4
Farm-System Dynamics and Social Impacts of Genetic Engineering

The dissemination of genetically-engineered (GE) crops, like the adoption process associated with other farm-level technologies, is a dynamic process that both affects and is affected by the social networks that farmers have with each other, with other actors in the commodity chain, and with the broader community in which farm households reside. As noted in Chapter 1, farmer decisions to adopt a technology are influenced not only by human-capital factors, such as the educational level of the adopter, but by social-capital factors, such as access to information provided by other farmers through social networks (Kaup, 2008). That necessarily implies that farmers receive information from others—for example, on the risks and benefits of a particular technology—and that they share their own knowledge and experience through the same networks. Such findings confirm the relevance of social factors in influencing how genetic-engineering technology is adopted, what the impacts of its adoption are, and the significance of farmers’ active participation in both formal and informal social networks with other actors in commodity chains and communities.

However, little research has been conducted on the social impacts of the adoption of genetic-engineering technology by farmers, even though there is substantial evidence that technological developments in agriculture affect social structures and relationships (Van Es et al., 1988; Buttel et al., 1990). Because further innovations through genetic engineering are anticipated, such research is needed to inform seed developers, policy makers, and farmers about potential favorable benefits for adopters



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4 Farm-System Dynamics and Social Impacts of Genetic Engineering T he dissemination of genetically-engineered (GE) crops, like the adoption process associated with other farm-level technologies, is a dynamic process that both affects and is affected by the social networks that farmers have with each other, with other actors in the com - modity chain, and with the broader community in which farm households reside. As noted in Chapter 1, farmer decisions to adopt a technology are influenced not only by human-capital factors, such as the educational level of the adopter, but by social-capital factors, such as access to infor- mation provided by other farmers through social networks (Kaup, 2008). That necessarily implies that farmers receive information from others— for example, on the risks and benefits of a particular technology—and that they share their own knowledge and experience through the same networks. Such findings confirm the relevance of social factors in influ - encing how genetic-engineering technology is adopted, what the impacts of its adoption are, and the significance of farmers’ active participation in both formal and informal social networks with other actors in commodity chains and communities. However, little research has been conducted on the social impacts of the adoption of genetic-engineering technology by farmers, even though there is substantial evidence that technological developments in agricul - ture affect social structures and relationships (Van Es et al., 1988; Buttel et al., 1990). Because further innovations through genetic engineering are anticipated, such research is needed to inform seed developers, pol - icy makers, and farmers about potential favorable benefits for adopters 

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 THE IMPACT OF GE CROPS ON FARM SUSTAINABILITY and nonadopters and unwanted or potentially unforeseen social effects (Guehlstorf, 2008). With such information, the likelihood of maximizing social benefits while minimizing socials costs is increased. To demonstrate the necessity for increasing commitments to the conducts of research on the social effects of GE-crop adoption, this chapter synthesizes what is known in the scientific literature about the social impacts of farm- technology adoption and the interactions between farmers’ social net - works. The chapter also identifies future research needs. SOCIAL IMPACTS OF ON-FARM TECHNOLOGY ADOPTION The earliest academic research in the United States on the social impacts of technology adoption at the farm and community levels was focused on mechanical technologies. More than a century ago, the use of machines in U.S. agriculture not only displaced labor but widened socioeconomic discrepancies between skilled and unskilled laborers (Quaintance, 1984). Academic interest in the socioeconomic consequences of agricultural mechanization was particularly strong in the 1930s and 1940s in the southern United States (Buttel et al., 1990) and again in the 1970s throughout the country. Berardi (1981) summarized the findings of the literature and found that mechanization was associated with decreases in the agricultural labor force, particularly those among the least educated and least skilled workers and in minority groups; with better working conditions and less “drudgery” for the remaining work force; with a decrease in farm numbers and an increase in farm size; with increased capital costs for agricultural producers; and with a decline in the socioeconomic viability of agriculture-dependent rural communi - ties. Data also suggested that the technological development of U.S. agriculture had contributed to declines in farm labor, in community dependence on agriculture, and in rural community viability although other on-farm and off-farm factors also contributed to these changes (Van Es et al., 1988). In the 1980s, social scientists broadened their research on the impacts of technology adoption on farms and farm communities to include studies of the potential and actual impacts of biological (pregenetic engineering) technologies in agriculture. Many observers assumed that, unlike the earlier wave of mechanical agricultural technologies, genetic-engineering technology would not be biased towards large-scale farming operations. Such an assumption was supported by analyses of the production capa - bilities of agricultural biotechnology. For example, it was noted that no interaction effect was observed between genetic predisposition to produce milk and the use of the growth hormone bovine somatotropin (BST) to increase milk production in dairy cows (Nytes et al., 1990). However,

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 FARM-SYSTEM DYNAMICS AND SOCIAL IMPACTS OF GENETIC ENGINEERING other studies that directly examined farm-level social change revealed that, despite the presumption of scale-neutrality, it was difficult to isolate the impacts of biological innovations from those of other technologi- cal innovations in agriculture because biological innovations were often developed and disseminated in conjunction with other technologies that may not have been scale-neutral (Kloppenburg, 1984). Additional research conducted on the social impacts of biotechnology in animal agriculture, specifically on the use of BST, noted that rates of adoption of BST were moderate and that, although adoption did not require large herds, scale effects were observed because BST use was more effective in high-producing cows, which were more likely to be found in large herds with complementary feeding technologies (Barham et al., 2004). Beck and Gong (1994) also observed the existence of a scale effect with adoption of BST, with adopters more likely to have larger herds, as well as being younger and having more formal education. Additionally, it was suggested that the quality of farm management had an impact on the benefits accruing to the adoption of BST (Bauman, 1992). The use of BST also was thought to lead to lower prices and thus to result in increased economic pressure on smaller producers (Marion and Wills, 1990). In other words, the body of research on the socioeconomic consequences of the use of biotechnologies, including Green Revolution technologies, indi- cated that “scale neutrality is not inevitable, but a possibility that depends on institutional context” (DuPuis and Geisler, 1988: 410). To put it another way, the social context of the adoption process and the impacts on that context are interconnected, from which it follows that the social impacts of genetic-engineering technology on farms and communities differ among cultures, commodities, and historical periods. Thus, though seed varieties are generally conceptualized as being scale-neutral, the adoption of any technology may be biased toward large firms that can spread the fixed costs of learning over greater quantities of production (Caswell et al., 1994). In developing countries, the economics of genetic-engineering technology do not appear to vary with farm size (Thirtle et al., 2003). However, scale may affect accessibility to technology. Small farmers have less influence in input supply and marketing chains with which to secure access to desired technologies. Thus, there can be a scale bias in the development and dissemination processes associated with herbicide-resistance technology that puts small farmers at a disadvantage. In contrast, as noted in Chapter 3, insect-resistance technology can replace insecticide applications that require fixed capital investments, such as for tractors and sprayers. In this regard genetic-engineering technology has the potential to favor small farmers, who would benefit more from a technology that required less fixed capital investment. The scale effects of transgenic varieties may also depend on the pricing (such as quantity

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0 THE IMPACT OF GE CROPS ON FARM SUSTAINABILITY discounts) set by seed companies, which typically assess a technology- user fee.1 An early empirical study was carried out by Fernandez-Cornejo et al. (2001) using 1998 U.S. farm data. They found that, as expected, the adoption of HR soybean was invariant to size, but adoption of HR corn was positively related to size. They explained this disparity as due to the different adoption rates: 34 percent of the farms had adopted HR soybean at the time, implying that adoption of HR soybean had progressed passed innovator and early-adopter stages into the realm where adopting farmers are much like the majority of farmers. On the other hand, adoption of HR corn was quite low at the time (5 percent of farms), implying that adop - tion was largely confined to innovators and other early adopters who in general tend to control substantial resources and who are willing to take the risks associated with trying new ideas. Thus, they claimed that the impact of farm size on adoption is highest at the very early stages of the diffusion of an innovation (HR corn), and becomes less important as diffusion increases. This result confirms Rogers’s (2003) observations that adoption is more responsive to farm size at the innovator stage, and the effect of farm size in adoption generally diminishes as diffusion progresses. Early adopters, by virtue of early adoption, also are able to capture a greater percentage of the economic benefits of the technology adoption process. Clearly, one cannot extrapolate the social impacts of the adoption of GE crops based solely on an assumption that the productive capa- bilities of genetic-engineering technology, when isolated from the interac- tion with other factors, should be scale-neutral. In other words, previous research on the social impacts of agricultural technologies suggests the possibility that the early dissemination of genetic-engineering technology would be associated with farm size, and that the use of GE crops could have differential impacts across farm types, farm size, and region, despite the fact that GE crops are presumed to be scale-neutral. In an article that attempted to predict some of the environmental, economic, and social effects of genetic engineering of crops, it was argued that the use of GE crops was “clearly capable of causing major ecologi- cal, economic, and social changes” (Pimentel et al., 1989: 611). Nonethe - less, over the last decade, there has been virtually no empirical research conducted on the social impacts of the use of GE crops on farms and rural communities. The lack of research may have to do in part with the scarcity of funds available for such research as well as a relative lack of interest in social issues on the part of environmental groups (Chen and 1 Examples of empirical studies on the effect of farm size on GE-crop adoption are given in “An Early Portrait of Farmers Who Adopt Genetically Engineered Crops” in Chapter 1.

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 FARM-SYSTEM DYNAMICS AND SOCIAL IMPACTS OF GENETIC ENGINEERING Buttel, 2000), and other groups and organizations that might be expected to support such research. Nonetheless, the results of research referred to above on the social repercussions of agricultural technologies, includ - ing non–genetic-engineering biotechnology in crops and biotechnology in animal agriculture, would suggest that there are impacts, that these impacts could be favorable or adverse, and that adverse impacts could be alleviated through the adoption of appropriate policies. For example, based on earlier research on the introduction of new technologies in agriculture, it might be hypothesized that certain categories of farmers (those with less access to credit, those with fewer social connections to university and private sector researchers, etc.) might be less able to access or benefit from existing GE crops. There is also the possibility that the types of genetic advances being marketed do not meet the needs of certain classes of farmers, and that the full spectrum of the potential of genetic-engineering technology is not being achieved. Furthermore, the possibility exists that communities where farmers play an important social, political, and economic role could be impacted as well. However, for the purpose of this report, no conclusion on the social impacts of the adoption of GE crops can be drawn on the basis of empirical evidence. Research on such impacts clearly should be accorded a high priority as genetic-engineering technology evolves. Without such research, the potential for genetic-engineering technology to contribute to the sustain- able development of U.S. agriculture and rural communities cannot be adequately assessed. Thus, we recommend that such research be spon- sored and pursued actively and immediately. SOCIAL NETWORKS AND ADOPTION DECISIONS The adoption of genetic-engineering technology and its perfor- mance on the farm are functions of the knowledge of agricultural deci - sion makers, who include farmers, input suppliers, commodity traders, farm-management consultants, and extension agents. In making technol - ogy-adoption decisions, farmers rely principally on information about the relative performance of competing technologies and on information about best practices for optimizing yields and controlling costs, given the technologies that they use. The performances of firms and technology, therefore, depend upon the information used by various commodity- system actors. Just et al. (2002) have shown that the internal competences of decision makers affect the degree to which they rely on different types and sources of information. Farmers rely on a variety of intermediaries—such as extension agents, commodity groups, commercial vendors, agricultural media, and other farmers—for information. For example, farmers often turn to commodity

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 THE IMPACT OF GE CROPS ON FARM SUSTAINABILITY associations for information about regulations and regulatory changes. Many of the intermediaries that farmers communicate with use public information, especially data and research results provided by the U.S. Department of Agriculture (USDA) Economic Research Service and the National Agricultural Statistics Service and by state extension services, particularly for information about the economic outlook of agriculture and specific industries. Intermediaries use formal channels of informa - tion more than farmers (Just et al., 2002) and then make that information available to farmers. Farmers obtain about half their information from informal sources (i.e., sources whose professional duties do not include provision of information) (Just et al., 2002), including people in the end-users’ civic, community, professional, and commercial networks, like neighbors, col - leagues, customers, and suppliers. Farmers’ reliance on informal sources may reflect low availability of or access to information from formal chan- nels, issues of affordability of private information, and credibility (Just et al., 2002). Those findings suggest that farmers’ attitudes toward GE crops are likely to be affected by a number of information providers. USDA’s Coop- erative Extension Service, commodity groups, and agricultural media are particularly influential in informing farmers’ views on the technical aspects of genetic-engineering technology, its economic implications, and its prospects. Although the influence of those sources has not been widely appreciated, they have played a key role in the adoption of the technology. As Wolf et al. (2001) and Just et al. (2002) demonstrated, informal sources of information are just as likely as formal sources to accelerate or to slow the rate of GE-crop adoption. It would also be reasonable to hypothesize that patterns of information use would be linked to the ability of farmers to use the technology effectively and maximize its potential. INTERACTION OF THE STRUCTURE OF THE SEED INDUSTRY AND FARMER DECISIONS The U.S. seed industry has experienced extensive structural change in the last few decades. The changes have affected decisions at the farm level by shaping the choices available to corn, soybean, and cotton farmers. As Fernandez-Cornejo and Just (2007) have summarized, plant- breeding research until the 1930s was conducted primarily by the public sector (for example, USDA and state agricultural experiment stations), and most commercial seed suppliers were small, family-owned busi- nesses that multiplied seed varieties that had been developed in the public domain. Seeds embody the scientific knowledge needed to produce a new plant variety with desirable attributes—such as higher yield, disease or

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 FARM-SYSTEM DYNAMICS AND SOCIAL IMPACTS OF GENETIC ENGINEERING pesticide resistance, or improved quality—so seed innovators face both the risk of imitation by competing seed firms and the risk of seed repro - duction by farmers themselves (Fernandez-Cornejo, 2004). The develop - ment of hybrid corn in the first half of the 20th century provided breeders with greater protection of intellectual-property rights (IPR) because seeds saved postharvest produced substantially smaller yields than the hybrid plants from which they were gathered. With that incentive, the number of private firms engaged in corn breeding grew rapidly. The proliferation of firms was followed by consolidation in part because U.S. law evolved to provide incentives to innovators for research and development by giving them exclusive control of their innovations through patent laws and other forms of enforceable legal protection (Fernandez-Cornejo, 2004). Two principal forms of legal protection for seed innovators are plant variety protection (PVP) certificates issued by the Plant Variety Protection Office of USDA and patents issued by the Patent and Trademark Office (PTO) of the U.S. Department of Com- merce. Both grant private crop breeders exclusive rights to multiply and market their newly developed varieties. Patents provide more control because PVP certificates have a research exemption that allows others to borrow a new variety for research purposes (Fernandez-Cornejo and Schimmelpfennig, 2004). IPRs for seed innovators were strengthened by the U.S. Supreme Court’s 1980 Diamond v Chakrabarty decision, which extended patent rights to GE microorganisms, important tools and prod - ucts of biotechnology. A series of rulings by PTO’s Board of Appeals and Interferences widened the scope of patent protection for GE organisms by including plants and nonhuman animals. Those rulings extended IPRs to a wide array of new biotechnology products in the form of utility patents (also referred to as patents for invention). Products protected under the rulings include seeds, plants, plant parts, genes, traits, and biotechnology processes (Fuglie et al., 1996; Fernandez-Cornejo, 2004). Enhanced IPR protection has brought rapid increases in private research and development (R&D), and indirectly assisted technology developers in setting prices above marginal costs (Goldsmith, 2001). Pri- vate spending on R&D in crop varieties increased by a factor of 14 in real terms from 1960 to 1996 (Fernandez-Cornejo, 2004), whereas public (federal and state) spending changed little (Figure 4-1; Fernandez-Cornejo and Schimmelpfennig, 2004). At the same time, IPR protection may have spurred market concentration in the seed industry. The potential profits of seed firms made possible through IPR protection may strengthen the incentive to invest and thus provide greater opportunities to large firms (Lesser, 1998). Many seed firms have been acquired by corporations that have the resources needed to achieve large economies of scale in R&D (Fernandez-Cornejo, 2004). For example, Lesser (1998) stated that more

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 THE IMPACT OF GE CROPS ON FARM SUSTAINABILITY 600 500 Million $ (1996 dollars) 400 Public research on biological efficiency 300 200 Private research on plant breeding 100 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 Year FIGURE 4-1 Public and private research expenditures on plant breeding. Biologi- cal efficiency includes breeding and selection of improved plant varieties. SOURCE: Fernandez-Cornejo, 2004. than 50 seed firms were acquired by pharmaceutical, petrochemical, and food firms after the passage of the Plant Variety Protection Act.2 In con- trast, Lesser (1998) also noted that weakness of IPR protection may lead to mergers and acquisitions. In any case, by 1997, the share of U.S. seed sales controlled by the four largest firms reached 69 percent for corn (up from 60 percent 1973), 47 percent for soybean (up from 7 percent in 1980), and 92 percent for cotton (up from 74 percent in 1970) (Table 4-1; Fernandez-Cornejo, 2004). Though it is difficult to obtain recent detailed published market share information, it appears from company reports and other sources that the trend of increased concentration in the struc - ture of the seed industry continued in recent years.3 Farm survey data for corn and soybean indicated that by 2007 the share of the four largest firms reached 72 percent for corn and 55 percent for soybean (Figure 4-2; Shi and Chavas, 2009). Concentration of R&D output can also be used to measure the concen- tration in innovation activity in the seed industry (Fulton and Giannakas, 2001). In genetic-engineering technology, a measure of R&D output is the 2 The Plant Variety Protection Act (PVPA) of 1970 granted plant breeders a certificate of protection that gave them exclusive rights to market a new plant variety for 18 years from the date of issuance. Amendment of the PVPA in 1994 brought it into conformity with inter- national standards. Protection provided by certificates of protection was extended from 18 to 20 years for most crops (Fernandez-Cornejo, 2004). 3 In the case of corn, Pioneer has lost its dominant position in the corn seed market from about 40 percent to 30 percent while Monsanto’s share of the corn seed market increased to about 30 percent as a result of the Landec acquisition (Leonard, 2006).

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 FARM-SYSTEM DYNAMICS AND SOCIAL IMPACTS OF GENETIC ENGINEERING TABLE 4-1 Estimated Seed Sales and Shares of Major Field Crops, United States, 1997 Corn Soybean Cotton Market Market Market Total Share Share Share ($ billions, current) Percentage of Acres Company 1.18 igure 4-2 F Pioneer Hi-Bred International 42.0 19.0 — Monsanto/Stoneville 0.54 14.0 19.0 11.0 Novartis/Syngenta 0.26 9.0 5.0 — Delta & Pine Land 0.08 — — 73.0 Dow Agrosciences/Mycogen 0.14 4.0 4.0 — Golden Harvest 0.09 4.0 — — AgrEvo/Cargill 0.09 4.0 — — Others 1.12 23.0 53.0 16.0 Total 3.50 100.0 100.0 100.0 SOURCES: Hayenga, 1998; Fernandez-Cornejo, 2004. 75 70 65 CR4 (perc ent) 60 55 50 Corn 45 Soybean 40 2000 2001 2002 2003 2004 2005 2006 2007 Year FIGURE 4-2 Share of planted acres of corn and soybean seeds by largest four firms (CR4). SOURCE: Stiegert et al., 2009. number of GE cultivars approved by USDA for release into the environ- ment for field testing. In particular, Fernandez-Cornejo (2004) adapted the four-firm concentration-ratio measure, commonly used to quantify industry concentration in terms of sales, to examine R&D concentra- tion on the basis of regulatory approvals of GE crop varieties. Table 4-2 shows the percentage of field releases obtained by the leading four firms

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 THE IMPACT OF GE CROPS ON FARM SUSTAINABILITY TABLE 4-2 Four-Firm Concentration Ratio in Field-Release Approvals from USDA Animal and Plant Health Inspection Service, by Crop, 1990–2000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Corn 67 67 65 82 82 67 60 73 73 80 79 Soybeans 100 100 94 68 72 94 82 82 71 87 85 Cotton 100 100 100 89 79 85 91 64 98 98 96 SOURCE: Fernandez-Cornejo, 2004. . in 1990–2000. The top four firms controlled well over 50 percent of the approvals; this suggests consolidation in R&D and potential barriers to entry for competitors. As Fulton and Giannakas (2001) noted, expendi- tures on R&D and expenditures made to obtain regulatory approvals are sunk costs—costs that cannot be recouped. If such sunk costs are present, markets are not contestable, so there are potential barriers to entry. 4 As Fernandez-Cornejo (2004) observed, on the basis of the four-firm concentration ratio of approvals, the extent of corn-seed R&D concentra - tion has been relatively constant at around 72 percent, which is fairly consistent with the four-firm concentration ratio in corn in terms of sales. Cotton-seed R&D is the most centralized, and this is also consistent with market-concentration measures. Patent ownership shows a pattern of concentration similar to that evi- dent in other R&D measures (Fernandez-Cornejo, 2004). Most of the bio - technology patents awarded to private firms are held by a small number of large companies. As of 1996–1997, Pioneer (soon after DuPont/Pioneer) held the largest number of patents for corn and soybean, followed by Monsanto (Brennan et al., 1999). The leading firms in the sector have received IPR protection not only by virtue of their respective R&D invest- ments but through mergers and acquisitions. For example, Pioneer was one of the first four companies active in the emerging corn-seed market in the early 1930s. As shown in Figure 4-3, Pioneer (Pioneer Hi-Bred Interna- tional, Inc.) made a series of acquisitions in 1973–1980 that strengthened its overall position in the seed market. The chemical firm DuPont bought 20 percent of Pioneer in August 1997 and bought the remaining 80 per- cent in 1999 for $7.7 billion. As a DuPont company, Pioneer continues to operate under the Pioneer name and remains headquartered in Iowa (Fernandez-Cornejo, 2004). Although the increase in seed-industry concentration has raised con- cerns about its potential impact on market power, and ultimately on 4A contestable market behaves in a competitive manner despite having few companies because of the threat of new entrants.

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 FARM-SYSTEM DYNAMICS AND SOCIAL IMPACTS OF GENETIC ENGINEERING Agri-Con of Idaho 1975 Green Meadows Ltd. Lankhart 1975 Pioneer Hi-Bred Lockett DuPont International, Inc. 1975 1999 Peterson 1973 Arnold Thomas Seed Co. 1975 Garst & Thomas Hybrid 1980 FIGURE 4-3 Evolution of Pioneer Hi-Bred International, Inc. / E.I. du Pont de Nemours and Company. SOURCE: Fernandez-Cornejo, 2004. the sustainability of farms, empirical results for U.S. cotton and corn seed industries over the period covering 1970–1998 (which includes only 2 years of GE-crop adoption) suggest that increased concentration during that time period resulted in a cost-reducing effect that prevailed over the effect of enhanced market power (Fernandez-Cornejo, 2004). Goldsmith (2001) argued that even though GE-seed prices were above the competi - tive price, the actions of biotechnology supply firms apparently were not adversely affecting the welfare of U.S. farmers. However, concerns have been raised that, in time, such market power could lead to decreased variability in the types of seeds being produced for the market, as well as increased prices, which could limit the ability of farmers to purchase those seeds most suited for local environmental conditions. In addition, it is conceivable that the continued market power of biotechnology supply firms could lead to increased input costs for farmers, which in turn could have an unfavorable effect on the socio- economic sustainability of farms. A recent study by Shi and Chavas (2009) has found that vertical integration (ownership of control of different

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0 THE IMPACT OF GE CROPS ON FARM SUSTAINABILITY cotton farmers had traditionally purchased their seed from ginners and seed distributors. Consequently, the introduction of GE seeds by the pri - vate sector and the patented nature of the technology in the case of com - mercially available corn, soybean, and cotton may not have appeared to be strikingly different from the established relationship between seed companies and farmers of those commodities. However, the developmental trajectory of GE-seed technology is lead- ing to concern that access to seeds without GE traits or to seeds that have only the specific GE traits of particular interest to farmers may become increasingly limited. Additional concerns are being raised about the lack of farmer input and knowledge regarding which seed traits might be developed. The push to develop seed varieties with a series of stacked traits, some of which may not be of use to some farmers with respect to short-term productivity (leaving aside the issue of improved resistance management discussed in Chapter 2), raises the issue of access to seeds that have equivalent yield potential but only the desired GE traits or no GE traits at all. Although the committee was not able to find published research that documents the degree of U.S. farmers’ access to and the quality of non-GE seed, testimony provided to the committee suggested that access to non-GE or nonstacked seed could become limited for some farmers and that available non-GE or nonstacked seed may not have the same yield characteristics as GE cultivars (Hill, personal communication). Research is needed to investigate the extent to which U.S. farmers are having difficulty purchasing high-yielding, non-GE seed. Public-sector institutions could address this concern by improving the design of licens - ing contracts with seed companies so that property rights of privately developed traits or cultivars will revert to university research programs if private companies do not use the technologies. Boehlje (1999) has suggested that U.S. agriculture is going through a structural change in which activities that will enhance product dif- ferentiation and added value to farming are being emphasized. As part of that evolution, many agricultural sectors (poultry, swine, and some fruits and vegetables) have come to be dominated by contracting arrange- ments between major agribusiness companies and farmers or by large vertically integrated agribusiness firms. Those large companies have the resources and scale to finance research in the development of GE traits. The emergence of alliances between biotechnology companies and large agribusiness firms, and even large farmers’ cooperatives to produce pro- prietary GE varieties, appears possible, but future research is needed to determine whether such relationships can lead to the development of differentiated products (Boehlje, 1999)—including those with traits that enhance direct value to consumers, such as improving health or conve- nience, or that respond to the environmental and management needs of

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0 FARM-SYSTEM DYNAMICS AND SOCIAL IMPACTS OF GENETIC ENGINEERING specific groups of farmers—and whether such relationships will limit farmers’ access to the types of GE traits they value. INTERACTIONS OF LEGAL AND SOCIAL ISSUES SURROUNDING GENETIC ENGINEERING Legal issues constitute an important sociopolitical dimension that influences the adoption of genetic-engineering technology and its impacts on farmers and communities. The legal issues are complex, and a com- plete treatment of them is beyond the expertise of any of the authors of this report. We briefly touch here on the issues of seed saving, gene flow, and organic standards. Seed Biotechnology Courts in the United States and Canada have consistently upheld the rights of companies that sell patented seeds and genes through technology- use agreements to prohibit seed-saving practices that involve seed sold through those contracts (Kershen, 2004; Anonymous, 2008). Although that property right has been established, some continue to express con - cern about the ethical issues surrounding the patenting of life forms and over the effects of technology-use agreements on seed-saving practices. Research on whether those concerns are warranted and what the impacts are on farm sustainability are needed. Concerns are also being raised about the lack of farmer involvement in GE-trait development for traits that could address production problems identified by farmers and over the implications of current patenting procedures on power relationships between biotechnology firms and farmers (Phillipson, 2001). However, the social and economic effects of the exercise of such property rights, espe - cially actual or potential litigation on both adopters and nonadopters of GE crops, have not been thoroughly investigated by social scientists. The lack of academic analyses of those issues may be due in part to the fact that companies, in any sector, that use the courts to enforce their property rights view legal actions and any out-of-court settlements as proprietary information. One interesting response by those who are concerned about the possible effects of the private control of genetic resources has been the open-source breeding movement.5 5 This movement, which has been inspired in part by open-source project movements in computer software and elsewhere, is in essence an attempt to develop publicly available genetic resources. As in the case of “shareware,” researchers working on open-source bio- technology can access and improve on publicly available genetic resources and technologies but must agree to make the improved materials available for others to use (Delmer, 2005; Lerner and Tirole, 2005).

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0 THE IMPACT OF GE CROPS ON FARM SUSTAINABILITY Gene Flow A second set of legal issues related to genetic-engineering technology has to do with gene flow, particularly from fields of GE crops to those managed by people not using GE crops (for more on the potential for gene flow between GE and non-GE crops and on the challenges of coexistence of GE and non-GE crops, see Chapter 2). As in cases that involve restrictions on farmers against seed saving, these issues can be viewed as property- rights issues. Does gene flow impinge on the rights of producers and con - sumers who wish to grow and eat foods that do not include GE material (Conner, 2003)? That is of particular concern to some farmers who wish to produce organic or non-GE crops. Even though organic certification by the U.S. government is determined by the process used to grow the crop, some farmers are concerned that their products may not be accepted by markets in other countries or by food distributors and consumers who establish their own standards, irrespective of process. Several lawsuits have been filed by farmers against agricultural- biotechnology companies in part because of damage alleged to have occurred as a result of drift of genetic material to the fields of farmers who do not wish to grow crops with GE traits (Kershen, 2004). Consumer groups have also brought legal action against the federal government for approving the commercialization of GE crops that have the potential to cross with non-GE crops in the same vicinity. As was discussed in previ - ous chapters, GE alfalfa was pulled from the market after a U.S. federal judge sided with arguments brought forward by numerous plaintiffs and found that USDA should have prepared an environmental impact state- ment before it deregulated the crop, which facilitates commercialization (Geertson Farms . Johanns, 2009). In another case filed by the Center for Food Safety and other plaintiffs, a federal judge decided in September 2009 that similar steps should have been taken before GE sugar beet was commercialized (Pollack, 2009). Issues raised by the possibility of gene flow are not only legal in nature. As noted in Chapters 2 and 3, the adventitious presence of GE material in non-GE crops raises complex environmental and economic challenges. Similarly, social problems could arise as a consequence of gene flow, particularly if GE and non-GE producers of the same commod- ity live in the same community. Gene-flow disputes could move beyond the merely legal and affect the overall functioning of communities where such disputes exist. This might include conflicts between farmers as well as stress related to the economic and social costs associated with lawsuits and the potential threat of lawsuits. Studies of the social effects of such disputes are needed to gauge the full impact on community well-being. The ability of GE production and non-GE production to coexist in society may depend on the health of communities. Proposals for establishing

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0 FARM-SYSTEM DYNAMICS AND SOCIAL IMPACTS OF GENETIC ENGINEERING “landscape clubs” (Furtan et al., 2007) and voluntary “GMO-free zones” 6 (Jank et al., 2006) clearly depend on the existence of high levels of com - munity cooperation, which could be undermined by disputes related to gene flow. Organic Laws and Resistance to Genetic Engineering One of the intriguing public debates that has emerged around genetic engineering in agriculture has been that regarding whether GE crops should be allowable in legal standards for organic agriculture. As dis - cussed in Chapter 1, many organic growers have vehemently resisted the notion that GE crops should be allowable in organic agricultural produc - tion systems. However, scientific arguments can be made for the use of genetic-engineering technology for making organic agricultural produc- tion more sustainable. Ronald and Adamchak (2008) note that what is or is not an appropriate use of genetic-engineering technology for “organic” producers is problematic given that genetic-engineering techniques can be used to transfer genes within plant species as easily as between them. Genetic-engineering techniques also include the use of marker-assisted breeding wherein the genetic “fingerprint” of plants can be used to aid conventional plant breeding. These authors also note the potential for genetic-engineering technology to develop new varieties of crops that could be grown under conditions that reduce some of the adverse envi- ronmental impacts of growing food and that contribute to local food production. The rationale parallels the arguments used in discussing the potential of genetic-engineering technology for improving the productive capability of orphan crops in developing countries (Naylor et al., 2004). The ideological divisions between those who favor and those who oppose the use of GE plants in organic production systems are complex, and in many cases concerns about safety and naturalness are connected to and mask socioeconomic concerns. An example of the complexity was the successful vote in Mendocino County, California, in 2004 to ban the local use of GE organisms in agriculture. The legal focus of the vote was on GE organisms, but it was clear, because of how genetic-engineering technology was linked to issues related to corporate versus local control of agriculture, that the technology was viewed by many of those sup - porting the measure as a social problem (Walsh-Dilley, 2009). Similarly, 6A group of growers concerned about the organic purity of an open-pollinated field crop may come together to form a “landscape club,” a fee-based organization designed to increase their economic welfare by providing protection against contamination through gene flow from related GE crops. A zone free from genetically modified organisms (GMO-free) would provide similar protection (Jank et al., 2006).

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0 THE IMPACT OF GE CROPS ON FARM SUSTAINABILITY some genetic-engineering proponents argue for including GE products in organic standards and labels at the same time that they argue against the labeling of foods with GE content because they consider GE and non- GE foods to be substantially equivalent products (Klintman, 2002). That position can be understood, in part, as a desire to obtain the economic benefit of some labels while avoiding the cost of being associated with other labels. Those examples underscore the important socioeconomic and sociopolitical dimensions in public debates about genetic-engineering technology. To reconcile those debates over the potential use of genetic engineering in sustainable and developing-country agriculture, it may be wise to heed the suggestion of Ronald and Adamchak (2008) and use various social, environmental, and economic criteria in making deci- sions on when to use and not to use genetic-engineering technology in agriculture. CONCLUSIONS Social dynamics and networks between farmers and within local com- munities play a substantial role in the decisions that farmers make with respect to the use of GE crops and likely are impacted by the use of and conflicts over those crops. Research on the adoption of other agricultural technologies has demonstrated substantial social impacts on a farm level and a community level. Those impacts include but are not limited to: decreases to and change of composition in the agricultural labor force; better on-farm working conditions; changes in farm and agricultural- industry structure; increases in capital requirements for farmers; and a decline in the socioeconomic viability of some rural communities. Compa- rable research on the effects of GE crops is lacking, and although it is rea - sonable to hypothesize that the social impacts of the spread of GE crops have been low due to the assumed scale neutrality of this technology, it is equally reasonable to assume that the social impacts have been numerous and profound. Those questions cannot be answered without short- and long-term empirical research on the social processes surrounding, and the social impacts associated with, the adoption of genetic-engineering tech - nologies at the farm level. Such research must take into account the vari - ous contextual factors that are influencing social changes on U.S. farms and rural communities. Research has demonstrated that farmers’ interest in genetic-engineering technology and patterns of adoption are influenced by farmers’ social networks and by farmers’ associations, private firms, and public actors, including universities. Research also has identified the continuing con- solidation of the seed industry and its integration with the chemical industry. The market power of firms that supply seed has not adversely

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0 FARM-SYSTEM DYNAMICS AND SOCIAL IMPACTS OF GENETIC ENGINEERING affected farmers’ economic welfare so far, but research is needed on how market structure may affect ongoing access to non-GE or single-trait seeds and future seed prices. Furthermore, there has been comparatively little research on how changes in farmer social networks and seed-industry concentration might be affecting farmers’ planting decisions and options, overall yield benefits, crop genetic diversity, and economic returns. A final set of social issues has to do with complex legal issues, includ- ing the adoption of and the use of genetic-engineering technology. U.S. and Canadian courts have upheld the legal rights of seed companies to prohibit seed-saving practices through the use of contracts. The issue of gene flow is complicated. One important question being raised is whether adventitious presence of genetic material from GE crops into non-GE crops impinges on the rights of producers, including organic producers, who do not wish to use specific GE traits. The legal debates may mask deeper social and ideological divisions over the use of GE plants and how to define and implement sustainable agricultural practices. REFERENCES Anonymous. 2001. Group spells out concerns over genetically modified wheat. CBC- News.ca, August 1. Health section. Available online at http://www.cbc.ca/health/ story/2001/07/31/gm_wheat010731.html. Accessed April 1, 2009. Anonymous. 2008. CAFC again agrees you can’t save seed; judge blocks sale of Roche Epo. Patent litigation. Biotechnology Law Report 27(3):221–222. Barham, B.L., J.D. Foltz, D. Jackson-Smith, and S. Moon. 2004. The dynamics of agricul - tural biotechnology adoption: Lessons from series rBST use in Wisconsin, 1994-2001. American Journal of Agricultural Economics 86(1):61–72. Bauman, D.E. 1992. Bovine somatotropin: Review of an emerging animal technology. Journal of Dairy Science 75(12):3432–3451. Beck, R.L., and H. Gong. 1994. Effect of socioeconomic factors on bovine somatotropin adop- tion choices. Journal of Dairy Science 77(1):333–337. Berardi, G.M. 1981. Socio-economic consequences of agricultural mechanization in the United States: Needed redirections for mechanization research. Rural Sociology 46(3):483–504. Boehlje, M. 1999. Structural changes in the agricultural industries: How do we measure, ana - lyze and understand them? American Journal of Agricultural Economics 81(5):1028–1041. Bradford, K., J. Alston, and N. Kalaitzandonakes. 2006. Regulation of biotechnology for specialty crops. In Regulating agricultural biotechnology: Economics and policy. eds. R.E. Just, J.M. Alston, and D. Zilberman, pp. 683–697. New York: Springer. Brennan, M.F., C.E. Pray, and A. Courtmanche. 1999. Impact of industry concentration on innovation in the U.S. plant biotech industry. Paper presented at the Transitions in agbiotech: Economics of strategy and policy NE-165 conference (Washington, DC, June 24–25, 1999). Buttel, F.H., O.F. Larson, and G.W. Gillespie Jr. 1990. The sociology of agriculture. New York: Greenwood Press. Caswell, M.F., K.O. Fuglie, and C.A. Klotz. 1994. Agricultural biotechnology: An eco- nomic perspective. Agricultural Economic Report No. 687. U.S. Department of Agriculture–Economic Research Service. Washington, DC.

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