Global Value of GM Rice Matty Demont a and Alexander J. Stein b a Africa Rice Center (AfricaRice), Saint-Louis, Senegal, b International Food Policy Research Institute (IFPRI), Washington, USA International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

Outline 1.Introduction 2.Methods 3.Metrics 4.Critical assessment International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

1. Introduction Rice = most important food crop of the developing world Worldwide, more than 3.5 billion people depend on rice for more than 20% of their daily calorie intake Staple food of more than half of the world’s population Many of whom are also poor & therefore extremely vulnerable to high rice prices International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

1. Introduction Rice world market = thin, fragmented, inelastic domestic demand, low world stockholdings  unstable GM rice may have substantial implications For alleviation of poverty, hunger, and malnutrition in rice growing & consuming countries (James, 2005) For global acceptance of GM crops (Brookes & Barfoot, 2003) International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

1. Introduction International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

1. Introduction International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012 Dominated by first-generation, agronomic GM traits: herbicide-tolerance & insect-resistance Many GM traits beyond approval stage, preproduction testing stage Also traits with consumer or industry benefits, i.e. second-generation GM traits Brookes & Barfoot (2003): By 2012, 3/4 of the GM traits will have reached the Asian farmer with a probability of at least 80% Dominated by first-generation, agronomic GM traits: herbicide-tolerance & insect-resistance Many GM traits beyond approval stage, preproduction testing stage Also traits with consumer or industry benefits, i.e. second-generation GM traits Brookes & Barfoot (2003): By 2012, 3/4 of the GM traits will have reached the Asian farmer with a probability of at least 80%

1. Introduction International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012 However, in 2012 nowhere in the world has GM rice been commercialized at a large scale Important existing and expected approvals: Approval of Bt rice in China Expected commercial approval of Golden Rice in the Philippines in 2013/14 Important for the developing world Is commercialization imminent? Review evidence on global value of GM rice However, in 2012 nowhere in the world has GM rice been commercialized at a large scale Important existing and expected approvals: Approval of Bt rice in China Expected commercial approval of Golden Rice in the Philippines in 2013/14 Important for the developing world Is commercialization imminent? Review evidence on global value of GM rice

2. Methods Almost no ex-post evidence  ex-ante Field trials vs. on-farm trials ANOVA, (stochastic) partial budgeting vs. econometric techniques Assumptions (e.g. technology licensing fee) Exogenous vs. endogenous technology fee Partial equilibrium models vs. CGE Disability-adjusted life years (DALYs) approach International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

3. Metrics International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

3. Metrics International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June Anticipated impacts are in line with classic examples of commercialized first-generation GM crops Impact of stress-resistant GM traits = f(stress incidence/severity & use of damage control inputs, e.g. herbicides, insecticides, water) Impact of Bt rice in China ranges from +0–12% yield advantage to –50–90% insecticide use DT rice in China: –13% yield variance, –33% water 1.Anticipated impacts are in line with classic examples of commercialized first-generation GM crops Impact of stress-resistant GM traits = f(stress incidence/severity & use of damage control inputs, e.g. herbicides, insecticides, water) Impact of Bt rice in China ranges from +0–12% yield advantage to –50–90% insecticide use DT rice in China: –13% yield variance, –33% water

3. Metrics International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

3. Metrics International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June Rice demand = relatively inelastic  large impact on food prices and poverty Impact of GM rice in China = +$4 billion Rice price China –12% Domestic demand +1.4% Increase income & demand in other sectors 3.World market = thin (small share is traded)  most gains are captured domestically  Independent of GM-unfriendly trade policies 2.Rice demand = relatively inelastic  large impact on food prices and poverty Impact of GM rice in China = +$4 billion Rice price China –12% Domestic demand +1.4% Increase income & demand in other sectors 3.World market = thin (small share is traded)  most gains are captured domestically  Independent of GM-unfriendly trade policies

3. Metrics International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June Second-generation GM rice traits have the potential to generate benefits one order of magnitude higher than first-generation traits Labor productivity  economy-wide impacts Golden Rice in India –60% VAD, +1.4 million DALYs (disability-adjusted life years) Golden Rice in China +2% national income Importance of consumer acceptance 4.Second-generation GM rice traits have the potential to generate benefits one order of magnitude higher than first-generation traits Labor productivity  economy-wide impacts Golden Rice in India –60% VAD, +1.4 million DALYs (disability-adjusted life years) Golden Rice in China +2% national income Importance of consumer acceptance

4. Critical Assessment Four limitations: 1.Proprietary seed technologies Monopolistic rent extraction Endogeneize technology licensing fee (Demont et al., 2009; Dillen et al., 2009; Konstandini et al., 2009) 2.Focus on first-order statistics (e.g. of yields) DT rice: yield variance reductions Represents 40% of the total benefits in Asia (Konstandini et al, 2009) International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

4. Critical Assessment Four limitations: 3.Modeling strategies Hicks-neutral productivity shocks Ex-post evidence shows shocks = factor-biased Consider trade effects, restrictions 4.Challenge of transforming DALYs  $ values What is the value of a DALY? $500, $1000, GDP, GNI? CGE captures economy-wide impacts (Anderson et al., 2005a, 2005b) International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012

Thank you! Grazie! Center of Excellence for Rice Research International Consortium on Applied Bioeconomy Research (ICABR) 16th Annual Conference on “The Political Economy of the Bioeconomy: Biotechnology and Biofuel”, Ravello, Italy, 24–27 June 2012