What would happen to profits without Roundup Ready sugar beets?
July 29, 2013
Producers are constantly searching for technologies and crops that improve profitability.
One important technology is the use of crops resistant to herbicides, such as Roundup.
These crops, often named Roundup Ready, allow producers to control weeds with less tillage and/or labor operations than conventionally produced crops.
One crop offered to producers in a Roundup Ready form is sugar beets.
Sugar beets are an important cash crop for irrigated farmers, and Roundup Ready sugar beets have become a popular choice among Wyoming producers.
Roundup Ready technology was commercially introduced into the sugar beet market in 2007 and has since seen a 95-percent acceptance rate among producers nationally.
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Producers using the technology can apply glyphosate to a growing field of sugar beets for weed control without harming the crop.
Some producers have attributed the increase in produced tonnage across the state to the adoption of Roundup Ready technology in sugar beets.
genetically modified seed concerns
Recently, some have expressed concern about the use of genetically modified seeds, and legal cases have been filed against use of Roundup Ready crops, including alfalfa and sugar beets due to potential risks posed to producers using other technologies.
As a result, the possibility exists that Roundup Ready sugar beets may be removed from the market.
In addition, scientists are concerned about the potential for weeds to become glyphosate resistant, reducing the economic advantage of growing Roundup Ready sugar beets.
Andrew Kniss, weed specialist and assistant professor, collaborated with agricultural economist Brian Lee, research scientist at the James C. Hageman Sustainable Agriculture Research and Extension Center; John Ritten, assistant professor and production systems specialist; and Chris Bastian, agricultural economist and associate professor, to evaluate what the cost to producers might be if Roundup Ready sugar beets were no longer available.
conventional and roundup ready sugar Beet comparison
An economic evaluation was conducted to compare profitability of conventional and Roundup Ready sugar beets using historical price data.
Profitability of the systems was compared across a range of prices for fuel, fertilizer and sugar beets.
Given the variability in conventional sugar beet production practices, two extremes of production (high cost and low cost) were analyzed.
Both production systems are based on data from producers and assume a 24 ton per acre yield with cost differences based on various levels of weed control activities.
GM or Roundup Ready sugar beets were also examined at yields of 24 ton per acre and 26 ton per acre, as many producers claim a yield increase due to the Roundup Ready technology.
Past publications have assumed the yield increase to range from 5 to 15 percent.
Sugar beet budgets were developed and a technique called Monte Carlo simulation was used to analyze profitability of these different scenarios across a wide range of potential prices for both outputs and production inputs.
determine Average profitability
The goal was to evaluate the average profitability of each system (conventional and Roundup Ready) on a per-acre basis over a variety of potential economic situations since both input and output prices are highly variable.
The Roundup Ready sugar beet system was charged a $75-per-acre technology fee above other production costs.
Roundup Ready sugar beets, assuming a 2-ton-per acre yield increase, were on average $95.65 per acre more profitable than their low-cost conventional counterparts ($813.87 minus $718.22).
When no yield increase was assumed for Roundup Ready sugar beets, the low-cost conventional system was on average $20.91 per acre more profitable, due mainly to the fact that producers pay a $75-per-acre technology fee for Roundup Ready sugar beets.
A .33-ton-per-acre yield increase in the Roundup Ready sugar beet system is needed to break even with the low-cost conventional system.
If a producer utilizes high-cost conventional production practices, the Roundup Ready system is $107.17 more profitable without
any yield increase, or $223.73 more profitable, assuming a 2-ton-per-acre yield increase for the GM system.
regulation may hurt profits
Because our simulation shows increased profitability due to an increase in yields with Roundup Ready sugar beets, it suggests producers in the state could potentially be hurt by regulation of GM technologies.
If our assumption of a 2-ton-per-acre yield increase in a Roundup Ready system is correct, producers could lose as much as $223 per acre if they revert to a high-cost, conventional weed control system.
However, our analyses also shows that adopting lower cost production practices could help to offset that loss. ❖