Global impact of biotech crops: socio-economic and environmental effects in the first ten years of commercial use

8 March 2007 Frampton, Dorset:  After ten years of commercialisation, biotech crops have made a significant, positive impact on the global economy by enhancing farm income; decreasing pesticide spraying and reducing the environmental footprint associated with pesticide use and soil cultivation, according to a study released today. 

“Since 1996, adoption of biotech crops has contributed to reducing greenhouse gas emissions from agriculture and decreased pesticide spraying,” said Graham Brookes, director of PG Economics, and one of the authors who conducted the study. “Farmers in biotech adopting countries have made significant farm income gains over the last ten years and at the same time, reduced the environmental impact associated with agricultural practices, benefiting all citizens.  These economic and environmental gains have also been greatest in developing countries.”

The study, “Global impact of biotech crops: socio-economic and environmental effects in the first ten years of commercial use,” reported that biotech crops have resulted in:

• Substantial net economic benefits at the farm level amounting to $5 billion in 2005 and $27 billion for the ten year period.
• a reduction in pesticide spraying by 224 million kg (equivalent to about 40% of the annual volume of pesticide active ingredient applied to arable crops in the European Union) and as a result, decreased the environmental impact associated with pesticide use by more than 15%
• a significant reduction in the release of greenhouse gas emissions from agriculture by a reduction is pesticide spaying applications, soil cultivation and facilitation of No-Till and conservation cultivation, which, in 2005, was equivalent to removing 4 million cars from the roads.

The study was compiled based largely on extensive analysis of existing farm-level economic impact data on biotech crops and additional primary analysis of the environmental impact from base data. A shorter version of the report has been peer reviewed and published in the Journal of Agrobiotechnology Management and Economics (AgbioForum. www.agbioforum.org ) - click the title: Global impact of biotech crops: socio-economic and environmental effects in the first ten years of commercial use.  AgBioForum AgBioForum Volume 9 // Number 3 // 2007.

A full manuscript of the report is available - click the title: Global impact of biotech crops: socio-economic and environmental effects in the first ten years of commercial use. 

The Executive summary is provided below.

PG Economics are independent consultants specialising in the economic and environmental impact of technology in agriculture.

For more information, contact by email, telephone fax and post at:

PG Economics Ltd
Wessex Barn, 8 Dorchester Rd, Frampton, Dorset, DT2 9NB
Telephone: +44 (0)1300 321501 Fax: +44 (0)1303 840959
E-mail: peter.barfoot@bioportfolio.com or graham.brookes@btinternet.com 
 

Executive summary and conclusions

This study presents the findings of research into the global socio-economic and environmental impact of GM crops in the ten years since they were first commercially planted on a significant area.  It focuses on the farm level economic effects, the environmental impact resulting from changes in the use of insecticides and herbicides, and the contribution towards reducing greenhouse gas (GHG) emissions.    

Background context

The analysis presented is largely based on the average performance and impact recorded in different crops.  The economic performance and environmental impact of the technology at the farm level does, however vary widely, both between and within regions/countries.  This means that the impact of this technology (and any new technology, GM or otherwise) is subject to variation at the local level.  Also the performance and impact should be considered on a case by case basis in terms of crop and trait combinations. 

Agricultural production systems (how farmers use different and new technologies and husbandry practices) are dynamic and vary with time.  This analysis seeks to address this issue, wherever possible, by comparing GM production systems with the most likely conventional alternative, if GM technology had not been available.  This is of particular relevance to the case of GM herbicide tolerant (GM HT) soybeans, where prior to the introduction of GM HT technology, production systems were already switching away from conventional to no/low tillage production (in which the latter systems make greater use of, and are more reliant on, herbicide-based weed control systems - the role of GM HT technology in facilitating this fundamental change in production systems is assessed below). 

In addition, the market dynamic impact of GM crop adoption (on prices) has been incorporated into the analysis by use of current prices (for each year) for all crops. 

Farm income effects[1]

The impact on farm incomes in the GM adopting countries has been very positive (Table 1).  This derives from enhanced productivity and efficiency gains: 

Ø      In 2005, the direct farm income benefit was about $5 billion.  If the additional income arising from second crop soybeans in Argentina is also taken into consideration[2], this income gain rises to $5.6 billion.  This is equivalent to having added between 3.6% and 4.0% to the value of global production of the four main crops of soybeans, maize, canola and cotton;

Ø      Since 1996, farm incomes have benefited by $24.2 billion ($27 billion inclusive of second crop soybean gains in Argentina);

Ø      The largest gains in farm income have arisen in the soybean sector, where the additional income generated by GM HT soybeans in 2005 has been equivalent to adding 7.1% to value of the crop in the GM growing countries, or adding the equivalent of 6.05% to the value of the global soybean crop;

Ø      Substantial gains have also arisen in the cotton sector (through a combination of higher yields and lower costs).  In 2005, cotton farm income levels in the GM adopting countries were higher by $1.9 billion and since 1996, the sector has benefited from an additional $8.44 billion.  The 2005 income gains are equivalent to adding 13.3% to the value of the cotton crop in these countries, or 7.3% to the value of total global cotton production;

Ø      Significant additions to farm incomes have also arisen in the maize and canola sectors.  The combination of GM insect resistant (GM IR) and herbicide tolerant (GM HT) technology in maize has boosted farm incomes by over $3.1 billion since 1996.  In the North American canola sector an additional $893 million has been generated.   

Table  SEQ Table \* ARABIC 1: Global farm income benefits from growing GM crops 1996-2005: million US $

Notes: Others = Virus resistant papaya and squash, rootworm resistant maize, Bracketed figures include second crop benefits in Argentina; Totals for the value shares exclude ‘other crops’ (ie, relate to the 4 main crops of soybeans, maize, canola and cotton)

Table 2 summarises this information for some of the main GM adopting countries.  This highlights the important farm income benefit arising from GM HT soybeans in Argentina, GM IR cotton in China and a range of GM cultivars in the US.  It also illustrates the growing level of farm income benefits being obtained in developing countries such as South Africa, Paraguay, India and Mexico. 

Table  SEQ Table \* ARABIC 2: GM crop farm income benefits 1996-2005 selected countries: million US $

Note: Argentine GM HT soybeans include second crop soybeans benefits.  N/a = not applicable

In terms of the division of the economic benefits obtained by farmers in developing countries relative to farmers in developed countries, Table 3 shows that in 2005, the majority of the farm income benefits (55%) have been earned by developing country farmers.  The vast majority of these income gains for developing country farmers have been from GM IR cotton and GM HT soybeans. 

Table  SEQ Table \* ARABIC 3: GM crop farm income benefits 2005: developing versus developed countries: million US $

 Developing countries include all countries in South America

Cumulatively over the period 1996 to 2005, developing country farmers have acquired 47% of the total ($27 billion) farm income benefit.

Examination of the cost farmers pay for accessing GM technology relative to the total gains derived, Table 4 shows that across the four main GM crops, the total cost was equal to about 26% of the total farm income gains.  For farmers in developing countries the total cost is equal to about 13% of total farm income gains, whilst for farmers in developed countries the cost is about 38% of the total farm income gain.

Table  SEQ Table \* ARABIC 4: Cost of accessing GM technology (in % terms) relative to the total farm income benefits 2005

N/a = not applicable

As well as these quantifiable impacts on farm profitability, there have been other important, more intangible impacts (of an economic nature).  Most of these have been important influences for adoption of the technology.  These include:

Herbicide tolerant crops

Ø      Increased management flexibility that comes from a combination of the ease of use associated with broad-spectrum, post-emergent herbicides like glyphosate and the increased/longer time window for spraying;

Ø      Compared to conventional crops, where post-emergent herbicide application may result in ‘knock-back’ (some risk of crop damage from the herbicide), this problem is less likely to occur in GM HT crops;

Ø      Facilitation of adoption of no/reduced tillage practices with resultant savings in time and equipment usage (see below for environmental benefits);

Ø      Improved weed control has reduced harvesting costs – cleaner crops have resulted in reduced times for harvesting.  It has also improved harvest quality and led to higher levels of quality price bonuses in some regions;

Ø      Elimination of potential damage caused by soil-incorporated residual herbicides in follow-on crops.

Insect resistant crops

Ø      Production risk management/insurance purposes – taking away the worry of significant pest damage occurring;

Ø      A ‘convenience’ benefit (less time spent on crop walking and/or applying insecticides);

Ø      Savings in energy use – mainly associated with less spraying;

Ø      Savings in machinery use (for spraying and possibly reduced harvesting times);

Ø      Improved quality (eg, lower levels of mycotoxins in GM IR maize);

Ø      Improved health and safety for farmers and farm workers (from reduced handling and use of pesticides);

Ø      Shorter growing season (eg, for some cotton growers in India) which allows some farmers to plant a second crop in the same season[3].  Also some Indian cotton growers have reported knock on benefits for bee keepers as fewer bees are now lost to insecticide spraying.

In relation to the nature and size of GM technology adopters, there is clear evidence that size of farm has not been a factor affecting use of the technology.  Both large and small farmers have adopted GM crops.  Size of operation has not been a barrier to adoption.  In 2005, 8.5 million farmers were using the technology globally, 90% plus of which were resource-poor farmers in developing countries.

The significant productivity and farm income gains identified above have, in some countries (notably Argentina) also made important contributions to income and employment generation in the wider economy.  For example, in Argentina, the economic gains resulting from the 140% increase in the soybean area since 1995 are estimated to have contributed towards the creation of 200,000 additional agricultural related jobs[4] and export-led economic growth.

Environmental impact from changes in insecticide and herbicide use[5]

To examine this impact, the study has analysed both active ingredient use and utilised the indicator known as the Environmental Impact Quotient (EIQ) to assess the broader impact on the environment (plus impact on animal and human health).  The EIQ distils the various environmental and health impacts of individual pesticides in different GM and conventional production systems into a single ‘field value per hectare’ and draws on all of the key toxicity and environmental exposure data related to individual products.  It therefore provides a consistent and fairly comprehensive measure to contrast and compare the impact of various pesticides on the environment and human health.  Readers should however note that the EIQ is an indicator only and does not take into account all environmental issues and impacts.  In the analysis of GM HT technology we have assumed that the conventional alternative delivers the same level of weed control as occurs in the GM HT production system. 

Table 5 summarises the environmental impact over the last ten years and shows that there have been important environmental gains associated with adoption of GM technology.  More specifically:

Ø      There has been a 15.3% net reduction in the environmental impact[6] on the cropping area devoted to GM crops since 1996.  The total volume of active ingredient (ai) applied to crops has also fallen by 7%;

Ø      In absolute terms, since 1996, the largest environmental gains have arisen from the adoption of GM HT soybeans.  This mainly reflects the (large) share of global GM crop plantings accounted for by GM HT soybeans.  The volume of herbicide use is 4.1% lower and the environmental impact 20% lower than levels that would have probably arisen if all of this GM crop area had been planted to conventional cultivars.  Readers should note that in some countries (notably in South America), the adoption of GM HT technology in soybeans has also coincided with increases in the volume of herbicides used and the environmental impact relative to historic levels.  As indicated above, this largely reflects the facilitating role of the GM HT technology in accelerating and maintaining the switch away from conventional tillage to no/low tillage production systems with their inherent environmental benefits.  This net increase in the environmental impact should, therefore be placed in the context of the reduced GHG emissions arising from this production system change (see below) and the general dynamics of agricultural production system changes (which the analysis presented above and in Table 5 takes account of);

Ø      Major environmental gains have also been derived from the adoption of GM insect resistant (IR) cotton (the largest gains on a per hectare basis).  Since 1996, there has been a 24% reduction in the environmental impact, and a 19% decrease in the volume of insecticides applied;

Ø      Important environmental gains have also arisen in the maize and canola sectors.  In the maize sector a 4.6% reduction in the environmental impact has occurred from reduced insecticide use and a switch to more environmentally benign herbicides has resulted in a further 4% reduction in the environmental impact of maize herbicides.  In the canola sector, the environmental impact has fallen by 23% because of a switch to more environmentally benign herbicides. 

Table  SEQ Table \* ARABIC 5: Impact of changes in the use of herbicides and insecticides from growing GM crops globally 1996-2005