Study shows no economic advantage for Iowa farmers to plant GMO crops

By Michael Duffy
Associate Director

Two years ago, I reported the results of a study that showed crops in Iowa planted with genetically modified seeds provided no significant difference in economic returns to farmers based on the 1998 crop year (see Fall 1999 Leopold Letter). I repeated the study this year using information from 2000, and found the same results: use of genetically modified seed did not appear to impact a farmer's bottom line for either corn or soybean production.

The information that I analyzed was collected by the USDA's National Agricultural Statistics Service as part of its annual Cost and Return survey. It was gathered in the late fall and early winter during personal interviews with approximately 350 Iowa farmers. They were asked what crops they grew, and whether the seed they planted contained a genetically modified organism (GMO). The survey covered all aspects of crop production including yields, pesticide and fertilizer use, seeding rates and the type and nature of machinery operations performed.

My analysis used information from a random selection of 172 soybean fields and 174 corn fields from the USDA survey. These numbers and the selection methods employed provide statistically reliable estimates at the state level. Although this analysis is only a cross-sectional survey and not a side-by-side comparison of GMO and non-GMO crops, it represents a picture of what Iowa farmers experienced, under varying conditions and situations, during the 2000 crop year.

Following is a summary of my analysis. I recently presented more details at the American Seed Trade Association meeting in Chicago. My speech, and accompanying charts, are posted on the Leopold Center web site. Copies also are available by contacting the Leopold Center.

Herbicide tolerant soybeans
Approximately 63 percent of the Iowa acres planted to soybeans in 2000 were varieties that had been genetically modified to tolerate herbicides used in weed control. In 1998, just over 40 percent was grown from GMO seed. Use of herbicide-tolerant varieties resulted in lower herbicide and weed management costs. However, they also had higher seed costs and slightly lower yields.

Yield. The herbicide-tolerant soybeans averaged 43.4 bushels per acre while the non-tolerant soybeans averaged 45.0 bushels per acre. The percentage difference in yields is identical to the difference found in the 1998 crop year. In 1998, the yields were 49.2 and 51.2 bushels per acre for herbicide-tolerant and non-tolerant soybeans, respectively.

Seed costs. The seed cost for herbicide-tolerant soybeans averaged $5.69 per acre more than the non-tolerant fields. In 1998, the difference was $7.53 per acre. The expense for non-tolerant soybeans was lower in 1998 while the expense for the tolerant varieties was slightly higher.

Herbicide costs. The non-tolerant soybeans averaged $26.15 per acre for herbicides, which was $6.17 higher than the herbicide costs for the tolerant fields. This cost difference is similar to what was found in 1998 even though the herbicide costs, in general, are higher in 2000 when compared to 1998.

Bt corn
A genetic modification used in corn production is the addition of bacillus thuringiensis (Bt) to fight a major pest, the European corn borer. The study included 128 non-Bt cornfields and 46 Bt fields. Similar to herbicide-tolerant soybeans, Bt corn produced a return essentially equal to the non-Bt corn.

Yield. The average yield for Bt corn was 152 bushels per acre. The average yield for the non-BT corn was 149 bushels per acre. This yield difference is less than the difference found in the 1998 study—160.4 bushels per acre for Bt corn and 147.7 bushels per acre for non-Bt corn

Fertilizer costs. The Bt cornfields had slightly higher total fertilizer costs per acre. The Bt fertilizer cost was $53.30 versus $48.67 for the non-Bt fields, much similar to the results found in 1998. Although no production reason exists for the higher fertilizer costs, it is hypothesized that the Bt fields are managed more intensively which leads to the increased fertilizer costs.

Seed costs. The costs for seeds vary depending on number chosen. Seed costs for the Bt corn averaged $4.31 per acre higher using the conservative assumptions employed in this study.

Other considerations. If returns are not significantly different, why have we seen such an increase in the use of GMO technology? For herbicide-tolerant soybeans, farmers answer that question by saying they can cover more acres more quickly and that they do not have to worry about weed management as they did in the past. For Bt corn, farmers view use of GMO seed as an insurance policy if there's an insect infestation. There are many such non-quantifiable benefits and costs associated with using GMO seeds.