Economic impacts on New Zealand of GM crops : result from partial equilibrium modelling

Abstract

This paper reports findings from economic modelling of the impacts on New Zealand agricultural producer returns from the commercial use of genetically modified (GM) food crops. Several possibilities are considered in the modelling, including different rates of GM crop adoption, positive and negative consumer responses, increases in productivity, first- and second-generation GM crops, and control of the intellectual property. The results are consistent with theory, other studies and expectations. Thus, it is not surprising that New Zealand producers increase their revenue the most when they concentrate on products that have a premium in the market because consumers prefer them. If consumers prefer non-GM products, New Zealand producers gain by focusing on those crops. If consumers prefer second-generation GM products, producers increase their returns by growing those crops. Secondly, it is also consistent with theory, experience and expectations that an increase in productivity does not necessarily lead to increased returns. This is dependent upon whether NZ has sole access to the technology or whether it is or becomes available overseas. Thus, even where a product has a consumer preference, producer returns can fall when productivity increases. Thirdly, controlling access to preferred products or to productive technology has beneficial effects for New Zealand commodity producers.