Estimated Domestic Producer and End User Benefits from Genetically Modifying U.S. Soybeans

Abstract

Recent losses in the U.S. soybean [Glycine max (L.) Merr.] market share have motivated soybean producers to seek alternative methods of increasing the demand for U.S. soybeans. Organizations funded by U.S. soybean producers are at the forefront of this issue, struggling with the dilemma of determining which options to pursue in order to generate the greatest returns for soybean producers. Options include genetically modifying the soybean to better fit the needs of end users, increasing per acre yields, and reducing the costs of production. A previous study estimated the gross values of 30 alternative modifications of the soybean. The purpose of this paper is to provide estimates of the expected net benefits accruing to U.S. soybean producers and end users from five genetic modifications. Producer and consumer surplus models were used to estimate the expected net benefits to U.S. soybean producers and end users. These results will be useful to producer organizations in allocating funds for genetic modification research. Producer welfare is found to increase with increasing demand elasticities. The most favorable scenario for producer organizations is where the elasticity of demand is high relative to the elasticity of supply, the added production costs or yield loss is zero, the shifts in total demand for U.S. soybeans are large, and the probability of research success is high. Producer organizations cannot simply compare the modifications based on their per bushel added values. Investing in the three modifications which had the highest per bushel added values resulted in expected producer net benefits $472.8 million lower than investing in research on the three modifications with the highest expected producer net benefits. Soybean modifications with moderately reduced yields will typically result in negative benefits for soybean producers. Very small or no yield reductions or very large per bushel values from the modification are needed to produce positive net values to producers. Research Question Recent losses in the U.S. soybean market share have motivated the soybean industry to seek alternative methods of increasing the demand for U.S. soybeans. Organizations funded by U.S. soybean producers are at the forefront of this issue, struggling with the dilemma of determining which alternatives to pursue in order to generate the greatest returns to soybean producers. Options being considered include genetically modifying the soybean to better fit the needs of end users, increasing per acre yields, and reducing the costs of production. This paper addresses the question; “Of the genetic modifications aimed at better fitting the needs of end users, which ones should producer organizations pursue in order to generate the greatest returns to U.S. soybean producers?” Literature Summary Most studies analyzing technological innovations have focused on supply shifting developments. Demand increasing innovations have received little attention. The main reasons for the lack of quantitative analyses of demand increasing innova...

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