“Adoption Impacts and Access to Innovation in

Small Resource Poor Countries: Results from a

Second Round Survey and Institutional

Assessment in Honduras”

José Falck Zepeda1, Denise McLean2, Patricia Zambrano1, Arie Sanders2, Maria Mercedes Roca2, Cecilia Chi-Ham3

1 IFPRI

2 Zamorano University

3 UC Davis PIPRA

Paper presented at the 17th ICABR meeting, Ravello Italy, June 21 2013

© 2013 UC-Davis and IFPRI

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2000 2002 2004 2006 2008 2010

% o

f G

DP

Agriculture Value Added

Sub-Saharan Africa

World

Honduras

United States

Honduras: High reliance on agriculture

Agricultural sector 13% of GDP1

Agribusiness and related sector 40-45%2 GDP

1 World Bank, 2011 2

http://www.hondurasopenforbusiness.com/SITEv2/files/pdf/Oportunidades_de_inversion_Agroin

dustria.pdf

Graphs: WorldBank Development Indicators (2013)

Map: National System of Environmental Indicators, SINIA

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Honduras

United States

Honduras: Limited resources for agricultural production

especially land

87% of territory corresponds to hillsides

susceptible to erosion

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World

Honduras

United States

Honduras: Low productivity of major staple

crops

Honduras’ Productivity:

1/3 of world averages and

1/7 of US yields

Corn is an essential part of Honduran diet

1FAO Statistics Division, 2012, 2Ministry of Agriculture and Livestock, 2012

Top commodity available for consumption 739 kcal/person/day

Basic grains represent up to 60% of Honduran diet

48% of total demand is for human consumption

Production Value, Top Commodities (2011)

Value [1000 Int$] Value [1000 Int$]

1 Coffee, green 303357 8 Tomatoes 56580

2 Cow milk, whole 230723 9 Oranges 54126

3 Chicken Meat 222122 10 Beans, dry 51791

4 Bananas 204849 11 Pineapple 39416

5 Cattle Meat 165830 12 Eggs 36661

6 Sugar cane 164766 13 Melons 33139

7 Palm oil 139218 14 Corn 32068

Corn in Honduras is grown mostly for food/feed

Corn supply in Honduras increasingly

dependent on imports

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1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

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Corn Production and Trade

Corn production Corn imports Corn exports Population total

Nearly 40% of corn is imported and

thus high concerns for corn price

volatility in international markets

Honduras Agriculture Ministry Jacobo Regalado:

“From the million ton we need we are only producing 600

thousands. We are still importing 400 thousands(…)

The idea is to accelerate the pace to substitute those 400

thousands with local production”.

Hondudiario, March 19, 2012

Honduras: The problem with

production intensification

Damage by lepidopteran insects can be as high as 40-70%

Increasing issues with other pests and diseases

Heavy damage due to aflatoxins / mycotoxins

Need to explore new control alternatives amenable to

smallholder´s producers

Smallholder producers:

Little access to technology, pest control alternatives and

credit

Knowledge limitations: to determine damage and to make

correct chemical applications….

GMOs in Honduras

8th Latin American country adopting GMOs since 20021

1ISAAA, 2012

Only country in Central America

cultivating GMOs for food

-USA*

-Brazil*

-Argentina*

-South Africa*

-Canada*

-Uruguay x1.5

-Philippines x3

-Spain x5

-Chile x7

-Honduras

-Portugal x.8

-Czech Republic x .7

-Poland x3

-Egypt x9

-Slovakia x0.4

-Romania x2

• By 2011, 72 thousand ha with hybrids and GM 15% area planted1

• GM estimated around 25-30 thousand ha

BT (MON810), RR (NK603), Herculex 1 , YGVTPro

(MON89034) traits approved for commercialization

WHY GMOs adopted in Honduras?

Honduras: promotional environment favoring biotechnology

adoption

Favorable policy, economic and social conditions facilitated adoption

UN Statistics Division, 2011. WTO Statistics, Trade

Profiles, 2012

Strategic interest in aligning agricultural policies with

the major economic and trade partners

• Honduras trade is essentially tied to the United States

• Historically strong presence of agricultural multinationals interested in increased

agricultural productivity

Established Biosafety Framework and Regulations

Incorporated biotechnology in National Food Self Sufficiency Strategy

Coordinated a joint agricultural and environmental political agenda

‘To facilitate the process to incorporate hybrids and transgenic

seeds in 25% of the area planted at the national level by 2014’

Honduras Agricultural and Livestock Ministry goal

Public Agricultural and Food Sector Strategy

1996/98: Biosecurity Regulation with Emphasis in Transgenic Plants

1998: National Committee of Biotechnology and Biosecurity (NCBB)

2006: CAFTA-DR Phytozoosanitary Law modification

2008: Cartagena Protocol Ratification

2001/12: Law for the Protection of New Varieties of Plants

USAID GAIN Report 2012.

Honduran government specific policy support for easing a transition

towards biotechnologies

Honduras: A case study to

understand biotechnology

adoption in small resource poor

developing countries

Honduras in the Latin American innovation

sphere Small markets Medium

markets

Large markets

Non-selective

importers of

technology

El Salvador,

Guatemala,

Honduras,

Nicaragua, Panamá

Bolivia, Ecuador

Selective

importers of

technology

Costa Rica,

Uruguay

Paraguay, Peru Venezuela

Tool users

- Colombia, Chile Argentina, Mexico

Innovators

Brazil

Notes: 1) Source: Trigo, Falck-Zepeda and Falconi (2010), 2)

Non-adopters are listed in italic text.

Which policies are important? Public sector

investments in

biotechnology

applications

Intellectual

property

management

Biosafety

regulations

Food/feed

safety and

consumer

protection

Support for

public sector

participation

and tech

transfer

including seed

systems

Non-adopters

Bolivia 0 0 - - 0

Ecuador 0 0 - - 0

Guatemala 0 - 0 0 -

Perú 0 - - 0 0

Venezuela + - - 0 0

Adopters

Argentina + 0 0 + +

Brazil + - 0 0 +

Costa Rica + - 0 0 +

Honduras 0 - 0 0 -

Mexico + 0 0 0 +

Uruguay + 0 0 0 +

Notes: 1) Source: selected countries from Trigo, Falck Zepeda and Falconi (2010), 2) + signifies promotional policies, 0 denotes

neutral policies, - reflects preventive policies, 3) Brazil was categorized as having a preventive biosafety policy in the Trigo et al. paper,

but is reclassified here as neutral based on recent developments in the country.

HOW HAS GM CORN WORKED IN

HONDURAS?

GM maize provided excellent

target pest control

Bt yield advantage 856-1781 Kg

ha-1 yield

Bt maize yields preferred even by

risk averse producers

100% higher seed cost than

conventional hybrid

Institutional issues important

Photos credit: © Sanders and Trabanino 2008

Falck-Zepeda, J., A. Sanders, C. Rogelio Trabanino, & R. Batallas-Huacon.

Caught Between Scylla and Charybdis: Impact Estimation Issues from the Early

Adoption of GM Maize in Honduras. AgBioForum, 15(2), 138-151. Available on

the World Wide Web: http://www.agbioforum.org.

2008 GM maize crop cycle in

Honduras: Results from our first survey

The 2013 (second) survey to observe experiences

of conventional & GM corn farmers

Economic, social and agronomic impacts

Farmers by corn type Size

Total < 7 hectares > 7 hectares

Conventional only 58 25 83

GM only 39 57 96

Both types of corn 11 19 30

Total 108 101 209

o We chose a representative sample of corn farmers from the

main corn producing state in Honduras

Disclosure:

Results presented here are preliminary

These may change with further work

Major maize producing areas in

Honduras

Olancho: The main corn producing state in

Honduras - 180,000 metric tons

- 35,000 planted hectares >30 % national corn production

- 12,000 hectares with GM >40% GM corn production

- 10,000 farmers

- A range of different corn production systems

We captured diversity within the commercial corn production

chain

Number of

applications

Conventional GM Both types,

conventional plot

Both types,

GM plot

< 7 ha > 7 ha < 7 ha > 7 ha < 7 ha > 7 ha < 7 ha > 7 ha

Insecticides 1.7 1.9 1.6 1.3 1.9 2.0 1.0 1.1 S

Herbicides 2.6 2.7 1.7 1.5 2.7 2.1 1.7 1.6 S

Fungicides 1.0 1.5 1.2 1.5 1.0 1.3 1.0 1.0 NS

Fertilizers 2.2 2.3 2.4 2.3 1.9 2.6 2.3 2.6 NS

S: Significant, NS: Not significant

Our findings: In average GM corn farmer seem to be

using less pesticides

GM corn producers from sample made one insecticide

and herbicide application less

Environmental

Impact Quotient

Conventional GM Both types,

conventional plot

Both types,

GM plot

< 7 ha > 7 ha < 7 ha > 7 ha < 7 ha > 7 ha < 7 ha > 7 ha

Insecticides 5.2 6.3 4.3 11.0 4.6 8.2 3.1 6.1 NS

Herbicides 24.3 29.6 27.1 28.6 42.6 12.5 24.6 16.0 NS

Fungicides 3.0 3.7 14.5 10.4 7.1 7.1 7.1 9.4 NS

Fertilizers 23.7 27.4 36.6 41.6 36.2 16.9 25.5 22.6 NS

S: Significant, NS: Not significant

GM and conventional corn farmers seem to have

a similar environmental impact measured by the

EIQ

EIQ: J. Kovach et al, IPM Program, Cornell University, New York State Agricultural Experiment Station Geneva, New York 14456

Cost structure in corn production Conventional GM

< 7 hectares > 7 hectares < 7 hectares > 7 hectares

Total costs (US$/ha) 717.1 749.7 1209.1 1460.8 * Yield (ton/ha) 2.8 3.4 5.4 5.5 * Price (US$/ton) 273.7 294.4 352.3 394.5 * Income (US$/ha) 748.5 1018.6 1929.7 2189.1 * Profit (US$/ha) 32.1 269.9 722.5 730.4 *1

1 At small scale

GM corn farmers seem to be obtaining

higher yields & profits

Of Cook’s D, the issue of outliers and

sampling biases…our data shows it’s present

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Observation ID Yield Cook’s D

42 6.500 0.053

84 5.200 0.385

99 7.475 0.033 116 4.543 0.039 120 9.100 0.020 121 2.507 0.022 129 2.839 0.021 131 6.500 0.688 132 3.250 0.054 143 1.817 0.028 152 5.200 1.230 155 7.800 0.036 169 1.083 0.020 170 6.045 2.381 173 0.975 0.030 174 8.060 0.032 182 0.195 0.060 200 5.200 0.033 212 7.800 0.032 217 1.300 0.020 222 9.100 0.022 230 6.500 0.026

“The classical instrumental variables (IV) estimator is extremely sensitive to the

presence of outliers in the sample. This is a concern as outliers can strongly dis-

tort the estimated effect of a given regressor on the dependent variable. Although

outlier diagnostics exist, they frequently fail to detect atypical observations since

they are themselves based on non-robust (to outliers) estimators. Furthermore,

they do not take into account the combined influence of outliers in the first and

second stages of the IV estimator” Desbordes and Verardi, Stata Journal 2012

Production function approach Robust Regression (MM-

Regression 85% efficiency,

ROBREG) Robust Regression (

MSREGRESS) Instrumental Variables (

IVREG2)

Variable Coef. Robust

SE Coef. Robust SE Coef. SE

GM corn user (1=Yes) 1.254 0.319 *** 1.157 0.387 *** 1.453 0.329 ***

Located in Juticalpa/Catacamas (1=Yes) 0.346 0.414 n.s. 1.303 0.199 *** 0.336 0.304 n.s.

Time cultivating GM maize -0.014 0.007 ** -0.026 0.005 *** -0.010 0.006 n.s.

Total income 0.251 0.105 ** 0.189 0.075 ** 0.216 0.078 ***

Total area in production (ha) 0.002 0.001 * -0.002 0.002 n.s. 0.002 0.001 n.s.

Total area cultivated with maize (ha) -0.004 0.006 n.s. 0.004 0.002 * -0.004 0.004 n.s.

Seed quantity planted (kg/ha) -0.002 0.016 n.s. 0.117 0.020 *** -0.005 0.015 n.s.

AI insecticide (Kg/ha) 1.030 0.593 * 2.156 1.139 * 0.718 0.561 n.s.

AI herbicide (Kg/ha) 0.070 0.064 n.s. 0.084 0.114 n.s. 0.158 0.070 **

AI fertilizer used (Kg/ha) 0.009 0.004 ** 0.017 0.002 *** 0.005 0.002 **

AI other pesticides(Kg/ha) 3.268 1.758 * 1.736 0.555 *** 1.516 0.883 *

Cost labor per day ($/ha) -0.008 0.006 n.s. -0.006 0.006 n.s. -0.004 0.006 n.s.

Seed planted squared 0.000 0.000 n.s. -0.002 0.000 *** 0.000 0.000 n.s.

AI insecticide squared -0.261 0.133 ** -2.090 0.736 *** -0.167 0.143 n.s.

AI herbicide squared -0.003 0.002 n.s. 0.016 0.009 * -0.006 0.003 **

AI fertilizer squared 0.000 0.000 ** 0.000 0.000 *** 0.000 0.000 n.s.

AI other pesticides squared -3.978 2.040 * -1.207 0.290 *** -0.926 0.654 n.s.

Constant 4.822 1.365 *** 3.592 0.846 *** 2.665 0.603 ***

Second stage (2SLS net income) First stage, dependent variables is GM corn user)

Variable Coef. Std. Err. Coef. Std. Err.

GM corn user (1=Yes) 279.1 131.7 **

Located in Juticalpa/Catacamas (1=Yes) 166.3 123.9 n.s. 0.209 0.067 **

Time cultivating GM maize -7.1 2.7 *** 0.003 0.001 *

Total income 96.7 34.4 *** 0.002 0.018 n.s.

Total production area (ha) 1.1 0.3 *** 0.000 0.000 n.s.

Total maize area (ha) 0.0 1.2 n.s. 0.002 0.001 **

AI insecticide (Kg/ha) 98.7 209.2 n.s. -0.183 0.130 n.s.

AI herbicide used (Kg/ha) 46.5 26.4 * 0.001 0.017 n.s.

AI fertilizer used (Kg/ha) -1.0 1.1 n.s. 0.000 0.001 n.s.

AI other pesticides (Kg/ha) 201.1 402.1 n.s. 0.002 0.209 n.s.

Cost labor per day ($/ha) -8.5 2.8 *** 0.000 0.001 n.s.

Seed planted squared 0.0 0.0 n.s. 0.000 0.000 n.s.

AI insecticide squared -60.1 49.4 n.s. 0.035 0.033 n.s.

AI herbicide squared -1.7 0.9 * 0.000 0.001 n.s.

AI fertilizer squared 0.0 0.0 n.s. 0.000 0.000 n.s.

AI other pesticides/fungicides used

squared

-205.6 240.3 n.s. 0.071 0.155 n.s.

Price GM seed 0.033 0.005 **

Year cultivating GM seed -0.275 0.032 **

Constant 659.2 214.6 *** 0.252 0.161 n.s.

Net income

THEN…WHY HAVE WE NOT

OBSERVED FULL ADOPTION BY

HONDURAN PRODUCERS?

Characteristic

• Monthly income >500 US$

• Access to technical assistance

• Access to credit

• Farmers applying fungicides

• Insecticide costs

• Fertilizer costs

• Cost of the use of machinery

GM

• 82 to 98% of farmers

• 16 to 30% of farmers

• 24 to 56% of farmers

• 58 to 50% of farmers

• 28 to 62 US$/ha

• 328 to 373 US$/ha

• 192 to 275 US$/ha

Conventional

• 40 to 64% of farmers

• 11 to 0% of farmers

• 19 to 28% of farmers

• 4 to 8% of farmers

• 11 to 16 US$/ha

• 213 to 237 US$/ha

• 106 to 104 US$/ha

Access to inputs may restrict adoption

Farmers without information, credit or other inputs are less

likely to adopt GM crops

Depending on plot size

Access to markets may limit profitability

Farmers with smaller plots or in remote areas

are less likely to adopt biotechnology

Characteristic

• Closer to urban areas

• Sell directly to industry

• Transportation costs

• Selling price

• Agronomic cycle

GM

• 92 to 93% of farmers

• 45 to 80% of farmers

• 134 to 152 US$/ha

• 352 to 395 US$/ton

• 3-4 months

Conventional

• 12 to 16% of farmers

• 2 to 4% of farmers

• 17 to 40 US$/ha

• 274 to 294 US$/ton

• 4-5 months

Depending on plot size

Gender/seed type Preferred for production Preferred for consumption

Conventional GM Conventional GM

Male/Conventional 0 13 0 0

Male/GM 0 18 5 1

Female/Conventional 20 0 18 0

Female/GM 0 12 8 0

All 20 43 31 1

Farmers may prefer other traits

Local corn varieties make better tortillas

Preliminary data from exploratory panel, 2013. Unpublished.

Preferred traits for production by production size & location

Large/valley Large/hills Small/valley Small/hills

Black spot resistance Black spot resistance Black spot resistance Black spot resistance

High yield High yield High yield High yield

Heavy grain Heavy grain Heavy grain

BT BT BT

RR RR

Price Price

Drought resistance Drought resistance

% germination

Full cob

Farmers have greater

preference for protection

against risk

Conclusions For the sample of producers included in our survey, GM maize

continues to perform as expected compared to a conventional Positive yield advantage Higher net income Reduction in pesticide applications Unclear environmental impact (need more work)

For expansion of area with GM maize in Honduras, issue is not a technical issue but seems to be institutional

Additional work needed to examine Production and financial risk Distribution of impact by size Impacts of institutional and governance issues on adoption Policies to support the smallest of the smallholders

Arie Sanders

Maria Mercedes Roca

Miljian Villalta

Alan B. Bennett

Cecilia Chi-Ham

Denisse McLean

Jose Falck-Zepeda

Patricia Zambrano

Sandra Mendoza. Participatory research

consultant

Research funded by: