A Forecast Study Of The Welfare Distribution For The Upcoming Commercialization Of GM Rice In China

The production of rice is always one of the most important factors for rice security of China, the discovery of hybrid rice in1974brought a breakthrough in China’s grain output, but as our population continues to increase, the grain is still in short supply. China’s grain self-sufficiency is the bottom line to ensure grain security. Increasing grain yields and reducing losses in the food production process is an effective way to increase grain output in the current technical conditions. As the introduction of the transgenic technology in agricultural production, it will bring the benefits of the yeilds increasing, cost saving and the protection of environmental, however, transgenic technology has become a public concern cause the potential safety problems. Under these conditions, whether the introduction of transgenic technology bring new benefits to the community? How the distribution of new social welfare among the seed R&D institutions or departments, producers, intermediaries and consumers? These will be the main content of our study.In this paper, from food production to consumption point we construct supply function and demand function of conventional rice, organic rice and transgenic rice to analyze the welfare change of the each stakeholders in the two market equilibrium before and after the introduction of genetically modified. Considering consumer preferences we construct demand function of each rice, based on the utility function to derive individual demand functions of three kinds of rice, combined with consumer preference distribution function we get the market demand for each kinds of rice. When construct supply function, we introduce the isolation of a variety of rice and the cost of transgenic technology to pay to derive each yield function by profit function, and we obtained rice-growing area while taking advantage of the land supply function deduced by Sobolevsky, Moschini and Lapan in2005, then get the corresponding supply of each rice through the acreage and the yield.The results show that the introduction of GM technology lead the prices of traditional rice rising and the price of organic rice becaming low, welfare of the various stakeholders increse, but it not mean that a variety of rice producers or consumers both benefited. The study found that the conventional rice producers and consumers benefit but the welfare of conventional rice consumers and non-conventional rice producers reduced. According to the distribution of additional social welfare, farmers are the main beneficiaries of the introduction of transgenic technology, followed by consumers, middlemen and the seed R&D agency or department finally.According to the sensitivity of four influencing factors, we found that the constantly increasing of segregation cost of organic rice and the update of transgenic technology will cause the social welfare rise continuously, but the increasing of labeling and traceability costs and the proportion of consumers resistance to GM-rice will lead the additional social welfare declining gradually.