Tropentag 2010 ETH Zurich, September 14-16, Economic Profitability and Adoption of Bt Cotton and non-bt Cotton in North India

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1 Tropentag 2010 ETH Zurch, September 14-16, 2010 Conference on Internatonal Research on Food Securty, Natural Resource Management and Rural Development Economc Proftablty and Adopton of Bt Cotton and non-bt Cotton n North Inda Puran Mal a, Krshna Kakumanu Reddy b, Manjunatha A. V. a, Segfred Bauer c a Ph.D. student n Justus Lebg Unversty,Gessen, Germany, E-mal: puran78@gmal.com c Professor, Project and Regonal Plannng, Justus Lebg Unversty,Gessen, Germany b Specal Project Scentst, Internatonal Water Management Insttute, Hyderabad Background and Problem Statement Cotton s one of the major cash crops n Inda. Inda s second largest producer of cotton n the world after Chna. The cotton was growng near about 9.5 mllon hectares producng 31 mllon bales n It s planted by 4 mllon farmers and nvolves many more n processng, textle manufacture and trade wth 30% contrbuton n GDP of Indan agrculture. However, yeld of cotton n Inda s low, wth an average yeld of 553 kg/ha compared to the world average of 780 kg/ha n (Sen, 2008). Man losses n cotton producton are due to ts susceptblty to about 162 speces of nsect pests and a number of dseases (Manjunath, 2004). Among the nsects, cotton bollworm s the most serous pest of cotton n Inda causng annual losses of at least US$300 mllon per year. Ths nsect has also developed resstance aganst most of the recommended nsectcdes whch forcng the farmers to apply as much as doses of sprays n a sngle croppng season (Kranth et al., 2001; Ramasubramanyam, 2004). So mtgatng ths yeld loss, ncorporatng the nsect resstance gene n cotton has become the prme objectve of cotton mprovement efforts n Inda. But panfully no bollworm resstance s avalable n the germplasm. Thus, n 2002, the efforts got dverted to harness Bt (Bacllus Thurngenss) technology for bollworm resstance n Inda. Bt s an ubqutous sol bacterum whch provde the resstance power to cotton plant aganst bollworms.after that the atmosphere of debate on Bt technology s occurred.there are some studes whch favour the Bt cotton for example James (2000) observed that n Inda, 40% hgher yeld of Bt hybrds (14.64q/ha) over ther non-bt counterparts (10.45q/ha). Nak (2001) analysed that n Inda, there was 78.8% ncrease n the value due to yeld and 14.7% reducton n pestcdes cost wth the growng of Bt cotton as compared to non-bt cotton. The

2 Qam and Zlberman (2003), Barwale et al. (2004) reported that on an average, Bt hybrds receved three tmes less spray aganst boll warm than non-bt cotton. The general germplasm effect was neglgble and the yeld gan was largely due to Bt gene tself. In , there was more than 80 % area of cotton was under Bt cotton. On the other hand, even area under Bt cotton s ncreased, there are some studes whch are totally neglect the beneft of Bt technology. For examples, Saha and Rahman, Shva and Jafr (2003) found that n Inda, performance of Bt cotton was worse than non Bt cotton not only n yeld as well as n qualty also. ISIS, Qayum and Sakkhar (2005) reported that Bt cotton was totally faled n Inda whch was not favourable for small farmers and ran fed areas. It yelded nearly 30% less than non-bt cotton. The debate about Bt cotton proftablty and ts sutablty for regon s gong on and area under Bt cotton s ncreasng very rapdly. Ths study s man objectve to clarfy ths debate and fnd out the factors whch are responsble for adopton of Bt cotton. Materal and Methods Bt cotton was ntroduced n 2005 n Northern Inda therefore Northern Inda was selected for ths study. Ths study based on prmary data whch s collected from farmers through personal ntervews from Haryana and Punjab states of North Inda. For collecton of data, mult-stage samplng technque was used. From each state 100 farmers were ntervewed, thus total 200 farmers were selected for detaled data collecton n whch 160 Bt farmers and 40 non-bt cotton farmers for agrculture year For proftablty analyss, partal budgetng tool s used whch s a method of makng a comparatve study of costs and returns whch results from a change n a part of the farm busness. The logt model s used to dentfy the Bt C Bt C adopton factors. If U U, then he wll adopt the Bt cotton If U < U, then he wll contnue wth non-bt cotton. U Where, X s the varable whch determnes the choce of ndvdual. So P f, ) ( Where, X s explanatory varables related to adopton 1 Y( P 1/ X) 1 e = Adopton of Bt cotton (1, 0) ( )

3 = Coeffcent of explanatory varables = Explanatory varables Expenses on nsectcde, cotton revenue, Network dummy, educaton, experence n cotton, No of nformaton source, famly sze, annually off-farm ncome and state dummy. Result and Dscusson In survey, we found that Bt farmers are younger and have hgher ncome and expenses than non Bt farmers. The result from table 1 shows that Bt cotton seed s very costly than non-bt seed. But Bt farmers are spendng near about half money on sprayng. Thus, Bt farmers used less nsectcde than non-bt cotton. It also means that Bt cotton s less envronmental hazards on the bass of chemcal nsectcdes. They used more chemcal fertlzer whch s near about double than non-bt farmers. Bt cotton needs more water than non-bt cotton. Ths thng proved here n ths study also. Bt farmers spent more money on pckng because Bt cotton had hgher yeld than non-bt cotton. In developng countres, cotton pckng always have done manually. Thus, n developng countres wll be lke that more yelds more pckng cost. Table 1: Partal Budgetng form of Bt and Non-Bt cotton a) Increase n costs n Rs./acre b) Decrease n cost n Rs. I) Seed cost = = Insectcde cost= = II) Fertlzer cost= = Sub total = III) Irrgaton cost= = IV) Pckng cost = = Sub total = = c) Decrease n Returns n Rs.: nl d) Total Increase n Returns n Rs.: = Comparng Net return wth Bt cotton = (b+ d)-(a+c) = ( ) = Rs. Wth Bt cotton, cost manly ncreased n seed, fertlzer, rrgaton and pckng whch s Rs per acre. On the other hand, farmers reduced the nsectcde cost whch s near about 26 per cent cost of total ncreased cost wth Bt cotton. But Bt farmers had hgher yeld, thus they had near about 50 per cent more return than non-bt cotton whch compensate all ncreased cost. Thus wth Bt cotton farmers got hgher net return.e. Rs per acre. In Northern Inda, Bt cotton was approved for commercal cultvaton n Some of the farmers adopt Bt cotton frst year, many other farmers adopted after see the Bt cotton n the farm of ther neghbour farmer or vllage farmers. The followng fgure 1. shows ther adopton pathway. In adopter major group of early majorty and another major group s from early adopters. Mostly farmers want to watch the seed varety n ther neghbourhood then they wll adopt. In northern Inda, farmers adopted Bt cotton manly n thrd year of Bt cotton approval.

4 1,2 1 0,97 1 0,8 0,6 0,64 0,4 0,2 0,2 0,21 0 Laggards Late Majorty Early majorty Early Adopters Innovators Fgure1. Overtme adopton pathway Table 2 shows that factor whch affects the adopton of Bt cotton n Northern Inda. Thrtle et. al (2003) also used the logt model and found that economc factors lke farm sze, non-farm ncome and socal factors lke farmer experence, female labour n famly are the man factors for Bt cotton adopton. So we also assumed that farm sze s a man factor to adopt a new technology because farmers wth large farms are lkely to bear more rsk than farmers wth small farms. The man factors whch affects the adopton of Bt cotton are economc factors lke nsectcde expenses, revenue from cotton, non-farm ncome and socal factors are educaton level of farmer, farmer s network. If the farmers want to spend less money on nsectcde, these farmers would lke to adopt a technology whch reduces the nsectcde use. Farmers get hgher cotton revenue, these farmers would lke to adopt new technology, new seed etc to mprove ther return n agrculture. When farmers have good money then they can spend some more money to mprove ther producton. Table 2: Adopton factors of Bt cotton n Northern Inda. Y Coeff. S.E. P> z Insectcde expenses (Rs./acre) Total cotton revenue (n Rs.) Annually Non-Farm ncome (n Rs.) Educaton (n school years) Network dummy Famly sze Experence n cotton farmng (n yrs.) No. of nformaton source State dummy (f state Haryana=1) Constant Log lkelhood Pseudo R

5 Non farm ncome has the postve sgn and largest coeffcent whch tells ts mportance as a source of money whch farmers can use to buy the expensve Bt cotton seed. Non-farm ncome has a stronger effect because the farmers are lkely to be less rsk averse. Educated farmers and other farmers who are engaged wth some famers club or organsaton means havng network would lke to adopt Bt cotton because these farmers always get nformaton about new technology properly. Here, state dummy has negatve mpact on adopton of Bt cotton. It means Punjab state farmers are more advanced to adopt Bt cotton than Haryana farmers because they have lttle bt more resources than Haryana farmers. Here, farmng experenced does not have mpact on adopton of Bt cotton. If the negatve ndcaton on adopton s analysed, then t can be concluded that more experenced farmers would lke to stay wth ther tradtonal way or conventonal cotton. They would not lke to adopt new technology or new seed varety so quckly. Conclusons After dscusson of man results, t can be concluded that Bt cotton s economcally proftable than non-bt cotton. But t requres more rrgaton whch shows that t s not sutable for dry areas. Bt cotton farmers used more fertlzer than non-bt cotton farmers. It means that n future, sol fertlty of Bt cotton area can be reduced. But on the other hand, Bt reduces the use of nsectcde whch shows that t s benefcal for the envronment. The farmers used Bt cotton due to more yeld and reducton n nsectcde. Adopton factors wll be verfed from place to place. In Northern Inda, the man factor for adopton of Bt cotton are economc factors. Manly these are nsectcde expenses, cotton revenue and non-farm ncome and others are educaton and network of farmers. Punjab farmers are more lkely to adopt Bt cotton than other farmers n Northern Inda. Refrences A.Sen (2008) Cotton Scenaro n Inda Barwale R.B., Gadwal, V.R., Zehr, Usha, Zehr, Brent Prospects for Bt cotton technology n Inda. Ag Bo Form. 7: pp ISIS Inda s Bt Cotton Fraud, ISIS Press Release. James, C Global Status of commercalzed transgenc crops: 1999.ISAAA Bref No. 17 Internatonal Servce for Acquston of Agr-Botech Applcatons. Ithaca, NY.

6 Kranth, K.R., Jadhav, D.R., Wanjar, R.R., Shakr Al and Russell, D Carbonate and organophosphate resstance n cotton pests n Inda, 1995 to Bulletn of Entomologcal Research, 91: pp Manjunath, T.M Bt cotton n Inda: The technology wns the controversy wanes Nak, G An analyss of Soco-Economc mpact of Bt technology on Indan cotton farmers. Centre for Management n Agrculture, Indan Insttute of Management Ahmedabad, Inda. pp 19. Qam, M., Zlberman, D Yeld effects of genetcally modfed crops n developng countres. Scence, 299: pp Qayum A, Sakkhar, K Bt Cotton n Andra Pradesh A three year assessment Deccan Development Socety, A.P. pp 49. Ramasubramanyam, T Magntude, mechansm and management of pyrethrods resstance n Helcoverpa armgera n Inda. Jr of Entomology, 1: pp Saha,S., Rahman, S Study reveals that Bt cotton performng poorly n Inda. http// artcles.php?root =2003 leaf = 07& flename = 6073 & feldtyp= html% Shva, V., and A.H. Jafr. Falure of the GMOs n Inda. Avalable at Thrtle, C., Beyers, L., Ismaël, Y. and Pesse, J. (2003). Can GM-technologes help the poor? The mpact of Bt cotton n Makhathn Flats, KwaZulu-Natal. World Development, 31: pp