada)  still  accounts  for  the 

majority of the GM crop area in the world (over 

90  %)  with  China  and  India  following.  Overall, 

more than 20 countries in all continents grow GM 

crops,  of  which  14  are  considered  developing 

countries.

Published  research  analysing  ex  post  the 
impacts  of  GM  crops  adoption  at  farm  level 

is  now  abundant  and  includes  studies  of  HT 

soybeans  in  the  US, Argentina  and  Romania;  of 

Bt cotton in China, India, South Africa, Argentina, 
Mexico,  US  and  Australia;  of  Bt  maize  in  the 

US,  South  Africa  and  Spain;  and  of  HT  canola 

in Canada. Most studies are based on surveys of 

commercial  farmers  (adopters  and  non-adopters 

of  the  technology). The  picture  emerging  is  that 

adoption of GM crops has taken place at a rapid 

rate and driven by a number of reasons including 

on-farm  and  off-farm  benefits.  On-farm  benefits 

are derived from reducing production costs (weed 

control costs for HT crops and pest control costs 

for Bt crops). For some crops there are also yield 

increases  (particularly  in  the  case  of  Bt  cotton), 

affected  in  some  regions  by  the  fact  that  GM 

traits  have  not  yet  been  introduced  in  all  local 

varieties.

Net  benefits  for  farmers  due  to  GM  crop 

adoption  may  also  derive  from  off-farm  income. 

For example, adoption of HT soybean in the US 

had  no  significant  effect  on  on-farm  income, 

but  resulted  in  crop  management  simplification, 

increased free time, and larger off-farm incomes 

for  adopting  farmers  resulting  in  net  benefits 

for  adopters.  Finally,  some  crops  are  adopted 

by  farmers  as  an  “insurance”  against  seasonal 

The  net  economic  benefits  for  farmers  are 

nevertheless  variable  in  regional  terms.  One 

reason  is  that  the  crops  are  designed  to  solve 

pest  and  weed  problems  which  vary  greatly  in 

their  geographical  distribution  and  impact  on 

production. In fact, adoption rates of a given GM 

crop in different regions of the same country can 

be very variable. Second, all GM crops cultivated 

to date have originated in North America and the 

process of introducing the GM trait into varieties 

suitable for all regions has not been finalised (the 

“germplasm” effect).

Ex  post  analyses  also  show  that  adoption 
of  dominant  GM  crops  and  on-farm  economic 

gains  have  benefited  both  small  and 

large 

farmers.  Small  farmers  have  shown  no  difficulty 

in  adopting  the  technology  and  adoption  rates 

are  not  related  to  farm  size.  Moreover,  detailed 

analyses (for example of Bt cotton in China) show 

that increases in gross margin are comparatively 

larger for smaller and lower income farmers than 

for larger and higher income farmers.

Ex post analyses provide data on the effects 
of  GM  crop  adoption  on  the  use  of  agricultural 

inputs.  Bt  cotton  adoption  has  resulted  in  a 

significant  decrease  in  the  use  of  insecticides  in 

all  cases  studied  (25%  of  all  insecticide  used  in 
agriculture world wide is for cotton cultivation). Bt 

maize adoption has induced only a little decrease 

in  insecticide  use  since  the  pests  Bt  maize  is 

designed  to  resist  were  not  usually  controlled 

by  insecticide  applications. The  adoption  of  HT 

soybean  has  resulted  in  the  displacement  of 

several  herbicides  by  one  single  product  that  is 

considered  to  be  less  toxic  than  the  herbicides 

it  replaces.  Use  of  this  herbicide  has  increased. 



HT  soybean  adoption  has  been  associated  with 

reduced  fuel  consumption  per  hectare  and  with 

the  adoption  of  reduced  soil  tillage  practices. 

 
 
 
 
 
 
 
 
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The  adoption  of  HT  soybean  has  been  linked 

on-farm economic benefits are predicted by these 

to  increased  use  of  land  (normally  from  pasture 

studies,  derived  from  a  reduction  of  production 

crops) for soybean production in Argentina.

costs for farmers.

The aggregate economic effects of GM crop 

Most  of  the  research  published  on  the 

adoption 
(welfare  creation  and  distribution) 
have  also  been  studied  ex  post,  although  the 
number  of  studies  published  and  their  coverage 

economic  impacts  of  GM  crop  introduction  has 

considered  a  global  market  with  no  significant 

segmentation and has not looked at costs incurred 

is  less  comprehensive  than  analyses  of  on-farm 

to preserve identity of GM and non-GM harvests 

effects. Aggregate  studies  show  positive  changes 

and supply chains. The domestic markets of GM 

in  economic  welfare  for  countries  adopting 

crop producing countries are not segmented (no 

GM  crops.  The  absolute  value  of  these  gains 

distinction is made between commodities of GM 

varies  widely  depending  on  the  assumptions 

and  non-GM  origin)  and  the  export  markets  for 

made  for  the  aggregate  models.  In  most  cases 

identity-preserved  non-GM  varieties  of  these 

farmers  (adopters  of  the  GM  crop)  are  the  main 

crops remain niche markets at global level. Price 

beneficiaries,  followed  by  seed  suppliers  (the 

differences  at  the  farm  gate  for  the  non-GM 

biotech  industry)  and  consumers  (due  to  lower 

counterparts  of  dominant  GM  crops  have  not 

market  prices).  The  welfare  distribution  ratio 
between  adopting  farmers  and  seed  suppliers 

is  strongly  affected  by  the  price  premium  paid 

by  farmers  for  GM  seeds.  Variations  in  price 

premium  depend  on  the  intellectual  property 

regime  affecting  GM  seeds  in  each  particular 

country, on the market availability of GM varieties 

developed by the public sector and on company 

pricing policies.

Due  to  the  scant  adoption  of  GM  crops  in 
EU  agriculture,  ex  post  impacts  have  only  been 
analysed  for  the  case  of  Bt  maize  cultivation  in 

been common.

Several  developments  suggest  that  these 

assumptions may have to be changed. One is the 

potential introduction in the main GM-producing 

countries of GM crops for direct human food use, 

such as wheat or rice. Even in a country with no 

GM  labelling  regulations,  such  as  the  US,  it  has 

been  suggested  that  the  introduction  of  a  crop 

like  wheat  might  be  accompanied  by  identity 

preservation  and  segregation  systems,  and  thus 

creating  differentiated  market  segments  and 

price differentials. Also, regulatory developments 

Spain. Adoption has resulted on average in larger 

worldwide are taking place in this field at national 

gross margins for adopting farmers (12% increase 

and multi-national level. Many world regions are 

over the average gross margin per hectare of maize 

adopting  specific  legislation  on  labelling  and 

production) yet with large regional variations. The 

traceability for all GMOs, produced domestically 

welfare  created  by  Bt  maize  adoption  in  Spain 

or imported.

is  shared  by  adopting  farmers  and  seed  industry 
(roughly 75%/25%). In recent years, a number of 
ex ante analyses of the possible economic impacts 
of  GM  crops  if  introduced  into  EU  agriculture 
have  been  published.  Ex  ante  evaluations  have 
a  strong  modelling  component  and  a  number 

of  parameters,  such  as  yield  effects  and  cost 

reductions  at  farm  level,  have  to  be  estimated 

from  experiences  in  field  trials  and/or  other 

countries.  Several  GM  crops  have  been  covered 

(HT rapeseed, HT sugar beet, Bt maize, Bt cotton) 

in various Member States. The studies range from 

on-farm impacts to more aggregate levels. Positive 

Some  studies  have  recently  tried  to  model 

GM  crop  introduction  including  segmentation 

of  markets  and  identity  preservation  costs.  The 

results  show  that  these  costs  can  be  substantial 

and  depend  mainly  on  the  tolerance  threshold 

considered  for  segregation.  In  some  scenarios, 

these  costs  outweigh  the  economic  benefits 

derived  from  the  introduction  of  GM  crop, 

resulting  in  a  net  welfare  loss  at  global  level.  It 
is  very  difficult  to  model  how  these  costs  will 

be  shared  by  different  actors  (price  scenarios 

and  regulatory  frameworks  may  influence  this 

aspect).

 
 
 
 
Finally,  in  the  case  of  the  EU,  analyses  of 

necessary)  and  incurring  the  costs.  Measures 

the  economic  impacts  of  introducing  GM  crops 

being  established  include  technical  measures 

in  agriculture  should  now  consider  the  novel 
concept  of  coexistence  between  GM  and  non-
GM  agriculture  developed  by  the  EU,  i.e.  the 

(respecting isolation distances from non-GM crop 

fields),  organisational  measures  (communication 

in  advance  of  the  decision  to  plant  GM  crops) 

segregation  measures  that  should  be  taken  at 

and  in  some  UE  Member  states  a  fixed  levy 

farm or regional level to ensure that farmers can 

per  hectare  of  GM  crop  cultivated.  A  similar 

provide  EU  consumers  with  a  choice  of  GM  or 

framework does not exist currently in other areas 

non-GM  harvests  that  comply  with  EU  labelling 

of the world where GM crops are cultivated. The 

standards.  EU  Member  States  have  begun 

impact  of  these  recent  developments  in  the  GM 

drafting  coexistence  rules  and  have  targeted 

crop adoption process and economic balance of 

GM  farmers  as  the  ones  taking  the  measures  (if 

GM crops on-farm needs further study.

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European Commission 

EUR 22547 EN – DG Joint Research Centre, Institute for Prospective Technological Studies 
Title: Economic Impact of Dominant GM Crops Worldwide: A Review 
Authors: Manuel Gómez-Barbero, Emilio Rodríguez-Cerezo 
Luxembourg: Office for Official Publications of the European Communities 
2006 
EUR - Scientific and Technical Research series; ISSN 1018-5593 
ISBN 92-79-03879-6 

Abstract 

It  is  now  more  than  ten  years  since  the  first  genetically  modified  (GM)  crops  were  introduced  into 
agriculture. During the decade 1996-2005, GM varieties with novel agronomic traits (commonly known 
as  first  generation  GM  crops)  have  quickly  been  taken  up  in  many  areas  of  the  world.  The  body  of 
evidence  accumulated  during  this  decade  by  many  research  institutions  and  published  in  scientific 
journals  has  grown  to  the  point  where  a  picture  of  the  economic  effects  of  dominant  GM  crops 
worldwide can now reasonably be obtained, and this is the purpose of this report. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The mission of the JRC is to provide customer-driven scientific and technical support for the conception, development,
implementation and monitoring of EU policies. As a service of the European Commission, the JRC functions as a
reference centre of science and technology for the Union. Close to the policy-making process, it serves the common
interest of the Member States, while being independent of special interests, whether private or national.

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ISBN 92-79-03879-6

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