IDEAS home Printed from https://ideas.repec.org/p/ags/kucawp/31854.html
   My bibliography  Save this paper

Impact Of Agricultural Biotechnology In The European Union'S Sugar Industry

Author

Listed:
  • Demont, Matty
  • Tollens, Eric

Abstract

We develop a welfare framework, which explicitly recognizes that research protected by intellectual property rights generates monopoly profits. The result is a simulation model, shaped to the European sugar sector, and enabling to assess the size and distribution of the benefits of transgenic sugar beet adoption in the European Union (EU) and the Rest of the World (ROW). Our model results suggest that the ROW captures the largest share of the benefits (53 % of total welfare increase). The EU sugar industry absorbs the next largest share of the benefits (30 %), with the smallest share (17 %) accruing to seed suppliers and gene developers. Since EU intervention prices are exogenously fixed each year, EU consumers do not take part in the distribution of the gains from the innovation. However, consumers outside the EU necessarily gain due to the depressing effect of the technology on world sugar prices. The latter is costly for the cane growers in the ROW, while beet producers gain. Our results reveal an apparent contradiction. When modern (bio)technologies are introduced in commodity markets subject to obsolete trade policies, the natural flow of domestic benefits from the input industry, via farmers, to consumers is hampered and biased towards the producing sector (input industry, farmers, and processors), leaving domestic consumers unaffected. Remarkably, given the current Common Market Organization for sugar, consumers outside the EU gain while EU citizens continue to subsidize EU sugar production trough high sugar prices, despite the innovation.

Suggested Citation

  • Demont, Matty & Tollens, Eric, 2002. "Impact Of Agricultural Biotechnology In The European Union'S Sugar Industry," Working Papers 31854, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
  • Handle: RePEc:ags:kucawp:31854
    as

    Download full text from publisher

    File URL: http://ageconsearch.umn.edu/record/31854/files/wp020061.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Giancarlo Moschini & Harvey Lapan & Andrei Sobolevsky, 2000. "Roundup ready® soybeans and welfare effects in the soybean complex," Agribusiness, John Wiley & Sons, Ltd., vol. 16(1), pages 33-55.
    2. Patricia Combette & Éric Giraud-Héraud & Vincent Réquillart, 1997. "La politique sucrière européenne après les accords du Gatt," Économie et Prévision, Programme National Persée, vol. 127(1), pages 1-13.
    3. Devadoss, Stephen & Kropf, Jurgen, 1996. "Impacts of trade liberalizations under the Uruguay round on the world sugar market," Agricultural Economics, Blackwell, vol. 15(2), pages 83-96, November.
    4. Giancarlo Moschini & Harvey Lapan, 1997. "Intellectual Property Rights and the Welfare Effects of Agricultural R&D," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1229-1242.
    5. George C. Davis & Maria Cristina Espinoza, 1998. "A Unified Approach to Sensitivity Analysis in Equilibrium Displacement Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(4), pages 868-879.
    6. Schmitz, Andrew & Vercammen, James, 1990. "Trade Liberalization in the World Sugar Market: Playing on a Level Field?," CUDARE Working Papers 198574, University of California, Berkeley, Department of Agricultural and Resource Economics.
    7. Kennedy, P. Lynn & Harrison, R. Wes, 1999. "Competitiveness In The World Sugar Industry: A Comparison Of The Eu And U.S. Sugar Sectors," 1999 Annual meeting, August 8-11, Nashville, TN 21649, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Poonyth, Daneswar & Westhoff, Patrick & Womack, Abner & Adams, Gary, 2000. "Impacts of WTO restrictions on subsidized EU sugar exports," Agricultural Economics, Blackwell, vol. 22(3), pages 233-245, April.
    9. Eric Tollens, 2004. "Biodiversity versus transgenic sugar beet: the one euro question," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 31(1), pages 1-18, March.
    10. Demont, Matty & Tollens, Eric, 2001. "Welfare Effects Of Transgenic Sugarbeets In The European Union: A Theoretical Ex-Ante Framework," Working Papers 31852, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    11. Devadoss, Stephen & Kropf, Jurgen, 1996. "Impacts of trade liberalizations under the Uruguay Round on the world sugar market," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 15(2), November.
    12. Colin Thirtle, 1999. "Productivity and the Returns to Levy-Funded R&D for Sugar Production in the Eastern Counties of England," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(3), pages 450-467.
    13. Jose B. Falck-Zepeda & Greg Traxler & Robert G. Nelson, 2000. "Rent creation and distribution from biotechnology innovations: The case of bt cotton and Herbicide-Tolerant soybeans in 1997," Agribusiness, John Wiley & Sons, Ltd., vol. 16(1), pages 21-32.
    14. José Benjamin Falck-Zepeda & Greg Traxler & Robert G. Nelson, 2000. "Surplus Distribution from the Introduction of a Biotechnology Innovation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 360-369.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tollens, Eric, 2002. "The Challenges Of Poverty Reduction With Particular Reference To Rural Poverty And Agriculture In Sub-Saharan Africa," Working Papers 31850, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    2. Falck-Zepeda, Jose & Horna, Daniela & Smale, Melinda, 2007. "The economic impact and the distribution of benefits and risk from the adoption of insect resistant (Bt) cotton in West Africa:," IFPRI discussion papers 718, International Food Policy Research Institute (IFPRI).
    3. Tollens, Eric, 2003. "Poverty And Livelihood Entitlement, How It Relates To Agriculture," Working Papers 31856, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    4. Choeun, Hong & Godo, Yoshihisa & Hayami, Yujiro, 2006. "The economics and politics of rice export taxation in Thailand: A historical simulation analysis, 1950-1985," Journal of Asian Economics, Elsevier, vol. 17(1), pages 103-125, February.
    5. Tollens, Eric, 2002. "Food Security In Kinshasa, Coping With Adversity," Working Papers 31848, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    6. Demont, Matty & Jouve, Philippe & Stessens, Johan & Tollens, Eric, 2000. "The Evolution Of Farming Systems In Northern Cote D'Ivoire: Boserup Versus Malthus And Competition Versus Complementarity," 2000 Annual meeting, July 30-August 2, Tampa, FL 21865, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Fogarasi, Jozsef, 2007. "Efficiency and total factor productivity in post-EU accession Hungarian sugar beet production," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 0, pages 1-13, January.
    8. Tollens, Eric, 2002. "Market Information Systems In Liberalized African Export Commodity Markets: The Case Of Cocoa And Coffee In Cote D'Ivoire, Nigeria And Cameroon," Working Papers 31860, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    9. Tollens, Eric, 2003. "Current Situation Of Food Security In The D.R. Congo: Diagnostic And Perspectives," Working Papers 31853, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:kucawp:31854. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: http://edirc.repec.org/data/alkulbe.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.