International trade in GMOs: have markets paid premiums on Brazilian soybeans?

Abstract

The introduction of GMO technology into global market chains and the rejection by consumers in some markets have led to the reorganization of soybean trades. Brazil has adopted the technology later than other countries and specialized in supplying non-GMO soybean between 1996 and 2005. On the other hand, the United States and Argentina, which adopted the technology in 1996, exported to countries with less social aversion to the GM-technology. The aim of this paper is to investigate the relation between changes in global market chains (price, source and destination and market shares) and GMO technology adoption, focusing on evidences for price premiums for non-GM soybeans produced in Brazil, by the analysis of the trade unit values (TUV). In order to do so, we employ multivariate methods (Principal Components and Hierarchical Cluster analyses) and estimate a Random Effect model based on a bilateral trade dataset covering the years from 1986 to 2010. Results show that GM-technology adoption significantly changed trade patterns. However, premiums were paid for Brazilian soybean only in niche markets, where the market share is lower.