Bt corn: Why is it so popular?

Date:06-05-2012


Approximately two out of every three acres is planted with a Bt corn variety in the United States. That is part of the overwhelming adoption of genetically enhanced seed, which also includes herbicide and drought tolerance. While all of them are designed to reduce various risks, farmers have an ulterior motive for their substantial endorsement of Bt corn.

Corn with a Bt gene to control certain insects was introduced in 1996, so USDA’s Economics Research Service has analyzed a 15 year history of Bt corn adoption and performance. ERS researchers say by the year 2000, 19 percent of acres were planted with Bt corn, and that jumped to 65 percent for the 2011 planting season. Quite a few agricultural economists attempted to quantify the economics of Bt corn in the first five years of adoption and found:

1. Yields were approximately 7.1 bushels per acre higher for Bt adopters in Iowa.
2. Yields were 18.2 bushels per acre higher for Bt adopters in Minnesota.
3. Bt corn yields were approximately 13 bushels per acre higher than conventional yields.
4. Adoption increased yields by 2.8 to 6.6 percent.
5. Adoption increased yields by 5.5 percent in Pennsylvania and Maryland.
6. Adopters had corn yields in 2001 that were 12.5 bushels per acre higher than yields of non-adopters
7. Average yields of Bt adopters in 2005 were 16.6 bushels per acre higher than average yields of non-adopters.

So, right out of the box, or bag, Bt corn became popular because it had some magic yield component to it. The ERS ag economists used USDA’s national economic study in 2010 to evaluate Bt use on 1,208 farms in the 19 major corn growing states. In that study, 77 percent of the adopters said they did so to benefit from increased yields. Another 10% reported it was done to save management time and 6 percent looked to Bt corn to save on insecticide costs.

Within the data turned up in the study actual corn yields were 26 bushels—or almost 20 percent higher—than conventional seed.  Seed use was 0.03 bushels per acre higher, and variable profits were $118 per acre higher for adopters than non-Bt corn adopters.  But since the seed is designed to produce a plant that controls harmful insects, it is unclear whether it continues to have an impact on the use of insecticides. The final two years of the data observed by the researchers were low in insect pressure and low in insecticide use, for both adopters and non-adopters of Bt corn. In the first 10 years of adoption insecticide use declined, and total pounds dropped by 4.5 million per year from 2001 to 2005; with another 3 million pound per year decline in the final five years of the study. In 2010 only 1.6 million pounds were used.

The researchers found, “this study’s findings suggest that Bt seed use increases profits, yields, and seed demand. More specifically, the elasticity results show that a 10 percent increase in the probability of adoption is associated with a 2.3 percent increase in profits, a 2.3 percent (3.44 bushels/acre) increase in yields, and a 2.1 percent increase in seed demand.” They report little statistically significant impact on insecticide demand, connected to the fact that 90 percent of farmers did not use insecticides, and when they do, their experience is expected to be profitable. And the researchers add, “The economic impacts of adopting GE crops vary with pest infestations, seed premiums, and prices of alternative pest control programs.”

Summary: 

Survey results indicate that, on average, variable profits were $118 per acre higher for adopters than for non-adopters, corn yields were 17 bushels per acre higher for adopters than for non-adopters, seed demand was 0.03 bushels per acre higher for adopters than for non-adopters, and insecticide demand was at a very low level for both adopters and non-adopters. Analysis confirms that Bt adoption is positively associated with increased profits, yields and seeding rates. However, Bt adoption is not significantly related to insecticide use.