The potential benefits of herbicide-resistant transgenic rice in Uruguay: Lessons for small developing countries

• Published in: Food policy 2006-04, Vol.31 (2), p.162-179
• Main Authors: Hareau, Guy G., Mills, Bradford F., Norton, George W.
• Format: Article
• Language: English
• Subjects: Agriculture; Biotechnology; Crop yield; developing countries; economic impact; Economic surplus; Farmers; genetic transformation; Genetically modified organisms; Genetically modified rice; grain yield; herbicide resistance; Market access; market power; molecular farming; Oryza sativa; Pesticides; plant-incorporated protectants; Rice; Stochastic models; stochastic processes; Stochastic simulation; surpluses; Technological change; transgenes; transgenic plants; Uruguay
• ISSN: 0306-9192; 1873-5657
• DOI: 10.1016/j.foodpol.2005.10.005

In many developing countries, the potential benefits from adopting a transgenic variety developed by a multinational corporation are limited by the crop’s small production base. This paper presents an ex-ante evaluation of the economic impact of herbicide resistant transgenic rice in a small developing country, Uruguay. To fully account for the multinational’s market power, the firm’s seed markup is assumed to affect the adoption rate for the variety. Stochastic simulation techniques are employed to understand how potential benefits may vary with changes in technology, yield, costs, and adoption parameters. The results indicate a $1.82 million mean net present value for producers from the development and utilization of transgenic rice in Uruguay and $0.55 million for the multinational. These relatively small multinational firm benefits suggest that a firm will not undertake significant efforts to develop transgenic varieties adapted to local conditions without either strategic partnerships with local institutions or access to wider regional markets.