The International Consortium on Agricultural Biotechnology Research (ICABR)
Adoption and Diffusion of rbST in California
Department of Agricultural and Resource Economics
University of California-Davis
Schulich School of Business
York University, Toronto
The problem of projecting future use patterns of agricultural biotechnology products in order to evaluate their potential for development and commercialization is a challenging proposition for economists. While many have attempted ex ante methods of projecting adoption and diffusion rates, very few have tested their ex ante results after the fact. In this paper, we use the results of a continuous survey of California dairy producers who participated in surveys from 1 7 years prior to the release of recombinant bovine Somatotropin (rbST) and 1 5 years after its commercial availability. Numerous papers in the animal science literature show that, with a few exceptions, use of rbST increases milk production by 5 15 pounds per cow per day of usage. The basic idea behind this paper is to review the survey results and use them in a variety of ways to test the predictability of the ex ante surveys.
This study uses data collected from California dairy producers 4-5 years after the commercial release of rbST to test the validity of predictions made using data collected from the same source 4-7 years prior to the commercial availability of rbST. A relatively straightforward discriminant function analysis, using exactly the same variables as the ex ante model shows that our abilities to project adoption rates, at least in this case, are fairly accurate. We also test the same model using logistic regression. Our relatively simple models show that the variables selected prior to the commercial availability of rbST were indeed relatively accurate predictors of the actual adoption rate 4-5 years after the commercial release of the new technology. Our models, however, do not do a perfect job in projecting the actual adoption rates of rbST in California. While the parameters of the ex post analyses are relatively similar and of the same sign as the ex ante analysis, there are still discrepancies that need to be explained.
There are a number of reasons, some of which have already been suggested in this, and other papers, why dairy producers may have changed their mind about adopting rbST between the ex ante and the ex post analyses. First, rbST does not require much in the way of large expenditures to be made in order to adopt it. Therefore, there is little cost associated with unadopting it if it does not work for a particular situation. Additionally, a number of studies are finding that while rbST is an effective technology for increasing milk production, it is not clear whether there is any significant increase in profitability from using rbST (Tauer and Knoblauch, 1997; Stephanides and Tauer, 1999; Tauer, 2000; Folz, 1999; Butler, 2000)
Second, there are several reasons why we might expect to find differences between the ex ante projections and the ex post rates of adoption. The farm level characteristics that we have used here are not the only things that impact the adoption of new technologies. External economic conditions such as the price of milk and feed costs are important determinants of the feasibility of adopting rbST, and are probably important determinants of the discrepancies in our analysis. For example, when feed costs are high and milk prices are low, rbST is feasible for a much lower proportion of dairy producers than when feed costs are low and milk prices are high (Butler and Carter, 1988, Butler, 1999). In addition, the peculiarities or unique characteristics of a new technology are also important factors that must be taken into account. Often these peculiarities may only become obvious after the technology becomes available and is tested for a time. rbST may also be used on a highly selective basis both in time and extent. Prior to its commercial availability it was assumed that dairy producers would use rbST on all or most of their cows for a sustained length of time. Our survey results show that most producers are using rbST on a widely varying proportion of their cows, and may often use it for a select time ranging from a few weeks to 5 or 6 months of a 10-month lactation. Therefore, a truer measure of adoption and whether we can predict it, may well be the total amount of extra milk that is produced as a result of using the new technology.
Much still remains to be done in the area of biotechnology adoption. It is especially important if we are to have any decent chance of evaluating the impacts of the many more biotechnologies already being develop
 Paper presented at the 5th International Conference on the Economics of Agricultural Biotechnology, Ravello, Italy, June 15 18, 2001.