Commercialization of Herbicide-Tolerant Soybeans in China: Perverse Domestic and International Trade Effects

The main purpose of this research is to analyze impact of adoption of bio-tech herbicide resistant soybeans in China by producers at different adoption rates as determined by technology fees. This adoption will impact China's production, consumption, global trade and competitiveness and world prices. Current research indicates approximately 20-25 percent of Urban consumers will not consume bio-tech vegetable oils. The USDA-ERS China model is used to address the trade impacts of commercializing bio-tech soybeans in China. On the supply side soybeans are differentiated into bio-tech and non-bio-tech soybeans. Similarly, demand and excess demand are decomposed into two distinct market segments. We present preliminary results from modeling the impacts of commercializing herbicide-tolerant biotech soybeans in China under two scenarios of adoption rates in response to the level of technology fees charged to the producers, a low technology fee and a high technology fee. The high technology fee is the policy most likely to be adopted by the Chinese government and exhibits a more realistic results. Adoption of biotech soybeans is relatively low given the high technology fees and only a gradual increase in production of biotech soybeans. The production of non-biotech soybeans within China is almost sufficient to satisfy domestic demand for non-biotech soybeans by a relatively small percent of urban consumers with a strong preference for non-biotech soybeans and soybean oil. The international effect on production, trade and prices are quite minimal and China's import demand of soybeans is not significantly affected.