Columbia, Missouri
January 2009
AgBioForum Volume 11
Number 2
Nicholas Kalaitzandonakes, Editor
TABLE OF CONTENTS
Insiders' Views on Business Models Used by Small Agricultural
Biotechnology Firms: Economic Implications for the Emerging
Global Industry
S. Blank
The source of most
innovations coming from the emerging agricultural
biotechnology industry is small and medium enterprises
(SMEs), yet SMEs have a high failure rate, which raises
questions, such as “is there some flaw in the business
structure of firms in the industry?,” or “is the economic
and policy environment facing the industry not conducive to
supporting SMEs?” The types of business models used by SMEs
across the globe are identified using “insider information”
collected from interviews of senior managers. Results have
implications for economic development because the economic
and policy environment is found to be the constraint.
An
Ex-ante Evaluation of the Economic Impact of Bt Cotton Adoption
by Spanish Farmers Facing the EU Cotton Sector Reform
M. Ceddia, M. Goméz-Barbero & E. Rodríguez-Cerezo
Cotton production in the
European Union (EU) is limited to areas of Greece and
Southern Spain (Andalusia). The 2004 reform of the EU cotton
policy severely affected the profitability of the crop. In
this article we analyze how the introduction of genetically
modified (GM), insect-resistant cotton varieties (Bt cotton)
might help EU cotton farmers to increase profitability and
therefore face the cotton policy reform. We first study
farmers' attitudes toward adoption of Bt cotton varieties
through a survey conducted in Andalusia (Southern Spain).
The results show a positive attitude of Andalusian cotton
farmers toward the Bt cotton varieties. Second, we perform
an ex-ante analysis of the effects of introducing Bt cotton
in Andalusia. Finally, we integrate the analysis of the
effects of Bt cotton with the analysis of the EU cotton
reform. Our results show that despite the significant
economic benefits of Bt cotton, the current policy reform is
likely to jeopardize the profita!
bility of cotton production in the EU.
Trust and Distrust in Biotechnology Risk Managers: Insights from
the United Kingdom, 1996-2002
H. James & L. Marks
During the late 1990s,
negative events related to biotechnology were reported in
the UK media. According to the trust asymmetry hypothesis,
such events should cause public trust in biotechnology risk
managers to decline rapidly and rebound slowly. Using
Eurobarometer data we show that public trust in risk
managers declined from 1996 to 1999 but rebounded sharply
between 1999 and 2002. Using canonical discriminant analysis
we find that trust is correlated with knowledge of science,
as well as perceptions of benefits and risks. We also
identify distinct categories of people who do not
trust--people who distrust risk managers but trust other
sources of biotechnology information, people who trust
nobody, and people who are uncertain about their trust of
risk managers. We argue that attention should be placed not
only on understanding how to improve trust but also on the
nature and characteristics of people who distrust risk
managers of biotechnology.
Public Attitudes Toward Molecular Farming in the UK
R. Milne
Plant-made pharmaceuticals
represent the third generation of genetically modified crops
as well as a potentially significant development in
pharmaceutical and vaccine manufacturing. Successful
development is contingent on a number of factors, one of
which is social acceptance. This article outlines the
results of a focus group study conducted in the UK on public
attitudes toward molecular farming. It finds that attitudes
are predominantly positive. Judgments about molecular
farming are made in terms of perceived need and benefits,
not limited to the participants themselves. Concerns do
exist about whether molecular farming represents the best
approach to pharmaceutical production, which diseases are
targeted, and whether it can be controlled and contained.
While participants are unfamiliar with molecular farming,
they draw on a range of existing knowledge and examples to
anchor their understandings of it.
How
External Political-Economic Forces Affect Firms' Attitudes
Toward the Industrial Use of Genetically Modified Organisms: An
Analysis in the South Korean Context
B. Sung & H. Jang
Based on survey data, this
article investigates the effects of external
political-economic forces on firms' attitudes toward the
industrial use of GMOs in the South Korean context by
performing an ordered probit regression analysis. The
survey, covering 240 firms, was conducted from November 15,
2005 through December 17, 2005. Results indicate that
external political-economic pressures derived from
government, consumers, industry, and markets were important
for promoting firms' industrial use of GMOs. The most
important variables (listed in order of decreasing
importance) were market attractiveness, competitive
intensity, consumer acceptance, and regulatory intensity in
terms of the coefficient. Hence, in South Korea, to promote
firms' industrial use of GMOs, the highest priority must be
given to policy measures promoting market circumstances
securing high profits. And these should be followed by
policies that induce inter-firm competition, obtain consumer
acceptance, and develop government regulations that are not
a burden to firms. NGOs pressures (i.e., NGOs objection),
firm's size, and dummies for firm types (i.e., food industry
vs. others) were not significant factors affecting firms'
attitudes towards the industrial use of GMOs.
Does
Biotech Labeling Affect Consumers' Purchasing Decisions? A Case
Study of Vegetable Oils in Nanjing, China
W. Lin, F. Tuan, Y. Dai, F. Zhong & X. Chen
This study analyzes whether
biotech labeling has an impact on consumers' purchasing
behavior in China using vegetable oils in Nanjing as a case
study. An Almost Ideal Demand System (AIDS), which
encompasses expenditure shares of individual edible oils, is
developed and estimated by seemingly unrelated regression
with theoretical constraints. The AIDS model is augmented by
the top-level demand for all edible oils in the context of a
two-stage budgeting approach. Results from the model based
on retail scanning data suggest that biotech labeling
induced only a modest switch in vegetable oils consumption
away from labeled soybean and blended oils and toward
non-biotech vegetable oils.
Pricing and Welfare Impacts of New Crop Traits: The Role of IPRs
and Coase's Conjecture Revisited
R. Perrin & L. Fulginiti
Crop traits are durable
when embedded in varieties, and thus they may be subject to
Coase's conjecture that monopolists who sell durables may be
unable to earn normal monopoly rents, or in the extreme
case, not any rents at all. To determine the potential
relevance of this conjecture for the crop traits market, we
analyze the theoretical time path of trait prices under
three systems of
intellectual property rights (utility patents, plant
breeders' rights, and none), alternative assumptions about
sellers' ability to commit to future action, and alternative
assumptions that buyers are either myopic or far-sighted
with respect to expectations about the future price of the
durable. Under only one of these stylized circumstances does
the Coase conjecture have traction, but it is a plausible
circumstance in much of the world--owners with plant
breeders' rights, buyers with foresight, sellers unable to
commit to future price paths. In this circumstance, this
theory suggests that sellers holding only plant breeders
rights would realize only 11% of potential social welfare
benefits from the trait, while farmers and/or downstream
consumers would realize about 85%. On the other hand, with
myopic buyers under any system of intellectual property
rights, temporal price discrimination is feasible, resulting
in above-normal monopolist welfare (about 70% of maximum
social welfare benefits) and little damage to consumers
relative to normal monopoly pricing.
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