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Premium price for GMO Bt corn costs farmers, boosts biotech firms: new report traces impact of additional costs for GMO Bt corn

(Feb. 20, 2002 CropChoice news) -- A new report released today found that farmers are helping to finance a large share of the biotech industry's research, development, and legal costs through the approximate 35 percent price premium they pay for genetically engineered Bt corn, compared to conventional corn seed prices.

The report found that corn seed expenditures grew at $1.34 per acre annually between 1995-1999 as Bt corn was being introduced, compared to just $.30 per year in the previous five years. The impact of the Bt corn premium on seed industry profits has been remarkable, according to the report. The Bt corn premium boosted earnings for Pioneer Hi-Bred by 7.3 percent, Monsanto by 9 percent, and Syngenta by over 18 percent between 1998-2000.

"The Bt Premium Price: What Does it Buy? The Impact of Extra Bt Corn Seed Costs on Farmer Earnings and Corporate Finances" is by Dr. Charles Benbrook of Benbrook Consulting Services. Dr. Benbrook previously served as the Executive Director of the National Academy of Science's Board of Agriculture. The report is part of a series being published by the Institute for Agriculture and Trade Policy and Genetically Engineered Food Alert on economic and legal issues related to genetically engineered crops.

The report can be viewed at http://www.iatp.org

The commercialization of corn genetically engineered to resist feeding damage by the European Corn Borer (ECB) and Southwestern Corn Borer (SWCB) has taken off in the last part of the 1990s. Introduced in 1996, this technology now accounts for about 20 percent of the acres planted to corn each year in the U.S. Farmers have spent about $659 million on Bt corn price premiums since 1996, an investment that has only delivered some $567 million in benefits, as shown in the November 2001 report - When Does It Pay To Plant Bt Corn?"

"Based on current seed pesticide industry pricing policies and financial performance goals, it is likely that the purchase of technologies like Bt corn will transfer another slice of farm income from growers to the seed-biotechnology industry," says report author Dr. Benbrook.

Other key findings of the report include:

  • Every acre planted to Bt corn has increased farmer seed expenditures an average of $9.80 per acre, about a 35 percent jump.
  • Farmers' net income per acre from corn production has declined sharply from a profit of $40 per acre in 1975, to a loss of $26 per acre in 1985, and a loss of $35 per acre in 1997.
  • The biggest jump in seed and pesticide costs occurred between 1994 and 1996, when Bt corn was introduced. These two production inputs now account for over $.40 in expenses for each bushel produced - between one-fifth and one-quarter of gross income. Just over a decade earlier, these expenses accounted for less than 10 percent of gross income.

"This report clearly shows that farmers are heavily subsidizing the big increase in research and development costs associated with the commercialization of GMO corn varieties, triggering further erosion to farm income," says Kristin Dawkins, of the Institute for Agriculture and Trade Policy - a member of Genetically Engineered Food Alert. "At a time when USDA estimates that corn farmers are losing almost $1.00 on every bushel they produce, this transfer of net income from farmers to biotech companies could not come at a worse time."

The report is part of a series being published by the Institute for Agriculture and Trade Policy and Genetically Engineered Food Alert on economic and legal issues related to genetically engineered crops. The first three reports of this series can be downloaded at: http://www.iatp.org

Contact: Ben Lilliston, 612-870-3416 or Charles Benbrook, 208-263-5236