Farmers' Adoption of Genetically Modified Varieties with Input Traits. Alexander, C., Fernandez-Cornejo, J., & Goodhue, R., E. 2003.
abstract   bibtex   
[From Executive Summary] The decision to adopt a new technology depends on its expected profitability. The expected profitability of an innovation depends on the suitability of the innovation, given its characteristics, for a specific farmer and farm, given their characteristics. We examine the determinants of the adoption of genetically modified (GM) corn and soybean varieties by Iowa producers using data collected from a survey of producers. Between the 1999 and 2000 crop years, the controversy regarding GM foods intensified. We conducted focus groups, as well as our survey, between the 1999 and 2000 crops, which allowed us to assess the effects of the intensification of the controversy on producers’ planting decisions empirically. Farmers did not necessarily react to the GM controversy in the same way for corn and soybeans; all permutations of increases and decreases for corn and soybeans were observed for individual survey respondents. The representative farmer increased or held constant his GM soybean acreage but decreased his GM corn acreage, consistent with the dynamic diffusion analysis in Fernandez-Cornejo, Alexander, and Goodhue. This behavior was consistent with the intentions of focus-group participants, who identified production risks and returns for GM soybeans that offset price risk due to the GM controversy for soybeans. In contrast, production risks and returns for GM corn reinforced this price risk. Further reinforcing these findings, descriptive analysis of our survey data suggested that producers who first adopted GM soybeans in 2000 were both more risk-averse than other growers and agreed more strongly that consumers would not accept some bioengineered foods. We constructed a theoretical model using the risk and return properties of GM and non-GM crops obtained from the focus groups. The model predicted behavior consistent with the above findings. We then tested it using the survey data. Agreement with the statement that consumers will not accept some bioengineered foods was associated with a significant decline in the intended share of acreage devoted to GM corn but had no explanatory power for GM soybean planting intentions. Risk attitudes did not prove to be a significant explanatory factor, perhaps due to the existence of production risk and price risk, which may have offset each other in the acreage-allocation decision. Other factors that were found to be significant in determining adoption decisions in our econometric analysis of our survey data included gross farm income, the previous year’s acreage allocation, agreement with the statement that farmers will benefit from biotechnology, years of schooling (soybeans only), total corn acreage (corn only), and concern regarding European corn-borer yield damage (corn only). An increase in gross farm income was associated with an increase in the share of GM acreage for both crops as commonly predicted by the adoption literature. The previous year’s GM acreage share for that crop was highly significant, consistent with models of the adoption process and our findings from the dynamic diffusion analysis. For the full corn sample, which included farmers with all or none of their acreage in GM varieties, an increase in total corn acreage was associated with a decrease in the share of corn acreage allocated to GM hybrids. For the full soybean sample, farmers with fewer years of schooling allocated a higher share of acreage to GM soybeans. This is consistent with the observation made by focus-group participants that planting herbicide- resistant soybeans varieties reduced management requirements.
@misc{
 title = {Farmers' Adoption of Genetically Modified Varieties with Input Traits},
 type = {misc},
 year = {2003},
 identifiers = {[object Object]},
 publisher = {Giannnini Foundation, University of California-Davis},
 city = {Davis, California},
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 created = {2012-01-04T19:06:03.000Z},
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 last_modified = {2012-01-04T19:21:45.000Z},
 tags = {economic,herbicide tolerant soybean,insect resistant corn},
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 source_type = {Report},
 abstract = {[From Executive Summary]  The decision to adopt a new technology depends on its expected profitability. The expected profitability of an innovation depends on the suitability of the innovation, given its characteristics, for a specific farmer and farm, given their characteristics. We examine the determinants of the adoption of genetically modified (GM) corn and soybean varieties by Iowa producers using data collected from a survey of producers. Between the 1999 and 2000 crop years, the controversy regarding GM foods intensified. We conducted focus groups, as well as our survey, between the 1999 and 2000 crops, which allowed us to assess the effects of the intensification of the controversy on producers’ planting decisions empirically. Farmers did not necessarily react to the GM controversy in the same way for corn and soybeans; all permutations of increases and decreases for corn and soybeans were observed for individual survey respondents. The representative farmer increased or held constant his GM soybean acreage but decreased his GM corn acreage, consistent with the dynamic diffusion analysis in Fernandez-Cornejo, Alexander, and Goodhue. This behavior was consistent with the intentions of focus-group participants, who identified production risks and returns for GM soybeans that offset price risk due to the GM controversy for soybeans. In contrast, production risks and returns for GM corn reinforced this price risk. Further reinforcing these findings, descriptive analysis of our survey data suggested that producers who first adopted GM soybeans in 2000 were both more risk-averse than other growers and agreed more strongly that consumers would not accept some bioengineered foods. We constructed a theoretical model using the risk and return properties of GM and non-GM crops obtained from the focus groups. The model predicted behavior consistent with the above findings. We then tested it using the survey data. Agreement with the statement that consumers will not accept some bioengineered foods was associated with a significant decline in the intended share of acreage devoted to GM corn but had no explanatory power for GM soybean planting intentions. Risk attitudes did not prove to be a significant explanatory factor, perhaps due to the existence of production risk and price risk, which may have offset each other in the acreage-allocation decision. Other factors that were found to be significant in determining adoption decisions in our econometric analysis of our survey data included gross farm income, the previous year’s acreage allocation, agreement with the statement that farmers will benefit from biotechnology, years of schooling (soybeans only), total corn acreage (corn only), and concern regarding European corn-borer yield damage (corn only). An increase in gross farm income was associated with an increase in the share of GM acreage for both crops as commonly predicted by the adoption literature. The previous year’s GM acreage share for that crop was highly significant, consistent with models of the adoption process and our findings from the dynamic diffusion analysis. For the full corn sample, which included farmers with all or none of their acreage in GM varieties, an increase in total corn acreage was associated with a decrease in the share of corn acreage allocated to GM hybrids. For the full soybean sample, farmers with fewer years of schooling allocated a higher share of acreage to GM soybeans. This is consistent with the observation made by focus-group participants that planting herbicide- resistant soybeans varieties reduced management requirements.},
 bibtype = {misc},
 author = {Alexander, Corinne and Fernandez-Cornejo, Jorge and Goodhue, Rachael E}
}

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