Analyzing the economics of Bt corn across the United States\u27 corn belt

Bt (Bacillus thuringiensis kurstaki) corn has been genetically engineered to resist European corn borer (ECB) and other insect pests. To decrease the potential for ECB resistance to Bt corn, farmers must plant a non-Bt corn refuge as part of an insect resistance management plan. Refuge allows Bt-susceptible ECB to live and mate with any resistant ECB that may emerge from the Bt corn. This research analyzed two aspects of the Bt corn adoption decision. First, the value of Bt corn under various conditions (e.g., different yields, ECB infestation pressure, and potential presence of other insects) was estimated. Regions of four states, Indiana, Illinois, Iowa, and Kansas, were analyzed using decision analysis. Second, a partial budgeting approach was used to analyze the spatial configuration of refuges within a Bt cornfield. Two potential refuges were analyzed, non-Bt corn and a sacrificial popcorn refuge. The value of Bt corn was estimated to be below current technology fees for most of Indiana. However, many Illinois farmers will benefit from planting Bt corn because the probability of ECB infestation exceeds 75% in some regions of Illinois. Farmers in the regions of Iowa with economically damaging ECB infestations in six or more of ten years may benefit from planting Bt corn. In southwest Kansas, economically damaging infestations of some combination of ECB and southwestern corn borer occur in one out of two years. There, the value of Bt corn far exceeds the technology fee. The economic cost of satisfying EPA\u27s 20% refuge requirement is relatively small for farmers who choose to adopt the Bt technology, less than 2.6% of typical per-acre variable production costs. Results of the refuge analysis indicate that planting a block-U refuge scheme is only slightly more costly (less than $3.00/acre) than planting strips. This is a result of increased labor costs and lower yields associated with additional planting time. Market segregation requirements may dictate a block within a field or adjacent fields as the refuge choice. A sacrificial refuge is only economical for a very high per-acre value for Bt corn or if the area planted to popcorn is less than 1%