Economic considerations for the adoption of transgenic crops: the case of bt corn

Biotechnology is offering farmers new crop production opportunities and challenges. Prior to selecting a transgenic variety, farmers must consider the cost of the technology fee, possible yield drag, potential pest infestations, possible reductions in pesticide costs, refuge requirements to minimize the development of insect resistance, and adjustments in cultural practices. Moreover, crop segregation in the field, storage, and shipment may be necessary to capture potential price premiums for nontransgenic varieties. As farmers consider these various production and marketing factors, they find that Bt corn is a more profitable control method for European corn borer in the Western Corn Belt relative to the Eastern Corn Belt. This is primarily due to higher infestation probabilities in the Western Corn Belt, coupled with greater demand for manufacturing and export uses in the Eastern Corn Belt where several buyers do not accept transgenic corn.