1 Introduction

Genetically modified organisms (GMOs) have revolutionized modern agriculture by incorporating DNA into an organism’s genome to create plants with enhanced features. This genetic modification aims to improve product sizes, productivity, and resistance to diseases and pests, thereby contributing to increased crop yields and reduced pesticide use (Klümper and Qaim, 2014; Werkissa, 2022). The development of GMO plants began with the introduction of Flavr Savr tomatoes, which were engineered to delay ripening and prevent rot, marking the onset of a new era in agricultural biotechnology.

The historical context of GMOs in agriculture can be traced back to the early 1970s when the first genetically modified bacteria capable of digesting oil spills were discovered. This breakthrough paved the way for the biotech revolution, leading to the widespread adoption of GM crops in the late 1990s. By the turn of the century, a significant portion of agricultural land in the United States was dedicated to GM crops, including corn, cotton, and soybeans (Arugula et al., 2014). The rapid adoption of GM technology has been driven by its potential to address challenges posed by population growth, climate change, and the need for sustainable agricultural practices (Zilberman et al., 2018; Giudice et al., 2021; Hariraman, 2022).

This study will evaluate the long-term impact of GMOs on agricultural economy, such as their benefits in improving agricultural productivity, reducing costs, and environmental sustainability. It will also address potential risks and controversies surrounding GMOs, including their challenges to human health, environment, and regulation. Through a comprehensive analysis of the economic impact of GMOs, this study aims to promote the potential development of genetically modified technology in promoting global food security and sustainable agriculture.

2 Overview of GMO Technology in Agriculture

2.1 Description of common GMO traits

Genetically modified organisms (GMOs) in agriculture primarily exhibit traits such as pest resistance and herbicide tolerance. Pest-resistant crops, often engineered to express insecticidal proteins like Cry proteins from Bacillus thuringiensis (Bt), significantly reduce the need for chemical insecticides, thereby lowering environmental impact and improving crop yields (Chen and Lin, 2013). Herbicide-tolerant (HT) crops, such as those tolerant to glyphosate or glufosinate, allow farmers to control weeds more effectively without damaging the crops themselves. This trait simplifies weed management and can be integrated with conservation tillage practices to enhance soil health and reduce erosion (Lee et al., 2014; Bonny, 2016). Newer GM traits include drought tolerance, enhanced nutritional content, and resistance to viral, bacterial, and fungal pathogens, broadening the scope of benefits provided by GM crops.

2.2 Adoption rates of GMO crops worldwide

Since their commercialization in 1996, the adoption of GM crops has seen a rapid increase globally. As of recent years, key GM crops such as soybean, maize, and cotton have been widely adopted in both developed and developing countries. For instance, GM technology adoption has led to a 37% reduction in chemical pesticide use, a 22% increase in crop yields, and a 68% increase in farmer profits on average (Klümper and Qaim, 2014). The adoption rates are particularly high in countries like the USA, Brazil, and Argentina, where large-scale farming operations benefit significantly from the efficiency and cost savings provided by GM crops (Seixas et al., 2022). However, the adoption rates vary significantly across different regions due to regulatory, economic, and social factors (Anderson et al., 2016; Huesing et al., 2016).

2.3 Key players in the development and commercialization of GMO plants

The development and commercialization of GM plants have been driven by both private and public sector entities. Major biotechnology companies such as Monsanto (now part of Bayer), DuPont Pioneer, and BASF have been at the forefront, investing heavily in research and development to create new GM traits and bring them to market 68. These companies have developed a range of GM crops that address various agricultural challenges, from pest and weed control to improving nutritional content and stress tolerance. Public sector research institutions and universities have also played a crucial role, particularly in developing GM crops tailored to the needs of small-scale farmers and specific regional challenges. For example, the development of virus-resistant papaya in Hawaii by public sector researchers has been a notable success story (Lundgren et al., 2009). Despite these advancements, the commercialization and global adoption of GM crops face challenges such as regulatory hurdles, public perception, and intellectual property issues (Azadi et al., 2015).

3 Economic Benefits of GMO Plants

3.1 Increased crop yields and farm profitability

The adoption of genetically modified (GM) crops has been shown to significantly increase crop yields and farm profitability. A comprehensive meta-analysis revealed that GM technology adoption has led to an average increase in crop yields by 22% and farmer profits by 68%. These yield gains are particularly pronounced in developing countries, where the benefits of GM crops are more substantial due to higher pest pressures and less effective pest management practices (Klümper and Qaim, 2014; Zilberman et al., 2018). Additionally, GM crops such as Bt cotton and Bt maize have demonstrated consistent yield improvements over conventional crops, contributing to higher gross margins for farmers.

3.2 Reduction in production costs

One of the notable economic benefits of GM crops is the reduction in production costs, particularly in terms of pesticide use and labor. The same meta-analysis indicated that GM crop adoption has reduced chemical pesticide use by 37% on average (Racovita et al., 2015). This reduction not only lowers the cost of purchasing pesticides but also decreases the labor required for pesticide application. Furthermore, the adoption of GM crops can lead to more efficient pest management practices, which in turn reduces the overall costs associated with pest control (Smyth, 2019). However, it is important to note that while pesticide costs decrease, seed costs for GM crops are generally higher than those for conventional crops.

3.3 Economic impact on small-scale vs. large-scale farmers

The economic impact of GM crops varies between small-scale and large-scale farmers. For small-scale farmers, particularly in developing countries, GM crops offer several advantages, including increased independence from farm size and improved occupational health due to reduced pesticide exposure. However, challenges such as the availability and accessibility of GM seeds, high seed prices, and intellectual property rights can hinder the adoption of GM technology by smallholders (Azadi et al., 2015). In contrast, large-scale farmers are better positioned to absorb the higher seed costs and benefit from economies of scale, leading to more significant economic gains from GM crop adoption (Fischer et al., 2015). The overall economic performance of GM crops is thus influenced by the scale of farming operations and the specific regional and regulatory contexts in which they are implemented (Finger et al., 2011).

GM crops provide substantial economic benefits through increased yields, reduced production costs, and enhanced profitability. However, the extent of these benefits can vary significantly between small-scale and large-scale farmers, highlighting the need for tailored approaches to support the adoption of GM technology across different farming contexts.

4 Long-term Economic Challenges

4.1 Market concentration and control by a few biotech companies

The dominance of a few multinational biotech companies in the GM crop market has led to significant market concentration. These companies control the majority of GM seed production and distribution, which can stifle competition and innovation. This concentration can also lead to higher seed prices and limited choices for farmers, particularly small-scale farmers in developing countries (Ricroch and Hénard-Damave, 2016; Seixas et al., 2022). The high costs associated with regulatory compliance further exacerbate this issue, as smaller companies and public research institutions may find it challenging to compete.

4.2 Dependency on proprietary seeds and its economic implications

Farmers' dependency on proprietary GM seeds has several economic implications. The high cost of GM seeds, often protected by intellectual property rights, can be a significant financial burden for farmers, especially in developing countries (Azadi et al., 2015). This dependency can also lead to a cycle of debt, as farmers must purchase new seeds each season rather than saving seeds from previous harvests. The reliance on a limited number of seed varieties can reduce genetic diversity, potentially increasing vulnerability to pests and diseases (Catacora-Vargas et al., 2018). The economic benefits of GM crops, such as increased yields and reduced pesticide costs, are often offset by the higher seed costs, leading to mixed economic outcomes for farmers.

4.3 Economic risks associated with potential GMO crop failures

The economic risks associated with potential GMO crop failures are significant. Crop failures can result from various factors, including pest resistance, environmental stress, and regulatory challenges. For instance, the emergence of herbicide-resistant weeds and insecticide-resistant pests can reduce the effectiveness of GM crops, leading to lower yields and increased costs for farmers (Tsatsakis et al., 2017). The high initial investment in GM seeds and associated technologies means that crop failures can have severe financial repercussions for farmers, particularly those with limited financial resources (Finger et al., 2011; Racovita et al., 2014). The variability in the economic benefits of GM crops across different regions and farming practices further complicates the assessment of long-term economic risks.

5 GMO Plants and Global Trade

5.1 Impact of GMO crops on global agricultural trade

The introduction of genetically modified (GM) crops has significantly influenced global agricultural trade. GM crops, such as soybeans, maize, and cotton, have been widely adopted in countries like the United States, Brazil, and Argentina, which are major exporters of these commodities. The adoption of GM crops has led to increased yields, lower production costs, and enhanced competitiveness in the global market (Zilberman et al., 2018; Addey, 2020). However, the regulatory landscape for GM crops varies significantly across countries, leading to trade disruptions. For instance, the European Union (EU) has stringent regulations on GM crops, which can result in higher prices and reduced imports of these products (Figure 1) (Kalaitzandonakes et al., 2014; Gocht et al., 2021).

Figure 1 Elements of the market balance for cereals, sugar, and meat markets for the EU, in the baseline and a cease of import scenario (Adopted from Gocht et al., 2021) Image caption: (A) presents the baseline; (B) describes the cease of import scenario. The percentage change compared to the baseline is presented in brackets in (B), after the totals in K=1 000 tones (Adopted from Gocht et al., 2021)

The impact of these trade barriers on economic welfare is significant, particularly for countries that heavily rely on agricultural exports. The strict policies of the European Union not only affect the export revenues of these countries but also force them to seek new buyers in the global market or adjust their production strategies. This policy divergence may also lead to an increase in global greenhouse gas emissions, as less efficient countries ramp up agricultural production to fill market gaps, ultimately having adverse effects on the global environment and economy.

5.2 Trade barriers and regulations concerning GMO products

Trade barriers and regulations concerning GMOs are a major challenge in global agricultural trade. Different countries have adopted varying regulatory frameworks for GM crops, leading to asynchronicity in approvals and market disruptions. For example, the EU's zero threshold policy for unapproved GMOs can lead to significant economic impacts, including increased costs for soybeans and soybean products. Additionally, the EU's classification of genome-edited crops under GMO legislation creates further complications for international trade, as it is often difficult to distinguish between genome-edited and non-genome-edited products (Gocht et al., 2021). These regulatory differences can result in trade conflicts, such as the “GM Cold War” between the pro-GMO United States and the GM-skeptic EU, and can deter developing countries from adopting GM crops despite their potential benefits.

5.3 Economic consequences of export restrictions on GMO crops

Export restrictions on GMO crops can have significant economic consequences for both exporting and importing countries. For instance, the United States, a major producer and exporter of GMOs, faces substantial revenue losses due to the restrictive GMO regulations of its trade partners. A 1% increase in the GMO regulatory index of trade partners can lead to millions of dollars in lost export revenue for U.S. corn and soybean sectors. Similarly, if the EU were to cease imports from its main suppliers due to regulatory asynchronicity, the prices of soybeans and related products could increase by over 200%. These export restrictions not only affect the economic welfare of exporting countries but also lead to higher food prices and potential food insecurity in importing countries. Therefore, it is crucial to harmonize GMO regulations to minimize trade disruptions and maximize the economic benefits of GM crops (Balogh and Jámbor, 2020).

6 Case Study: The Economic Impact of Bt Cotton in India

6.1 Background on Bt cotton and its adoption in India

Bt cotton, a genetically modified crop developed to resist bollworm pests, was introduced in India in 2002. The Genetic Engineering Approval Committee (GEAC) approved its commercial cultivation initially in the western and southern parts of the country, with Punjab following in 2005 (Peshin et al., 2021). The adoption of Bt cotton was rapid, with 72% of farmers adopting it on 22% of the total cotton area before its official release 10. The technology was heralded as a significant advancement in pest management, promising reduced pesticide use and increased yields (Kathage and Qaim, 2012; Kranthi and Stone, 2020).

6.2 Economic outcomes for Indian cotton farmers

The economic impact of Bt cotton on Indian farmers has been substantial. Studies have shown that Bt cotton adoption led to a 24% increase in cotton yield per acre and a 50% gain in cotton profit among smallholders, primarily due to reduced pest damage. This increase in yield and profit has translated into higher household incomes and improved living standards, with consumption expenditures rising by 18% during the 2006-2008 period. The initial years of Bt cotton adoption saw significant reductions in pesticide use, contributing to cost savings for farmers (Kranthi and Stone, 2020).

However, the benefits have not been uniformly distributed. Larger farms have seen more significant income effects compared to smaller farms, primarily due to differential opportunity incomes of saved family labor. Despite these disparities, the overall economic performance of Bt cotton has been positive, with higher yields and reduced pesticide costs contributing to better gross margins (Ali and Abdulai, 2010).

6.3 Challenges faced

Despite the initial success, several challenges have emerged over time. One of the primary issues is the development of resistance in pests. While Bt cotton has been effective in controlling bollworms, other pests such as sucking insects have become more prevalent, leading to increased pesticide use. This shift has resulted in higher costs for farmers, who now spend more on pesticides than before the introduction of Bt cotton. Market fluctuations have also posed challenges. The cost of Bt cotton seeds is significantly higher than that of non-Bt seeds, which, coupled with the increased expenditure on pesticides, has raised concerns about the long-term sustainability of Bt cotton farming (Figure 2) (Gutierrez et al., 2020). The stagnation of yields in recent years has further complicated the economic landscape for cotton farmers (Subramanian, 2023).

Figure 2 Analysis of the bio-economics of Indian cotton using PBDM (Adopted from Gutierrez et al., 2020) Image caption: a: Factors affecting the dynamics of tritrophic interactions at each location (x,y,z); b The scales modeled (individual, populations, species interactions, field, regional, etc.); c: The flow of a regional bioeconomic analysis (Adopted from Gutierrez et al., 2020)

Although Bt cotton initially provided effective pest control, over time, the increase in pest resistance led to a resurgence in pesticide use, stagnation in yields, and ultimately a decline in farmers' incomes, increasing economic pressure. This exacerbated the economic challenges faced by farmers, particularly as rising production costs and declining returns contributed to an increase in farmer suicides. This reflects the complex impact of Bt cotton on agricultural production and economic well-being.

7 Environmental and Economic Interactions

7.1 The role of GMOs in sustainable agriculture and environmental conservation

Genetically modified organisms (GMOs) play a significant role in promoting sustainable agriculture and environmental conservation. GMOs have been shown to increase crop yields and reduce the need for chemical pesticides, which in turn lowers the environmental footprint of agricultural practices. By enhancing the efficiency of resource use, GMOs contribute to the conservation of soil and water quality, and they help in reducing soil erosion and increasing carbon sequestration. Additionally, GMOs can be engineered to be more resilient to climate change, thereby supporting agricultural systems in adapting to rapidly changing environmental conditions 18. However, it is crucial to balance the benefits with potential risks, such as the development of herbicide-resistant weeds and the impact on non-target species.

7.2 Economic costs and benefits of environmental impacts

The economic implications of GMOs on environmental factors such as biodiversity and soil health are multifaceted. On the one hand, GMOs can lead to significant economic benefits by reducing the costs associated with pesticide use and increasing crop yields, which enhances farmer profits and contributes to global food security. The adoption of GMOs has also been linked to improved soil health through practices like conservation tillage, which reduces soil erosion and enhances soil carbon sequestration. On the other hand, the potential negative impacts on biodiversity, such as the emergence of herbicide-resistant weeds and the disruption of ecological processes, can incur economic costs related to managing these issues. The balance of these costs and benefits is critical for developing sustainable agricultural practices that maximize economic gains while minimizing environmental harm.

7.3 Long-term economic implications of potential environmental risks

The long-term economic implications of potential environmental risks associated with GMOs are complex and require careful consideration. While GMOs offer substantial short-term economic benefits, such as increased yields and reduced production costs, the long-term risks include the potential for reduced biodiversity and the development of resistant pest species, which could lead to increased management costs and reduced agricultural productivity over time. Additionally, the overreliance on GMOs and monoculture practices can disrupt ecological balances and food webs, potentially leading to unforeseen economic consequences. Therefore, it is essential to implement robust regulatory frameworks that balance the immediate economic benefits with the long-term sustainability of agricultural ecosystems. Effective regulation and the adoption of integrated pest management strategies can help mitigate these risks and ensure the long-term economic viability of GMO-based agricultural systems.

8 Socioeconomic Considerations

8.1 Impact of GMOs on rural communities and labor markets

The introduction of genetically modified organisms (GMOs) in agriculture has had significant impacts on rural communities and labor markets. GMOs have been shown to increase crop yields and reduce the need for chemical pesticides, which can lead to higher profits for farmers (Klümper and Qaim, 2014). This economic benefit is particularly pronounced in developing countries, where the adoption of GMOs has been associated with substantial reductions in poverty rates (Ślusarczyk et al., 2020). However, the benefits are not uniformly distributed. The dominance of private industry and intellectual property rights can limit access to GMOs for small-scale farmers, potentially exacerbating existing socioeconomic disparities. The introduction of GMOs can disrupt traditional farming practices and local economies, as seen in the case of beekeepers in Spain and Uruguay, who faced significant socioeconomic challenges due to GMO contamination (Binimelis and Wickson, 2018).

8.2 Public perception and consumer acceptance of GMO products

Public perception and consumer acceptance of GMO products remain contentious issues. Despite the demonstrated benefits of GMOs, such as increased yields and reduced pesticide use, public suspicion persists, largely due to concerns about potential environmental and health risks (Roberts and Naimy, 2023). The controversy is fueled by a lack of clear communication and understanding between scientists, policymakers, and the public. Studies suggest that consumer acceptance could be improved through better risk-benefit communication and by addressing specific consumer needs, such as developing GMOs with traits that directly benefit consumers (Ishii and Araki, 2016). Fostering trust in regulatory frameworks and ensuring transparent communication about the safety and benefits of GMOs are crucial steps toward increasing public acceptance.

8.3 Socioeconomic disparities in access to GMO technology

Access to GMO technology is unevenly distributed, with significant socioeconomic disparities. In many cases, the high costs associated with GMO seeds and the dominance of private companies in the biotechnology sector limit the ability of small-scale and resource-poor farmers to adopt these technologies 3. This can lead to a widening gap between large commercial farms and smallholder farmers, particularly in developing countries. Furthermore, regulatory and political settings play a crucial role in determining access to GMOs. In regions with stringent regulations and precautionary approaches, the adoption of GMOs can be hindered, preventing farmers from reaping the potential benefits. Addressing these disparities requires a balanced regulatory approach that considers both the risks and benefits of GMOs, as well as policies that support equitable access to biotechnology (Fischer et al., 2015; Zilberman et al., 2018).

9 Policy and Regulatory Frameworks

9.1 Overview of global and regional regulations on GMO crops

The regulatory landscape for genetically modified (GM) crops is complex and varies significantly across different regions. Globally, the adoption and regulation of GM crops have been influenced by a combination of scientific, economic, and socio-political factors. For instance, while some countries have embraced GM technology, others have stringent regulations that limit its use. The European Union (EU) is known for its rigorous regulatory framework, which includes zero threshold policies for unapproved GMOs, leading to significant market disruptions. In contrast, countries like the United States and Brazil have more streamlined approval processes, facilitating the widespread adoption of GM crops. The regulatory asynchronicity between countries can result in trade barriers and economic inefficiencies, as seen in the case of the EU's stringent policies (Kalaitzandonakes et al., 2014; Smyth, 2017).

9.2 Economic implications of regulatory compliance and approval processes

The economic implications of regulatory compliance and approval processes for GM crops are substantial. The costs associated with meeting regulatory requirements can be prohibitive, particularly for developing countries. Overregulation can lead to significant foregone benefits, as it hampers the development and use of GM crops that could otherwise contribute to food security and poverty reduction. The delays in regulatory approvals also have a detrimental impact on international trade, causing market disruptions and increased costs for agricultural commodities. For example, the EU's zero threshold policy for unapproved GMOs has been shown to increase the cost of soybeans, soybean meal, and soy oil by over 200% when trade with major suppliers is disrupted (Garcia-Yi et al., 2014). Asynchronous approval of GM crops between trading partners can negatively impact trade flows, as seen in the case of cotton, maize, and soybeans.

9.3 Case examples of policy successes and failures in managing GMO impacts

There are several case examples that illustrate the successes and failures of policies in managing the impacts of GMOs. One notable success is the adoption of GM crops in the United States, where a conducive regulatory environment has facilitated significant economic and environmental benefits. The adoption of GM crops has led to increased yields, reduced pesticide use, and higher economic performance for farmers (Finger et al., 2011; Faria and Wieck, 2015; Zilberman et al., 2018). On the other hand, the EU's stringent regulatory framework has been criticized for its negative economic impacts. The zero threshold policy for unapproved GMOs has led to market disruptions and increased costs for agricultural commodities. Furthermore, the regulatory delays in approving new GM crops have hindered the potential benefits of these technologies, particularly in improving food security. The mixed views on GM crops in Europe have also influenced the adoption of these technologies in other regions, potentially limiting their benefits (Hundleby and Harwood, 2018).

10 Concluding Remarks

The review of the literature on the long-term impact of genetically modified organisms (GMOs) on the agricultural economy reveals several significant findings. GMOs have been shown to increase crop yields, reduce pesticide use, and enhance farmer profits, particularly in developing countries. The adoption of GM crops has also contributed to global food security and poverty reduction by providing substantial economic benefits to farmers and consumers. However, the socio-economic impacts of GM crops are complex and vary significantly depending on the political and regulatory context. While GMOs offer environmental benefits such as reduced land use and lower greenhouse gas emissions, they also pose potential risks, including the development of herbicide and insecticide resistance and impacts on biodiversity.

The economic opportunities presented by GMOs are substantial. They include increased agricultural productivity, reduced costs for farmers, and enhanced food security, which are particularly beneficial for developing countries. The technology also offers environmental advantages, such as reduced pesticide use and lower carbon footprints. However, these benefits are counterbalanced by several challenges. Public skepticism and regulatory hurdles can impede the adoption of GMOs, leading to missed economic opportunities, especially in regions with stringent regulations. Additionally, the dominance of a few transnational companies in the GMO seed market raises concerns about access and affordability for small-scale farmers. The potential environmental risks associated with GMOs, such as gene flow and the emergence of resistant pests, also necessitate careful management and ongoing research.

To maximize the benefits and mitigate the challenges associated with GMOs, several recommendations can be made. There is a need for more comprehensive and long-term studies on the socio-economic impacts of GMOs, particularly in diverse local contexts. Research should also focus on the environmental risks and benefits of GMOs to develop more sustainable agricultural practices. Policymakers should aim to create balanced regulatory frameworks that facilitate the adoption of GMOs while ensuring safety and addressing public concerns. This includes streamlining approval processes and reducing excessive precautionary measures that hinder innovation. Efforts should be made to improve access to GMO technology for small-scale and developing country farmers. This can be achieved through public-private partnerships, subsidies, and educational programs that inform farmers about the benefits and safe use of GMOs. By addressing these areas, the agricultural sector can better harness the potential of GMOs to drive economic growth, enhance food security, and promote environmental sustainability.

Acknowledgments

The author expresses his sincere gratitude for the suggestions provided by the two reviewers.

Conflict of Interest Disclosure

The author affirms that this research was conducted without any commercial or financial relationships that could be construed as a potential conflict of interest.

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