Dynamic Diffusion with Disadoption: The Case of Crop Biotechnology in the USA

Article excerpt

Controversy over the use of genetically engineered (GE) crops may have induced some farmers to disadopt these seeds, making atraditional diffusion model inappropriate. In this study, we develop and estimate a dynamic diffusion model, examine the diffusion paths of GE com, soybeans, and cotton, predict the adoption of those crops over the next two years, and explore the main determinants of the diffusion rate. Our estimates indicate that future growth of Bt crops will be slower or negative, depending mainly on the infestation levels ofthe target pests. Adoption of herbicide-tolerant soybeans and cotton will continue to increase, unless consumer sentiment in the United States changes radically.

Key Words: corn, cotton, diffusion of innovations, genetic engineering, pest management, soybeans

Many agricultural innovations follow a well-known diffusion process which results in an S-shaped diffusion curve, first discussed by sociologists (and introduced to economics by Griliches in 1957).1 The diffusion of genetically engineered (GE) crops followed this process in 1996-99, and the static logistic model appeared to fit the data (see figure 1). More recently, however, the market environment-- particularly the export market-suggests the use of traditional (static) diffusion methods may not be appropriate for examining the diffusion of this technology.

Increased concern, especially in Europe and Japan, regarding the safety of these crops has resulted in the development of segregated markets for "non-- GE" crops. While these markets are still small, the evolving information regarding the demand forthese crops suggests dynamic considerations are especially important for this particular adoption process.

This study has three objectives: (a) to examine the diffusion paths of GE crops, including corn, soybeans, and cotton; (b) to predict the adoption of GE crops over the next two years under different scenarios; and (c) to explore some of the determinants of the rate of diffusion.

Background

Genetic engineering refers to the genetic modification of organisms by recombinant DNA techniques. By a precise alteration of a plant's traits, genetic engineering facilitates the development of characteristics not possible through traditional plant breeding techniques. By targeting a single plant trait, genetic engineering can decrease the number of unintended characteristics that may occur with traditional breeding. The genetically engineered crops considered in this analysis include those with herbicide-tolerant and insect-resistant traits.

GE crops carrying herbicide-tolerant genes were developed to survive certain broad-spectrum herbicides. Previously, these herbicides would have destroyed the crop along with the targeted weeds. Thus, herbicide-tolerant crops have provided farmers a broader variety of postemergent herbicides.

The most common herbicide-tolerant crops are Roundup Ready (RR) crops resistant to glyphosate, an herbicide effective on many species of grasses, broadleaf weeds, and sedges. Glyphosate tolerance has been incorporated into soybeans, corn, canola, and cotton. Other GE herbicide-tolerant crops include Liberty Link (LL) corn resistant to glufosinateammonium, and BXN cotton resistant to bromoxynil. [There are also traditionally bred herbicide-tolerant crops, such as corn resistant to imidazolinone (IMI) and sethoxydim (SR), and soybeans resistant to sulfonylurea (STS)].

Adoption of herbicide-tolerant soybeans has been particularly rapid compared to adoption of other agricultural innovations. Herbicide-tolerant soybeans became available to farmers for the first time in limited quantities in 1996; usage expanded from about 7% of the soybean acreage in 1996 to more than 50% in 2000. Similarly, herbicide-tolerant cotton expanded from around 2% of the cotton acreage in 1996 to 26% in 1998, and reached 46% in 2000 (figure 1).

Bt crops are the only insect-resistant GE crops commercially available. …