Transgenic Virus Resistant Potatoes in Mexico: Potential Socioeconomic Implications of North-South Biotechnology Transfer

Despite the rapid international development of biotechnology, we still lack knowledge and information about how low- and middle-income countries can best access this promising technology. Nor are the socioeconomic repercussions of applying biotechnology in these countries’ agricultural sectors well understood. This study seeks to fill in some of the gaps in our knowledge by analyzing a biotechnology transfer project that provided proprietary recombinant potato technology to Mexico.

In 1991, the government of Mexico and the private US corporation Monsanto entered into a North-South biotechnology transfer agreement in which Monsanto agreed to donate non-conventional virus resistance technology for potatoes. ISAAA developed and brokered the agreement, and the Rockefeller Foundation provided funding for the project. Two public Mexican research institutes, CINVESTAV and INIFAP, carried out product development and adapted the technology to local potato varieties. In 1993, the first transgenic potato field trials in Mexico took place. The release of three transformed varieties (Alpha, Norteña and the red variety Rosita) with resistance to the potato viruses PVX and PVY is expected in 1999. After seed multiplication by national seed producers, farmers’ technology adoption could start from the year 2000 onwards, under optimistic assumptions. In addition, a new project phase began in 1997, when Monsanto donated technology that confers resistance to PLRV, an economically more important virus in Mexico than PVX or PVY, but for which non-conventional resistance had not previously been available. The release to seed growers for multiplication of Norteña and Rosita varieties resistant to all three viruses is scheduled for 2001. The use, however, of the PLRV technology in Alpha¾the country’s most popular and widely used potato variety¾is prohibited in the current licensing agreement. Since none of these technologies have yet reached farmers’ fields, the socioeconomic effects of these innovations are quantitatively analyzed within an ex ante framework by means of an equilibrium displacement model of the Mexican potato market.

The most pressing phytosanitary problem in Mexican potato production does not have biotechnological nor conventional solutions. Virus resistance nevertheless is the priority need for which proven technologies are available. The limited use of pathogen-free seed material¾only 23 percent of the land devoted to growing potatoes is cultivated with certified seeds¾leads to virus-induced yield losses that are much higher than in countries with better developed potato seed industries. Genetic resistance is therefore likely to considerably increase potato yields, even without additional inputs. On average, the potential net yield gain of the transgenic varieties is projected to be 5 percent with resistance to PVX and PVY only, with an increase to 22 percent when resistance to PLRV is added. These productivity increases will raise income levels for Mexican potato farmers and will also benefit domestic consumers, who will pay lower prices as long as the international potato trade remains limited. In a closed potato economy, consumers would capture about half of the total economic benefits created by these biotechnology applications.  Increased international potato trade¾a possible outcome of the NAFTA trade agreement¾would slightly reduce the overall advantage of the technology, though with an increased benefit share for domestic producers.

This study includes an analysis of hypothetical scenarios in which the Alpha variety also possesses resistance to PLRV. The results show that if Monsanto were to donate PLRV resistance for the Alpha variety, then the project’s Internal Rate of Return (IRR) would increase from 50 to 64 percent, and, even more impressively, the aggregate benefits of the biotechnology transfer could triple. The additional cost of including this resistance would be low because of Mexico’s previous experience in related technology development. Furthermore, because Alpha is not widely grown in countries other than Mexico, Monsanto’s own commercial interest in transforming the variety would not be more than moderate.