The controversies surrounding genetically modified crops continue. Studies on adoption of new agricultural technologies, such as Bt cotton, have been limited in scope, often focusing on damaging environmental impacts. It is necessary, however, to consider the economic impacts of these new technologies in developing countries.

Potentially, there are both benefits and costs of genetically modified (GM) agricultural technology for developing countries. In South Africa, many small farmers have started to grow the Bt cotton variety developed by Delta Pineland as a cash crop, because it produces an insecticide that helps resist bollworm. Research from the University of Reading, UK, presents the results of a survey of small cotton farmers in the Makhathini region of South Africa. The authors focus on the economic benefits of adopting this Bt cotton variety. Unlike previous studies, the Makhathini study is large scale and relatively long term.

There are nearly 5,000 small farmers in Makhathini, of which around 1,400 grow cotton in any one year. By 2002, an estimated 92 per cent of the small cotton growers in Makhathini had adopted the Bt variety. All farmers bought seeds and pesticides from the private company Vunisa Cotton and used credit to pay for these inputs. Vunisa Cotton also purchased the cotton produced: there were no other cotton supply or cotton marketing companies in the area during the study period.

Key findings from the research include:

• Bt cotton produces higher yields and increased profits for farmers.
• Farmers do not need to spray so much pesticide on Bt cotton, meaning that they have more time for other income generating activities (such as off-farm employment).
• Using less pesticide is likely to have health and environmental benefits; hospital records show a decline in pesticide poisoning cases following the adoption of the Bt cotton variety.
• Smaller producers benefited as much, if not more, than larger producers.

Whether these benefits can be sustained, and repeated for other GM crop varieties, is unclear from this study. Makhathini may be a special case and there may be certain constraints and risks associated with adoption:

• The widespread adoption of the Bt variety may lead to pest resistance, although this risk is also present in conventional breeding methods. Planting limited amounts of a more susceptible cotton variety in Bt fields may minimise this problem.
• A collapse in production (for example because of bollworm attack) would have serious consequences on farmers who are so dependent on credit.
• Vunisa Cotton’s central role in providing and purchasing Bt cotton means the farmers are entirely dependent upon one company. This presents a risk; farmers will be subject to the company’s future pricing decisions.
• Farmers may save time on labour, but alternative sources of income are limited in Makhathini.

Source(s):
‘The Economic Impact of Genetically Modified Cotton on South African Smallholders: Yield, Profit and Health Effects’, Journal of Development Studies, Vol.42, No.4, pages 662-677, by Richard Bennett, Stephen Morse and Yousouf Ismael, 2006

id21 Research Highlight: 22 September 2006

Further Information:
Richard Bennett
Department of Agricultural and Food Economics
University of Reading
Reading, RG6 6AR
UK

Tel: +44 (0)118 3786478
Fax: +44 (0)118 9756467
Contact the contributor: r.m.bennett@reading.ac.uk

University of Reading, UK

Stephen Morse
Department of Geography
University of Reading
Reading, RG6 6AB
UK

Tel: +44 (0)118 3788736
Fax: +44 (0)118 9755865
Contact the contributor: s.morse@reading.ac.uk

Other related links:
id21 insights #52 'Debating GM crops'

'Debating biotechnology in southern Africa'

'Separating fact from fiction –GM crops in developing countries'

'Bt cotton: benefits for poor farmers?'

'Regulating biotechnology in practice – the case of Bt cotton in India'

See id21's links for agriculture