Quarterly Journal of International Agriculture No. 3/05
Value-enhanced genetically modified crops: research incentives and implications for developing countries
Kenrett Y. Jefferson-Moore
North Carolina A&T State University, Greensboro, NC, USA
Greg Traxler and Henry Kinnucan
Auburn University, Auburn, AL, USA
Abstract
In this paper, we present an economic model of the supply and demand
for a second wave of genetically modified (GM) crops, referred to as
output quality or value-enhanced crops. These include plant varieties
that have one or more modified output characteristics adding end-user
value to the commodity, such as higher quality oils and increased
protein or vitamin levels. Implications for potential future growth of
GM value-enhanced crops (GM-VECs) are examined. A significant amount of
resources is being invested in GM-VEC research, yet their economic
potential remains uncertain. Because no GM-VEC has yet attained a
significant market presence, the model is illustrated using parameters
from the market for high oil corn in the US. Particular attention is
given to characterization of the incentives that exist for farmers to
adopt and for industry to invest in research for GM-VECs. A Muth type
model is used to simulate benefit distribution under varying market
structure and technological parameter assumptions. After presenting
results of this general case, some of the challenges facing the use of
GM-VECs in developing countries are discussed.
Keywords: biotechnology, agricultural research, Muth model, value-enhanced crops, nutritional enhancement
JEL: Q 160
Vol. 44 (2005), No. 3: 311-326