The International Consortium on Agricultural Biotechnology Research (ICABR)


Biotechnology, GMOs, and the Organization of the Food System

Robert D. Weaver and Taeho Kim
Pennsylvania State University

Ag biotech offers significant potential for improving the economically valued performance of crops. However, for a number of reasons, it has quickly become apparent that research and development costs of genetically modified organisms (GMOs) may be difficult to recover through traditional market-based pricing. Crop improvement through conventional crop breeding has shown us that producers are not willing to pay substantial or continuing fees for innovations. Crop chemicals have similarly shown short-lived horizons for pricing that generates a return to R&D. Consumer response to GMOs to date has suggested strong aversion for products of GMO origin could occur. For many crops, these economics have led private R&D efforts to seek profits elsewhere, leaving performance failures uncorrected and opportunities for enhancing performance unfulfilled by the private sector. Where social value is perceived, these needs and opportunities have traditionally been pursued by public sector R&D. However, the current political and social perspectives with respect to GMOs in many developed and developing countries may curtail public sector involvement in GMO R&D.

This paper considers economic performance of private versus public sector GMO R&D in the food supply chain and identifies the characteristics of GMO performance that will be of interest as targets of private sector R&D. By implication, those types of GMO performance that will likely not attract private sector R&D effort will be identified as a potential realm for public sector R&D effort.

The nature and characteristics of GMO R&D under different forms of industry organization (vertical integration, contracting, licensing, etc.) are identified through simulation of the food supply chain. To place the study in specific context, GMO R&D of the following types will be considered: 1) yield enhancing, 2) damage control enhancing (e.g. pesticide tolerance, or pest targeted), and 3) market enhancing (e.g. through establishment of hither-to-fore unavailable product characteristics). By comparing the extent and nature of R&D under different market and research organizations, an assessment is presented of the social implications of achievement of alternative levels of GMO R&D.

Implications for research policy will be drawn from the results. It is likely that conclusions will be able to establish the social implications of alternative organizations of research.

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