University of Hohenheim, Germany
Georg-August-University of Goettingen, Germany
While previous research has analyzed the impacts of Bt cotton in India, most available studies are based only on one or two years of data. We analyze the technology’s performance over the first five years of adoption, using panel data with three rounds of observations. On average, Bt-adopting farmers realize pesticide reductions of roughly 40%, and yield advantages of 30-40%. Profit gains are at a magnitude of US $60 per acre. These benefits have been sustainable over time. Farmers’ satisfaction is reflected in a high willingness to pay for Bt seeds. Nonetheless, in 2006 Indian state governments decided to establish price caps at levels much lower than what companies had charged before. This intervention has further increased farmers’ profits, but the impact on aggregate Bt adoption was relatively small. Price controls might have negative long-term implications, as they can severely hamper private sector incentives to invest in new technologies.
Key words: Biotechnology, Bt cotton, genetically modified crops, farm survey, India, seed markets, technology adoption, willingness to pay (WTP).