Can Food Produced with New Plant Engineering Techniques Succeed in the Marketplace? A Case Study of Apples
Stéphan Marette, John C. Beghin, Anne-Célia Disdier, Eliza Mojduszka
September 2021 [21-WP 624]
Marette, S., J. Beghin, A.C. Disdier, and E. Mojduszka. 2021. "Can Food Produced with New Plant Engineering Techniques Succeed in the Marketplace? A Case Study of Apples." Working paper 21-WP 624. Center for Agricultural and Rural Development, Iowa State University.
New Plant Engineering Techniques (NPETs) have path-breaking potential to improve foods by strengthening their production, increasing resistance to biotic and abiotic stresses, and by bettering their appearance and nutritional quality. Can NPETs-based foods succeed in the marketplace? Providing answers to this question, we first develop a simple economic model for R&D investment in food innovations based on NPETs and traditional hybridization methods, to identify which technology emerges under various parameter characterizations and associated economic welfare outcomes. The framework combines the cost of food innovation with consumers’ willingness to pay (WTP) for the new food, highlighting the uncertain and costly nature of R&D processes as well as the role of consumer acceptance of technology, and the cost of ignorance, and regret, if consumers are not fully informed on the technology used to generate the new food. We then apply the framework to a case of NPETs-based new apples using recently elicited WTP of French and US consumers. Our simulation results suggest that NPETs may be socially beneficial under full information, and when the probability of success under NPETs is significantly higher than under traditional hybridization. Otherwise, the innovation based on traditional hybridization is socially optimal. A probable collapse of conventional apples raises the social desirability of new apples generated by NPETs and traditional hybridization.