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Economic Impact of Bt-Corn Hybrids: Summary Available

June 1, 2001
A report titled Agricultural Biotechnology: Updated Benefit Estimates was published in January of 2001 by the National Center for Food and Agricultural Policy (http://www.ncfap.org) and authored by Janet Carpenter and Leonard Gianessi. The report was compiled through support provided by the Rockefeller Foundation. The aggregate costs and benefits to U.S. producers who planted Bt corn (1997-1999) were calculated. In 1997, 1998, and 1999, the net gain or loss for planting Bt hybrids was + (gain) $89 million, ­ (loss) $26 million, and ­ (loss) $35 million, respectively. Aggregate losses ($s) occurred in 1998 and 1999 in spite of production increases attributed to the use of Bt corn: 1997--11.7 bushels per acre increase, 55.8 million total bushels increased nationally; 1998--4.2 bushels per acre increase, 60.6 million total bushels increased nationally; and 1999--3.3 bushels per acre increase, 66.4 million total bushels increased nationally. These estimates are based on the following economic variables: 1997--technology fee of $10 per acre and a corn market price of $2.43 per bushel, 1998--technology fee of $10 per acre and a corn market price of $1.95 per bushel, and 1999--technology fee of $8 per acre and a corn market price of $1.90 per bushel. These economic inputs resulted in a profit of $18 per acre in 1997 and losses of $1.81 and $1.73 per acre in 1998 and 1999, respectively.

This report clearly elucidates that when European corn borer infestations and market prices are low, the use of Bt hybrids may not result in profits. In fact, in 1998 and 1999, aggregate estimates for the United States showed that net losses ($s) occurred for producers who invested in this technology. Obviously, profits can be impressive ($18 per acre) when Bt hybrids are planted in outbreak years and commodity prices are more favorable. As we've stated many times in the Bulletin, the purchase of Bt hybrids is like taking out an insurance plan against European corn borers. The insurance premium will not return a dividend every year.--Mike Gray




Author: Mike Gray


The Pest Management and Crop Development Bulletin
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