Genetically modified crops hit the dirt five years ago. The question about them today is not whether they work-Bts and Roundup Ready generally live up to production expectations.
No, the question is about dollars and cents: There is evidence that the economic benefit of these new crops is slim, although it's not nonexistent.
You can mark Danny Larson down as a Bt believer. He farms 1,400 acres near Mineota, Minn. Back in 1996, Larson sprayed half his corn for the European corn borer and got a 30- to 40-bushel yield boost.
Jeff Halat of Genoa, Ill. is growing 1,600 acres of Asgrow Roundup Ready soybeans this year. If the returns for Roundup Ready soybeans don't clearly beat conventional varieties as some claim, Halat argues that the technology gives him valuable flexibility in his far-flung farming operation. The technology also yields well for him and has allowed him to get ahead of a tough ragweed problem.
That left him eager for Bt corn the next year, and what he discovered was a yield difference of 70 bushels between early maturing non-Bts and full-season Bts. "That sold me," Larson says.
Then in 1998 and 1999, corn borer pressure fell off, and the Bt benefit was less clear. New conventional hybrids (not Bts), all from DuPont's Pioneer Hi-Bred, were Larson's best yielders.
Still, he hangs with Bts. Except for his refuges, he's all Bt this year.
"In a high-pressure year, [Bt corn] is definitely worth it," Larson says. "But it's also buying insurance. You buy insurance for your home and hope its doesn't burn down. It's the same thing with Bt."
Even Pioneer acknowledges that in low-pressure corn borer years, the return from Bts falls off. But in a study the company published earlier this year, it calculates an average annual YieldGard Bt advantage of 8.7% over similar non-Bt genetics.
And based on average infestations in Minnesota and Illinois, the YieldGard advantage grows to between 11% and 13%.
Its data show that even with low infestations-0.5 borer per plant-Bts provide a positive economic return.
Yield Versus Costs
Here, however, is where the argument begins. Return is based on yield, yes, but also obviously on input costs. Pioneer notes that its "cost" calculation is based on the difference between the cost of Bt and conventional corn seed.
Iowa State University economist Mike Duffy has found it's not safe to assume all other input costs are equally comparable.
In a paper published by Iowa State's Leopold Center for Sustainable Agriculture, Duffy reports that on 377 fields in Iowa in 1998, Bts outyielded non-Bts 160.4 bushels to 147.7.
However, Duffy found that Bt producers still used a surprisingly large amount of insecticides (the chemicals went on 12% of Bt fields at a cost of $17.56 an acre). Insecticide costs for non-Bt fields, applied to 18% of those fields, averaged $14.94 an acre.
Duffy also found that herbicide costs on Bt fields averaged almost $3 more per acre, and fertilizer costs averaged $5 more per acre. Add that to the higher seed cost, and Duffy calculates the Bt return as a rather thin $3.97 per acre.
In a North Carolina study of the returns on Bt corn, this one in 1998, researchers concluded that the return from higher yields was greater than seed and technology costs. This field study showed net gains to Bt corn of about $3 to $16 per acre. Duffy's calculation falls at the lower end of that range.
The same kind of economics appear to be at work with Roundup Ready soybeans.
In interviews with growers of soybeans on 365 fields, the advantage went to the nongenetically modified varieties by $1.25 an acre.
Input costs for genetically modified soybeans in 1998 were $9 an acre lower, including a 30% smaller herbicide bill. But the yield was off 2 bushels when compared with yields of conventional varieties. That, along with higher seed costs, tipped the balance.
A study published by USDA this past spring concluded that, overall, the adoption of herbicide-resistant soybeans did not lead to a statistically significant increase in net returns.
But those conclusions run somewhat counter to other studies about the economics of herbicide-resistant soybeans. Two 1998 studies, one in Tennessee and one in Mississippi, showed higher yields and higher returns than conventional soybeans. In North Carolina too, researchers found that net farm returns from Roundup Ready soybeans were about $6 per acre higher than traditional varieties.
That same USDA study suggests that perhaps there really is a significant return from engineered soybeans, only it is more apparent in different regions of the country.
Economists writing the report that was released this spring broke down their data into regions. They found that in the area generally including the Midwest Corn Belt, the net return from herbicide-tolerant soybeans were big, about $40 per acre. This is an area that produces 70% of the soybeans. In the South, the returns were less significant.
A Different Revolution
Duffy is planning to run a similar study with Iowa growers again at the end of this year. But if it is true that the economic benefit of Bts and Roundup Ready are making a less-than-clear economic argument in their favor, why the massive run to this technology? "This is new technology in a different way," Duffy says. "If I showed you a Bt seed and a conventional seed, you couldn't tell the difference."
In other words, here is revolutionary technology that doesn't require much change on the farm. Unlike the switch from the horse to the tractor or from the plow to no-till, no corn or soybean farmer has to change his equipment line or even his management routine to be productive with the new seeds.
Also, farmers are seeing benefits beyond what can be clearly measured in dollars and cents. "[Growers] are getting clean fields and ease of harvest," says Duffy. "They can cover more acres and make difficult ground more productive."
That would describe Jeff Halat, centered in Genoa, Ill. He farms 3,200 scattered acres on the very western fringes of Chicago's suburbs. Half that acreage is in Asgrow's Roundup Ready beans this year.
The technology has helped him lick a pesky ragweed problem-with a less costly herbicide program. Halat is not unhappy with his yields. He was 80% Roundup Ready soybeans in 1999, and average yields topped out at 56 bushels an acre.
And Halat buys time with Roundup. With heavy June rains keeping his sprayer idle, ragweeds were reaching a foot tall. But with a Roundup option, Halat says, he could count on control that would be difficult with another program.
"I'm able to use a specific product on specific targets on my farms," Halat says. "The weed control has been tremendous. The benefits are there."
And even though genetically modified seed may not have produced a clear economic advantage, neither do they harm farming's bottom line.
Duffy found that the lower yields in GMO soybeans were offset by lower input costs. GMO corn produced higher yields, but the costs were higher than those of non-GMO corn.
Potential higher returns also are probably being chewed up by the actions of growers and seed companies.
Having paid a higher price for GMO seed, growers are more likely to put more inputs to protect that investment.
"There is a general feeling that maybe people planting Bt corn are just a little more aggressive or a little more astute managers," says Duffy.
And the seed companies? They would be negligent if they didn't figure out how to bring home some of the economic benefit growers earn by using souped-up seed.
That's not overly cynical, Duffy notes. "If they didn't, I would fire those who didn't," he says.
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Last Updated on 8/20/00
By Dan Ellis