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Effects of Bt Cotton in India During the First Five Years of Adoption

Author

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  • Sadashivappa, Prakash
  • Qaim, Matin

Abstract

While previous research has analyzed the impacts of Bt cotton in India, most available studies are based on one or two years of data only. We analyze the technology’s performance over the first five years of adoption, using panel data with three rounds of observations. On average, Bt adopting farmers realize pesticide reductions of about 40%, and yield advantages of 30-40%. Profit gains are in a magnitude of US $60 per acre. These benefits have been sustainable over time. Farmers’ satisfaction is reflected in a high willingness to pay for Bt seeds. Nonetheless, in 2006 Indian state governments decided to establish price caps at levels much lower than what companies had charged before. This intervention has further increased farmers’ profits, but the impact on aggregate Bt adoption was relatively small. Price controls might have negative long-term implications, as they can severely hamper private sector incentives to invest in new technologies.

Suggested Citation

  • Sadashivappa, Prakash & Qaim, Matin, 2009. "Effects of Bt Cotton in India During the First Five Years of Adoption," 2009 Conference, August 16-22, 2009, Beijing, China 49947, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae09:49947
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    File URL: http://ageconsearch.umn.edu/record/49947/files/Effects%20of%20Bt%20Cotton%20in%20India%20During%20the%20First%20Five%20Years%20of%20Adoption.pdf
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    References listed on IDEAS

    as
    1. Qaim, Matin & De Janvry, Alain, 2005. "Bt cotton and pesticide use in Argentina: economic and environmental effects," Environment and Development Economics, Cambridge University Press, vol. 10(02), pages 179-200, May.
    2. Hubbell, Bryan J. & Marra, Michele C. & Carlson, Gerald A., 2000. "Estimating The Demand For A New Technology: Bt Cotton And Insecticide Policies In The Southeast," Transitions in Agbiotech: Economics of Strategy and Policy, June 24-25, 1999, Washington, D.C. 26016, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    3. Benjamin Crost & Bhavani Shankar & Richard Bennett & Stephen Morse, 2007. "Bias from Farmer Self-Selection in Genetically Modified Crop Productivity Estimates: Evidence from Indian Data," Journal of Agricultural Economics, Wiley Blackwell, vol. 58(1), pages 24-36, February.
    4. Lence, Sergio H. & Hayes, Dermot J. & McCunn, Alan & Smith, Stephen & Niebur, William S., 2005. "Welfare Impacts of Intellectual Property Protection in the Seed Industry," Staff General Research Papers Archive 12434, Iowa State University, Department of Economics.
    5. Lalitha, N., 2004. "Diffusion of agricultural biotechnology and intellectual property rights: emerging issues in India," Ecological Economics, Elsevier, vol. 49(2), pages 187-198, June.
    6. Matin Qaim & Alain de Janvry, 2003. "Genetically Modified Crops, Corporate Pricing Strategies, and Farmers' Adoption: The Case of Bt Cotton in Argentina," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 814-828.
    7. repec:oup:revage:v:28:y:2006:i:1:p:59-71. is not listed on IDEAS
    8. Alan McCunn & Stephen Smith & William S. Niebur, 2005. "Welfare Impacts of Intellectual Property Protection in the Seed Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 951-968.
    9. Krishna, Vijesh V. & Qaim, Matin, 2007. "Estimating the adoption of Bt eggplant in India: Who Benefits from public-private partnership?," Food Policy, Elsevier, vol. 32(5-6), pages 523-543.
    10. Joseph C. Cooper & Michael Hanemann & Giovanni Signorello, 2002. "One-and-One-Half-Bound Dichotomous Choice Contingent Valuation," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 742-750, November.
    11. Arnab K. Basu & Matin Qaim, 2007. "On the Adoption of Genetically Modified Seeds in Developing Countries and the Optimal Types of Government Intervention," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(3), pages 784-804.
    12. Huang, Jikun & Hu, Ruifa & Rozelle, Scott & Qiao, Fangbin & Pray, Carl E., 2002. "Transgenic varieties and productivity of smallholder cotton farmers in China," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 0(Issue 3), pages 1-21.
    13. Fernandez-Cornejo, Jorge & Klotz-Ingram, Cassandra & Jans, Sharon, 2002. "Farm-Level Effects Of Adopting Herbicide-Tolerant Soybeans In The U.S.A," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 0(Number 1), pages 1-15, April.
    14. Subramanian, Arjunan & Qaim, Matin, 2009. "Village-wide Effects of Agricultural Biotechnology: The Case of Bt Cotton in India," World Development, Elsevier, vol. 37(1), pages 256-267, January.
    15. Timo Kuosmanen & Diemuth Pemsl & Justus Wesseler, 2006. "Specification and Estimation of Production Functions Involving Damage Control Inputs: A Two-Stage, Semiparametric Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 499-511.
    16. Richard Bennett & Uma Kambhampati & Stephen Morse & Yousouf Ismael, 2006. "Farm-Level Economic Performance of Genetically Modified Cotton in Maharashtra, India," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(1), pages 59-71.
    17. Bryan J. Hubbell & Michele C. Marra & Gerald A. Carlson, 2000. "Estimating the Demand for a New Technology: Bt Cotton and Insecticide Policies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(1), pages 118-132.
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    Cited by:

    1. Kolady, Deepthi & Spielman, David J. & Cavalieri, Anthony J., 2010. "Intellectual property rights, private investment in research, and productivity growth in Indian agriculture: A review of evidence and options," IFPRI discussion papers 1031, International Food Policy Research Institute (IFPRI).

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