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Motivation

Emerging Markets for GM Foods: An Indian Perspective on Consumer Understanding and Willingness to Pay Satish Y. Deodhar (IIM-A) Sankar Ganesh (IIM-A) Wen Chern (OSU). Motivation. GM inevitability seems to come from: Population growth Productivity plateau Rapid technological advances, and

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Motivation

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  1. Emerging Markets for GM Foods:An Indian Perspective on Consumer Understanding and Willingness to PaySatish Y. Deodhar (IIM-A)Sankar Ganesh (IIM-A)Wen Chern (OSU)

  2. Motivation • GM inevitability seems to come from: • Population growth • Productivity plateau • Rapid technological advances, and • Freer agricultural trade • India - late entrant in the GM Crop cultivation • Today 5th largest area in GM crops (ISAAA) • Technology adoption & welfare gains issues have been addressed • E.g. Gupta and Chandak (2005) • Neilsen and Anderson (2000)

  3. Food Crops • Commercial production of food crops not allowed in India at this time • (Bt) cottonseed oil – cooking medium • Corn imports are at zero duty (GM corn?) • Need to understand consumers’ opinion • Implications of allowing GM food crops • GM Crop regulation, labelling, extension activity • Avoid KFC experience!

  4. Product Choice • Cottonseed oil • Popular cooking medium • Quite likely Bt cottonseeds being pressed for oil • Golden Rice • Staple food • Holds promise to alleviate nutrition deficiency • GM fed Chicken • The most common and popular non-vegetarian food

  5. Survey Design • City of Ahmedabad • A representative group of town and city people • 12 to 15 households from 43 wards of the city • Total size of 602 responses • Questionnaire put on web • Answers sought from students, professors, businesspersons and scientists • Total size of 110 responses • Questions on • Knowledge, perception, and acceptability • Socio-economic and demographic profile • Choice between GM and non-GM in CV format

  6. Random Utility Approach Uij = u (Zj, Dj, gij) Uij = Vij + gij V0j = a0 + b0 Zj + c0 (dj – Pgmj) V1j = a1 + b1 Zj + c1 (dj – Pngmj) j I* = a + bZj – c(Pngmj – Pgmj) + gj E[WTPngmj– WTPgmj ] = a/c + b/c E[Zj]

  7. A Representative Characteristics Table 4.1(a): Income Distribution of the Respondents * 4 respondents did not reveal their income

  8. Some Observations • More than 90% of city respondents do not know what GM is all about • About 85% of internet respondents know somewhat or nothing about GM foods • After giving pros and cons of GM food, more than 70% of city respondents willing to buy GM foods. • Almost all want mandatory labelling, but only about 30 percent willing to pay for it ! • Ethics and religion matter much more to city respondents than internet respondents

  9. Ceteris Paribus • If government’s regulatory performance is considered excellent or good, the chances of choosing non-GM food do not increase • Likelihood of GM food consumption increases as one moves from very-poor to middle income categories • Being in joint family and female increase the likelihood of choosing non-GM food • As GM prices decrease relative to non-GM, chances of choosing GM increase • Based on expected WTP, consumers are willing to pay a premium of about 19.5% for golden rice, 16% for GM oil, and less-than 1% for non-GM fed chicken

  10. Implications • Majority of the middle class may just be willing to buy GM foods. • Labelling issue will be important until consumer apprehensions about GM persist • Information extension activity by consumer forums, ministries and firms may be necessary • (Perceived) consumer confidence in regulatory mechanism may be critical in acceptance of GM foods

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