VOL. 9 NO. 1 SEP/OCT 2005 Special Issue: China’s Agricultural Boom, with Implications for California hina is reforming its agricultural producers and improves producer health, Also in this issue......... economy, has joined the WTO, providing strong incentives for China to Cand is laying the foundation for commercialize GM rice. They investigate increased competitiveness internationally. the likely impacts of commercialization on Genetically Modified China’s emergence as a major agricultural world trade in rice, with particular atten- Rice in China: Effects on trading nation over the next few years will tion paid to California’s rice industry. Farmers–in China and cause a series of changes in China’s agri- China is also an increasingly impor- California cultural markets and in global markets. tant competitor for California in the global by Scott Rozelle, Jikun Most researchers agree that China has markets for many specialty crops, includ- Huang and Ruifa Hu..............2 an enormous potential for purchasing ing strawberries. Colin Carter, James U.S. agricultural products, but that break- Chalfant and Rachael Goodhue develop ing into the “China Market” is difficult. comparisons between strawberry pro- China’s Strawberry Second, China, because of its location and duction in China and California. China’s Industry: An Emerging factor endowments, can compete with strawberry production and exports have Competitor for California? many of California’s most important com- grown substantially, especially exports by Colin A. Carter, modities in world markets. Agribusiness into markets that have been important for James A. Chalfant and leaders in California see the emergence of U.S. strawberries. The authors note that Rachael E. Goodhue.............7 China into world food markets as posing strawberry yields in China are limited perhaps the single most important chal- currently by disease problems and inef- lenge to California agriculture in the 21st ficient production practices. Thus, they New Horizons for Century. conclude that China has the potential to Rural Reform in China: Giannini Foundation researchers are increase production even without increas- Resources, Property examining many issues regarding China’s ing acreage. Rights and Consumerism emergence as a key competitor to Califor- Fredrich Karhl, David Roland-Holst by Fredrich Kahrl, nia agriculture. This special issue features and David Zilberman take a broad view David Roland-Holst and some of this work in three papers, each of agricultural reform in China. They note David Zilberman...................11 written by leading experts on China and that, although growth in the agricultural agricultural issues. Scott Rozelle, Jikun sector has been impressive, rural incomes Huang and Ruifa Hu suggest that China are still low in many regions of the coun- may soon become the first nation to begin try and some current practices appear to In the next issue... commercial production of genetically be unsustainable over the long term. The modified rice. China’s research program on authors examine the major inputs—labor, Does the Internet rice biotechnology has developed varieties land, water and technology—into China’s Increase Farm Profits? with resistance to key insects, tolerance to agricultural production and discuss the by Aaron Smith and drought and resistance to herbicides. The policy reforms that are needed to improve Catherine Morrison Paul authors’ research suggests that adoption of rural incomes, enhance food security and GM-rice varieties reduces costs for China’s develop sustainable production practices. Giannini Foundation of Agricultural Economics Genetically Modified Rice in China: Effects on Farmers—in China and California by Scott Rozelle, Jikun Huang and Ruifa Hu China is likely to soon commercialize a genetically modified (GM) major food grain. In this report, we track not only the implications for producers in China, but also discuss how the release of GM rice might affect the rest of the world, including California’s rice growers. Ê hina has not commercialized genetically While most scientists believe that agricultural bio- modified (GM) rice, but they are close and technology can provide new sources of productivity Cmany observers believe the time is near when growth and address some of the negative effects of con- national leaders will “pull the trigger.” After exami- ventional agronomic techniques for producers of rice ning the state of biotechnology research on rice in the and other basic food crops in China and other devel- world, in general, we examine the implications for oping countries, at present GM varieties are primar- producers in China, the world’s largest rice economy. ily used for industrial crops, such as cotton, and feed To do so, we draw on our work that has appeared in crops for animals, such as yellow maize and soybeans. Science and other media. While we come to the con- In the late 1980s and 1990s, government research in clusion that China’s producers will benefit, the con- many developing nations—including China, often sequences of the decision to commercialize GM rice, funded by the Rockefeller Foundation, began ambi- however, likely will be felt by millions, perhaps even tious rice biotechnology research programs to develop billions, of people outside of China. Indeed, China’s new rice varieties that would increase yields and nutri- decision may start a domino effect that could cas- tion, reduce input use and make the rice plant, as well cade around the globe. It also could have direct con- as other food plants, more tolerant to both biotic and sequences for California rice growers—both positive abiotic stresses. This research led to a major increase and negative. In the second part of the article, we will in knowledge about the rice plant and rice genetics. speculate on some of the far-reaching consequences Scientists in many of those countries—China, India, of the commercialization of GM rice, especially con- Costa Rica, to name a few—are currently conducting sidering how it might affect California’s rice industry. field trials for new GM varieties of insect and disease- resistant rice. However, due to government indecision, Stalled Out: The Record of evolving biosafety regulatory systems, and a perceived GM Rice during the Past Decade resistance of consumers and traders, no country has yet One of the early promises by the supporters of agri- approved GM rice for commercial use. cultural biotechnology was that it could make a major The difficulties of commercializing GM rice appear contribution to the reduction of world hunger. It is to be affecting the amount and direction of public and now 25 years since some of those early promises were private biotech research. For example, government sci- made and a decade since genetically modified (GM) entists in India are faced with increasing complications crops were first grown commercially. Unfortunately, in finding locations for the trials of GM rice because the only way that biotechnology has contributed to of regulatory issues and pressure by anti-biotechnology the well-being of small, semi-subsistent producers is groups on state governments. The private sector also through higher incomes from the production of GM is cutting back because of consumer resistance to GM cotton. There arguably has been no benefit for poor, products and the rising cost of commercializing new hungry consumers. However, China is currently on products. For example, Monsanto in the United States the threshold of starting to fulfill the promise of more discontinued work on rice in the late 1990s and other food for the poor through the introduction of rice companies, such as Syngenta and Bayer, have cut back varieties that can resist important insect pests and on their rice research programs. California, too, has diseases. One important question is if GM rice were to made it clear that it is not interested in trying to move be released, could it begin to deliver on its promise? forward on commercializing GM rice. 2 Giannini Foundation of Agricultural Economics As a result, GM rice has not been commercialized Figure 1. Public Research Expenditures anywhere in the world and little is in the pipeline in on Agricultural Biotechnology in China: most countries. In fact, no GM staple-food crop is grown 1986 to 2003 1800 in developing countries except for Bt white maize in b South Africa, where it is primarily grown by large, rela- 1600 tively wealthy farmers. Even in China, a country that 1400 aggressively commercialized Bt cotton and invested Totala Rice heavily into research on GM food crops, has not com- 1200 mercialized any major food crops despite the fact GM 1000 food crops have been in field trials since 1997. 800 One reason that commercialization may not have proceeded, especially in developing countries such as 600 China, is that there has been little independent evi- 400 dence on whether GM food crops would really improve the income and well-being of small, poor farmers. 200 Often regulators and policymakers have to take the Prices 2003 Real in RMB, Yuan, Million 0 word of the government scientists and companies who 1986 1990 1995 2000 2003 developed and are promoting these GM products. In Year this article, we attempt to answer two questions: Does a Total agricultural biotechnology spending includes spending on animals, plants and microorganisms. GM rice help reduce pesticides in the fields of farmers? b The official RMB-U.S. dollar exchange rate in 2003 was 8.277. Do the new varieties of GM rice increase the yields of Source: Authors’ survey. farmers? varieties that are resistant to rice stem borer and leaf China’s GM Rice Research Program roller were approved for environmental release trials China’s modern biotechnology program, begun in the in 1997 and 1998. In experimental fields in Central 1980s, has grown into the largest initiative in the devel- China in 1999, a Bt rice hybrid yielded 28.9 percent oping world.