Farm income and production impacts of using GM crop technology 1996–2016

ABSTRACT

This paper estimates the value of using genetically modified (GM) crop technology in agriculture at the farm level. It follows and updates earlier annual studies which examined impacts on yields, key variable costs of production, direct farm (gross) income and impacts on the production base of the four main crops of soybeans, corn, cotton and canola. The commercialisation of GM crops has occurred at a rapid rate since the mid 1990s, with important changes in both the overall level of adoption and impact occurring in 2016. This annual updated analysis shows that there continues to be very significant net economic benefits at the farm level amounting to $18.2 billion in 2016 and $186.1 billion for the period 1996–2016 (in nominal terms). These gains have been divided 48% to farmers in developed countries and 52% to farmers in developing countries. About 65% of the gains have derived from yield and production gains with the remaining 35% coming from cost savings. The technology has also made important contributions to increasing global production levels of the four main crops, having, for example, added 213 million tonnes and 405 million tonnes respectively, to the global production of soybeans and maize since the introduction of the technology in the mid 1990s.

INTRODUCTION

2016 represents the twenty first year of widespread cultivation of crops containing genetically modified (GM) traits, with our estimate of the global planted area of GM-traited crops in this year to be about 178 million hectares.

During this period, there have been many papers assessing the farm level economic and farm income impacts associated with the adoption of this technology. The authors of this paper have, since 2005, engaged in an annual exercise to aggregate and update the sum of these various studies, and where possible to supplement this with new analysis. The aim of this has been to provide an up to date and as accurate as possible assessment of some of the key farm level economic impacts associated with the global adoption of crops containing GM traits. It is also hoped the analysis continues to contribute to greater understanding of the impact of this technology and to facilitate more informed decision-making, especially in countries where crop biotechnology is currently not permitted.

This study updates the findings of earlier analysis into the global impact of GM crops since their commercial introduction in 1996 by integrating data and analysis for 2016. Previous analysis by the current authors has been published in various journals, with the last analysis being Brookes and Barfoot.¹ The methodology and analytical procedures in this present discussion are unchanged to allow a direct comparison of the new with earlier data. Readers should however, note that some data presented in this paper are not directly comparable with data presented in previous analysis because the current paper takes into account the availability of new data and analysis (including revisions to data for earlier years).

In order to save readers of this paper the chore of consulting the past papers for details of the methodology and arguments, these are included in full in this paper.

The analysis concentrates on gross farm income effects because these are a primary driver of adoption amongst farmers (both large commercial and small-scale subsistence). It also quantifies the (net) production impact of the technology. The authors recognise that an economic assessment could examine a broader range of potential impacts (eg, on labour usage, household incomes, local communities and economies).

However, these are not included because undertaking such an exercise would add considerably to the length of the paper and an assessment of wider economic impacts would probably merit a separate assessment in its own right.

RESULTS AND DISCUSSION

a. Herbicide Tolerant (HT) Crops

The main impact of GM HT (largely tolerant to the broad-spectrum herbicide glyphosate) technology has been to provide more cost effective (less expensive) and easier weed control for farmers. Nevertheless, some users of this technology have also derived higher yields from better weed control (relative to weed control obtained from conventional technology). The magnitude of these impacts varies by country and year, and is mainly due to prevailing costs of different herbicides used in GM HT systems versus conventional alternatives, the mix and amounts of herbicides applied, the cost farmers pay for accessing the GM HT technology and levels of weed problems. The following important factors affecting the level of cost savings achieved in recent years should be noted:

• The mix and amounts of herbicides used on GM HT crops and conventional crops are affected by price and availability of herbicides. Herbicides used include both ‘older’ products that are no longer protected by patents and newer ‘patent-protected’ chemistry, with availability affected by commerical decisions of suppliers to market or withdraw products from markets and regulation (eg, changes to approval processes). Prices also vary by year and country;

• The amount farmers pay for use of the technology varies by country. Pricing of technology (all forms of seed and crop protection technology, not just GM technology) varies according to the level of benefit that farmers are likely to derive from it. In addition, it is influenced by intellectual property rights (patent protection, plant breeders’ rights and rules relating to use of farm-saved seed). In countries with weaker intellectual property rights, the cost of the technology tends to be lower than in countries where there are stronger rights. This is examined further in c) below;

• Where GM HT crops (tolerant to glyphosate) have been widely grown, some incidence of weed resistance to glyphosate has occurred and resistance has become a major concern in some regions. This has been attributed to how glyphosate was used; because of its broad-spectrum post-emergence activity, it was often used as the sole method of weed control. This approach to weed control put tremendous selection pressure on weeds and as a result contributed to the evolution of weed populations predominated by resistant individual weeds. It should, however, be noted that there are hundreds of resistant weed species confirmed in the International Survey of Herbicide Resistant Weeds (www.weedscience.com)⁷⁶. Worldwide, there are 41 weed species that are currently resistant to glyphosate (accessed February 2018), compared to 160 weed species resistant to ALS herbicides (eg, chlorimuron ethyl commonly used in conventional soybean crops) and 74 weed species resistant to photosystem II inhibitor herbicides (eg, atriazine commonly used in corn production). In addition, GM HT technology has played a major role in facilitating the adoption of no and reduced tillage production techniques in North and South America. This has also probably contributed to the emergence of weeds resistant to herbicides like glyphosate and to weed shifts towards those weed species that are not well controlled by glyphosate. As a result, growers of GM HT crops are increasingly being advised to include other herbicides (with different and complementary modes of action) in combination with glyphosate in their weed management systems, even where instances of weed resistance to glyphosate have not been found. This change in weed management emphasis also reflects the broader agenda of developing strategies across all forms of cropping systems to minimise and slow down the potential for weeds developing resistance to existing technology solutions.² At the macro level, these changes have influenced the mix, total amount, cost and overall profile of herbicides applied to GM HT crops. Whilst this has resulted in the weed control costs associated with growing GM HT crops generally being higher in 2016 than 10–15 years previously, relative to the conventional alternative, GM HT crops have continued to offer important economic advantages for most users, either in the form of lower costs of production or higher yields (arising from better weed control). It should also be noted that many of the herbicides used in conventional production systems had significant resistance issues themselves in the mid 1990s and this was one of the reasons why glyphosate tolerant soybeans were rapidly adopted, as glyphosate provided good control of these weeds. If the GM HT technology was no longer delivering net economic benefits, it is likely that farmers around the world would have significantly reduced their adoption of this technology in favour of conventional alternatives. The fact that GM HT global crop adoption levels have not fallen in recent years suggests that farmers must be continuing to derive important economic benefits from using the technology.

These points are further illustrated in the analysis below.

GM HT soybeans

The impact of this technology on gross farm income is summarised in Table 1. The main farm level gain has arisen from a reduction in the cost of production, mainly through lower expenditure on weed control (mostly herbicides). Not surprisingly, where yield gains have occurred from improvements in the level of weed control, the average farm income gain has been higher, in countries such as Romania, Mexico and Bolivia. A second generation of GM HT soybeans became available to commercial soybean growers in the US and Canada in 2009. This technology offered the same tolerance to glyphosate as the first generation (and the same cost saving) but with higher yielding potential. The realisation of this potential is shown in the higher average gross farm income benefits (Table 1). GM HT soybeans have also facilitated the adoption of no tillage production systems, shortening the production cycle. This advantage has enabled many farmers in South America to plant a crop of soybeans immediately after a wheat crop in the same growing season. The second crop, additional to traditional ‘one crop’ soybean production, has added considerably to farm incomes and to the volumes of soybean production in countries such as Argentina and Paraguay.

TABLE 1.

GM HT soybeans: Summary of average gross farm level income impacts 1996–2016 ($/hectare).

Country	Cost of technology	Average gross farm income benefit (after deduction of cost of technology)	Aggregate income benefit (million $)	Type of benefit	References
1st generation GM HT soybeans
Romania (to 2006 only)	50–60	104	44.6	Small cost savings of about $9/ha, balance due to yield gains of +13% to +31%	Brookes10
					Monsanto Romania11
Argentina	2–4	22.5 plus second crop benefits of 216	18,567.3	Cost savings plus second crop gains	Qaim and Traxler12
					Trigo and CAP13 and updated from 2008 to reflect herbicide usage and price changes
Brazil	7–25	32	7,220.2	Cost savings	Parana Department of Agriculture14
					Galveo15–17 and updated to reflect herbicide usage and price changes
US	15–57	34	13,297.3	Cost savings	Marra et al18
					Carpenter and Gianessi19
					Sankala and Blumenthal7,8
					Johnson and Strom20
					And updated to reflect herbicide price and common product usage
Canada	20–40	21	200.6	Cost savings	George Morris Center21 and updated to reflect herbicide price and common product usage
Paraguay	4–10	16.5 plus second crop benefits of 301	1,199.1	Cost savings	Based on Argentina as no country-specific analysis identified. Impacts confirmed by industry sources and herbicide costs and usage updated 2009 onwards from herbicide survey data AMIS Global/Kleffmann22
Uruguay	2–4	19	183.2	Cost savings	Based on Argentina as no country-specific analysis identified. Impacts confirmed by industry sources and herbicide costs and usage updated 2009 onwards from herbicide survey data AMIS Global/Kleffmann22
South Africa	2–30	9	38.4	Cost savings	As there are no published studies available, based on data from industry sources and herbicide costs and usage updated 2009 onwards from herbicide survey data AMIS Global/Kleffmann22
Mexico	20–47	40	6.1	Cost savings plus yield impacts in range of −2% to +13%	Monsanto annual monitoring reports submitted to Ministry of Agriculture and personal communications
Bolivia	3–4	97	775.6	Cost savings plus yield gain of +15%	Fernandez W et al23
2ndt generation GM HT soybeans
US and Canada	50–67	120 (US)	12,329.1 (US)	Cost savings as first generation plus yield gains in range of +5% to +11%	As first generation GM HT soybeans plus annual farm level survey data from Monsanto USA3
		110 (Can)	662.8 (Can)
Intacta soybeans
Brazil	33–56	113	4,207.4	Herbicide cost saving as 1st generation plus insecticide saving $19/ha and yield gain +9% to +10%	Monsanto Brazil pre commercial trials and post market (farm survey) monitoring, MB Agro24
Argentina	30–56	64	497.4	Herbicide cost saving as 1st generation plus insecticide saving $21/ha and yield gain +7% to +9%	Monsanto Argentina pre commercial trials and post market monitoring surveys
Paraguay	30–56	122	437.1	Herbicide cost saving as 1st generation plus insecticide saving $33/ha and yield gain +9% to +13%	Monsanto Paraguay pre commercial trials and post market monitoring surveys
Uruguay	30–56	62	69.5	Herbicide cost saving as 1st generation plus insecticide saving $19/ha and yield gain +7% to +9%	Monsanto Uruguay pre commercial trials and post market monitoring surveys

Notes.

1.Romania stopped growing GM HT soybeans in 2007 after joining the European Union, where the trait is not approved for planting

2.The range in values for cost of technology relates to annual changes in the average cost paid by farmers. It varies for reasons such as the price of the technology set by seed companies, exchange rates, average seed rates and values identified in different studies

3.Intacta soybeans (HT and IR) first grown commercially in 2013

4.For additional details of how impacts have been estimated, see examples in Appendix 1

5.AMIS Global/Kleffmann are subscription-based data sources (derived from farmer surveys) on pesticide use

6.References to Monsanto Argentina, Brazil, Paraguay and Uruguay as sources of data from pre-commericalisation trials and post market monitoring – this is unpublished data provided to the authors by these companies on a yearly basis covering seed premium, yield comparisons and cost of insecticide/number of insecticide treatment comparisons for Intacta crops versus conventional and GM HT (only) crops. The data derives from survey-based monitoring of sites growing each crop

Overall, in 2016, GM HT technology in soybeans (excluding second generation ‘Intacta’ soybeans: see below) has boosted gross farm incomes by $4.37 billion, and since 1996 has delivered $54.6 billion of extra farm income. Of the total cumulative farm income gains from using GM HT soybeans, $24.6 billion (45%) has been due to yield gains/second crop benefits and the balance, 55%, has been due to cost savings.

GM HT and IR (intacta) soybeans

This combination of GM herbicide tolerance (to glyphosate) and insect resistance in soybeans was first grown commercially in 2013, in South America. In the first four years, the technology was used on approximately 49.6 million hectares and contributed an additional $5.2 billion to gross farm income of soybean farmers in Argentina, Brazil, Paraguay and Uruguay, through a combination of cost savings (decreased expenditure on herbicides and insecticides) and higher yields (see Table 1).

GM HT maize

The adoption of GM HT maize has mainly resulted in lower costs of production, although yield gains from improved weed control have arisen in Argentina, Brazil, the Philippines and Vietnam (Table 2).

TABLE 2.

GM HT maize: Summary of average gross farm income impacts 1996–2016 ($/hectare).

Country	Cost of technology	Average gross farm income benefit (after deduction of cost of technology)	Aggregate income benefit (million $)	Type of benefit	References
US	15–30	28	8,450.0	Cost savings	Carpenter and Gianessi19
					Sankala and Blumenthal7,8
					Johnson and Strom20
					Also updated annually to reflect herbicide price and common product usage
Canada	17–35	15	185.3	Cost savings	Monsanto Canada (personal communications) and updated annually since 2008 to reflect changes in herbicide prices and usage
Argentina	16–33	108	2,391.9	Cost savings plus yield gains over 10% and higher in some regions	Personal communication from Monsanto Argentina, Grupo CEO and updated since 2008 to reflect changes in herbicide prices and usage
South Africa	9–18	5	65.2	Cost savings	Personal communication from Monsanto South Africa and updated since 2008 to reflect changes in herbicide prices and usage
Brazil	10–32	38	1,831.9	Cost savings plus yield gains of +1% to +7%	Galveo15–17
Colombia	14–24	15	6.0	Cost savings	Mendez et al25
Philippines	24–47	31	171.0	Cost savings plus yield gains of +5% to +15%	Gonsales26
					Monsanto Philippines (personal communications)
					Updated since 2010 to reflect changes in herbicide prices and usage
Paraguay	13–17	3	4.1	Cost saving	Personal communication from Monsanto Paraguay and AMIS Global/Kleffman – annually updated to reflect changes in herbicide prices and usage
Uruguay	6–17	3	1.36	Cost saving	Personal communication from Monsanto Uruguay and AMIS Global/Kleffman – updated annually to reflect changes in herbicide prices and usage
Vietnam	26–28	37	1.43		Brookes27

1. The range in values for cost of technology relates to annual changes in the average cost paid by farmers. It varies for reasons such as the price of the technology set by seed companies, exchange rates, average seed rates and values identified in different studies

2. For additional details of how impacts have been estimated, see examples in Appendix 1

3. AMIS Global/Kleffmann are subscription-based data sources (derived from farmer surveys) on pesticide use

4. References to Monsanto Argentina, Canada, South Africa, Philippines, Paraguay and Uruguay as sources of data – this is unpublished data provided to the authors by these companies on a yearly basis covering seed premium and typical herbicide treatments used on GM HT and conventional crops

5. Reference to changes in herbicide prices and usage – author estimates drawing on AMIS Global/Kleffmann data and other similar database sources eg, Kynetec (for the US) and extension services (eg, Ontario Ministry of Agriculture in Canada)

In 2016, the total global farm income gain from using this technology was $2.1 billion with the cumulative gain over the period 1996–2016 being $13.1 billion. Within this, $4.5 billion (34%) was due to yield gains and the rest derived from lower costs of production.

GM HT cotton

The use of GM HT cotton delivered a gross farm income gain of about $130.1 million in 2016. In the 1996–2016 period, the total gross farm income benefit was $1.92 billion. As with other GM HT traits, these farm income gains have mainly arisen from cost savings (71% of the total gains), although there have been some yield gains in Argentina, Brazil, Mexico and Colombia (Table 3).

TABLE 3.

GM HT cotton summary of average gross farm income impacts 1996–2016 ($/hectare).

Country	Cost of technology	Average gross farm income benefit (after deduction of cost of technology)	Aggregate income benefit (million $)	Type of benefit	References
US	13–82	20	1,135.5	Cost savings	Carpenter and Gianessi19
					Sankala and Blumenthal7,8
					Johnson and Strom20
					Also updated to reflect herbicide price and common product usage
South Africa	13–32	33	4.8	Cost savings	Personal communication from Monsanto South Africa and updated since 2008 to reflect changes in herbicide prices and usage
Australia	32–82	28	113.2	Cost savings	Doyle et al28
					Monsanto Australia (personal communications) and updated to reflect changes in herbicide usage and prices
Argentina	10–30	43	183.9	Cost savings and yield gain of +9%	Personal communication from Monsanto Argentina, Grupo CEO and updated since 2008 to reflect changes in herbicide prices and usage
Brazil	26–54	62	180.3	Cost savings plus yield gains of +1.6% to +4%	Galveo15–17
Mexico	29–79	267	274.4	Cost savings plus yield gains of +3% to +20%	Monsanto Mexico annual monitoring reports submitted to the Ministry of Agriculture and personal communications
Colombia	96–187	95	24.8	Cost savings plus yield gains of +4%	Monsanto Colombia annual personal communications

1. The range in values for cost of technology relates to annual changes in the average cost paid by farmers. It varies for reasons such as the price of the technology set by seed companies, exchange rates, average seed rates, the nature and effectiveness of the technology (eg, second generation ‘Flex’ cotton offered more flexible and cost-effective weed control than the earlier first generation of HT technology) and values identified in different studies

2. For additional details of how impacts have been estimated, see examples in Appendix 1

3. References to Monsanto Argentina, Australia, South Africa and Colombia as sources of data – this is unpublished data provided to the authors by these companies on a yearly basis covering seed premium and typical herbicide treatments used on GM HT and conventional crops

4. Reference to Monsanto Mexico annual monitoring reports. These are unpublished, annual monitoring of crop reports that the company is required to submit to the Mexican Ministry of Agriculture, as part of post market monitoring requirements. This provides data on seed premia, cost of weed control and production and yields for GM HT cotton versus conventional to a regional level

5. Reference to changes in herbicide prices and usage – author estimates drawing on AMIS Global/Kleffmann data and other similar database sources eg, Kynetec (for the US) and extension services (eg, New South Wales Department of Agriculture in Australia)

Other HT crops

GM HT canola (tolerant to glyphosate or glufosinate) has been grown in Canada, the US, and more recently Australia, whilst GM HT sugar beet is grown in the US and Canada. The gross farm income impacts associated with the adoption of these technologies are summarised in Table 4. In both cases, the main farm income benefit has derived from yield gains. In 2016, the total global income gain from the adoption of GM HT technology in canola and sugar beet was $559 million and cumulatively since 1996, it was $6.44 billion.

TABLE 4.

Other GM HT crops summary of average gross farm income impacts 1996–2016 ($/hectare).

Country	Cost of technology	Average farm income benefit (after deduction of cost of technology)	Aggregate income benefit (million $)	Type of benefit	References
GM HT canola
US	12–33	49	360.9	Mostly yield gains of +1% to +12% (especially Invigor canola)	Sankala and Blumenthal7,8
					Johnson and Strom20
					And updated to reflect herbicide price and common product usage
Canada	12–32	57	5,520.0	Mostly yield gains of +3% to +12% (especially Invigor canola)	Canola Council29
					Gusta et al30 and updated to reflect herbicide price changes and seed variety trial data (on yields)
Australia	10–41	45	89.9	Mostly yield gains of +12% to +22% (where replacing triazine tolerant canola) but no yield gain relative to other non GM (herbicide tolerant canola)	Monsanto Australia,31 Fischler and Tozer32 and Hudson and Richards33
GM HT sugar beet
US and Canada	130–151	116	454.0	Mostly yield gains of +3% to +13%	Kniss34
					Khan35
					Jon-Joseph et al36
					Annual updates of herbicide price and usage data

Notes.

1. In Australia, one of the most popular type of production has been canola tolerant to the triazine group of herbicides (tolerance derived from non GM techniques). It is relative to this form of canola that the main farm income benefits of GM HT (to glyphosate) canola has occurred

2. InVigor’ hybrid vigour canola (tolerant to the herbicide glufosinate) is higher yielding than conventional or other GM HT canola and derives this additional vigour from GM techniques

3. The range in values for cost of technology relates to annual changes in the average cost paid by farmers. It varies for reasons such as the price of the technology set by seed companies, exchange rates, average seed rates and values identified in different studies

4. For additional details of how impacts have been estimated, see examples in Appendix 1

5. References to Monsanto Australia as a source of data – this is unpublished data provided to the authors by this company on a yearly basis covering seed premium and typical herbicide treatments used on GM HT and conventional crops

6. Reference to changes in herbicide prices and usage – author estimates drawing on AMIS Global/Kleffmann data and other similar database sources eg, Kynetec (for the US)

b Insect Resistant (GM IR) Crops

The main way in which these technologies have impacted on farm incomes has been through lowering the levels of pest damage and hence delivering higher yields (Table 5).

TABLE 5.

Average (%) yield gains GM IR cotton and maize 1996–2016.

	Maize insect resistance to corn boring pests	Maize insect resistance to rootworm pests	Cotton insect resistance	References
US	7.0	5.0	9.9	Carpenter and Gianessi19
				Marra et al18
				Sankala and Blumenthal7,8
				Hutchison et al37
				Rice38
				Mullins and Hudson9
China	N/a	N/a	10.0	Pray et al39
South Africa	11.1	N/a	24.0	Gouse et al40-42
				Van der Wald43
				Ismael et al44
				Kirsten et al45
				James46
Honduras	23.8	N/a	N/a	Falk Zepeda et al47,48
Mexico	N/a	N/a	11.0	Traxler and Godoy-Avila75
				Monsanto Mexico annual cotton monitoring reports
Argentina	6.0	N/a	30.0	Trigo49
				Trigo and Cap13
				Qaim and De Janvry50,51
				Elena52
Philippines	18.2	N/a	N/a	Gonsales53
				Gonsales et al26
				Yorobe54
				Ramon55
Spain	11.2	N/a	N/a	Brookes56,57
				Gomez-Barbero, Barbel M A and Rodriguez-Corejo58
				Riesgo et al59
Uruguay	5.6	N/a	N/a	As Argentina (no country-specific studies available and industry sources estimate similar impacts as in Argentina)
India	N/a	N/a	30.0	Bennett et al4
				IMRB5,6
				Herring and Rao60
Colombia	21.8	N/a	18.0	Mendez et al25
				Zambrano et al61
Canada	7.0	5.0	N/a	As US (no country-specific studies available and industry sources estimate similar impacts as in the US)
Burkina Faso	N/a	N/a	18.0	Vitale J et al,62 Vitale J63
Brazil	11.8	N/a	1.3	Galveo15–17,64
				Monsanto Brazil65
Pakistan	N/a	N/a	21.0	Nazli et al,66 Kouser and Qaim67,68
Myanmar	N/a	N/a	30.7	USDA69
Australia	N/a	N/a	Nil	Doyle70
				James71
				CSIRO72
				Fitt73
Paraguay	5.5	N/a	Not available	As Argentina (no country-specific studies available and industry sources estimate similar impacts as in Argentina)
Vietnam	7.2	N/a	N/a	Brookes27

Notes.

1. N/a = not applicable

2. Reference to Monsanto Mexico annual monitoring reports. These are unpublished, annual monitoring of crop reports that the company is required to submit to the Mexican Ministry of Agriculture, as part of post market monitoring requirements. This provides data on seed premia, cost of pest control and production and yields for GM IR cotton versus conventional to a regional level

6. GM IR maize performance in Uruguay and Paraguay. Industry sources consulted for using Argentina impact data as a suitable proxy for impact in these countries include Monsanto Argentina, Uruguay and Paraguay, Argenbio (Argentine Biotechnology Association) and Trigo E (Grupo CEO)

The greatest improvement in yields has occurred in developing countries, where conventional methods of pest control have been least effective (eg, reasons such as poorly developed extension and advisory services, lack of access to finance to fund use of crop protection application equipment and products), with any cost savings associated with reduced insecticide use being mostly found in developed countries. These effects can be seen in the level of farm income gains that have arisen from the adoption of these technologies, as shown in Table 6.

TABLE 6.

GM IR crops: Average gross farm income benefit 1996–2016 ($/hectare).

Country	GM IR maize: cost of technology	GM IR maize (income benefit after deduction of cost of technology)	Aggregate income benefit GM IR maize (million $)	GM IR cotton: cost of technology	GM IR cotton (income benefit after deduction of cost of technology)	Aggregate income benefit GM IR cotton (million $)
US	17–32 IRCB, 22–42 IR CRW	81 IRCB, 77 IR CRW	38,509.0	26–58	111	5,430.5
Canada	17–26 IRCB, 22–42 IR CRW	75 IRCB 87 IR CRW	1,457.6	N/a	N/a	N/a
Argentina	10–33	28	1,108.8	21–86	240	921.0
Philippines	30–47	100	553.0	N/a	N/a	N/a
South Africa	9–17	95	2,173.2	14–50	152	34.5
Spain	17–51	207	274.9	N/a	N/a	N/a
Uruguay	11–33	30	29.6	N/a	N/a	N/a
Honduras	100	48	11.5	N/a	N/a	N/a
Colombia	30–49	275	130.0	50–175	68	21.1
Brazil	44–69	74	6,222.9	26–52	40	134.9
China	N/a	N/a	N/a	38–60	349	19,644.9
Australia	N/a	N/a	N/a	85–299	211	953.7
Mexico	N/a	N/a	N/a	48–75	215	272.1
India	N/a	N/a	N/a	12–54	207	21,121.7
Burkina Faso	N/a	N/a	N/a	51–54	97	204.6
Myanmar	N/a	N/a	N/a	17–20	160	358.4
Pakistan	N/a	N/a	N/a	4–15	235	4,794.3
Paraguay	16–20	19	32.0	N/a	N/a	N/a
Vietnam	38–42	105	4.0		N/a
Average across all user countries		76			219

Notes.

1. GM IR maize all are IRCB unless stated (IRCB = insect resistance to corn boring pests), IRCRW = insect resistance to corn rootworm

2. The range in values for cost of technology relates to annual changes in the average cost paid by farmers. It varies for reasons such as the price of the technology set by seed companies, the nature and effectiveness of the technology (eg, second generation ‘Bollgard’ cotton offered protection against a wider range of pests than the earlier first generation of ‘Bollgard’ technology), exchange rates, average seed rates and values identified in different studies.

3. Average across all countries is a weighted average based on areas planted in each user country

4. n/a = not applicable

5. Sources – as Table 5

At the aggregate level, the global gross farm income gains from using GM IR maize and cotton in 2016 were $4.81 billion and $3.7 billion respectively. Cumulatively since 1996, the gains have been $50.6 billion for GM IR maize and $54 billion for GM IR cotton.

c. GM Drought Tolerant Maize

Drought tolerant maize has been grown in parts of the US since 2014 and in 2016 was planted on 1.34 million hectares. Drawing on yield comparison data with other drought tolerant maize (varieties conveying drought tolerance that is not derived from GM technology) from field trials (source: Monsanto US³ Field Trials Network in the Western Great Plains), this suggests that the technology is providing users with a net yield gain of about 2.3% and a small cost saving in irrigation costs. After taking into consideration, the additional cost of the seed compared to non-GM drought tolerant maize), the average gross farm income gain (2014–2016) has been about $15/ha. In 2016, this resulted to an aggregate farm income gain of about $20 million and over the period 2014–2016, a total gain of about $33.3 million.

d. Aggregated (Global Level) Impacts

GM crop technology has had a significant positive impact on global gross farm income, which amounted to $18.2 billion in 2016. This is equivalent to having added 5.4% to the value of global production of the four main crops of soybeans, maize, canola and cotton. Since 1996, gross farm incomes have increased by $186.1 billion.

At the country level, US farmers have been the largest beneficiaries of higher incomes, realising over $80.3 billion in extra income between 1996 and 2016. This is not surprising given that US farmers were first to make widespread use of GM crop technology and for many years the GM adoption levels in all four US crops have been in excess of 80%. Important farm income benefits ($46.4 billion) have occurred in South America (Argentina, Bolivia, Brazil, Colombia, Paraguay and Uruguay), mostly from GM technology in soybeans and maize. GM IR cotton has also been responsible for an additional $40.8 billion additional income for cotton farmers in China and India.

In 2016, 55% of the farm income benefits were earned by farmers in developing countries. The vast majority of these gains have been from GM IR cotton and GM HT soybeans. Over the twenty-one years 1996–2016, the cumulative farm income gain derived by developing country farmers was $96 billion, equal to 51.7% of the total farm income during this period.

The cost to farmers for accessing GM technology, across the four main crops, in 2016, was equal to 29% of the total value of technology gains. This is defined as the farm income gains referred to above plus the cost of the technology payable to the seed supply chain. Readers should note that the cost of the technology accrues to the seed supply chain including sellers of seed to farmers, seed multipliers, plant breeders, distributors and the GM technology providers.

In developing countries, the total cost was equal to 20% of total technology gains compared with 36% in developed countries. Whilst circumstances vary between countries, the higher share of total technology gains accounted for by farm income in developing countries relative to developed countries reflects factors such as weaker provision and enforcement of intellectual property rights in developing countries and the higher average level of farm income gain per hectare derived by farmers in developing countries compared to those in developed countries.

Sixty-five per cent of the total income gain over the 21-year period derives from higher yields and second crop soybean gains with 35% from lower costs (mostly on insecticides and herbicides). In terms of the two main trait types, insect resistance and herbicide tolerance have accounted for 52% and 48% respectively of the total income gain. The balance of the income gain arising from yield/production gains relative to cost savings is changing as second-generation GM crops are increasingly adopted. Thus in 2016 the split of total income gain came 72% from yield/production gains and 28% from cost savings.

Crop production effects

Based on the yield impacts used in the direct farm income benefit calculations above and taking account of the second soybean crop facilitation in South America, GM crops have added important volumes to global production of maize, cotton, canola and soybeans since 1996 (Table 7).

TABLE 7.

Additional crop production arising from positive yield effects of GM crops.

	1996–2016 additional production (million tonnes)	2016 additional production (million tonnes)
Soybeans	213.47	31.56
Maize	404.91	47.36
Cotton	27.47	2.27
Canola	11.65	1.00
Sugar beet	1.2	0.17

Note: Sugar beet, US and Canada only (from 2008)

The GM IR traits, used in maize and cotton, have accounted for 93.5% of the additional maize production and 98.9% of the additional cotton production. Positive yield impacts from the use of this technology have occurred in all user countries, except for GM IR cotton in Australia where the levels of Heliothis sp (boll and bud worm pests) pest control previously obtained with intensive insecticide use were very good. The main benefit and reason for adoption of this technology in Australia has arisen from significant cost savings and the associated environmental gains from reduced insecticide use, when compared to average yields derived from crops using conventional technology (such as application of insecticides and seed treatments). The average yield impact across the total area planted to these traits over the 21 years since 1996 has been +14% for maize and +15% for cotton.

As indicated earlier, the primary impact of GM HT technology has been to provide more cost effective (less expensive) and easier weed control, as opposed to improving yields, the improved weed control has, nevertheless, delivered higher yields in some countries. The main source of additional production from this technology has been via the facilitation of no tillage production systems, shortening the production cycle and how it has enabled many farmers in South America to plant a crop of soybeans immediately after a wheat crop in the same growing season. This second crop, additional to traditional soybean production, has added 166.8 million tonnes to soybean production in Argentina and Paraguay between 1996 and 2016 (accounting for 83.4% of the total GM HT-related additional soybean production). Intacta soybeans added a further 13.46 million tonnes since 2013.

CONCLUDING COMMENTS

In the last 21 years, crop biotechnology has helped farmers grow more food using fewer resources by reducing the damage caused by pests and better controlling weeds. The highest yield increases have occurred in developing countries and this has contributed to a more reliable and secure food supply base in these countries. In South America, HT technology has helped farmers reduce tillage, shortening the time between planting and harvesting, allowing them the opportunity to grow an additional soybean crop after wheat in the same growing season.

With higher yields and less time and money spent managing pests and weeds, farmers have earned higher incomes. This has proved to be especially valuable for farmers in developing countries where, in 2016, an average $5 was received for each extra dollar invested in biotech crop seeds.

The widespread use of GM crop technology is also changing agriculture's land footprint by allowing farmers to grow more without needing to use additional land. To maintain global production levels at 2016 levels, without biotech crops, would have required farmers to plant an additional 10.8 million hectares (ha) of soybeans, 8.2 million ha of maize, 2.9 million ha of cotton and 0.5 million ha of canola, an area equivalent to the combined land area of Bangladesh and Sri Lanka.

Nevertheless, in relation to the use of HT crops, over reliance on the use of glyphosate and the lack of crop and herbicide rotation by farmers, in some regions, has contributed to the development of weed resistance. In order to address this problem and maintain good levels of weed control, farmers have increasingly adopted more integrated weed management strategies incorporating a mix of herbicides, other HT crops and cultural weed control measures (in other words using other herbicides with glyphosate rather than solely relying on glyphosate, using HT crops which are tolerant to other herbicides, such as glufosinate and using cultural practices such as mulching). This has added cost to the GM HT production systems compared to about 10–15 years ago, although relative to the current conventional alternative, the GM HT technology continues to offer important economic benefits in 2016.

Overall, there continues to be a considerable and growing body of evidence, in peer reviewed literature, and summarised in this paper, that quantifies the positive economic impacts of crop biotechnology. The analysis provides insights into the reasons why so many farmers around the world have adopted and continue to use the technology. Readers are encouraged to read the peer reviewed papers cited, and the many others who have published on this subject (and listed in the references below) and to draw their own conclusions.

METHODOLOGY

The report is based on detailed analysis of existing farm level impact data for GM crops, much of which can be found in peer reviewed literature. Most of this literature broadly refers to itself as ‘economic impact’ literature and applies farm accounting or partial budget approaches to assess the impact of GM crop technology on revenue, key costs of production (notably cost of seed, weed control, pest control and use of labour) and gross farm income. Whilst primary data for impacts of commercial cultivation were not available for every crop, in every year and for each country, a substantial body of representative research and analysis is available and this has been used as the basis for the analysis presented. The authors have also undertaken their own analysis of the impact of some trait-crop combinations in some countries (notably GM herbicide tolerant (HT) traits in North and South America) based on key input (eg, herbicide and insecticide usage) and cost data.

The farm level economic impact of the technology varies widely, both between and within regions/countries. Therefore, the analysis is considered on a case by case basis, using average performance and impact recorded in different crop and trait combinations by the studies reviewed. Where more than one piece of relevant research (eg, on the impact of using a GM trait on the yield of a crop in one country in a particular year) has been identified, the findings used in this analysis reflect the authors assessment of which research is most likely to be reasonably representative of impact in the country in that year. For example, there are many papers on the impact of GM insect resistant (IR) cotton in India. Few of these are reasonably representative of cotton growing across the country, with many papers based on small scale, local and unrepresentative samples of cotton farmers. Only the reasonably representative research has been drawn on for use in this paper – readers should consult the references to this paper to identify the sources used.

This approach may still both, overstate, or understate, the impact of GM technology for some trait, crop and country combinations, especially in cases where the technology has provided yield enhancements. However, as impact data for every trait, crop, location and year data is not available, the authors have had to extrapolate available impact data from identified studies to years for which no data are available. In addition, if the only studies available took place several years ago, there is a risk that basing current assessments on such comparisons may not adequately reflect the nature of currently available alternative (non-GM seed or crop protection) technology. The authors acknowledge that these factors represent potential methodological weaknesses. To reduce the possibilities of over/understating impact due to these factors, the analysis:

• Directly applies impacts identified from the literature to the years that have been studied. As a result, the impacts used vary in many cases according to the findings of literature covering different years. Examples where such data is available include the impact of GM insect resistant (IR) cotton: in India (see Bennett R et al,⁴ IMRB⁵ and IMRB⁶), in Mexico (see Traxler and Godoy-Avila⁷⁵ and Monsanto Mexico annual monitoring reports submitted to the Ministry of Agriculture in Mexico) and in the US (see Sankala & Blumenthal^7,8 Mullins & Hudson⁹). Hence, the analysis takes into account variation in the impact of the technology on yield according to its effectiveness in dealing with (annual) fluctuations in pest and weed infestation levels;

• Uses current farm level crop prices and bases any yield impacts on (adjusted – see below) current average yields. This introduces a degree of dynamic analysis that would, otherwise, be missing if constant prices and average yields identified in year-specific studies had been used;

• It includes some changes and updates to the impact assumptions identified in the literature based on new papers, annual consultation with local sources (analysts, industry representatives, databases of crop protection usage and prices) and some ‘own analysis’ of changes in crop protection usage and prices and of seed varieties planted;

• Adjusts downwards the average base yield (in cases where GM technology has been identified as having delivered yield improvements) on which the yield enhancement has been applied. In this way, the impact on total production is not overstated.

Detailed examples of how the methodology has been applied to calculate the 2016 impacts are presented in Appendix 1.

Other aspects of the methodology used to estimate the impact on direct farm income are as follows:

• Where stacked traits have been used, the individual trait components were analysed separately to ensure estimates of all traits were calculated. This is possible because the non-stacked seed has been (and in many cases continues to be) available and used by farmers and there are studies that have assessed trait-specific impacts;

• All values presented are nominal for the year shown and the base currency used is the US dollar. All financial impacts in other currencies have been converted to US dollars at prevailing annual average exchange rates for each year (source: United States Department of Agriculture Economics Research Service);

• The analysis focuses on changes in farm income in each year arising from impact of GM technology on yields, key costs of production (notably seed cost and crop protection expenditure but also impact on costs such as fuel and labour. Inclusion of these costs is, however, more limited than the impacts on seed and crop protection costs because only a few of the papers reviewed have included consideration of such costs in their analysis. In most cases the analysis relates to impact of crop protection and seed cost only, crop quality (eg, improvements in quality arising from less pest damage or lower levels of weed impurities which result in price premia being obtained from buyers) and the scope for facilitating the planting of a second crop in a season (eg, second crop soybeans in Argentina following wheat that would, in the absence of the GM HT seed, probably not have been planted). Thus, the farm income effect measured is essentially a gross margin impact (impact on gross revenue less variable costs of production) rather than a full net cost of production assessment. Through the inclusion of yield impacts and the application of actual (average) farm prices for each year, the analysis also indirectly takes into account the possible impact of GM crop adoption on global crop supply and world prices.

The paper also includes estimates of the production impacts of GM technology at the crop level. These have been aggregated to provide the reader with a global perspective of the broader production impact of the technology. These impacts derive from the yield impacts and the facilitation of additional cropping within a season (notably in relation to soybeans in South America). Details of how these values were calculateed (for 2016) are shown in Appendix 1.

Funding Statement

Monsanto Company

ACKNOWLEDGEMENTS

The authors acknowledge that funding towards the researching of this paper was provided by Monsanto. The material presented in this paper is, however, the independent views of the authors – it is a standard condition for all work undertaken by PG Economics that all reports are independently and objectively compiled without influence from funding sponsors.