Emerging Markets for GM Foods:
An Indian Perspective on
Consumer Understanding and Willingness to Pay
Satish Y. Deodhar (IIM-A)
Sankar Ganesh (IIM-A)
Wen Chern (OSU)
Motivation
• GM inevitability seems to come from:
–
–
–
–
Population growth
Productivity plateau
Rapid technological advances, and
Freer agricultural trade
• India - late entrant in the GM Crop cultivation
• Today 5th largest area in GM crops (ISAAA)
• Technology adoption & welfare gains issues
have been addressed
– E.g. Gupta and Chandak (2005)
– Neilsen and Anderson (2000)
Food Crops
• Commercial production of food crops not
allowed in India at this time
• (Bt) cottonseed oil – cooking medium
• Corn imports are at zero duty (GM corn?)
• Need to understand consumers’ opinion
• Implications of allowing GM food crops
– GM Crop regulation, labelling, extension activity
– Avoid KFC experience!
Product Choice
• Cottonseed oil
– Popular cooking medium
– Quite likely Bt cottonseeds being pressed for oil
• Golden Rice
– Staple food
– Holds promise to alleviate nutrition deficiency
• GM fed Chicken
– The most common and popular non-vegetarian
food
Survey Design
• City of Ahmedabad
– A representative group of town and city people
– 12 to 15 households from 43 wards of the city
– Total size of 602 responses
• Questionnaire put on web
– Answers sought from students, professors,
businesspersons and scientists
– Total size of 110 responses
• Questions on
– Knowledge, perception, and acceptability
– Socio-economic and demographic profile
– Choice between GM and non-GM in CV format
Z
Random Utility Approach
Uij = u (Zj, Dj, gij)
Uij = Vij + gij
V0j = a0 + b0 Zj + c0 (dj – Pgmj)
j
V1j = a1
+ b1 Zj + c1 (dj – Pngmj)
I* = a + bZj – c(Pngmj – Pgmj) + gj
Z
E[WTPngmj – WTPgmj ] = a/c + b/c E[Zj]
A Representative Characteristics
Table 4.1(a): Income Distribution of the Respondents
City Survey
Particulars
Num
ber
Percentage
Internet Survey
Number
Percentage
Yearly total household income ( Rs)
<50000
147
24.58
4
3.64
50000 to <1 lakh
266
44.48
9
8.18
1 lakh to < 2.5 lakhs
149
24.92
31
28.18
2.5 lakhs to < 5 lakhs
33
5.52
37
33.64
5 lakhs to < 10 lakhs
3
0.50
20
18.18
9
8.18
110
100
≥ 10 lakhs
Total
598*
* 4 respondents did not reveal their income
100
Some Observations
• More than 90% of city respondents do not
know what GM is all about
• About 85% of internet respondents know
somewhat or nothing about GM foods
• After giving pros and cons of GM food, more
than 70% of city respondents willing to buy
GM foods.
• Almost all want mandatory labelling, but only
about 30 percent willing to pay for it !
• Ethics and religion matter much more to city
respondents than internet respondents
Ceteris Paribus
• If government’s regulatory performance is
considered excellent or good, the chances of
choosing non-GM food do not increase
• Likelihood of GM food consumption
increases as one moves from very-poor to
middle income categories
• Being in joint family and female increase the
likelihood of choosing non-GM food
• As GM prices decrease relative to non-GM,
chances of choosing GM increase
• Based on expected WTP, consumers are
willing to pay a premium of about 19.5% for
golden rice, 16% for GM oil, and less-than 1%
for non-GM fed chicken
Implications
• Majority of the middle class may just be
willing to buy GM foods.
• Labelling issue will be important until
consumer apprehensions about GM persist
• Information extension activity by consumer
forums, ministries and firms may be
necessary
• (Perceived) consumer confidence in
regulatory mechanism may be critical in
acceptance of GM foods