Research Suggests Fighting World Hunger can be Profitable for Ag Biotech Companies October 25, 2018
New research by University of Nebraska–Lincoln agricultural economists Konstantinos Giannakas and Amalia Yiannaka found that agricultural biotechnology companies can profit by lowering the price of genetic modification technologies in hunger-stricken areas when consumers associate these technologies with reducing malnutrition and hunger.
In other words, these companies can actually do well by doing good.
“When a company develops a new innovation, such as a new seed trait, a common assumption is that the company should exercise market power in order to maximize profits,” said Giannakas, Harold W. Eberhard Distinguished Professor. “However, our research shows that the company can actually profit by giving away its technology to hunger-stricken areas.”
The Food and Agriculture Organization estimates that more than 820 million people around the world face malnutrition and hunger. Agricultural biotechnology has the potential to address food insecurity challenges by conferring agronomic benefits to producers and by having the ability to enhance both the resistance of plants to environmental stresses, such as drought, and the quality and nutritional value of food.
The research shows that when the association of genetic modification technologies with reduced malnutrition and hunger in food insecure areas of the world lessens consumer aversion to such technologies, innovating companies will find it economically optimal to reduce their price and increase consumer access to nutritious food in hunger-stricken areas as their losses in these areas are more than compensated by their gains in the rest of the world.
“For these benefits to be maximized, it is important that the impact of genetic modification technology in hunger-stricken areas of the world is significant and is broadly and effectively communicated,” said Giannakas.
The results of the study were recently published in Agricultural Economics, the journal of the International Association of Agricultural Economists.