GM Sugarbeets yield profitsWritten by Saige Albert
Looking to answer the profitability question as it relates to sugarbeets, UW graduate student in agricultural economics Brian Lee began looking at the profitability of genetically modified (GM) sugarbeets as compared to the conventionally grown crop for his thesis project.
“This all came about because of the environmental concerns that have been brought up about GM sugarbeets recently,” says Lee.
“Since the introduction of GM sugarbeets, there has been a 95 percent adoption rate,” Lee explains. “USDA APHIS (Animal and Plant Health Inspection Service) did an environmental impact statement to look at the effects the sugarbeets could have.”
Lee also mentions that, in Wyoming, sugarbeets have a big impact. According to the Wyoming Agricultural Statistics 2011, 821,000 tons of sugarbeets were produced in Wyoming in 2010, with the U.S. producing almost 32 million tons. With a 2009 average market price of $53.90 per ton, the impact of sugarbeets in the state is big.
Setting it up
“We wanted to visually compare GM and conventional sugarbeet profits,” explains Lee, “so we needed budgets and input prices.”
Using existing sugarbeet budgets provided by University of Nebraska Extension, Lee varied sugar, fuel, Roundup and fertilizer prices for GM and conventional crops, as well as potential market risk.
“The goal of this analysis was to see which type of sugarbeet is more profitable, and how often,” he says.
With a distribution of prices, Lee set up a model to vary those prices with each iteration and ran the model 10,000 times, enabling him to look at the difference between GM and conventional beets.
“From one year’s set of prices, within these budgets, the GM sugarbeet will be more profitable,” Lee comments.
Lee shared his analysis with several professors at UW, who had several concerns, so he continued his analysis to address any questions.
“One of the plant scientists thought herbicide prices were too low, so we looked at that, as well,” he explains. “A 10 percent reduction in herbicide cost accounted for about seven percent of the total cost of production. However, a 30 percent increase in herbicide costs showed herbicide accounting for 10 percent of production cost.”
A similar analysis was performed looking at Roundup prices, as well, and showed the herbicide costing from two to six percent of total production cost.
“The GM sugar beet profit distribution shows average profit at about $781 per acre. The max is well above $2,000,” he explains, adding that 95 percent of the time profit will hit between $313 and $1,300 per acre when using GM sugarbeets.
For conventional beets, Lee notes an average profit of $700 per acre, and, 95 percent of the time, profit will range between $267 and $1,200 per acre.
“Each time I ran the numbers through the budget, I was able to capture how much more profitable the GM was from the conventional,” says Lee. “The minimum difference was $8.08 and the maximum was $213. This says that 100 percent of the time, GM sugarbeets will be more profitable than conventional.”
Things to consider
“I recommend that, as long as glyphosate-resistant sugarbeets are around, go ahead and produce them,” says Lee. “They seem more profitable.”
He notes, however, that data from the USDA for Roundup was limited to 10 years, and the assumption that the average boost in yield of two tons was a driver in the differences.
“We did find that if you don’t see a yield boost from GM sugarbeets, conventional is more profitable 100 percent of the time,” he notes.
Currently, research is being conducted in the field to validate the two-ton yield increase. Lee also mentions that input differences, as well as irrigation and soil types, differ from place to place, which could yield other results.
“In general, GM sugarbeets will be more profitable, given market risk and price fluctuation, unless we see more government regulations,” notes Lee.
Lee’s advisor, UW Extension Production Economist John Ritten, also mentions, “There is a lot of research out there, but not as much on profitability analysis. When Brian gets to the next stage, he will run whole-farm models.”
“I’ve shown that GM sugarbeets are more profitable, but what about when other crops are available?” asks Lee. “I’m currently doing a linear programming model with corn, wheat, dry beans, initial alfalfa and established alfalfa to see what the optimal mix of crops is to maximize profit.”
GM sugarbeets hit the market
In 2005, USDA APHIS deregulated a genetically modified (GM) variety of sugarbeet that is tolerant to Roundup, a herbicide containing glyphosate. These sugarbeets, called Roundup Ready sugarbeets, were widely planted and accounted for 95 percent of sugarbeets planted in 2009-2010 crop year.
The deregulation of GM sugarbeets was only considered after an environmental assessment determined they were unlikely to pose a plant pest risk, according to the organization’s website.
However, following a lawsuit initiated by the Center for Food Safety, the Sierra Club and two organic seed groups in January 2008, courts mandated that the 2005 APHIS decision be vacated, and that the GM sugarbeet must be regulated once again beginning Aug. 13, 2010.
Shortly after, on Feb. 4, 2011, APHIS determined that partial de-regulation was sufficient until a full environmental impact statement (EIS) was complete. The EIS was published Oct. 11, 2011, and was open for comment until Dec. 13, 2011. The future of Roundup Ready sugarbeets remains in the balance.