Regional Factors Affecting the Impact of Biotechnology in U.S. Crop Production

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The regional impacts of future biotechnology in crop production would be affected by the crop mix, climate, input use, and particular pest problems which have developed in the U.S. agricultural system over the years. The future products of biotechnology are difficult to predict accurately, but researchers indicate that reducing production losses due to environmental and pest pressures is the direction being taken in the late-1980s. The use of seeds, fertilizers, and chemicals in the production of crops is a $15 billion industry and is a target for improvement through biotechnology. However, commercial products are not expected until the mid-1990's. The aggregate impact of biotechnology on U.S. crop agriculture is likely to be the greatest from innovation in four major crops: corn, soybeans, wheat, and hay. The regions of most importance for these crops are in the midwest: Corn Belt, Lake States, and Northern Plains. On a regional basis, high-input crops such as cotton, fruit, and vegetables in the coastal states could be affected by biotechnology because of their high per-acre costs of inputs. Currently biotechnologists are developing improved methods of genetic manipulation to facilitate isolation and transfer of desirable traits to economically important crops. As yet, however, progress has occurred more rapidly with certain microbes and dicotyledonous crops than with the more important monocotyledonous cereal crops such as corn and wheat. A major hurdle in the successful development of transgenic cereal crops has been the difficulty of regenerating whole plants from manipulated cell cultures. Clearing that hurdle could increase the opportunities for a significant aggregate impact from biotechnology. A biotechnology in corn production that eliminates the insect damage normally occurring under current control practices could increase annual production by 7 percent, a difference possibly equivalent to $978 million annually in 1995-97. Production would increase the most in the Corn Belt and Northern Plains
while increasing the least in the Delta and Pacific regions. A biotechnology that eliminates weed losses in soybean production could increase annual production 9.8 percent, a difference possibly equivalent to $7606 million annually in 1995-97. In this case, the Corn Belt, Lake States, and Delta regions would increase production the most. Estimating the benefits of loss-reducing biotechnologies in other crop-pest combinations is limited by a lack of comparable regional data. The total value of U.S. corn and soybean crops would be pressured to decline 15 percent with the projected supply increases possible from biotechnologies that eliminate insect losses in corn and weed losses in soybeans. Using elasticities of -0.408 and -0.349 for corn and soybeans, respectively, the 1995-97 combined total value of annual production with these yield increases could be $4.1 billion below what it would be without these increases. Commodity differences with respect to elasticity of demand, yield benefits, and regional production affect the regional distribution of the producers' impact from crop biotechnologies. The consumers' benefit from insect-resistant corn and herbicide resistant soybeans amounts to about $2.9 billion and $3.l billion, respectively. The combined $6 billion in consumers' benefit net of the producers' $4.1 billion lower crop value results in an annual $1.9 .billion net impact from these two general biotechnologies. The distribution of the social benefit is likely to be greater in high population regions, such as the Northeast and Pacific, than in the midwest.
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A.E. Ext. 89-06
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Charles H. Dyson School of Applied Economics and Management, Cornell University
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