Presentation at the 2013 ICABR meeting in Ravello, Italy. Details experiences with two surveys conducted on GM maize in Honduras. Identifies impacts on yields and profits, issues, traits related to the adoption of a GM product in a small resources poor country.

1. “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

2. Honduras: High reliance on agriculture
Agriculture Value Added
25
% of GDP
20
Sub-Saharan Africa
World
Honduras
United States
15
10
5
0
2000
2002
2004
2006
2008
2010
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

3. Honduras: Limited resources for agricultural production
especially land
Arable Land
% of Land Area
25
20
Sub-Saharan Africa
World
Honduras
United States
15
10
5
0
2000
2002
2004
87% of territory corresponds to hillsides
susceptible to erosion
Graphs: WorldBank Development Indicators (2013)
Map: National System of Environmental Indicators, SINIA
2006
2008

4. Honduras: Low productivity of major staple
crops
Kilograms / hectare
Cereal Yield
8000
7000
6000
5000
4000
3000
2000
1000
0
Sub-Saharan Africa
World
Honduras
United States
2000
2002
2004
2006
2008
2010
Honduras’ Productivity:
1/3 of world averages and
1/7 of US yields

5. Corn is an essential part of Honduran diet
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
1FAO
Statistics Division, 2012, 2Ministry of Agriculture and Livestock, 2012

6. Corn supply in Honduras increasingly
dependent on imports
Corn Production and Trade
8000
600
6000
400
4000
200
2000
0
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
Corn production
Corn imports
Nearly 40% of corn is imported and
thus high concerns for corn price
volatility in international markets
Corn exports
Population (thousands)
Tons (thousands)
800
0
Population total
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

7. 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….

8. GMOs in Honduras
8th Latin American country adopting GMOs since 20021
-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
1ISAAA,
2012
Only country in Central America
cultivating GMOs for food

9. WHY GMOs adopted in Honduras?

10. Honduras: promotional environment favoring biotechnology
adoption
Favorable policy, economic and social conditions facilitated adoption
• Honduras trade is essentially tied to the United States
• Historically strong presence of agricultural multinationals interested in increased
agricultural productivity
UN Statistics Division, 2011. WTO Statistics, Trade
Profiles, 2012
Strategic interest in aligning agricultural policies with
the major economic and trade partners

11. Honduran government specific policy support for easing a transition
towards biotechnologies
 Established Biosafety Framework and Regulations
 Incorporated biotechnology in National Food Self Sufficiency Strategy
 Coordinated a joint agricultural and environmental political agenda
1996/98:
1998:
2006:
2008:
2001/12:
Biosecurity Regulation with Emphasis in Transgenic Plants
National Committee of Biotechnology and Biosecurity (NCBB)
CAFTA-DR Phytozoosanitary Law modification
Cartagena Protocol Ratification
Law for the Protection of New Varieties of Plants
USAID GAIN Report 2012.
‘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
Honduras: A case study to
understand biotechnology
adoption in small resource poor
developing countries

12. Honduras in the Latin American innovation
sphere
Small markets
Non-selective
importers of
technology
Selective
importers of
technology
Tool users
Innovators
El Salvador,
Guatemala,
Honduras,
Nicaragua, Panamá
Costa Rica,
Uruguay
-
Medium
markets
Bolivia, Ecuador
Large markets
Paraguay, Peru
Venezuela
Colombia, Chile
Argentina, Mexico
Brazil
Notes: 1) Source: Trigo, Falck-Zepeda and Falconi (2010), 2)
Non-adopters are listed in italic text.

13. 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
Ecuador
Guatemala
Perú
Venezuela
0
0
0
0
+
0
0
-
0
-
0
0
0
0
0
0
0
Argentina
Brazil
Costa Rica
Honduras
+
+
+
0
0
-
0
0
0
0
+
0
0
0
+
+
+
-
Mexico
Uruguay
+
+
0
0
0
0
0
0
+
+
Adopters
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.

14. HOW HAS GM CORN WORKED IN
HONDURAS?

15. 2008 GM maize crop cycle in
Honduras: Results from our first survey
 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
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.
Photos credit: © Sanders and Trabanino 2008

16. 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

17. Disclosure:
 Results presented here are preliminary
 These may change with further work

18. Major maize producing areas in
Honduras

19. Olancho: The main metric tons producing state in
- 180,000 corn
- 35,000 planted hectares >30 % national corn production
Honduras
- 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

20. Our findings: In average GM corn farmer seem to be
using less pesticides
Number of
applications
Conventional
Both types,
conventional plot
GM
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
GM corn producers from sample made one insecticide
and herbicide application less

21. GM and conventional corn farmers seem to have
a similar environmental impact measured by the
EIQ
Environmental
Impact Quotient
Conventional
< 7 ha
> 7 ha
Both types,
conventional plot
GM
< 7 ha
> 7 ha
< 7 ha
> 7 ha
Both types,
GM plot
< 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
EIQ: J. Kovach et al, IPM Program, Cornell University, New York State Agricultural Experiment Station Geneva, New York 14456

22. GM corn farmers seem to be obtaining
higher yields & profits
Cost structure in corn production
Conventional
< 7 hectares
Total costs (US$/ha)
Yield (ton/ha)
Price (US$/ton)
Income (US$/ha)
Profit (US$/ha)
1 At
small scale
717.1
2.8
273.7
748.5
32.1
> 7 hectares
749.7
3.4
294.4
1018.6
269.9
GM
< 7 hectares
1209.1
5.4
352.3
1929.7
722.5
> 7 hectares
1460.8
5.5
394.5
2189.1
730.4
*
*
*
*
*1

23. 120
121
129
131
132
143
152
155
169
170
173
174
182
200
212
217
222
230
Cook’s D
0.053
0.385
0.033
0.039
0.020
0.022
0.021
0.688
0.054
0.028
1.230
0.036
0.020
2.381
0.030
0.032
0.060
0.033
0.032
0.020
0.022
0.026
84
20
Robust standardized residuals
116
6.500
5.200
7.475
4.543
9.100
2.507
2.839
6.500
3.250
1.817
5.200
7.800
1.083
6.045
0.975
8.060
0.195
5.200
7.800
1.300
9.100
6.500
170
131
212
99 200
42 230 120
133 88 93
9689
199
394 110
214 186
191 145
92
155
204
166
198
216
125
11260 127
2115985 115 136 103
206
117141 203 208 106
135
158
157
91161 111
185 140
215
100
171101
5686
5121
184
176
122
174
137
164
182
132130
20114
78140 233
10468 213
109
7790 154
107 183
144 153
232 175
11168
129
76
173
0
Yield
42
84
99
116
152
-20
Observation ID
40
Of Cook’s D, the issue of outliers and
sampling biases…our data shows it’s present
0
500
1000
Robust_distance
1500
“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 distort 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
2000

24. Production function approach
Variable
Robust Regression (MMRegression 85% efficiency,
ROBREG)
Robust
Coef.
SE
Robust Regression (
MSREGRESS)
Instrumental Variables (
IVREG2)
Coef.
Coef.
Robust SE
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.
-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.
Time cultivating GM maize
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.
-3.978
2.040 *
-1.207
0.290 ***
-0.926
0.654 n.s.
3.592
0.846 ***
2.665
0.603 ***
AI other pesticides squared
Constant
4.822
1.365 ***

25. Net income
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.
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.
-205.6
240.3
n.s.
0.071
0.155
n.s.
0.033
0.005
**
-0.275
0.032
**
0.252
0.161
n.s.
AI other pesticides (Kg/ha)
AI other pesticides/fungicides used
squared
Price GM seed
Year cultivating GM seed
Constant
659.2
214.6
***

26. The 2013 (second) survey to observe experiences of
conventional & GM corn farmers – summary of
preliminary results
 Average yield difference of 1.1-
1.4 tons/hectare
 Positive net income gains of US$
279 per hectare
 Persistent institutional issues
Access to productive inputs
Access to markets
Credit
Technology information gaps
Other traits not addressed by the
technology may be important
 Local varieties






27. THEN…WHY HAVE WE NOT
OBSERVED FULL ADOPTION BY
HONDURAN PRODUCERS?

28. Access to inputs may restrict adoption
GM
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
•
•
•
•
•
•
•
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$/ha
Depending on plot size
Farmers without information, credit or other inputs are less
likely to adopt GM crops
Conventional
•
•
•
•
•
•
•
40 to 64% of farmers
11 to 0% of farmers
19 to 28% of farmers
4 to 8% of farmers
11 to 16 US$/ha
213 to 237 US$/ha
106 to 104 US$/ha

29. Access to markets may limit profitability
GM
Characteristic
• Closer to urban areas
• Sell directly to industry
• Transportation costs
• Selling price
• Agronomic cycle
Conventional
• 92 to 93% of farmers
• 12 to 16% of farmers
•
•
•
•
•
•
•
•
45 to 80% of farmers
134 to 152 US$/ha
352 to 395 US$/ton
3-4 months
Depending on plot size
Farmers with smaller plots or in remote areas
are less likely to adopt biotechnology
2 to 4% of farmers
17 to 40 US$/ha
274 to 294 US$/ton
4-5 months

30. Farmers may prefer other traits
Large/valley
Black spot resistance
High yield
Heavy grain
BT
RR
Price
Drought resistance
Preferred traits for production by production size & location
Large/hills
Small/valley
Small/hills
Black spot resistance
Black spot resistance
Black spot resistance
High yield
High yield
High yield
Heavy grain
Heavy grain
BT
BT
RR
Price
Farmers have greater
Drought resistance
preference for protection
% germination
against risk
Full cob
Gender/seed type
Male/Conventional
Male/GM
Female/Conventional
Female/GM
All
Preferred for production
Conventional
GM
0
13
0
18
20
0
0
12
20
43
Preferred for consumption
Conventional
GM
0
0
5
1
18
0
8
0
31
1
Local corn varieties make better tortillas
Preliminary data from exploratory panel, 2013. Unpublished.

31. 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

32. Jose Falck-Zepeda
Patricia Zambrano
Alan B. Bennett
Cecilia Chi-Ham
Denisse McLean
Arie Sanders
Maria Mercedes Roca
Miljian Villalta
Sandra Mendoza. Participatory research
consultant
Research funded by: