Productivity, Access, and Risk: the Keys to Biotechnology in Developing Countries

1. Productivity, Access, and Risk: the Keys to Biotechnology in Developing Countries David Zilberman, University of California Gregory Graff, University of California Matin Qaim, University of Bonn Cherisa Yarkin, University of California

2. Presumed Points of Failure • Productivity: Biotechnology aims to solve problems of the North; will not make a difference in the South. • Access: Biotechnology is controlled by corporations; will not be accessible on feasible terms to poor peasants. • Risks: Damage to environment and human health, contamination of native genetic materials, and loss of crop biodiversity

3. Productivity: Yield-Increasing Potential • Yield = potential output x (1 - damage) damage = f (pest, pest control) • Combination of high pest pressure and minimal existing use of pest control  potential for yield-increasing effect • Attractive features of pest-control agricultural biotechnologies • Simplicity of use • Reduction in use of chemicals or labor

4. Productivity: Evidence for Bt Cotton Gains Bt cotton in: • United States: yield effect 0 – 15% • China: yield effect 10% • South Africa: yield effect 20%-40% • India: yield effect 60 – 80 % In every country have reduction in chemical usage

5. The Impact of Bt Cotton in India • Bt cotton is used to provide resistance to the American bollworm (Helicoverpa armigera). • The technology was developed by Monsanto and was introduced in collaboration with the Maharashtra Hybrid Seed Company (Mahyco). • Field trials with these Bt hybrids have been carried out since 1997 and, for the 2002/03 growing season, the technology was commercially approved by the Indian authorities.

6. Our study • For our analysis, we use data from on-farm field trials that were carried out during the 2001/02 growing season as part of the regulatory procedure. • In 2001, field trials were carried out on 395 farms in seven states of India. These trials were initiated by Mahyco and supervised by the regulatory authorities.

7. Experimental design • Three adjacent 646 m2 plots were planted: the first with a Bt cotton hybrid, the second with the same hybrid but without the Bt gene (non-Bt counterpart), and the third with a different hybrid commonly used in the particular location (popular check). • All three plots were managed by the farmers themselves, following customary practices. • This setup allows reducing the effects of differences in agroecological conditions and managerial abilities when making technological comparisons.

8. The actual data source • In addition to the regular trial records, more comprehensive information was collected for 157 farms on agronomic aspects and farm and household characteristics. • Observations from these 157 farms constitute the data basis for this analysis. • They cover 25 districts in three major cotton-producing states—Maharashtra and Madhya Pradesh in Central India and Tamil Nadu in the South. Plot-level input and output data were extrapolated to 1 hectare to facilitate comparisons.

9. Results • Bt hybrids were sprayed three times less often against bollworms than the conventional hybrids. • On average, insecticide amounts on Bt cotton plots were reduced by almost 70%, which is consistent with studies from other countries. • At average pesticide amounts of 1.6 kg/ha (active ingredients) on the conventional trial plots, crop damage in 2001/02 was about 60%. Bt does not completely eliminate pest-related yield losses.

10. Results II • Average yields of Bt hybrids exceeded those of non-Bt counterparts and local checks by 80% and 87%, respectively. • 2001/02 was a season with high bollworm pressure in India, so that average yield effects will be somewhat lower in years with less pest problems.

11. Insecticide Use and Crop Losses with and without Bt Technology

12. Yield and pesticides use comparisons

13. Predicted yield effects of pest controlling Biotech

14. Access Intellectual Property Rights (IPR) Registrations

15. Access: Biotechnologies in the South • Most IP is generated by research in the North • Transfer of public sector’s rights to the private sector provides incentives for development and commercialization • Companies have little incentive to invest in applications specific to the South

16. Access: Biotechnologies in the South • Companies are willing to give technologies for use in South; good PR • Companies worry about liability, transaction costs • Universities with rights to technology will also be open to transferring to South applications • Needed institutional mediation: IP clearinghouse

17. Access: Objectives of clearinghouse for IPR • Reduce search costs to identifying set of technologies accessible • Reduce transaction cost for the commercialization of innovations • Increase transparency about ownership of IPR • Provide mechanisms to manage negotiation of access to IPR • Improve technology transfer mechanisms and practices (mostly in public sector institution)

18. Access: Model of a clearinghouse for IPR Member organizations IP providers: Non-member organizations Direct licensing transactions Assignment, license, or option for full or limited fields of use “Re-packaging” Pooled sub-licensing Single patent sub-licensing IP users: Non-member IP users Non-member IP users Member organization IP users

19. Access: Reducing Regulatory Constraints • Registration should be efficient. Excessive requirements may be used as a source of political economic rent seeking. • Borders are arbitrary. Countries can take advantage of regulatory clearances granted elsewhere and concentrate on addressing unique local problems and risks. • Countries should develop regional alliances for regulation and establish mechanisms for easy transfer of regulatory information.

20. Environment Risks Agricultural biodiversity

21. Environment: Sound Basis for Risk Analysis • Is the Precautionary Principle a sound basis for risk analysis? • There are always trade-offs between risks and benefits, and between risks and risks. • In Africa, does risk of “genetic contamination” exceed risk of starvation? • Agricultural biotechnology should be evaluated in comparison to pesticides and other real alternatives. • In tropics, increased productivity would reduce pressure for deforestation.

22. Gmo’s are not perfect- • Gmo’s have problems-resistance buildup, damage to secondary pests, genetic contamination. • Refugia, monitoring of impacts, restriction of use in some locations can address these problems partially-but alternatives have problems and risks that have to be considered. • Agricultural biotech is in its infancy- built up of human capital and accumulation of -will lead to eliminations of many bug and lead to better technologies

23. Environment: Sound Basis for Risk Analysis • Risks and benefits should be quantified. • Sound reliability factors—i.e. confidence intervals—should be used to standardize risk estimates.

24. Environment: Relative to Modern Breeding Biotech Can Enhance Crop Biodiversity • Main premise: Agbiotech allows minor modification of existing varieties and under appropriate institutional setup can be adopted while preserving crop biodiversity • Conventional breeding involves often massive genetic changes, and adjustments to accommodate biodiversity are costly and • Well functioning IPR system can lead to crop biodiversity preservation • Field data support this claim

25. Table 1. Number of available varieties for different GM technologies in selected countries (2001/2002)

26. Environment: Biodiversity scenarios in the field • Strong IPRs, strong breeding sector, and low transaction costs. (US)Private technology owner will license the innovation to different seed companies, who incorporate it into many or all crop varieties, so that crop biodiversity is preserved. • Strong IPRs, strong breeding sector, but high transaction costs. (EU) If an agreement cannot be reached, companies will bypass breeding sector, directly introduce GM crop varieties that are not locally adapted.

27. Environment: Biodiversity scenarios in the field • Weak IPRs and a strong breeding sector. (China) Many different GM varieties are available Farmers and consumers are beneficiaries. SR social optimum. • Weak IPRs and a weak breeding sector. (Africa)If foreign GM crop varieties are even introduced, are done directly without adaptation. A loss of local crop biodiversity.

28. Biotech Could Enhance Crop Biodiversity • Conventional breeding led to wholesale replacement of land races with elite line monocultures • Biotechnology could provide precise improvements to traditional land races • Could lead to reintroduction of new “technologically competitive” land races - ”Jurasic garden”

29. Conclusions Agbiotechnology has significant potential for developing countries; the challenge is to realize that potential: • Productivity: yield effect of biotechnology tends to be larger in developing countries • Access: institutions can reduce IP and regulatory costs for developing countries • Risks: crop biodiversity can be preserved and could even be restored with biotechnology

30. Ag bio tech is only part of the solution • Ag biotech is more than Gmo’s. • It will evolve- alternative molecular approaches will be developed-but • knowledge will not be accumulated without experience • Development may be dependent on public and private sector funding • Ag biotech must be pursued as part of a portfolio of technology and knowledge tools aiming to enhance productivity and environmental sustainability of agriculture.

31. Consider • 250 million Americans are the “guinea pigs” for agricultural biotechnology. Northern countries also took the risk with cars and with modern chemicals. • Africa missed the Green Revolution; will it also miss the Gene Revolution?