• Adoption of genetically engineered technology on soybeans, cotton, and corn has increased dramatically since introduction in the mid-1990's, encompassing 20-44 percent of acreage planted in 1998.

• Use of Bt cotton and Bt corn is associated with significantly higher yields in most years for
  some regions. Herbicide tolerance in soybeans is associated with significantly higher yields in some regions in 1997. It is important to note, however, that crop yield differences between adopters and nonadopters could also be due to other factors not controlled for in the analyses.

• In 1997, herbicide-tolerant technology significantly reduced herbicide treatments for soybeans and, to a lesser extent, for cotton. Fewer insecticide treatments for the target pests were required for Bt corn and cotton.

Background

Seed companies and scientists claim that herbicide-tolerant and insect-resistant crops offer more
effective options for controlling pests, reducing chemical pesticide use with consequent savings in
pesticide costs, and increasing crop yields. Some of the arguments are:

• Herbicide-tolerant genes allow crops to survive effective herbicides that previously would have destroyed the crop along with the targeted weeds, and allowed farmers to use these herbicides for post-emergent weed control. Although farmers using herbicide-tolerant crops continue to use chemical herbicides, these herbicides can be used at lower application rates, require a smaller number of applications, and are more benign than traditional herbicides required without herbicide-tolerant genes.

• Farmers using Bt crops can reduce insecticide costs by discontinuing or decreasing applications of chemical insecticides targeting pests susceptible to Bt, such as pyrethroids in cotton. However, Bt crops have no effect on the use of insecticides to treat other pests. Farmers planting Bt crops benefit from decreased dependence on weather conditions affecting the timing and effectiveness of insecticide applications because the Bt toxin remains active in the plant throughout the crop year. These improvements in pest control reduce pest losses, leading to higher yields.

Although farmers may experience decreased pesticide costs and higher revenues attributed to
herbicide-tolerant and insect-resistant crops, there is a cost. Genetically engineered seed costs are greater than traditional seed, and farmers are also required to pay a technology fee. A threshold infestation level is thus required for farmers to obtain economic benefits from adopting
herbicide-tolerant and insect-resistant crops. The expected benefits from adopting these varieties
greatly depend on infestation levels and the associated yield advantages and pesticide use. Therefore, farmers in regions that have an increased probability of pest infestations would benefit from reduced pesticide applications and higher expected yields.

ARMS Survey Results

Adoption rates
Acreage using genetically engineered crops has increased from about 8 million acres in surveyed states in 1996 to more than 50 million acres in 1998. Genetically engineered cotton containing the Bt gene protects cotton from the budworm, bollworm, and pink bollworm. Bt cotton became available to farmers in 1995 and its use expanded rapidly, reaching 15 percent of cotton acreage in 1996 and about 17 percent in 1998. (See Table 1, Extent of Bt and Herbicide-Tolerant Seed Technologies Used in Corn, Soybean, and Cotton Production, by   Region, 1996-98.) Similarly, Bt corn provides protection from the European corn borer. The Environmental Protection Agency (EPA) approved Bt corn in August 1995 and its use has grown from about 1 percent of planted corn acreage in 1996 to 19 percent in 1998.

Adoption rates for herbicide-tolerant crops have been particularly rapid. Herbicide-tolerant soybeans became available to farmers for the first time and in limited quantities in 1996, but usage expanded to about 17 percent of the soybean acreage in the major states surveyed in 1997 and to more than 40 percent of the soybean acreage in 1998. Herbicide-tolerant cotton expanded from 10 percent of surveyed acreage in 1997 to 26 percent in 1998.

Reasons for adoption
- According to the 1997 ARMS survey, the majority of farmers surveyed (ranging from 54 to 76 percent of adopters) indicated that the main reason they adopted genetically engineered crops with pest management traits was to "increase yields through improved pest control."
- The second reason, stated by 19-42 percent of adopters, was "to decrease pesticide costs." All other reasons combined ranged between 3 and 15 percent of adopters. These results confirm other adoption studies pioneered by the economist Griliches who showed that expected profitability positively influences the adoption of agricultural innovations. Hence, factors expected to increase profitability by increasing revenues per acre or reducing costs are generally expected to positively influence adoption.

Comparison with other adoption estimates
The adoption estimates shown in Table 1 (ERS estimates) broadly agree with industry estimates, with the following exceptions:

ERS estimates appear to be HIGH for:

• Herbicide tolerant soybeans in 1996 and 1998. The ERS estimates are between 4 and 9 percentage points higher than industry estimates; and

• Herbicide-tolerant corn for 1998. The ERS estimate is about 10 percentage points higher than industry estimates.

ERS estimates appear to be LOW for:

• Herbicide-resistant cotton for 1998. The ERS estimate is about 11 percentage points below
  industry estimates.

Yields and pest management
Despite environmental concerns about increased weed and insect resistance resulting from the use of herbicide-tolerant and insect-resistant crops, farmers believe that the use of these crops will offer many benefits, such as increased yields, decreased pest management costs, and greater cropping practice flexibility. Benefits and performance of these crops are expected to vary greatly by region, pest infestation levels, seed and technology costs, irrigation, and other factors. Performance may improve after development of popular regional varieties containing these genes to ensure yield advantages. For many farmers, expected benefits appear to have outweighed expected costs, as evidenced by the rapid adoption rates.

Comparison of mean yields shows that in most cases (4 of 7 region/year cases for which data were sufficient) adopters of Bt cotton appear to obtain statistically significant higher yields than nonadopters (See Table 2, Yields from Bt and Herbicide-Tolerant Seed Technologies Used in Corn, Soybean, and Cotton Production Compared to All Other Seed Technologies, by Region,
1996-98.) Although less prevalent, similar results (2 of 5 cases) were observed for Bt corn. For the
case of herbicide-tolerant crops, the results are mixed: only for a few regions and in some years are yields higher for adopters. Most of the time (4 of 5 for corn, 9 of 13 for soybeans, 3 of 5 for cotton), differences in yields are statistically insignificant.

Comparison of mean pesticide acre-treatments for 1997 shows that in most cases (2 of 3) the
adoption of Bt cotton reduces treatments of insecticides normally used on the pests targeted by Bt (See Table 3, Pesticide Acre-Treatments from Bt and Herbicide-Tolerant Seed Technologies
Used in Corn, Soybean, and Cotton Production Compared to All Other Seed Technologies,
by Region, 1997.) In 1 of 3 cases, total treatments for all other cotton pests are higher for adopters than nonadopters. Insecticide treatments for Bt-targeted pests on corn are significantly lower for Bt users than for nonusers. Adoption of herbicide-tolerant varieties accompanied statistically significant reductions in herbicide treatments in 4 of 8 cases across all crops, mostly for soybeans.

What's Ahead?

ERS and USDA's National Agricultural Statistics Service (NASS) will continue working together to
develop estimates of the implications of adoption of genetically engineered crops, using the ARMS and other survey data. The ERS research program statistically controls for relevant factors for which there are data by using multiple regressions in econometric models. That is, differences in economic conditions and crop or management practices are held constant so that the effect of adoption can be observed. For example, in our ongoing research on biotechnology, ERS analysts control for output and input prices, infestation levels, and self-selection.

Preliminary results of this ongoing research show that in most cases the adoption of crops with traits for herbicide-tolerance and insecticide-resistance reduces pesticide use, although in some cases the effect is small or insignificant.

In 1997, the effect of adopting herbicide-tolerant soybean seeds created a very small increase in
yields. The effect on variable profits was not statistically significant, as slightly higher adopter'
revenues and lower herbicide costs were not able to compensate for the higher adopters' seed costs and technical fees.

On the other hand, adopting Bt cotton had significantly increased yields and variable profits in 1997. Adopting herbicide-tolerant cotton had a similar effect, but to a smaller degree.

For more information, contact Ralph Heimlich, 202-694-5504.

Links

Some of these documents are in Adobe Acrobat format. You can download and get help using
the Adobe Acrobat Reader to view and print these documents.

"Value-Enhanced Crops: Biotechnology's Next Stage," Agricultural Outlook, March 1999.

ERS/NASS Agricultural Resource Management Study (ARMS) survey.

"Update on Bt Corn and Other New Technology", in Feed Yearbook, April 1999, published by
ERS.

New U.S. Farm Resource Regions, in the Issues Center on the ERS website.

USDA - ERS report
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