Estimating the Value of Innovation and Extension Information: SCNResistant Soybean Varieties

Seungki Lee, GianCarlo Moschini
June 2020  [20-WP 603]

This paper presents direct evidence on the impact of a specific extension program that is aimed at promoting the adoption of varieties resistant to the soybean cyst nematode (SCN), specifically the Iowa State University SCN-Resistant Soybean Variety Trials (ISU-SCN). We use two data sources: the ISU-SCN experimental data, and a rich proprietary dataset on farmers’ seed purchases. Combining these data, we estimate the value of SCN-resistant variety availability, and the associated variety trials that provide information on their performance, to farmers and seed companies. Given the scope and diffusion of this extension program, the focus of the analysis is on Iowa and Illinois over the period 2011-2016. Farmers’ seed choices are modeled in a discrete choice framework, specifically a one-level nested logit model. Using the estimated demand model, we find farmers’ marginal willingness-to-pay (WTP) for SCN-resistant varieties to be $0.81/acre. Also, the additional WTP for extension information related to these varieties is about $0.75/acre. Using counterfactual analyses, over the period and region of the study, the total surplus associated with the existence of, and information about, the SCN resistance trait is estimated to be about $140 million. About two thirds of this surplus is captured by seed suppliers and one third is held by farmers.

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