Estimating Farm-Level Effects of Adopting Biotechnology
by
William Lin, Gregory K. Price, and Jorge Fernandez-Cornejo
Field Crops Branch
Market and Trade Economics Division
Economic Research Service
U.S. Department of Agriculture
Washington, D.C.
August 2001
__________
Paper presented at the American Agricultural Economics Association Annual Meeting in Chicago, IL, August 5-8,
2001. William Lin and Gregory K. Price are agricultural economists with the Market and Trade Economics
Division, and Jorge Fernandez-Cornejo is an agricultural economist with the Resource Economics Division, ERS-
USDA.
1
Estimating Farm-Level Effects of Adopting Biotechnology
William Lin, Gregory K. Price, and Jorge Fernandez-Cornejo
Introduction
The rapid adoption of biotech crops in the United States in recent years has largely reflected the
benefits of potential increases in crop yields and pest control cost savings from this technology.
U.S. and overseas consumers have also indirectly benefited from biotechnology adoption
because increased crop supplies lower prices for these commodities. Thus, estimates of the
benefits from biotechnology adoption require accurate information about the technologies' farm-
level impacts on crop yields and pest control costs. In addition, estimates of these farm-level
effects induced by biotech adoption affect the distribution of benefits among the stakeholders--
U.S. producers, gene developers, germplasm suppliers, U.S. consumers, and producers and
consumers in the rest of the world.
However, estimates of the farm-level effects differ significantly, depending on the data source.
For example, a recent study of the distribution of benefits from biotech adoption by Falck-
Zepeda, Traxler, and Nelsona (hereafter FTN) shows that adopters' yields for 1997 herbicide-
tolerant soybeans were 13.0 percent higher than nonadopters in the Corn Belt based on the
USDA Agricultural Resource Management Studies (ARMS) survey. In contrast, Moschini et al.
in another study of the welfare effects of herbicide-tolerant so