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An Economic Cost-Benefit Analysis
of GM Crop Cultivation: An Irish
Case Study
Marie-Louise Flannery, Fiona S. Thorne,
B Paul W. Kelly and Ewen Mullins
GM Crops in Ireland
At the time of study, no GM crop cultivation in
Ireland (EU had put a moratorium on import and
production of GM foods)
Existing varieties of crops (non-GM) susceptible
to disease- winter wheat susceptible to fungal
diseases due to mild and wet Irish climate.
Goal
Conduct cost-benefit analysis of four genetically
modified (GM) crops
Winter wheat
Spring barley
Sugar beet
Potato
Methodology
Compare net revenue from GM crop to existing
(non GM) crop
Include fixed and variable costs:
• Materials (seed, fertilizers, herbicides, fungicides,
insecticides, growth regulators)
• Machinery hire (plowing, tilling, sowing, spraying,
fertilizer spreading, harvesting)
• Miscellaneous costs (interest [7%] and transport)
Seed Cost
GM seed not sold in Ireland
• Relied on literature to derive a seed premium
for sugar beet GM.
• Other crops: assumed a 15% premium.
Legislative Constraint
GM crops must be kept separate from other
crops
Test importance of restriction, add “coexistence
levy” of €25 per ha to capture extra cost of this
rule.
Benefits
Trials in Europe and Ireland reveal 6% increase in
yield for sugar beets.
Wheat, barley and potato – no yield
experiments in EU. Authors assume pesticide
cost reduction.
Sampling
Finally, used two years that were considered
representative:
• 2002: low yield, high disease
• 2003: high yield, low disease
Took average of two years.
Current Acreage
•
•
•
•
Sugar beet: 31,500 (ha)
Winter wheat: 60,500 ha
Spring barley: 163,270 ha
Potato: 14,150 ha
Analysis
Used actual, non-GM yields and costs for 2002 and
2003 to compute net revenue per hectare.
Predicted net revenue for GM crops in 2002 and
2003 given yield and cost assumptions.
Net benefit is change in net revenues across all
acreage.
Sugar Beet Results
Category
Yield
Conventional
GM
Net Effect
45
48
3
Gross Revenue
2295
2407
112
Seed Cost
102
132
+30
Herbicide
172
31
-141
Other Costs
1139
1139
0
Total Cost
1413
1302
-111
Net Revenue
882
1131
223
% Change
+29%
Wheat Results
Category
Yield
Conventional
GM
Net Effect
9.1
9.1
0
1250
1250
0
Seed Cost
60
94
+34
Herbicide
165
100
-65
Other Costs
707
707
0
Total Cost
932
901
-31
Net Revenue
318
349
+31
Gross Revenue
% Change
+9%
All Crops
.
Unmeasured Factors
EU may prohibit sale of GM crops in EU. Project could fail
unless export to rest of world.
Risk GM crops destroy regular crops- should be
minimized by cost of coexistence levy
Does not consider market responses (appropriate)
Assumes no change in hectares planted
Does not examine possible change in price
Results
GM crops have higher net benefits (net revenue
per hectare) than non-GM crops.
Net benefit varies by crop type (highest for
sugar beet).
Major gain is not in higher yields but in lower
costs.
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