Genetically Engineered Crops Experiences and Prospects (2016) / Chapter Skim
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6 Social and Economic Effects of Genetically Engineered Crops
6 Social and Economic Effects of Genetically Engineered Crops
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For clarity purposes and to maintain uniformity with previous National Research Council reports, the committee chose to use the term social and economic effects.
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Any analysis must be nuanced and acknowledge that social and economic effects of GE crops will vary in time and space and among farmers and households. This chapter assesses what is known about the social and economic effects that have occurred since GE crops were introduced by pursuing a strategy that examines a broad set of individual studies and a mix of systematic reviews and meta-analyses to identify relevant issues and effects related to GE crop adoption and use.2 The chapter first looks at social and economic effects on or near the farm pertaining to income, small-scale farmers, farmer knowledge, gender, rural communities, and the choices available to farmers with respect to seeds and practices.
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After the review, the committee looks at the relationship between genetic-engineering technology and other dimensions at the farm level, such as gender, community, and farmer knowledge. Income Effects Agronomic effects such as changes in yield and insecticide and herbicide applications for GE crops with IR or HR traits, respectively, were discussed in Chapter 4.
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5 Klümper and Qaim (2014) included ex-ante and ex-post studies conducted in Argentina, Australia, Brazil, Burkina Faso, Canada, Chile, China, Colombia, Czech R epublic, Germany, India, Mali, Pakistan, Philippines, Portugal, Romania, South Africa, Spain, and the United States.
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, which described the issues and limitations faced by researchers of social and economic effects in developing and, to a degree, developed countries. The issues pertain particularly to studies conducted during the first decade of adoption of genetically engineered (GE)
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That is, the differences between GE and conventionally bred crops may be overestimated or under estimated, or it may be concluded that the differences are statistically significant when they are not. ducted in Argentina, China, India, Mexico, and South Africa and concluded that GE cotton, maize, and soybean provide economic gains to adopting farmers in these countries; however, the effect was highly variable and depended on national institutional capacity to help poorer farmers to gain access to suitable innovations.
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are assigned a treatment group (for example, adoption of genetically engineered [GE] seed)
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For maize, gross margins were not different for farmers using Bt vari eties than non-GE varieties in Spain, South Africa, and Argentina. Insecticide costs were also significantly lower for Spain and Germany, which was the main reason for adoption of Bt maize by German farmers, in addition to better insect-pest control.
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(2005) , for example, provided evidence of the favorable effects of Bt cotton adoption in the Yellow River region, but adoption has not been as successful in the Yangtze River Valley.
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(2009) on household labor savings were in line with the results of studies covered by Fernandez-Cornejo et al.
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conducted an ex ante study of economic effects on Bt eggplant farmers in Bangladesh. They surveyed 60 farmers, 30 in each of two regions, for information on input costs, crop varieties, seed 7 Three of the four provinces were the same as those reporting in 2004–2005.
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(2015) review of social and economic effects of GE crops, only 20 focused on HR crops.
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Looking at the average yield, they found a small but constant advantage in cost efficiency for the HR varieties compared with conventionally bred hybrids in both seasons. The same was true of Bt-HR varieties.
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compared 11 glyphosate-resistant sugar beet fields in commercial production with comparable non-GE sugar beet fields in Wyoming. Growers managed each pair of fields independently of outside advice.
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Studies have concentrated on one trait–crop combination (Bt cotton) in three countries (India, South Africa, and China)
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. USDA estimated that most of the 14,200 hectares of sugar beet planted in Canada in 2012 was herbicide resistant (Evans and Lupescu, 2012)
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. Benefits of Existing Genetically Engineered Crops The most widely grown GE crops -- HR soybean, Bt maize, Bt cotton, Bt-HR maize, Bt-HR cotton, and HR canola -- were first commercialized in the United States, where they were grown primarily on large-scale farms.
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. The area of land farmed has not increased nearly as much as the number of people involved in farming; from 1960 to 2000, average farm size declined, but the general trend masks the story told when income groups are examined sepa rately.
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SOCIAL AND ECONOMIC EFFECTS 273 FIGURE 6-1 Diversity in farm size by region.
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Earlier studies of the economic returns to small-scale farmers from the adoption of Bt cotton in the Makhathini Flats of South Africa found gains
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In general, cotton production -- GE or otherwise -- has declined in South Africa for large and small farmers since the 2003–2004 season because of a downturn in the price of cotton compared with the prices of maize, soybean, and sunflower (Helianthus annuus) (Gouse, 2012)
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However, the authors also documented various institutional challenges -- such as loss of credit access, market disruptions, the failure to cross the Bt trait into local varieties, and the high cost of seed in South Africa and Burkina Faso -- as related to declining interest in GE cotton (Dowd-Uribe and Schnurr, 2016)
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The study showed that adoption of Bt maize increased yields and net farm, off-farm, and household income compared with non-GE hybrids 13 In 2005–2006 and 2006–2007, non-GE, Bt, and HR varieties were compared. In 2007– 2008, all four varieties were compared.
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HR Soybean. As mentioned above in the discussion of income effects, HR soybean has been studied far less than other GE varieties. HR soybean is the most widely grown GE trait–crop combination in medium-income and high-income countries; most of the hectares planted are produced on large farms in the United States, Brazil, and Argentina.
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Eggplant fruit and shoot borer is frequently cited as one of the most destructive pests in the region (Islam and Norton; 2007; Krishna and Qaim, 2008)
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He suggested that increased income from Bt eggplant would be only 8,025 rupees/ hectare for smallholders if they even adopted the hybrid and that integrated pest management (IPM) with non-Bt varieties could make the same inroads in combating eggplant fruit and shoot borer, reducing insecticide use, and increasing income for smallholders (by 164,923 rupees/hectare in his estimate)
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In their view, selling Bt eggplant OPVs at a much lower price than Bt eggplant hybrids may increase social welfare inasmuch as some resourcepoor farmers, who previously were income-constrained or lacked access to credit, may be able to tap into the technology. However, some farmers who were planting eggplant hybrids may opt for the OPV Bt eggplant because it may have a lower cost.
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Similarly, Macnaghten and Carro-Ripalda (2015) provided evidence that farmers in Mexico, India, and Brazil lack trust in the organizations and institutions responsible for delivering GE seeds and a concern about the loss of indigenous seeds.
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. Prospects and Limitations for Genetically Engineered Crops in Development for Small-Scale Farmers At the time that the committee's report was written, only a few GE traits had been incorporated into crops, and Bt eggplant, the only GE crop that had been specifically developed to address the needs of small-scale, resource-poor farmers, was planted by fewer than 150 farmers worldwide.
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argued that small-scale farmers in Africa cannot take advantage of improved plant genetics until soil fertility and nutrient availability are addressed. However, many traits being developed with genetic engineering are not attainable with conventional breeding or agroecological approaches.
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. The committee heard from a number of presenters who stressed that for genetic-engineering technology to contribute to resolving issues of smallscale farmers, particularly those who are resource-poor, concurrent investments are needed in soil fertility, integrated pest management, optimized plant density, credit availability, market development, storage, and extension services (Hendrickson, 2015; Horsch, 2015; McMurdy, 2015; Schnurr, 2015)
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The deciding factor should be society's returns on R&D investments. There is evidence that HR maize in South Africa and HR soybean in Bolivia have been useful to smaller producers because the decrease in the time needed to plant seeds and weed fields has freed up family labor to pursue off-farm income.
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However, sustained gains will typically -- but not necessarily -- be expected in those situations in which farmers also had institutional support, such as access to credit, affordable inputs, extension services, and markets. Institutional factors potentially curtail economic benefits to small-scale farmers.
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, Canada, and New Zealand tend to exclude, even if unintentionally, farmer knowledge related to establishing regulatory policies. Their study focused on how seed farmers' experiential knowledge of managing seed-crop purity might inform biopharming regulation, which they argued is difficult to incorporate into existing riskassessment and risk-management regulatory regimes.
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. Considerable attention has been given to farmer knowledge and practices related to the evolution of resistance in weeds and insects in GE cropping systems (Llewellyn and Pannell, 2009; Mortensen et al., 2012; Ervin
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A more systematic study of farmer knowledge is needed to improve the regulatory structures in which farmers function
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. The research on gender and genetic engineering in agriculture has focused primarily on developing countries (Bennett et al., 2003; S ubramanian and Qaim, 2010; Zambrano et al., 2012, 2013)
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Similarly, a study of 32 small-scale farmers in the Makhathini Flats of South Africa found that the planting of Bt cotton was beneficial for women in the household; in this case, it was because women did not have to spray the crops, so their energies could be diverted to other activities (Bennett et al., 2003)
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FINDING: GE crops with Bt and HR traits differentially affect men and women in the agricultural labor force, depending on the gendered division of labor for the specific crop and for particular localities. FINDING: There is a small body of evidence that women's involve ment in decision-making about planting new crop varieties and soil conservation has increased in farming households in general, including households that have adopted GE crops.
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. As a previous National Research Council report (NRC, 2010a:12)
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(2011) found that seed cost for Bt cotton was significantly higher than that for non-GE cotton in South Africa, India, and the United States but not in China.
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. To simplify terminology, the committee will refer to the production process that uses GE seed as "GE," the production process that may use synthetic inputs but not GE seed as "nonGE," and the production process that uses organic practices as "organic." The separation begins on the farm, where efforts are made to prevent gene flow between GE crops and non-GE or organic varieties of the same species and between GE crops and related plant species such as wild relatives.
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18 For example, seed companies of crops with GE traits and farmer trade associations have developed programs, guidelines, and best management practices to reduce the incidence of unwanted low-level presence of GE traits. Companies have sponsored the Excellence Through Stewardship Program, which develops best management practices to prevent gene flow during testing and field trials of GE crops and to minimize inadvertent introduction of unwanted GE traits (Excellence Through Stewardship, 2008, updated 2014)
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Minimizing unwanted gene flow from nearby crops requires expenditures on management practices, such as the creation of buffer zones between fields of organic or non-GE crops and those of GE crops. In the United States, there is dis agreement about who is responsible for paying for the management practices and who is liable for damages if a grower of organic or non-GE crops loses a market price premium because of the presence of GE traits.
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. In all member states that have adopted segregation measures, the burden is on GE crop growers and operators to avoid gene flow to neighboring farmers (EC, 2009)
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However, because contracts between growers and buyers are private, it is difficult to find documented information about how extensively growers are contracting to meet specific non-GE standards or to what extent farmers of organic or non-GE crops are incurring economic losses as a result of being unable to meet contracts because of cross-contamination. In 2016, USDA–ERS released a survey that showed that the percentage of organic farmers reporting economic losses due to the unintended presence of GE materials in their crops varied by region and by the presence of GE crop varieties in their area.
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The unapproved GE trait may TABLE 6-1 Successful Coexistence Schemes in Selected Countries That Produce and Market Genetically Engineered (GE) and Non-GE Cropsa Producing Country Maize Soybean Cotton Canola Australia GE and organic GE and non-GE Brazil GE GE and non-GE GE and organic Burkina Faso GE and organic Canada GE, non-GE, GE, non-GE, GE, non-GE, and organic and organic and organic China GE and organic India GE and organic Pakistan GE and organic South Africa GE and non-GE GE GE and organic Spain GE, non-GE, and organic United States GE, non-GE, GE, non-GE, GE and organic GE, non-GE, and organic and organic and organic a Non-GE crops include those produced with synthetic fertilizers and pesticides and those produced with practices that meet organic standards.
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FINDING: The question of who is economically responsible for adven titious presence is handled differently by different countries. SOCIAL AND ECONOMIC EFFECTS BEYOND THE FARM When crops leave a farm, they may end up in a market just down the road, a livestock feedlot, or a barge headed to a market on the other side of an ocean.
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. They found that consumers' WTP for food derived from GE crops is lower than that for food with no ingredients from GE crops and that the magnitude of the consumers' discount for food from GE crops depends on the type of genetic change made, the type of food product, and how the genetic change altered the final product.
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has the authority to require label information to ensure the safe use of a product or to prevent marketplace deception; because FDA has determined that all commercialized GE crops are not materially different from conventionally bred crops, it has not found cause to mandate labeling of GE foods under its authority (see Chapter 9)
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One market response would probably be downstream market pressure on farmers to grow non-GE crops to supply food manufacturers with materials that would enable them to avoid labeling; an increase in non-GE sources could lead eventually to a decrease in ingredient costs. The benefits of mandatory labeling depend on the extent to which consumers use the information to choose products that they want (or avoid ones that they do not want)
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FINDING: The economic effects of mandatory labeling of GE food at the consumer level are uncertain. Constraints on Trade Starting in the 1980s, global trade in agriculture has become more liberalized through a series of international free-trade agreements, including those negotiated under the World Trade Organization.
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. Finally, asynchronous approvals may deter the development and adoption of new GE traits or new GE crops because farmers producing for an export market may be reluctant to grow varieties that incur the risk of not gaining regulatory approval.
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. Some developers of new GE crops have introduced their products with plans to ensure a separate distribution channel for the crops from conventionally bred varieties until export market approval has been received (Richael, 2015)
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Available at http://www.nongmoproject.org/product-verification/ non-gmo-project-standard/. Accessed November 6, 2015.
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Effects of Regulation on the Development and Introduction of New Genetically Engineered Crops The development and introduction of new GE crops are affected by regulatory-approval processes. In the case of GE food and crops, as with other products, the purpose of any regulatory product-approval system is to benefit society by preventing harm to public health and the environment and preventing economic harm caused by unsafe or ineffective products (as defined by the relevant regulatory or legal standard)
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. An important issue is that estimates of regulatory costs do not capture less easily monetized issues.
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(2007) used the real-options model to examine the effects of the potential introduction of HR sugar beet and Bt and HR maize into the EU for cultivation.
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. The reason for that difference is that, although compositional analyses are often performed on new varieties to demonstrate that they are within normal genetic variation, toxicity tests and environ mental assessments that are not performed on conventionally bred crops are
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. The estimate also did not include costs associated with regulatory approval in export markets.
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. The VR papaya was the only commercialized GE crop grown in the United States in 2015 that was developed through the public sector.
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The estimates do not include social costs, such as government-sector regulatory costs, socialwelfare losses, or transitional and indirect costs (Falck-Zepeda, 2006) , nor do the studies reflect opportunity costs of capital that potentially could be invested elsewhere, as is done in the pharmaceutical industry (DiMasi et al., 2003)
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to farmers. Patent law, seed-market concentration, and public-research investment can have various social and economic effects.
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The 1930 Plant Patent Act in the United States allowed plant breeders an option to shift those asexually reproduced types of crops from public goods to private goods by applying for a specialized patent to prevent the copying of protected plants through such practices as propagation of cuttings or by tissue culture (Huffman and Evenson, 2006) .b The 1970 Plant Variety Protection Act (PVPA)
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Pioneer Hi-Bred endorsed the application of utility patents to newly invented or developed GE and non-GE crop varieties, in addition to the application of PVPA (Janis and Kesan, 2002; Sease, 2007)
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The findings of the 2004 National Research Council report need to be examined in relation to the application of patents to GE crops as well as conventionally bred crops. A growing body of work questions whether patents are conducive to innovation in agriculture.
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Giving smallholder farmers in developing countries greater control over their seeds, with other forms of agricultural knowledge and technology, may be foundational to promoting their social welfare (Kloppenburg, 2010; Wittman, 2011)
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in that a firm or university holding a patent on plant germplasm may legally block research on the crop. The Public Intellectual Property Resource for Agriculture, a clearinghouse for intellectual-property information in agricultural biotechnology, was developed to address some of the concerns raised by patents on GE crops, such as patent thickets and constraints on research (Graff and Zilberman, 2001)
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(2012) study were similar to those on the effect of the Plant Variety Protection Act on yields of selected crops in the United States (Naseem et al., 2005; Kolady and Lesser, 2009)
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. That case has at least two implications: Molecular-genetic research techniques can be useful in disqualifying patents on conventionally bred crops, and the granting of utility patents on crops has favorable and unfavorable social effects.
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A second way to document market concentration is to show how a small number of large companies have gained control of the intellectual property associated with GE crops. Since GE crop research began in the 1980s, 37 companies have secured patents on GE maize and 118 companies have secured patents on non-maize GE crops.
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First, if the market is noncompetitive, farmers are likely to face higher than competitive market pricing. The 2010 National Research Council report on farm-level impacts of GE crops in the United States noted that seed prices increased dramatically for GE crops from 1994 to 2008.
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. Investment in Public Research The 2010 National Research Council report on farm-level impacts of GE crops in the United States listed four kinds of contributions required of the public sector.
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noted that clear definition of public and private institutional responsibilities may reduce confusion and promote synergistic cooperation. However, they also stated that a greater involvement by universities in GE crops R&D would foster the proliferation of more public goods from GE crop research and might even help to "alleviate political concerns regarding [GE]
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Of course, crop-productivity gains do not equally enhance social welfare for everyone inasmuch as greater yields can depress commodity prices to the detriment of farmers. However, enhanced agricultural productivity can contribute to greater availability of food for many people and thus enhance social welfare.
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FINDING: There is disagreement in the literature as to whether patents facilitate or hinder university–industry knowledge-sharing, innovation, and the commercialization of useful goods, and utility patents on GE crop germplasm legally block research on a crop. FINDING: Whether a patent is applied to conventionally bred or GE crops, institutions with substantial legal and financial resources are c apable of securing patent protections that limit access by small farmers, marketers, and plant breeders who lack resources to pay licensing fees or to mount legal challenges.
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should decrease the year-to-year variation in food availability, and that is important in preventing hunger. GE crops that have already been commercialized have the potential to protect yields in places where they have not been introduced, and GE crops in development, such as those reviewed earlier in this chapter in the section "Prospects and Limitations for Genetically Engineered Crops in Development for Small-Scale Farmers" may protect yields of a wider array of crops (for example, disease-resistant cassava and climate-resilient rice)
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for smallholders. Chapter 8 addresses the potential for genetic-engineering technology to increase potential yield and enhance nutritional traits.
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Having reviewed the literature available on social and economic effects, the committee finds that the research on the topic is not sufficient. Much of the literature focuses on one or two trait–crop combinations and does not have sufficient coverage especially of new crops in the R&D pipeline.
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2012. Agricultural biotechnology and smallholder farmers in developing countries.
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2003. Bt cotton, pesticides, labour and health: A case study of smallholder farmers in the Makhathini Flats, Republic of South Africa.
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Webinar presentation to the National Academy of Sciences' Committee on Genetically Engineered Crops: Past Experience and Future Prospects, April 21. Carter, C.A., and G.P.
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Webinar presentation to the National Academy of Sciences' Committee on Geneti cally Engineered Crops: Past Experience and Future Prospects, April 30. Dowd-Uribe, B., and M.A.
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2014. Technical Consultation on Low Levels of Genetically Modified (GM)
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2014. Committee discussion with presenters at the National Academy of Sciences' Committee on Genetically Engineered Crops: Past Experience and Future Prospects, December 10, Washington, DC.
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Webinar pre sentation to the National Academy of Sciences' Committee on Genetically Engineered Crops: Past Experience and Future Prospects, November 6. Gonsalves, C., D.R.
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Can Genetically Modified Crops Help African Farmers? Webinar presentation to the National Academy of Sciences' Committee on Genetically Engineered Crops: Past Experience and Future Prospects, February 4.
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Webinar presentation to the National Academy of Sciences' Committee on Genetically Engineered Crops: Past Experience and Future Prospects, May 6. Howard, P.H.
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2012. Genetically-engineered crops and their effects on varietal diversity: A case of Bt eggplant in India.
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2013. Elements of public trust in the American food system: Experts, organizations, and genetically modified food.
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Webinar presentation to the National Academy of Sciences' Committee on Genetically Engineered Crops: Past Experience and Future Prospects, April 21. McMichael, P
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2010a. The Impact of Genetically Engineered Crops on Farm Sustainability in the United States.
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vs. EU: An Examination of the Trade Issues Surrounding Genetically Modified Foods.
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Webinar presentation to the National Academy of Sciences' Committee on Genetically Engineered Crops: Past Experience and Future Prospects, April 21. Rickson, S.T., R.E.
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Webinar presentation to the National Academy of Sciences' Commit tee on Genetically Engineered Crops: Past Experience and Future Prospects, November 6. Sease, E.J.
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2003. Information Policy and Genetically Modified Food: Weighing the Benefits and Costs.
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Presentation to the National Academy of Sciences' Committee on Genetically Engineered Crops: Past Experience and Future Prospects, December 10, Washington, DC. Welsh, R., and L
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Pp. 1–18 in Agricultural Biotechnology and Intellectual Property: Seeds of Change, J.P.
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