Welfare Gains from Application of First Generation Biotechnology in Indian Agriculture: The Case of Bt Cotton

Abstract

The study has quantified the welfare gains from adoption of Bt cotton in India. The adoption of Bt cotton has increased income levels and generated substantial gains due to higher yields and lower cost of production through lower cost on plant protection. During the period 2002–15, the total benefit has been estimated to be of ` 220 billion with 85 per cent share accruing to the producers and 15 per cent to the private seed companies/marketing firms. The welfare gains have been found to vary across states, depending upon the extent of penetration of Bt technology and agronomic performance of the crop. In India, Bt gene is embedded in hybrids as a value-capturing mechanism, necessitating seed purchase by farmers every season afresh. One policy option to improve the producer surplus could be development of the open pollinated Bt varieties in the country that may provide higher benefits to the adopters in resourcepoor regions, which are generally more suited for varieties than hybrids. The study has also highlighted some indirect gains in terms of soil health, green house emission, human health, to cite a few.