Here at The Rodale
Institute® we’ve been focusing in recent years
on weed management for organic growers. In particular,
we’ve been trying to perfect no-till organic techniques
and technologies. So, when we uncover evidence that
shows just how bankrupt pesticide-ready GM technologies
are—even from an economic point of view—we
like to share those findings. When Paul Hepperly, The
Rodale Institute’s research manager, emailed us
a link to this article, we said “Man, we’ve
got to reprint this, even if it’s from two years
ago. It deserves a second life!”
So, here’s the story of how an Iowa State professor
entered the industry lion’s den and documented
the failure of GM seed technologies:
In December 2001 at the American Seed Trade Association
Meeting in Chicago, Michael Duffy, a Professor of Agriculture
Economics at Iowa State University, addressed a crowd
squarely supporting new biotechnologies and their commercialization
as seed varieties.
Dr. Duffy entertained this hostile crowd with a very
concise message--that biotechnology has simply not worked
for Midwest corn and soybean farmers.
In his address, which we reprint in full here, Duffy
documented how the real Iowa yields of Round-up Ready®
and non-genetically modified soybeans were nearly equivalent.
The variable that promised to spell disaster for Iowa
farmers was the high seed costs associated with GM crops.
By using this new technology, Duffy found, Iowa farmers
lost an additional $8.85 per acre compared to non-GMO
The same was true, Duffy found, for BT corn—equivalent
yields to non-GMO corn, but added costs resulting in
an additional loss of $3.25 per bushel compared to non-GMO
Real results from real farmers showed conclusively
that Iowa corn and soybean farmers do not benefit from
these new technological innovations. You might just
be able to guess who does.
As Professor Duffy states so elegantly, “concentration
of market power leads to failure in markets and the
ability of these markets to allocate resources efficiently.“
The experiment has been a big failure both economically
and environmentally. Maybe it’s time to step in
and show the world a better way.
December 3, 2003: Good morning. I appreciate the
opportunity to be with you today. My talk is going to focus on an
extremely important topic. Yet, too often, it also is a topic that
segregates people into competing groups that rely only on rhetoric
and scare tactics rather than discussing the real issues.
We all have our biases and regardless of what anyone says, our
biases influence our perspectives. As scientists we strive to eliminate
our biases from our research but the very fact that we look at one
issue and not another reveals our biases. What we should strive
for is to control our biases and acknowledge them from the beginning.
I am the Associate Director for Iowa State University's Leopold
Center for Sustainable Agriculture. I also am the Professor-in-Charge
of the ISU Beginning Farmer Center. Finally, I am an ISU Extension
All this means that I view the world both from an economic perspective
and from the perspective of working with agriculture and farmers.
I am an educator who tries to present information in as factual
a way as possible and give people the tools and means to form their
own opinions. I start from the basic supposition that economics
is the study of allocating scarce resources and not simply the study
of money. I also feel that humans are a part of the natural system
and not apart from it. The impacts of our worldly actions are governed
by a set of ecological principles; some of which we understand and
others that we do not fully comprehend.
As an economist, I believe in the market as an efficient mechanism
for allocating resources. However, just as I believe in the efficiency
of the market, I also know there are market failures. These failures
take several forms. Difficulty in valuing externalities is one example.
Public goods, such as air and water, are other areas where the market
cannot efficiently cope with all the issues. Allocating resources
between generations is another problematic area for the market.
Finally, I think that concentration of market power is something
that will lead to the failure of markets as an efficient mechanism
for allocating resources.
In this talk I will first briefly discuss biotechnology. Next,
I will share the results of a study examining the farmer impact
of herbicide tolerant soybeans and Bt corn. Finally, I will draw
some conclusions and discuss the implications of what I have found.
Biotechnology has been labeled "a misleading expression because
it conveys a singularity or unity to what is actually a tremendously
diverse set of activities and range of choices." (Buttel, 1985)
A U.S. Department of Agriculture (USDA) publication notes, "…
biotech processes and products are so diverse and have so little
in common with one another that it is difficult to construct valid
generalizations about them. Broader than genetic engineering and
gene splicing, biotech includes tissue, cell, and embryo culture;
protoplast fusion; bioregulation or hormonal control of physiological
and metabolic processes; production of gene-controlled products;
directed plant breeding; and fermentation processing." (USDA,
Throughout this paper I am simply going to use the term biotechnology,
recognizing that there are inherent problems with using this single
term. However, I do not want to further muddle an already confusing
issue with what, for most of us, are technicalities.
Michael Fox provides a chronological presentation of the significant
biotechnology events leading up to the present day. Fox begins with
the breeding experiments by Mendel in 1869. (Fox, 1992) Others feel
that the roots of biotechnology, especially as it relates to traditional
plant breeding, can be traced back to the earliest days of agriculture
and the domestication of plants and animals. Keeney, however, points
out, "In contrast, the new agricultural biotechnologies provide
the tools for molecular and cellular approaches to altering plants
and animals." (Keeney, 1998)
This is a big distinction between more traditional plant and animal
breeding and biotechnology. The traditional methods were limited
to using only materials that were biologically similar. With today's
biotechnology capabilities, scientists are able to construct animals
and plants that would never have been possible using conventional
Before considering who benefits from biotechnology, it is necessary
to discuss one idea that I feel is erroneous. Many proponents of
biotechnology say that this technology is necessary to feed the
world. They argue that if we do not use biotechnology, many of the
world's people will face starvation and other ills associated with
malnutrition. This is certainly a concern; however, the evidence
shows that it is not the hungry who are being fed but rather the
affluent, i.e., those who can afford to buy the food. The earlier
Green Revolution also was promoted as a means of eliminating world
hunger. Food production has increased but we still have hungry people.
The problem is not one of production but rather a problem of distribution
and politics. Ho Zhiqian, a Chinese nutrition expert, was quoted
as saying, "Can the Earth feed all its people? That, I'm afraid,
is strictly a political question." (Reid, 1998) As we think
about biotechnology, we must not confuse wanting the world to be
fed with wanting to feed the world.
Before discussing a specific example of who benefits from biotechnology
it is important to examine what agricultural examples of biotechnology
have been approved. As of May 1999, there were 15 products approved
for unregulated release, 13 crop, and 2 non-crop. (USDA, 2001) There
were 53 different examples within the 13 crop groups. Only three
of the products contained what were described as "value-enhanced
traits". The rest contained "agronomic traits," primarily
herbicide tolerance or insect resistance.
These are the so-called first generation biotech or genetically
engineered products. A second generation now being developed or
tested will greatly expand the number of available crops and applications
of this technology.
The case of herbicide-tolerant soybeans will be used to examine
the benefits of biotechnology at the farm level. The data for this
analysis come from a random sample, cross-sectional survey of Iowa
soybean fields. The survey was conducted by the Iowa office of the
USDA's National Agricultural Statistics Service in the fall of 2000.
The data presented are for the 2000 crop year.
The survey covered all aspects of crop production. This included
yields, pesticide and fertilizer use, seeding rates and the type
and nature of machinery operations performed.
Several assumptions were necessary to compare the costs and returns
for herbicide- tolerant versus non-tolerant soybeans. The price
per bushel was $5.40. This price represented the average loan rate
and emergency payments. The per unit cost for pesticides was obtained
from various sources at Iowa State University. The per unit costs
of fertilizer and seeds were the costs used in the Iowa State Extension
Service cost of production estimates (Duffy and Smith, 2001). Finally,
the costs for the various machinery operations represented the average
custom rate charge as reported by the Iowa State University Extension
Service (Edwards and Smith, 2001a).
The final data set contained observations for 172 fields. Of these
fields, 63 percent (108 fields) reported using herbicide-tolerant
soybeans. There were 64 fields that reported planting soybeans that
were not herbicide tolerant.
Figure 1 (below) shows the average yields. The herbicide-tolerant
soybeans averaged 43.4 bushels per acre while the non-tolerant soybeans
averaged 45.0 bushels per acre. The percentage difference in yields
is identical to the difference found in a similar study for the
1998 crop year (Duffy, 1999). In 1998, the yields were 49.2 and
51.2 bushels per acre for herbicide- tolerant and non-tolerant soybeans,
The major cost differences attributed to planting herbicide-tolerant
or non-tolerant soybeans are for seed and herbicide costs. Figure
2 (below) shows the seed expenses for herbicide- tolerant and non-tolerant
soybeans. The seed expenses were found by multiplying the price
for seed times the seeding rate. (The seeding rate was the rate
reported by the farmer.) The price for the non-tolerant seed was
the price reported by Iowa State Extension (Duffy and Smith, 2001).
There was a 5 percent premium added to this price to represent the
price for the herbicide-tolerant seed. Five percent was a conservative
estimate to reflect any price differences plus the tech fee charged.
The seed cost for herbicide-tolerant soybeans averaged $5.69 per
acre more than the non-tolerant fields. In 1998, the difference
was $7.53 per acre. The expense for non-tolerant soybeans was lower
in 1998 while the expense for the tolerant varieties was slightly
The cost for herbicides is shown in Figure 3 (below). The farmers
reported the rate of each chemical they applied. The non-tolerant
soybeans averaged $26.15 per acre for herbicides, which was $6.17
higher than the herbicide costs for the tolerant fields. This cost
difference is similar to what was found in 1998 even though the
herbicide costs, in general, are higher in 2000 when compared to
The herbicide-tolerant soybean fields had an average of 1.55 sprayer
trips in 2000, compared to 2.45 trips for the non-tolerant fields.
Sprayer trips ranged from 1 to 4 for the tolerant fields while 6
was the maximum number of sprayer trips reported for the non-tolerant
Cultivation is another technique used to manage weeds. In 2000,
48 percent of the tolerant fields reported at least one cultivation.
This compares to 63 percent of the non-tolerant fields that reported
at least one cultivation. The number of cultivations ranged from
0 to 2 but the average number of cultivations reported for the tolerant
fields was .59 versus an average of .85 cultivations for the non-tolerant
Figure 4 (below) presents the total weed management costs for
both the tolerant and non-tolerant soybeans. This figure includes
herbicide material and application costs as well as the cost for
cultivations. The total weed management cost for tolerant fields
was $27.14 versus $34.80 per acre for the non-tolerant fields. Again,
these costs and the differences were very similar to the 1998 totals.
When all of the costs, including those mentioned, plus fertilizer,
lime, all machinery operations, insurance, and a land charge are
considered, there is essentially no difference in costs between
the tolerant and non-tolerant fields.
The land charge used was calculated in three steps. First, the
average statewide yield for soybeans was divided by the average
rent per acre. (Edwards and Smith, 2001b) The result was $2.85 per
bushel. This amount was multiplied by the average yield in the survey
and the result was $125.08 per acre. This was the land charge used
for all fields.
Figure 5 (below) shows the return to labor and management for the
tolerant and the non-tolerant fields. In 2000 both seed types lost
money. The return to the herbicide-tolerant fields was an $8.87
per acre loss while the non-tolerant varieties essentially broke
even with a calculated $.02 per acre loss.
Two major considerations could not be included in this analysis.
First, the price per bushel for either the type of soybeans was
assumed to be the same. Recently there have been some considerations
for price differentials based on whether or not the soybeans were
herbicide tolerant. The second major consideration omitted from
this analysis was the difference in time for combining. Farmers
report that they are able to combine tolerant fields faster because
there is less clogging of the combine. Many also report producing
cleaner beans. These considerations are beyond the scope of this
These considerations notwithstanding, based on this analysis it
appears that there is essentially no difference in the return to
using herbicide-tolerant versus non-tolerant soybeans. This is the
same conclusion that was reached in the similar 1998 study.
Use of herbicide-tolerant varieties results in lower herbicide
and weed management costs. However, they also have higher seed costs
and slightly lower yields.
If the returns to the herbicide tolerant and non-tolerant varieties
are similar, why have the tolerant crops been adopted so readily?
The acreage planted to herbicide-tolerant varieties has gone from
nothing a few years ago to more than half the acres planted or higher
depending on the estimate. There are several reasons for this phenomenon.
First, the ease of harvest is an overriding consideration for many
producers. Being able to harvest easier and faster makes farmers
more willing to adopt a new technology even if it does not produce
clearly superior returns.
Farmers also may be using the herbicide-tolerant varieties on fields
with particularly heavy weed problems. If the average returns are
comparable. then it is simpler to use the same varieties so that
commingled soybeans are not an issue.
Advertising and landlord pressure could also be part of the explanation
for the phenomenal rise in the use of herbicide-tolerant soybeans.
Some landlords insist on clean fields and the herbicide-tolerant
varieties offer that option.
There are other reasons that have been mentioned such as greater
flexibility, less time in the field at harvest, and so forth. Many
of these become individually compelling reasons. But, given the
analyses in 1998 and again in 2000, there does not appear to be
any difference in the per acre profitability between the two varieties.
The second example used to evaluate who benefits from biotechnology
is Bt corn. The data used for this study come from the same data
set used for the soybean example just reported. For corn, there
were 128 non-Bt fields and 46 Bt fields.
The costs and returns were calculated in the same way as for the
soybeans. The price used for corn was $2.06 per bushel. This price
reflects the $1.76 loan rate of regular government payments plus
The average yield for Bt corn was 152 bushels per acre (Figure
6). The average yield for the non-BT corn was 149 bushels per acre.
This yield difference is less than the difference found in the 1998
The planting rate was reported by the farmers, while the cost for
seed was reported by Iowa State Extension with a 15 percent premium
added for Bt seeds. This reflects the cost differences plus the
tech fee. Figure 7 shows the seed cost comparisons.
The Bt cornfields had slightly higher total fertilizer costs per
acre (Figure 8). The Bt fertilizer cost was $53.30 versus $48.67
for the non-Bt fields, much similar to the results found in 1998.
Although no production reason exists for the higher fertilizer costs,
it is hypothesized that the Bt fields are managed more intensively
which leads to the increased fertilizer costs.
Total, non-land, costs for Bt corn averaged $207.25 per acre as
opposed to the non-Bt corn that averaged $197.00 per acre. This
difference is lower than the cost difference found in 1998. At that
time the Bt corn was $20 per acre more costly than the non-Bt varieties.
The land charge used here was calculated similarly to the land
charge for the soybeans. The average rental rate used was $130 per
acre. This is higher than the Iowa average rate of $120 reported
by the Iowa State Extension (Edwards and Smith, 2001b).
Both Bt and non-Bt corn showed a negative return to labor and
management. The Bt corn lost an average of $28.28 per acre while
the non-Bt corn posted an average loss of $25.02 (Figure 9).
Similar to herbicide-tolerant soybeans, Bt corn produced a return
essentially equal to the non-Bt corn. Even though Bt corn has not
increased in acreage as the herbicide-tolerant soybeans have, this
again raises the question of why people would adopt an equal technology
at all, especially given the potential marketing problems associated
with Bt corn.
Many farmers plant Bt corn as a sort of insurance policy. Pest
populations are unknown at the beginning of the season. There are
certain fields and conditions where a pest outbreak is more likely.
For these fields, the use of Bt corn could produce dramatically
different results than those presented here. Remember that this
is a cross-sectional study and not a side-by-side comparison.
Some farmers claim the Bt corn has more brittle stalks and that
it is not as appealing to cattle as a feed. In spite of these observations,
the yields for Bt corn found here are higher than the non-Bt and
this was similar to the cross-sectional study in 1998.
Who Benefits from Biotechnology?
The preceding analysis shows that the primary beneficiaries of
the first generation biotechnology products are most likely the
seed companies that created the products. Additionally, in the case
of herbicide tolerance the companies that supply the tolerant herbicides
also are the benefactors from the development of the biotech crops.
It also appears that farmers have benefited from biotechnology.
Their gains, however, appear to more related to greater ease of
production and the ability to cover more acres as opposed to an
increase in the profits per acre. The farmer benefits are evidenced
by the rapid adoption of this new technology. As noted, in Iowa
soybean acres planted to herbicide-tolerant varieties went from
zero to more than half the total acreage in just a few years. Farmers
definitely perceive a benefit even if their profits are not increasing.
It has been argued that consumers also are the beneficiaries of
the first generation biotech products because the increased production
leads to lower prices. Whether or not production increases depends
upon the crop under consideration. For soybeans, the yields actually
are slightly less, while for corn they are slightly higher.
Regardless of the crop under consideration, it is hard to determine
whether consumers actually benefit from the first generation biotech
products. The prices for the basic commodities covered are already
low due to abundant supplies. In addition, government programs that
support prices will cost the taxpayers more if the prices continue
Consumers actually spend only a fraction of their food dollar
on these basic commodities. Changes in the price of the basic commodities
will have little impact on the prices charged to the consumers.
Additionally, a consumer backlash against biotech indicates that,
for at least some consumers, the addition of biotech crops is not
seen as a benefit but an added risk.
Today's biotech crops and applications are merely the first generation
of products. It appears from these examples that the primary beneficiaries
are the seed and chemical companies and, to a lesser extent, the
farmers. What will happen with the proposed second-generation products
remains to be seen.
The results presented here are from a cross-sectional study. Replicated,
randomized plot studies by Pecinovsky also reached the same conclusions.
(Iowa State University, 2001) Similar to this study, he found the
Bt corn had higher yields whereas the herbicide tolerant soybeans
had lower yields.
Today the primary benefactors of biotechnology are the seed companies
and chemical companies. Farmers appear to be receiving some non-pecuniary
benefits. And, in spite of arguments to the contrary, there is only
mixed evidence with respect to consumer benefits.
The primary reason for the first generation biotech applications
was to focus on input traits. Given this approach it is not surprising
that the input companies are the primary beneficiaries. Biotech
applications that focus on output traits, as opposed to the input
traits, may produce more widely dispersed benefits.
One of the issues that I have not addressed but that is a concern
to many people pertains to the externalities associated with the
use of biotechnology, especially as it has been applied to date.
There is a question of unknown health effects from the genetically
modified products. Health officials have assured the public that
this should not a concern, but this is not an entirely satisfactory
reassurance to many.
Several other externality issues surround the use of biotech crops.
Insect and weed resistance will develop faster with the widespread
use of these products. There also is the issue of pollen drift that
affects people trying to grow either organic commodities or some
other type of crop requiring segregation from biotech varieties.
Biotechnology is an extremely powerful tool. It has the potential
to create many useful products as well as many unforeseen problems.
As with any new technology, it must be evaluated carefully. It is
not prudent to expect private companies to develop products for
the public good. Companies are in the business of making money and
the products they pursue are designed for that end. To expect any
other result from private research is not appropriate or realistic.