Roundup Ready Soybean Technology and Farm Production Costs

Abstract

Roundup Ready soybean technology (RR) lowers adopters' costs by (a) allowing postemergence use of the inexpensive herbicide glyphosate, (b) saving on management costs because of simple use, and (c) cutting risk by widening the time window for postemergence spraying. RR lowers nonadopters' costs by (d) creating competition that lowers other herbicides' prices. Our empirical results suggest that for most farms (a) is insufficient to cover the RR seed price premium, so (b) and (c) must be substantial for many adopters. Preliminary results indicate that RR provides bigger cost savings in the western Corn Belt than the eastern. Oligopolistic RR suppliers have set its price premium higher than potential cost/risk savings on many farms. We conclude that RR will not be fully adopted soon.

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