Transgenic Rice Crops

Economic Implications of its Adoption in Uruguay

Abstract

Since the possibility of incorporating transgenic events in rice crops emerged, the Uruguayan rice sector has stated a position contrary to GMO. This article attempts to provide quantitative elements for identifying potential technological trajectories for the rice complex in Uruguay, facing this new reality. The potential impact of the technical change generated by the emergence of transgenic varieties in rice was evaluated using a general equilibrium model applied to international trade. The technological shock on the economy as a whole and on international trade patterns was simulated for 12 regions, 8 sectors, and 5 production factors. The study assessed 4 scenarios to reflect changes in consumer preferences facing GM varieties in the market. The relationships between agents with other sectors of the economy and other countries were reviewed, estimating the magnitude and direction of the impact, through the concept of equivalent variation (EV). The findings of this research suggest that the adoption of GM rice in Uruguay produces a welfare loss in the country, due to changes in consumption patterns of consumers in importing countries. Moreover, since the EU became an important destination for Uruguayan rice in recent years, the real impact could be even higher than the impact estimated in this study. However, the potential release of the first commercial GM herbicide-resistant rice variety in Brazil opens a new scenario, raising questions about the sustainability of the Uruguayan position in the long run.