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Profiting from Science

The economics of biotech

Putting aside the philosophical and ownership debates for a moment, a more real and pressing issue is that even GE seeds can offer diminishing returns.  Eventually, pests adapt to IR plants and weeds to HT crops, requiring new innovations in technology, which can mean additional fees and costs, more plantings, and so forth.

One reason some HT seeds have begun to fail is that farmers over-sprayed Roundup herbicide to increase short-term harvests versus utilizing more lengthy practices of traditional crop rotation.  How these changes affect growers economically depends on the commodities planted and their associated costs.

“The economic decisions are difficult for farmers,” says Steve Savage, agricultural scientist and blogger at “A vast amount of farmland is rented, and usually on an annual cash basis [which] puts a lot of pressure on the farmer to plant the highest yielding, best cash crop.  So some of the things they might otherwise do for weed control, they might not do because the income potential isn’t high enough.  They could practice covered cropping or no-wheel traffic, but the payoff for these practices doesn’t come for five to six years. Farmers have to make rational economic decisions or they don’t stay in farming, and the drivers in the system today are pushing growers towards relatively short-term thinking.”

Balancing the Costs

When considering the economic implications of GE crops, each grower must consider the variables and not assume that pest resistance or weed control automatically produces higher profits. While GE technology certainly serves some, others may find costs outweigh benefits.

In trying to confirm definitive economic benefits, a 2006 European study found varied data related to  soybean production: “At this stage, there are two counterbalancing elements… On the one hand, seedprices of GM crops are higher while yields…are lower; on the other hand, input costs are  lower as well.”

Further analysis in the study found GE crops were equally adoptable by large and small growers alike, and that benefits could include “off-farm” income, such as the ability to dedicate time to other nonagricultural activities, although, again, such benefits depended on the grower. “The net economic benefits for farmers are nevertheless variable in regional terms.  One reason is that the crops are designed to solve pest and weed problems which vary greatly in geographical distribution and impact on production.”

Certainly, the scientific aims of GE commodities are to manage aspects of growing through traits expressed in the crops, thereby reducing costs and increasing profits. But, to date, it is not clear whether this is true across the board. Rather, the economic risks and benefits of GE crops remain highly individualized and variable-dependent. Further, because of the current murky sentiment around GE crops, adoption could create unforeseen economic challenges, such as customer relations.