Global Welfare Effects of GM Sugar Beet under Changing EU Sugar Policies

Abstract

Ex-post impact studies of genetically modified crops indicate that society is capturing sizeable gains in agricultural biotechnology. In Europe, in contrast, due to limited adoption, research has been largely restricted to ex-ante technology and policy impact assessment of GM crop cultivation. In this study we assess the impact of a hypothetical introduction of herbicide tolerant sugar beet in the global sugar sector under both the former and the actual European Common Market Organization for sugar. The model starts from a farm- level analysis, introducing a perfect corporate pricing strategy under restricted monopoly power, which is expanded to a partial equilibrium model of the world sugar trade. We show that even under the given condition of private market power, significant gains accrue to farmers and consumers, while a smaller part goes to the seed sector (gene developers and seed suppliers). The global value of HT sugar beet for society in the period 1996-2014 is estimated at €15.4 billion, of which 29% is captured by EU farmers, 31% by farmers and consumers in the rest of the world, and 39% by the seed sector. However, the global sugar sector is foregoing most of this value, as the technology is currently only accepted by the US sugar industry.