China's Genetically Modified Corn Policy:What Are The Economic Consequences?

The brilliant achievement of the grain “twelve consecutive growth” is of great strategic significance in China.For the agricultural country whose population accounts for 1/5 of the world's population,the grain yield improvement is the cornerstone for stable development.As the major force of yield increase,the corn's total output exceeded rice for the first time in 2012 and it became the largest crop in our country.Meanwhile,the corn is also an important consumption crop.It can be widely used from seeds,raw material extension,livestock fodder,industrial raw materials and biomass energy.It plays an important role in increasing farmers' income and maintaining the national food security.Contrary to the intuitive economic expectation,the increasing yield did not bring the efficiency and prosperity of the industries related to corn,but brought a series of problems: along with the annual harvest,the stock is also rising;although the stock of corn is 2 tons,China still imports a large number of corn.The import volume is 793 times of export;the supply expanding doesn't cause price decline,but price inversion,thus pushing the market to cheap imported corn;a large number of downstream processing industries don't get sufficient and cheap raw materials and the industry capacity tends to shrink,etc.The corn industry faces the upper limit pressure of these "two ceilings",price and subsidy,the hard constraint of ecological environment and natural conditions.And the "floor" of cost is also lifting,thereby causing “three high” problem,high cost,high inventory and high import."Further promote the agricultural supply-side structural reform" is the strategic direction established by the 2017 "Central First Document".The core production needs to face “destocking,cost declining and short plank improvement” policy objectives,solve the" three high problem” and realize the supply-side reform.So promoting appropriate development strategies has become a topic that needs to be further studied.Currently,the main measure that have been implemented is reducing the cultivated area in non-superiority area.But it shall be noted that the various problems faced by the corn is not only caused by yield increase.And a large number of imports indicates that the market actually needs corn,“cheap” corn.According to FAO data,90% of the imported corn in China are from the United States.93% of the corn in the United States use GM technology.The low cost and high output eventually lead to low price.GM technology s a sensitive topic in the world.Due to its excellent traits and possible risks,people's attitude toward it can be divided into two camps,support and opposition camps.Chinese government has maintained a cautious attitude on this topic.Any policy decision shall go through rigorous and comprehensive scientific verification.The Ministry of Agriculture clearly put forward the GM development route “according to the non-edible,indirect edible and edible roadmap,the first is the development of non-edible economic crops,followed by forage crops and processing raw materials crops.The next is general food crops and the last is grain crops.” This route suggests the stage of GM development.Based on the above analysis,the corn industry might seek for strategic development by introducing GM technology.When GM is concerned,the consumers' acceptance level and purchase intention shall also be taken into account.If there is policy reform in the corn market(supply level),the influence will not be limited in the industry,or a country.The effects will be spreaded to the entire industry and it will even affect the global agricultural trade pattern.Once it comes to GM technology,the consumer preferences(demand level)shall be taken into consideration and then is the economic impact caused by the whole market changes.Based on the above objectives,this study adopts GTAP model and constructs suitable Chinese GTAP-GMM model on the basis.It firstly uses DNDC model to convert the "technology growth rate" that represents the application of GM technology,puts it to the model,simulates the policy change effects of the corn industry(production level,containing three scenarios),then puts the experiment results of the research on the consumer payment willingness as the "consumer preference" impact into GTAP-GMM model,so as to get the policy change effects under the influence of consumer preference.And it finally achieves the comprehensive consideration in macro level,industry level,trade level,supply and demand level.First of all,in order to investigate the true attitude of consumers towards GM products,this paper classifies the products into three categories according to the information attribute,studies the rationality of classification and evaluates the consumer willingness by questionnaire.The results show that the differences of the three kinds of GM products are obvious.But from the parallel comparison results of the food safety problem,consumers' resistance degree for GM products is not high.For further consideration,the questionnaire answers have hypothetical color.Thus,in order to verify the rationality of classification and get the real payment willingness(the conclusion shall be put in the GTAP-GMM model in this paper for simulation),this paper designs economics experiment and confirms the questionnaire results from the classification effects.Compared to search products,GM information disclosure is experience products and credence products,which bring additional 7.23% and 16.2% discount;the non-GM information disclosure will make the payment willingness of search products increase by 6.19% and bring additional 9.75% and 3.67% premium for experience products and credence products.Different from the original hypothesis,the consumers' sensitivity for experience products is higher than credence products.It is because that in the current development stage,the experience GM products are more exposed in real life,such as GM oil.Consumer are more familiar with them,so their consciousness is more "alert".Secondly,this research constructs GTAP-GMM model to simulate the impact of the corn policy adjustment on the overall economy and industry.The scene design link is mainly concentrated on three levels.Firstly,the great change faced by corn planting in 2015 and 2016 in reality is the cancellation of temporary storage policy,so the effects of this policy change shall be firstly considered for the evaluation of the future industry development(scenario 1);secondly,this paper also pays attention to the "three steps" GM industry development policy proposed by the Ministry of Agriculture(scenario 2);thirdly,it considers the effect of GM development policy under the condition of the cancellation of temporary corn storage policy(scenario 3).The policy evaluation results show that in scenario 1,the cancellation of temporary corn storage policy is conducive to GDP.It can efficiently allocate and utilize the domestic resources and the corn supply and demand can be decided by the market rule.In scenario 2,the development of GM corn planting can drive the economic growth.In scenario 3,under the condition of the cancellation of temporary corn storage policy,the growth of GM planting is more.It can be seen that the policy mix is beneficial to the country in the economic level.Finally,it combines the empirical results in the above two parts: convert the consumer payment willingness in the experiment results to consumer preference change as an impact value,put it in the GTAP-GMM model constructed in this paper and investigate the impact on the economic effects in the three kinds of scenarios after adding the consumer preference effect.The results show that whether the country opens the GM planting,it will cause negative impact for the overall economy due to consumers psychology in “GM”.The prices of the similar GM products are low.So when the income is the same,consumers can buy more products,which will indirectly promote the growth of the output of related corn industries.The consumer preference for GM corn is low,which can also drive the development of Chinese traditional corn industry.To sum up,whether China opens the GM corn planting,the import demand will suffer from the biggest impact under the influence of consumer preference for GM consumption.The market needs to reduce the prices of GM products to compensate for consumers,which is beneficial for the domestic consumers(only in the price level,without considering others,including the possible risks).Then consumers can obtain the final consumer goods with lower prices and the domestic welfare increases.