Transcript The Economic Effects of Global GM Crop Production on American

The Economic Effects of Global
GM Crop Production on American
Farmers
Cory Gunderson
University of Wisconsin-Stout
Genetically Modified Organisms
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What is it?
Why does it matter?
Historical Perspective
Market Analysis of Agri-biotech
– Growing monopoly power of GM-crops
– Large barriers of entry
• R&D
• Mergers, Acquisitions, and Licensing
– Patent Data
• Why is it important?
Claimed Advantages to GM Crops
• Increased Revenue for Farmer
– Reduced Pesticide Usage
– Higher yields per unit of arable land
• Agreements between agri-biotech and
individual farmer
– Vast knowledge of product
– Reduced cost of product decisions
• (Monsanto Stewardship Agreement)
Claimed Disadvantages to GM Crops
• Reduction in net revenue due to
increased seed costs and minimal to no
decrease in pesticide usage
– No significant reduction in pesticide usage
for most United States farmers
• Economically imbalanced agreements
control land usage, property rights, and
substantial guidelines for GM seed usage
Firm Distribution in Seed Market and
Growing Monopoly Power
GM CR₄ vs Non-GM Market Share
70
60
50
40
30
20
10
0
2000
2001
R² = 0.607
2002
2003
2004
2005
GM CR₄ Market Share
Non GM Market Share
Linear (GM CR₄ Market Share)
Linear (Non GM Market Share)
2006
2007
Firm Distribution in Seed Market and
Growing Monopoly Power
GM CR₄ vs Non-GM Market Share
70
60
50
40
30
20
10
0
2000
2001
2002
R²=.8305
2003
2004
GM CR4 Marketshare Trendline
y = 0.5707x2 - 3.2548x + 62.949
2005
2006
Non GM Marketshare Trendline
y = -0.5707x2 + 3.2548x + 37.051
2007
Patent Data of Agri-Biotech firms
• Patent Category. A01H0001->Processes for
modification of genotypes.
• Patent Category. A01H0004->Plants
reproduction by tissue culture techniques
1000
# of Assigned Patents for Top 8 Firms from 1981 to 2009
900
Total # of Patents
800
700
600
500
400
300
200
100
0
1
2
3
4
5
6
7
8
A01H0001
947
619
149
99
81
71
71
69
A01H0004
217
110
58
51
45
43
40
32
Patent Data of Agri-Biotech firms
A01H0001 Top Eight Firm Patent Assignees
A01H0001 Top Eight Firm Patent Assignees
1. Monsanto LLC.
2. Pioneer Hi Bred Inc.
3. Syngenta Participations Inc.
4. Du Pont
5. Stine Seed Farm Inc.
6. Nat. Inst of Agrobio Science
7. Seminis Vegetable Seeds Inc.
8. Mertec LLC.
1000
1. Monsanto LLC.
2. Pioneer Hi Bred Inc.
3. Mitsui Petrochemical Ind.
4. Syngenta Participations Inc.
5. Mertec LLC.
6. D&PI Technology Holding
7. Seminis Vegetable Seeds Inc.
8. Kirin Brewery
# of Assigned Patents for Top 8 Firms from 1981 to 2009
900
Total # of Patents
800
700
600
500
400
300
200
100
0
1
2
3
4
5
6
7
8
A01H0001
947
619
149
99
81
71
71
69
A01H0004
217
110
58
51
45
43
40
32
The Production and Economic Impacts of Bt Corn, 1996-2001: Bushels of Corn
Yield Loss
Avoided, Value of Increased Yield, the Bt Corn Premium, and Impact on Farmlevel Profits, 1996-2001
State
1996
1997
1998
1999
2000
2001
TOTALS
Colorado
369,200 2,246,149 5,477,784 6,811,740 6,240,780 6,027,840 27,173,493
Illinois
2,549,583 3,806,569 4,165,384 4,053,672 6,013,907 24,301,408 44,890,523
Indiana
276,438 820,573 995,390 5,230,579 3,016,440 5,056,819 15,396,240
Iowa
1,402,080 3,275,005 3,533,718 3,042,394 3,567,000 13,742,001 28,562,198
Kansas
283,227 888,071 1,035,368 923,832 932,880 3,881,196 7,944,574
Kentucky
139,707 355,056 306,811 900,900 484,120 1,146,880 3,333,474
Michigan
103,626 355,680 100,596 188,760 178,957 364,320 1,291,939
Minnesota
1,140,000 2,497,970 3,091,663 2,111,576 2,926,663 12,854,824 24,622,695
Missouri
739,555 1,218,781 1,344,871 1,393,982 317,950 1,468,800 6,483,940
Nebraska
1,685,493 4,974,442 2,723,418 3,108,040 5,569,200 14,710,800 32,771,393
New York
32,218 110,854 125,841 177,710 129,654 277,970 854,246
Ohio
93,240 409,106 295,849 1,147,608 614,739 2,275,416 4,835,958
Pennsylvania
13,114 46,178
59,319
56,700
97,441 133,950 406,701
South Dakota
897,867 1,416,606 1,719,979 2,107,224 3,385,648 8,873,304 18,400,628
Texas
611,520 3,895,545 7,683,624 9,810,450 9,478,560 6,697,600 38,177,299
Wisconsin
305,454 880,610 262,152 1,045,044 944,328 2,120,294 5,557,882
Other States
746,435 1,648,085 2,357,586 1,636,252 2,698,088 6,339,178 15,425,624
U.S. Total
(Bushels)
Dollar Value
Added Yield*
11,388,756 28,845,280 35,279,353 43,746,462 46,596,356 110,272,601 276,128,808
30,863,529 $70,094,030 $ 68,441,944 $ 79,618,561 $ 86,203,258 $231,572,461 $566,793,785
Bt Corn Price
Premium*
11,690,000 $62,730,000 $144,720,000 $147,180,000 $154,250,000 $138,560,000 $659,130,000
Net Profit (Loss)
from Bt Corn 19,173,529 $ 7,364,030 $(76,278,056)$(67,561,439)$(68,046,742)$ 93,012,461 $(92,336,215)
Source: Benbrook Consulting Services, 2001.
Increased expenditures, Decreasing revenues
• Farmers have spent about $659 million
more on Bt corn seed from 1996-2001,
while harvesting about 276 million more
bushels worth some $567 million, for a
net loss of $92 million
Global Impacts of MNC
• Implications of Multinational Corporations
– Increased concentration of total firms involved in
global trade
– Increased total revenue from sales of crops to MNC
but decrease in revenue to small to medium size
crop producers
– Resulting consequences of imperfect competition
have significant impacts on global producers
• The extent of power that GMCs have is directly
correlated to the level of arability within the
land. The technology is extremely useful for
certain regions especially with the increasing
demand on food stocks for business and human
consumption.
Concluding thoughts/ Questions
• Increased costs of GM-seeds compared to
conventional seeds have caused a loss for small
firms.
• Patent data shows a significant concentration of
three out of the four top firms in both categories
• Total firm distribution is becoming increasingly
polarized
• Significantly imbalanced agreements between
large seed production firms and small size
farmers ($8-$30 dollars per acre premium, seed
costs, required pesticide, increased log keeping,
extensive cleanup of seeds after harvest, etc.