Download Powerpoint - Economics of Agricultural Development

Agricultural Research and
Biotechnology
AAEC 3204
Dr. George Norton
Agricultural and
Applied Economics
Virginia Tech
Copyright 2008
Objectives
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Discuss economic issues associated with
agricultural research
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Research as an investment
Distributional effects
Public versus private research
Types of organization of
research
International research centers
Biotechnology
Role of agricultural research
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Increase productivity of existing resources
Generate higher productivity inputs and ways
of producing food
Design new or improved institutional
arrangements
Summary: Research produces new
technologies and new institutions
Effects of Agricultural Research
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Reduces cost per unit of production,
potentially increasing farm incomes
Agr. production increases can reduce food
prices or generate foreign exchange
Demand for labor may increase or decrease
Distributional effects occur by farm size, type
of farm, income distribution
Potential effects on risk, food security, and
environment
Distributional effects of research
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Consumers versus producers
Income distribution and nutrition
Farm size effects
Land versus labor
Owners versus tenants
Regional effects
Environmental effects
Economic surplus analysis
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Economic Surplus analysis with trade
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High rates of return for
agricultural research
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How are these returns measured?
1. By estimating a production function:
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Ag Output = F (land, labor, fertilizer, research,
extension, education)
Use results in a benefit cost analysis
2. By calculating changes in economic surplus
Why should the public sector
get involved with research?
Insufficient private incentive because of
 Public good nature of some research
 Risk
 Farms are small
What are intellectual property
rights and why are they important
for agricultural research?
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Examples: patents, copyrights, plant
breeder’s rights
Create incentives for private firms to
undertake research because they can
profit from their discoveries
Broad categories of research
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Basic research
Applied research
Adaptive research
testing
Countries have 3 options with
respect to research
Direct transfer
 Borrow and adapt
 Comprehensive research
What determines choice among these?
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Cost
Environmental sensitivity
Differences in resource base
Availability of research to transfer in
Sources of new technologies
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Public and private research followed by local
technology transfer
Technologies transferred in from other
countries (and often adapted before adopted)
International Technology Transfer:
the Green Revolution
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What was the green
revolution?
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Where did it occur?
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When did it occur?
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What were its
distributional effects?
Hayami and Ruttan’s green
revolution conclusions
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Rapid adoption of varieties where suited and
superior to local varieties
Farm tenure did not prove to be a serious constraint
to adoption
Wheat and rice technologies have increased
demand for labor
New varieties have increased regional disparities
New varieties have kept down consumer prices
History of International Agricultural
Research Centers
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Rockefeller and Ford
Foundations began work in
Mexico in 1940’s
CIMMYT and IRRI
established in early 1960’s
CGIAR system with its
common funding and
Technical Committee in
1971
International Agricultural Research Centers
Modern Biotechnologies
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Examples:
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Marker assisted breeding
Tissue culture
Genetically modified organisms (GMOs)
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Pest resistance
Drought, salt, or cold tolerance
Nutritional enhancement of crops
Pharmaceutical products from plants
Genomics
PCR disease diagnostics
Genetically Modified Organisms (GMOs)
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What are GMOs?
Where do they come from?
Why might economic issues ultimately
determine the value of GMOs?
Do you think GMOs will help in reducing
world hunger? Why or why not?
Do you think GMOs will help improve human
health and the environment, or harm them?
What are genetically modified foods?
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Also called genetically modified organisms (GMO).
Involves the insertion of DNA from one organism into
another OR modification of an organism’s DNA in
order to achieve a desired trait.
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Arctic fish DNA
=
strawberry
A strawberry
resistant to frost
Examples of GMO’s
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Golden rice – rice that contains betacarotene (Vitamin A), which is not found in
regular rice.
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Bt corn – corn that contains a chemical
normally found in a bacterium (Bacillus
thuringiensis) that is toxic to insects but not to
humans.
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Herbicide resistant plants.
Eggplant
Tobacco
Rice
How are plants modified?
• Agrobacterium that normally normally
infects plants with disease is used to
infect plant with gene of interests or…
• A particle gun is used to shoot small bits
of metal coated with the gene into the
plant.
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How are animals modified?
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The microinjection
method uses a fine
needle to inject a
solution of DNA into
a developing
embryo.
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Potential Benefits of GMOs
Humanitarian:
Pest resistance
Herbicide
resistance
Cold tolerance
Drought
tolerance
Increased nutrition
Edible vaccines
More
food
Cheaper
food
Reduced
risk
Reducing
world
hunger
and
improving
world
health
Environmental: reduced use of pesticides in
farming.
Potential Environmental Hazards
Reduced
effectiveness of
pesticides as
insects become
resistant to
engineered toxins.
Loss of biodiversity
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Harm to other organisms
Pollen from Bt corn was found to
cause high mortality rates in
monarch butterfly larvae. BUT
follow-up studies have shown
that the exposure levels in the
fields are negligible
Potential Environmental Hazards
Gene Transfer to non-target species
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Herbicide resistant plants and weeds could
cross breed and create “superweeds”
To address this one could:
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Create sterile male plants that don’t produce pollen
Engineer the plants so that pollen doesn’t contain the
foreign genes
Create buffer zones of non-GM crops around GM
crops. The buffer crops would not be harvested.
Potential Human Health Risks
Allergens
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Genetic engineering could potential introduce or create
allergens
For example, inserting genes from a nut into another
plant could be dangerous for people who are allergic to
nuts
Unknown health risks
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Biological processes involve a lot of INTERACTIONS
It is often difficult to identify every possible interaction.
Economic Hazards
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Reduced competition
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Suicide seeds
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GM seeds are patented
Plants with sterile seeds that are infertile are
created
Farmers are forced to buy seeds every year
However, some companies have reduced
costs or donated GM seeds to impoverished
nations.
Creating a balance
Economic benefits
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So are GM foods a
good or bad thing?
It depend on each
individual case.
Consumers, the
government and
scientists should be
responsible for
weighing the
benefits against the
costs.
Improved Nutrition
Environmental risks
Resistance to disease
Health risks
Reduced use of
chemicals
Economic risks
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Components of a well-linked agricultural
research system for developing
countries
International
agricultural
research
centers
Public
agricultural
research in
developed
countries
National and
local public
experiment
stations
On-farm
research and
extension
Private
companies
producing
research
results
Domestic
Technology
Transfer:
Agricultural
Extension
Speeds up transfer of knowledge
Many types of extension
systems in the world
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Examples:
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Local and regional offices with specialists and
generalists
Training and visit system with regional offices
Integrated into farming systems research and
extension
What types of systems for technology
transfer are most cost effective?
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Depends on information
technology
Depends on audience,
types of technologies to
transfer, infrastructure,
etc.
Depends on incentives
for private sector
Requirements of a successful
extension worker
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Technical competence
Economic competence
Farming competence
Communications
competence
Summary of effects of research
and extension education
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Production, productivity, and efficiency up
Food prices down
Extension speeds up technology transfer
Distributional effects
Incomes up
Solutions to environmental problems