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Production and Marketing Characteristics of Adopters and Nonadopters of Transgenic Cotton Varieties in California
California Polytechnic State University
This paper analyzes the characteristics of early adopters of transgenic cotton varieties in California and explains the factors driving such early adoption. The research was conducted through the use of a mail survey that was distributed to all cotton growers in California during December 2000 and January 2001. A response rate of 16% of the 1,300 cotton growers generated a sample size of 206 California cotton growers.
Key words: cotton, transgenic, adoption, biotechnology, USA, California.
Introduction

The United States (US) is second to China in the production of cotton in the world market. China and the US are followed by India, Pakistan, and Uzbekistan in the world production of cotton. Seventeen states produce cotton within the US. California generates 13% of US cotton production. Cotton is California's largest planted crop, with one million acres in production and 20 million pounds of cottonseed planted annually. The objective of this research is to compare production and marketing characteristics of early adopters and nonadopters of transgenic cotton varieties in California. This research was conducted through the use of a mail survey distributed to all California cotton growers during December 2000 and January 2001. A response rate of 16% of the 1,300 cotton growers generated a sample size of 206 California cotton growers.

Transgenic Cotton Planted and Planned

The results of this research indicate that 57% of growers planted transgenic cotton in 2000. On average, 44% of the total acreage of adopters of transgenic varieties was devoted to such varieties (Table 1).

There are three varieties of cotton that are planted in California. Upland variety cotton is used for basic clothing products, such as jeans or sweatshirts. Acala is a specific variety of Upland that must be approved and is grown in the San Joaquin Valley in California. Pima variety is premium cotton that is used to make expensive clothing, sheets, and so forth.

The most planted variety among respondents was the Acala variety. However, adopters of transgenic varieties had a lower proportion of acreage planted with Acala and a higher proportion planted with Upland. A similar relationship holds for the expected plantings for next season (Table 2).

Plantings of transgenic varieties were expected to increase in the following year. The mean proportion of acreage planted among last year's adopters would increase from 44% to 48%. Further, there was a planned increase in planting of transgenic varieties (from 0% to 17%) by those that did not plant it in the previous year (Table 3).

Less than 5% of the early adopters intended to disadopt. The early adopters that planned to continue use of transgenic varieties indicated intentions to increase the proportion of their total acres devoted to transgenic varieties from 37% to 54% (Table 4).

Table 1. Adoption levels of transgenic cotton in 2000.
Type of Cotton Growers Planted Transgenic Acreage as Percent of Total
Adopted Transgenic 57% 44%
All Nontransgenic 43% 0%
N 200 200

Table 2. Proportion of cotton acreage by variety.
  Adopters Nonadopters t
This Season
Pima 7.34% 5.23% .96
Acala 62.76% 81.38% -3.69**
Upland 29.89% 13.39% 3.37*
Next Season
Pima 12.59% 8.06% 1.55
Acala 63.00% 76.45% -2.61**
Upland 23.71% 15.31% 1.73*
N 114 86  
**Significant difference at the .05 level. *Significant difference at the .10 level.

Table 3. Planting intentions for transgenic varieties in 2001.
  Adopters Nonadopters t
Percent of Acreage in Transgenic Varieties Last Year 43.96% 0% 13.44**
Percent of Acreage in Transgenic Varieties Next Year 47.84% 16.57% 6.59**
N 114 86  
** Significant difference at the .05 level.

Table 4. Proportion of transgenic acreage based on adoption of transgenic varieties last year.
  Planted Transgenic Last Year and Next Year Will Not Plant Transgenic Next Year Independent t
Percentage Last Year 37.46% 4.78% 8.58**
Percentage Next Year 53.94% 0% 18.47**
N 124 71  
** Significant difference at the .05 level.

Transgenic Acreage, Tech Fee, Profit, and Production Costs

The increase in the anticipated acreage of transgenic varieties is likely the result of the growers' recovering increased expenses (e.g., technology for transgenic varieties) and their expectations that transgenic varieties generate more profit per acre. When increased expenses are recovered, the propensity to continue or increase adoption increases as well. On average, 80.9% of all early adopters recovered the tech fee. The proportion of early adopters who planned continuing adoption, however, was 88%.

Similarly, when early adopters expect increased profitability from transgenic varieties, their propensity to continue or increase adoption also increases. On average, 76% of early adopters indicated that they believe transgenic varieties to be more profitable than nontransgenic varieties; 48% of nonadopters also had similar expectations (Table 5). As this expectation increases, so does the propensity to continue adoption. 87.6% of early adopters who believed transgenic varieties to be more profitable planned to continue using transgenic varieties in the next year.

On the other hand, poor performance of the new transgenic varieties in the field discouraged continuing adoption. Only 13% of growers that did not plan to use transgenic varieties next year were early adopters of transgenic varieties. Most of these growers (64.3%) did not recover their tech fee. Furthermore, a majority of growers that did not plan to repeat planting with transgenic varieties (92.9%) did not experience higher profit per acre from their transgenic varieties (Table 6).

Where does increased profitability from transgenic varieties come from? Users of transgenic cotton varieties have indicated experiencing lower fuel and labor costs per acre (Table 7). Given typical reductions in the number of sprays for pests expected in the case of transgenic varieties, lower fuel and labor costs are reasonable.

Table 5. Transgenic varieties generate more profit per acre than nontransgenic varieties.
  Adopters Nonadopters χ²
Transgenic Varieties Generate More Profit Per Acre Than Nontransgenic 76.0% 48.1% 12.335**
N 104 54  
** Significant difference at the .05 level.

Table 6. Transgenic varieties last year compared to next year.
  Will Plant Transgenic Next Year Will Not Plant Transgenic Next Year χ²
Planted Transgenic Last Year 87.5% 12.5% 64.97**
Did Not Plant Transgenic Last Year 31.3% 68.7%  
N 112 83  
** Significant difference at the .05 level.

Table 7. Production costs where significant differences exist among adopters and nonadopters.
  Adopters Nonadopters t
Fuel Cost/Acre $38.56
(N=58)
$52.17
(N=41)
-1.998*
Labor Cost/Acre $81.22
(N=64)
$104.71
(N=45)
-2.54**
** Significant difference at the .05 level. *Significant difference at the .10 level.

Cottonseed Purchasing Behavior

California cotton growers were most likely to purchase their seed from ginners or seed distributors. However, early adopters of transgenic varieties were more likely to purchase seed from a chemical distributor. Indeed, almost half of respondents who used transgenic cotton had bought their seed from a chemical supplier. In contrast, only 16% of nonadopters had purchased their seed from such distributors (Table 8).

The primary source of technical information about seed is seed companies. However, the transgenic users were also very likely to use a pest control advisor (PCA) for technical information about seed. Furthermore, 22% of early adopters got their technical information from the University of California-Davis integrated pest management (IPM) website, while only 11.6% of nonadopters received information from the same source (Table 9).

63% of growers surveyed indicated that they purchased from only one supplier. However, a comparison of early adopters and nonadopters of transgenic varieties shows that adopters were less likely to use only one supplier. Only half of early adopters purchased from one supplier, while 82.4% of nonadopters purchased seed from only a single supplier of seed (Table 10).

Therefore, it is not surprising that nonadopters believed that finding a "single" supplier is an important consideration in their seed purchasing decision. However, the most important factors to both groups when evaluating a seed supplier were product availability and product delivery, followed by technical support and communication. Nonadopters indicated that marketing and internet support are more important when evaluating a seed supplier than did early adopters of transgenic varieties (Table 11).

Table 8. Types of seed supplier.
  Adopters Nonadopters χ²
Ginners 67.5% 64.0% .282
Chemical Supplier 46.5% 16.3% 20.085**
Seed Distributor 43.0% 34.9% 1.345
Seed Producer 11.4% 10.5% .044
All-service Farm Supply 6.1% 4.7% .209
Other 2.6% 1.2% .540
N 114 86  
** Significant difference at the .05 level.

Table 9. Sources of technical information about cottonseed.
  Adopters Nonadopters χ²
Seed Producer 71.1% 60.5% 2.467
PCA 64% 45.3% 6.947**
Farm Advisor 51.3% 44.2% .997
Another Grower 49.1% 53.5% .374
UC Davis IPM Website 21.9% 11.6% 3.603*
Other 20.2% 29.4% 2.270
N 114 86  
** Significant difference at the .05 level. *Significant difference at the .10 level.

Table 10. Purchase seed from more than one seed supplier.
  Adopters Nonadopters χ²
Yes 49.1% 17.6%  
No 50.9% 82.4% 21.021**
N 114 85  
** Significant difference at the .05 level.

Table 11. Factors used when evaluating a seed supplier.
  Adopters Nonadopters χ²
Product Availability 76.1% 73.3% .211
Product Delivery 71.9% 69.8% .111
Technical Support 58.8% 47.7% 2.430
Communication 47.4% 43.0% .373
Informational Grower Meetings 39.5% 48.8% 1.749
Sales People 35.4% 25.6% 2.194
One Source Supplier 23.7% 34.9% 3.017*
Marketing Support 11.4% 21.2% 3.536*
Internet Support (crop information) 3.5% 14.0% 7.266**
N 114 86  
** Significant difference at the .05 level. *Significant difference at the .10 level.

The most important factor in the decision on variety to plant for both groups was yield trial results. However, 91.2% of early adopters relied on the results of competitive field trials when deciding which variety to plant—significantly more than nonadopters. This is a reasonable result, as growers are attempting to evaluate the performance of the new transgenic varieties. The next most important factors in the decision on variety to plant for both groups were neighbors, industrial field days, and the farm advisor (Table 12).

Both transgenic users and nonusers used pay net 30 days and no pay until harvest plans for their seed. Further, both groups preferred the no pay until harvest plan (Tables 13 & 14).

Both groups agreed that return policies are very or extremely important in the purchase decision for seed. As expected, it is somewhat more important for early adopters, since they are confronted with increased uncertainty about the performance of the new varieties (Table 15). Both groups of respondents agreed that if specific varieties are in short supply they should be allotted by past business relationships and historical purchases (Table 16).

Newsletters and field days were the most preferred methods for presenting results of competitive trials to both groups. However, 64% of early adopters felt that results from competitive trials should be made accessible online to the growers for the most benefit (Table 17). Again, such response is reasonable, as early adopters attempt to find alternative strategies to mitigate risk and uncertainty on the performance of the new varieties.

Table 12. Factors influencing decision on variety to plant.
  Adopters Nonadopters χ²
Competitive Trial Results 91.2% 82.6% 3.369*
Neighbors 65.8% 61.6% .368
Industry Field Days 57.0% 46.5% 2.170
Farm Advisor 55.3% 47.7% 1.131
Farm Publications 38.9% 27.9% 2.642
Distributor 28.1% 34.9% 1.064
Seed Breeders 26.5% 26.7% .001
Seed Salesman 22.1% 20.9% .041
Trade Journals 21.1% 19.8% .050
Other 18.4% 23.3% .703
N 114 86  
*Significant difference at the .10 level.

Table 13. Current payment programs for cottonseed purchases.
  Adopters Nonadopters χ²
Pay Upon Delivery 1.8% 5.9% 4.814
Pay Net 30 Days 36.8% 44.7%  
Pay Net 60 Days 14.0% 9.4%  
Pay Net 90 Days 14.9% 11.8%  
No Pay Until Harvest 27.2% 22.4%  
Other 5.3% 5.9%  
N 114 85  

Table 14. Payment programs liked to see from a seed supplier.
  Adopters Nonadopters χ²
Pay Upon Delivery 1.8% 1.3% 7.090
Pay Net 30 Days 10.9% 16.7%  
Pay Net 60 Days 6.4% 9.0%  
Pay Net 90 Days 11.8% 21.8%  
No Pay Until Harvest 61.8% 47.4%  
Other 7.3% 3.8%  
N 110 78  

Table 15. Importance of seed return policies in purchasing decision.
  Adopters Nonadopters χ²
1 (very important) 51.8% 43.5% 3.146
2 26.8% 24.7%  
3 12.5% 20.0%  
4 7.1% 8.2%  
5 (not at all important) 1.8% 3.5%  
N 112 85  

Table 16. Allocations of specific varieties in short supply.
  Adopters Nonadopters χ²
Allotted by Past Business Relationship and Historical Purchases 47.7% 51.9% .596
Allotted by Equal Percentage to Each Grower 40.5% 39.5%  
Allotted by Volume of Current Purchase 11.7% 8.6%  
N 111 81  

Table 17. How results from competitive trials should be presented to growers for the most benefit.
  Adopters Nonadopters χ²
Newsletter Mailings 88.6% 87.2%  .089
Field Day 69.3% 77.9% 2.358
Accessible Online 64.0% 44.2% 7.820**
Trade Journal 48.2% 52.3% .326
Other 3.5% 7.1% 1.286
N 114 86  
** Significant difference at the .05 level.

Growing and Business Practices

The growing practices of the early adopters and nonadopters were similar with respect to bed spacing and plant populations per acre. Approximately one half of both transgenic respondents and nontransgenic respondents used 38 inches for bed spacing (Table 18). In addition, most growers used plant populations of 40,000 to 54,999 plants per acre (Table 19).

Record keeping was the leading use of computers among all growers surveyed. However, early adopters of transgenic varieties were more advanced computer users than nonadopters. They indicated that computers are used in their businesses for financial records, research, marketing/futures markets, inter-company communication (email), and internet sales at higher levels than those of nonadopters (Table 20).

Growers of transgenic varieties were more likely to be in Tulare and King Counties and less likely to be in Fresno, Merced, and Madera Counties (Table 21).

Table 18. Bed spacing use.
  Adopters Nonadopters χ²
30 Inches 28.6% 16.3% 4.541
38 Inches 50.9% 59.3%  
40 Inches 16.1% 20.9%  
Other 4.5% 3.5%  
N 112 86  

Table 19. Plant populations used per acre.
  Adopters Nonadopters χ²
30,000-34,999 3.6% 7.3% 1.955
35,000-39,999 9.1% 8.5%  
40,000-44,999 27.3% 29.3%  
45,000-49,999 27.3% 23.2%  
50,000-54,999 20.0% 17.1%  
55,000 and Greater 12.7% 14.6%  
N 110 82  

Table 20. Amount business is aided through use of computers.
  Adopters Nonadopters χ²
Record Keeping 77.9% 68.7% 2.105
Financial Records 73.7% 59.0% 4.699**
Research 43.0% 26.5% 5.656**
Marketing/Futures Markets 36.8% 24.1% 3.618*
Inter-company Communication (email) 24.6% 14.5% 3.030*
Business-to-Business Communication 21.9% 13.3% 2.421
Internet Sales (any type of product) 10.5% 2.4% 4.793**
N 114 83  
**Significant difference at the .05 level. *Significant difference at the .10 level.

Table 21. County/counties cotton farmed.
  Adopters Nonadopters χ²
Fresno 23.2% 29.4% 14.616*
Tulare 22.3% 18.8%  
Kern 18.8% 18.8%  
King 14.3% 5.9%  
Merced 7.1% 14.1%  
Riverside 4.5%  
Madera 4.5% 10.6%  
Imperial 3.6% 2.4%  
Glen 1.8%  
N 112 85  
*Significant difference at the .10 level.

Summary and Conclusions

The results of this research indicate that 57% of California growers planted transgenic cotton in 2000. Most respondents that planted transgenic varieties in the previous year indicated that they would plant transgenic cotton the following year. Almost a third of nonadopters indicated that they expected to begin adoption the following year. The mean proportion of cotton acreage planned for the following year among early adopters increased significantly from 37% to 54% of total acreage. This increase in acreage planted in transgenic varieties is attributed to increased profitability. Not all early adopters experienced increased profits, however. 12.5% of early adopters did not plan to plant transgenic varieties next year. Over 90% of those who planned to discontinue adoption indicated that they did not consider transgenic varieties more profitable than nontransgenic varieties.

Early adopters experienced a lower cost of fuel per acre and a lower labor cost per acre than nonadopters, pointing to some potential sources of efficiencies from transgenic varieties.

Uncertain performance of new varieties is a key source of risk in the early stages of market introduction. Accordingly, sources of information and other strategies that mitigate such risk seem to be important to early adopters. Respondents indicated that seed producers and PCAs were their top two sources for technical information about seed, while the UC-Davis IPM website was the least-used source for technical information about seed. However, PCAs and the IPM website were more likely to be used by early adopters. Most respondents indicated that newsletter mailings and field days should be used to present results from competitive trials. However, early adopters were more likely to indicate that internet access to competitive trials was important.

Early adopters were more likely to indicate that their businesses were aided through the use of computers. Computers were more likely to aid their businesses in the following ways: financial records, inter-company communication through email, internet sales, marketing and futures markets, and research. This result suggests that early adopters might be more progressive growers.

Overall, the results suggest that economics drive adoption of cotton transgenic varieties in California. This research indicates that the use of transgenic varieties of cotton in California is expected to increase among current users and new users. The increase in adoption of transgenic cotton varieties is related to a higher level of profit per acre. Adopters of transgenic varieties are more likely to use computers and the internet in their business activities. Further, competitive trial results are important to them in their decision of which variety to plant. However, due to the decrease in the price of cotton and the decline in planting since this survey was administered, additional research is needed to examine the impact of transgenics in this changed market environment.

When this research was conducted (December, 2000) the price of cotton was approximately $64 and has since plummeted to approximately $35 (National Cotton Council of America, 2002). The price of cotton in 2002 is currently at a 20- to 30-year low. This price reduction, which can be attributed to an increase in world supply, is leading to an overall decrease in the quantity of cotton planned in the US. According to the US Department of Agriculture, there will be a 17.8% reduction in the quantity planted in the US from 2002 to 2003 (United States Department of Agriculture Economic Research Service, 2002). It is expected, however, that adoption of transgenic varieties might be accelerated by the more difficult economic conditions confronted by California cotton growers. Due to the change in the world supply and price of cotton, additional research will be needed to examine the impact of the cotton price decline on the adoption of transgenic seed varieties.

References

National Cotton Council of America. (June 2002). Cotton policies and prices—NCC provides missing information and clarification of misinformation in WSJ article. Available on the World Wide Web: http://www.cotton.org/gov/WSJ-response.cfm.

United States Department of Agriculture Economic Research Service. (2002). Cotton and wool yearbook—summary (ERS-CWS-2002). Available on the World Wide Web: http://www.ers.usda.gov/publications/so/.


Suggested citation: Wolf, M., Gelke, J., Lindo, M., Doub P., and Lohse, B. (2002). Production and marketing characteristics of adopters and nonadopters of transgenic cotton varieties in California. AgBioForum, 5(2), 65-70. Available on the World Wide Web: http://www.agbioforum.org.
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