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Date:

August 3, 2000

Subject:

Biotechnology and Impact on the Structure of Agriculture (Small F

 

Below is a message from Dennis Keeney and a response by Rick Roush. I want
to add a few comments to this thread.

I think it is important to separate the technology ( agricultural
biotechnology) from structural changes occurring in agriculture. The
question to ask is as follows, "Does the technology (agricultural
biotechnology) have a bias towards larger farmers?"
I think the answer to that question is almost always "No." I give
this "No" answer because biotechnology is a technology that is in the seed.
Hence, every farmer regardless of size can easily calculate whether it will
be to the farmer's economic advantage (taking into account the environmental
benefits, the seed cost, the agronomic requirements) to use biotech seed or
non-biotech seed. Because the technology is contained in the seed, even the
smallest, poorest farmer quickly and easily can determine whether the
technology is worthwhile to the farmer. Moreover, the seed is identical for
the small farmer and the larger farmer and each receives the same benefit
from the seed -- although obviously a better farmer in terms of agronomic
practices will benefit more than a less-skilled farmer. Note this
agronomic-skills difference depends on the individual farmers, not the
technology, and the skilled individual farmer should be as likely to be the
small farmer as the large farmer.
Does my answer to the quesation change if one considers "gene
expression technology" (GET) [also called "gene use restriction technology"
(GURT)] in the seed? I would still generally answer "No" that biotechnolgy
is scale-neutral. I do so because the same basic calculation exists for GET
biotechnology seed as for biotechnology seed -- do the benefits of the GET
seed provide sufficient benefits to outweight the need to purchase seed each
year. I agree that large farmers (as a class) are more comfortable with
buying new seed each year than small farmers (as a class) but I believe that
the data shows that small farmers also often buy new seed each year.
Moreover, small farmers have been doing so for many year with regard to
hybrids. I do not believe that hybrid seed, as a technology, has a scale
bias towards large farmers. Hence, I do not think that GET biotechnolgy
seeds presents different scale-bias issues than hybrids.
To sum up, agricultural biotechnolgy (the technology in the seed)
seems to me to be scale-neutral.

But, someone might object, biotechnology, particularly GET-biotech
seeds forces small farmers,particularly in the developming world, to use
production inputs from off the farm and thus increases the power of the
off-farm companies (the seed companies). I agree but I argue that this
impact is not due to biotechnology as a technology but is simply a
reflection of broader trends which are occuring, and will occur, whether
agricultural biotechnology is adopted or not. In other words, farmer
dependence on off-farm companies is growing rapidly and tremendously with or
without biotechnology. Several examples in a non-biotechnology world:
Example One -- Farmers around the world are entering
production contracts with food companies. Farmers, by signing these
contracts, are forgoing independence in return for contractual ties to these
off-farm companies. These companies are insisting on production contracts
in order to create and to meet consumer demand for specific food products
and specific, assured quality. These structural trends are occurring and
will occur regardless of agricultural biotechnology.
Example Two -- One of the greatest source of off-farm
concentration of power is occurring -- not in the direct agricultural input
sector (i.e. seeds, chemicals, equipment) -- in the grocery companies.
Grocery companies in the United States, but particularly the EU, have
consolidated rapidly in recent years and will very likely continue to
consolidate in the years to come regardless of agricultural biotechnology.
These grocery companies are developing supply chains that tie farmers into
these supply chains thereby increasing the power of the grocery companies
and decreasing the independence of farmers. (As evidence, recall that the
Iceland Grocery chain in England says that it has locked up 40% of the
organic fruit and vegetable production by long-term contracts to assure
itself an adequate supply and to protect against price rises for organic
produce).
Indeed, I think that biotechnolgy actually may help farmers preserve
their own independent status and to resist the structural changes that point
toward increased off-farm control. I suggest two mechanisms for this to
occur:
** biotechnology offers the possibility of a greater number
of value-added products which increases the possibilty of profitable niche
markets for farmers;
** biotechnology can increase the profitability of farmers
-- or otherwise farmers would not adopt the technology -- and more
financially secure farmers have greater bargining power when the time comes
to sign the contracts that tie them to the off-farm seed, chemical, food
processing, or grocery companies.

One might still object that farmers should not be facing this
growing strength of off-farm companies period, in biotechnology or
non-biotechnology agriculture. I might agree but note that the argument is
now about the structure of agriculture irrespective of the technology. The
distinction that began this too long message still holds: it is important
to separate the technology from the structural changes. Too often, in my
opinion, these distinct questions are intertwined in ways that confuse and
muddle our thinking about biotechnology.

[As an aside: One of the consequences of the biotechnology ruckus
in Europe, particularly England, is how the grocery chains (Iceland,
Sailsbury, etc.) have used the ruckus (cynically, in my opinion) to increase
their oligopolistic power via market share and to extend that power directly
to the fields of farmers. But take away the biotechnology ruckus, these
grocery chains would continue to consolidate and to exert their influence
upon farmers anyway. While diverting attention to biotechnology fears, the
British grocery chains may be turning farmers into low-tech serfs for the
nouveau nobility of wealthy urban consumers, primarily to the benefit of the
grocery chains. Getting consumers to purchase premium price products (e.g.
fashionable brand-name denims or organics) rather than substantially
equivalent products (e.g. non-fashonable label denims or bulk
biotech-commodities) is a marketer's dream.]

Drew



============================================================================
=================
Subj: megafarm units
Date: Fri, 4 Aug 2000 12:22:46 AM Eastern Daylight Time
From: Rick Roush

Dennis:

Can you clarify for me just how GE crops are relevant to "megafarm units"
? Of course farmers have to decide if GE crops offer any economic
advantages (I hope they will also consider if they offer environmental
advantages), just as my grandfather in Lake Park Iowa had to decide if
(and which) corn hybrids were profitable, but how is GE contributing for
or against survival of the family farm?

Rick

>
>Subj: Re: UCS
>Date: Wed, 2 Aug 2000 5:05:23 PM Eastern Daylight Time
>From: Dennis R Keeney
>
>I agree that Margaret's views are socioeconomic in nature. But in her
>defense, that is what is on the minds of many farmers these days, do I
>stay in business or not? Do GE crops offer any economic advantages? And
>if I and my neighbor go and are replaced by megafarm units, what happens
>to my kids and my community? We have to go beyond science to find many
of
>the issues to GE crops.
>
>Dennis Keeney
===========


Drew L. Kershen
Earl Sneed Centennial Professor of Law
University of Oklahoma College of Law
300 Timberdell Rd.
Norman, OK 73019-5081 U.S.A.
Ph.: 01-405-325-4784
FAX: 01-405-325-0389
dkershen@ou.edu