The Value of Bt Corn in Southwest Kansas: A Monte Carlo Simulation Approach

By Hyde, Jeffrey; Martin, Marshall A. et al. | Journal of Agricultural and Resource Economics, April 2003 | Go to article overview

The Value of Bt Corn in Southwest Kansas: A Monte Carlo Simulation Approach


Hyde, Jeffrey, Martin, Marshall A., Preckel, Paul V., Buschman, Lawrent L., et al., Journal of Agricultural and Resource Economics


While most Corn Belt farmers consider planting Bt corn to control European corn borer, southwestern Kansas farmers must also take into account an array of other insect pests, including corn rootworm, spider mites, and southwestern corn borer. This research uses a decision analysis framework to estimate the expected economic value of Bt corn in southwest Kansas. Mean per acre Bt values ranged from $12.49 to $34.60, well above the technology fee assumed to be $14 per unit, or $5.25 per acre at a seeding rate of 30,000 seeds per acre. The minimum value over all scenarios was $8.69 per acre. Using Monte Carlo simulation, it was shown that European and southwestern corn borer infestation probabilities, expected corn price, and expected pest-free yields are important determinants of the value of Bt corn.

Key words: Bt corn, decision analysis, European corn borer, integrated pest management, Monte Carlo simulation, southwestern corn borer

Introduction

The European corn borer (ECB), Ostrinia nubilalis (Hubner), is a major corn insect pest. Estimates of ECB damage in the United States exceed $1 billion annually (Russnogle). In 1996, corn genetically engineered to control ECB, as well as some other corn insect pests, was commercially introduced. The genetic makeup of these plants has been modified so that the corn now produces its own Bacillus thuringiensis kurstaki (Bt) proteins, which are toxic to ECB and certain other insect pests.

Most insecticides used across the Corn Belt are about 80% effective in controlling ECB. Chemical insecticides such as bifenthrin (Capture(R)) may be significantly more effective, with an efficacy in the range of 90-95%. However, YieldGard(R) Bt corn provides nearly 100% effective control of ECB throughout the entire growing season (Ostlie, Hutchison, and Hellmich). Based on U.S. Department of Agriculture/National Agricultural Statistics Service (USDA/NASS) data, in 2001, about 16% of U.S. corn acres were planted to Bt corn, down from 18% in 2000. In comparison, 25% of Kansas corn acres were planted to Bt corn in both 2000 and 2001.

The southwestern region of Kansas differs a great deal from the remainder of the Corn Belt. While most Corn Belt farmers would consider planting Bt corn to control only ECB, southwest Kansas farmers must consider a broader array of insect pests. Pressure from southwestern corn borer (SWCB), Diatraea grandiosella (Dyar), and spider mites, Tetranychidae spp., must be accounted for when making the decision whether or not to plant Bt corn.

The primary objective of this research is to estimate the value of Bt corn to growers in the southwest Kansas region (as shown in figure 1). However, despite this specific geographic focus, the analysis may be applicable to a much larger geographic area.

Bt Corn

Using the tools of genetic engineering, scientists have inserted a gene from Bt, a naturally occurring soil bacterium, into the corn's deoxyribonucleic acid (DNA). The genetically modified corn plant produces a protein that destroys cells in some insects' guts, causing the insects to cease eating and eventually to die (Ostlie, Hutchison, and Hellmich). Of the types of Bt corn available, two are sold under the brand name YieldGard(R) (BT11 and MON810, developed by Northrup King/Novartis Seeds/Syngenta and Monsanto, respectively). It is assumed these represent the most prevalent type of Bt corn planted in the southwest Kansas region, based on discussion with seed salespeople and crop scouts in the region. Thus, YieldGard(R) Bt corn was selected for analysis in this study. The YieldGard(R) technology has been approved by regulatory agencies in the United States, the European Union, and Japan.

Previous Analyses of Farm-Level Bt Corn Benefits

While the literature contains several examples of farm-level studies of genetically modified crops, few studies have focused on the farm-level economic effects of Bt corn adoption. …

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