Global Value of GM Rice Matty Demont a and Alexander J. Stein b a Africa Rice Center (AfricaRice ), Saint-Louis ,

1. Global Value of GM Rice Matty Demonta and Alexander J. Steinb a Africa Rice Center (AfricaRice), Saint-Louis, Senegal, m.demont@cgiar.org b International Food Policy Research Institute (IFPRI), Washington, USA International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

2. Outline • Introduction • Methods • Metrics • Critical assessment International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

3. 1. Introduction • Rice = most important food crop of the developing world • Worldwide, more than 3.5 billion people depend on rice for more than 20% of their daily calorie intake • Staple food of more than half of the world’s population • Many of whom are also poor & therefore extremely vulnerable to high rice prices International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

4. 1. Introduction • Rice world market = thin, fragmented, inelastic domestic demand, low world stockholdings  unstable • GM rice may have substantial implications • For alleviation of poverty, hunger, and malnutrition in rice growing & consuming countries (James, 2005) • For global acceptance of GM crops (Brookes & Barfoot, 2003) International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

5. 1. Introduction International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

6. 1. Introduction • Dominated by first-generation, agronomic GM traits: herbicide-tolerance & insect-resistance • Many GM traits beyond approval stage, preproduction testing stage • Also traits with consumer or industry benefits, i.e. second-generation GM traits • Brookes & Barfoot (2003): By 2012, 3/4 of the GM traits will have reached the Asian farmer with a probability of at least 80% International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

7. 1. Introduction • However, in 2012 nowhere in the world has GM rice been commercialized at a large scale • Important existing and expected approvals: • Approval of Bt rice in China • Expected commercial approval of Golden Rice in the Philippines in 2013/14 • Important for the developing world • Is commercialization imminent? • Review evidence on global value of GM rice International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

8. 2. Methods • Almost no ex-post evidence  ex-ante • Field trials vs. on-farm trials • ANOVA, (stochastic) partial budgeting vs. econometric techniques • Assumptions (e.g. technology licensing fee) • Exogenous vs. endogenous technology fee • Partial equilibrium models vs. CGE • Disability-adjusted life years (DALYs) approach International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

9. 3. Metrics International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

10. 3. Metrics • Anticipated impacts are in line with classic examples of commercialized first-generation GM crops • Impact of stress-resistant GM traits = f(stress incidence/severity & use of damage control inputs, e.g. herbicides, insecticides, water) • Impact of Bt rice in China ranges from +0–12% yield advantage to –50–90% insecticide use • DT rice in China: –13% yield variance, –33% water International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

11. 3. Metrics International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

12. 3. Metrics • Rice demand = relatively inelastic  large impact on food prices and poverty • Impact of GM rice in China = +$4 billion • Rice price China –12% • Domestic demand +1.4% • Increase income & demand in other sectors • World market = thin (small share is traded) • most gains are captured domestically • Independent of GM-unfriendly trade policies International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

13. 3. Metrics • Second-generation GM rice traits have the potential to generate benefits one order of magnitude higher than first-generation traits • Labor productivity  economy-wide impacts • Golden Rice in India –60% VAD, +1.4 million DALYs (disability-adjusted life years) • Golden Rice in China +2% national income • Importance of consumer acceptance International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

14. 4. Critical Assessment Four limitations: • Proprietary seed technologies • Monopolistic rent extraction • Endogeneize technology licensing fee (Demont et al., 2009; Dillen et al., 2009; Konstandiniet al., 2009) • Focus on first-order statistics (e.g. of yields) • DT rice: yield variance reductions • Represents 40% of the total benefits in Asia (Konstandiniet al, 2009) International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

15. 4. Critical Assessment Four limitations: • Modeling strategies • Hicks-neutral productivity shocks • Ex-post evidence shows shocks = factor-biased • Consider trade effects, restrictions • Challenge of transforming DALYs$ values • What is the value of a DALY? $500, $1000, GDP, GNI? • CGE captures economy-wide impacts (Anderson et al., 2005a, 2005b) International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

16. Thank you! Grazie! m.demont@cgiar.org Center of Excellence for Rice Research International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012