In this paper we attempted to quantify the magnitude and distribution of rents created by the planting of Genetically Modified Organisms (GMO) in cotton and soybeans in 1997. In both cases, of Bt cotton and herbicide tolerant soybeans in 1997, we used economic models presented in Alston, Norton and Pardey; and Moschini and Lapan.
In the case of Bt cotton in 1997, we used survey data of paired fields in various states made by Plexus Marketing Group and Timber Mill Research, Inc., and industry data for yield and cost changes due to the introduction of the technology. Since there is no information on the performance of GMO cotton abroad, we assumed two scenarios. The first scenario assumed that rest of world farmers obtained half of the results obtained by U.S. farmers. The second scenario assumed ROW farmers obtained the same results as U.S. farmers. Results of both scenarios indicate that farmers captured approximately 42% of the additional rents created by planting GMO cotton in the United States. The innovators, Monsanto and the seed companies, captured approximately 36% and 9% of the rents respectively. Consumers captured 7% and the rest of the world, captured a net value representing 5% of total rents. These results contrast with our estimations of the 1996 crop where farmers captured 59% of rents, and the innovators captured 26%. In addition, our 1997 estimates represent 76% of economic rents created in 1996.
Estimates of the economic surplus estimation of the planting of herbicide tolerant soybeans indicate that U.S. farmers gained from using the technology. We assumed the same scenarios in herbicide tolerant soybeans as the scenarios considered in the Bt cotton analysis. Results from both scenarios considered in herbicide-tolerant soybeans differ by the amount of losses of ROW farmers. As expected in this model, with increased efficiency of ROW farmers, they would be able to reduce their losses, and less surplus would be available to the rest of the economic agents in the market (Alston, Norton and Pardey). U. S. farmers captured between 50% and 59% of rents in the 50% and same efficiency scenario respectively. The innovators' share remained fairly stable at 31% of total surplus created.