Published January 25, 2017 CROP ECONOMICS, PRODUCTION & MANAGEMENT TheProduction,Consumption,andEnvironmentalImpacts ofRiceHybridizationintheUnitedStates L.Nalley,*J.Tack,A.Durand,G.Thoma,F.Tsiboe,A.Shew,andA.Barkley ABSTRACT The introduction of hybrid rice in the United States gives producers an alternative to traditionally cultivated, conventional lines. The objective of our study is to estimate the economic (consumer and producer welfare) and environmental impacts of the commercial adoption of hybrid rice in the Mid-South of the United States. In our study, the revenue gains associated with hybrid adoption were estimated at an average of $76.24 million annually from 2003 to 2013, using existing research findings in combination with original modeling. Disease packages, specifically the blast resistance found in all publically released hybrids, led to both cost and fungicide reductions, which in turn result in higher profits and increased levels of environmental sustainability. The cost savings from eliminating fungicide applications and mitigating yield loss through embedded blast resistance in hybrids were estimated at $14.35 million annually from 2003 to 2013. The RiceFlow model results from our study suggest that the yield premiums through heterosis and blast resistance associated with hybrid adoption in the MidSouth increased US exports by 383,000 Mg annually and has fed an additional 5.89 million people annually. Furthermore, the results from our detailed Life Cycle Assessment show that hybrid rice has lower environmental (fossil fuel depletion, ecotoxicity, carcinogenics, eutrophication, acidification, global warming, and ozone depletion) impacts per megagram of rice than conventional rice. Core Ideas • This study estimated the economic and environmental impact of hybrid rice adoption. • The blast resistance in hybrid rice is estimated to be worth $14.35 million annually. • Hybrid adoption in the Mid-South feeds an additional 5.89 million people annually. • The LCA indicated that hybrid rice had lower environmental impact, mainly due to increase d yields. Published in Agron. J. 109:193–203 (2017) doi:10.2134/agronj2016.05.0281 Received 16 May 2016 Accepted 30 Sept. 2016 Available freely online through the author-supported open access option Copyright © 2017 American Society of Agronomy 5585 Guilford Road, Madison, WI 53711 USA This is an open access article distributed under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/) R ice (Oryza sativa L.) is a global staple food crop that provides the primary source of calories for more than 50% of the world’s population (World Bank, 2013). The United Nations estimates that global population will increase 33% by 2050, from 7.2 billion today to 9.6 billion persons. Consequently, rice will continue to play an important nutritional role because it is the staple crop in many of the countries that are experiencing rapid population growth. In comparison to other rice-producing countries, the United States is a small producer, generating only 1.3% of the world’s rice; however, the United States has been among the top five rice exporters for several decades (Lakkakula et al., 2015). Because rice provides 21% of global human per capita energy and 15% of per capita protein (International Rice Research Institute, 2013), moderate price/supply shocks can have large impacts on low-income rice consumers. For example, in 2008, when rice prices tripled due largely to trade restrictions in India and Egypt, the World Bank estimated that an additional 105 million people were pushed into poverty (World Bank, 2013). This price turmoil occurred with only an 8% reduction in trade from 2007 (Childs, 2009). With this in mind, the international rice market is highly volatile for a number of reasons. Some of those reasons are that rice has an inelastic supply and demand (i.e., the percentage supply response to a change in price is less than the percentage change in price) throughout much of its primary production and consumption area (Asia), and it is thinly traded on a global scale. Global rice exports are highly concentrated, with the top five exporters (Thailand, India, Vietnam, Pakistan, and the United States) controlling 87% of global net trade (Wailes and Chavez, 2012). Given that the global rice market is so thinly traded and small shocks in price/supply can have large ripple effects, the adoption of hybrid rice in the United States (beginning in 2000 with its associated yield increases) potentially influenced global food security. Since the first commercially available hybrid rice line was released in the Mid-South in 2000, the most tangible benefit has been the increased yields associated with its adoption. Hybrids can yield 15 to 20% more than conventional cultivars on similar land L. Nalley, A. Durand, F. Tsiboe, and A. Shew, Dep. of Agricultural Economics and Agribusiness, Univ. of Arkansas, Fayetteville, AR 72701; J. Tack, Dep. of Agricultural Economics, Mississippi State Univ. Starkville, MS 39762; A. Barkley, Dep. of Agricultural Economics, Kansas State Univ., Manhattan, KS 66506; G. Thoma, Dep. of Chemical Engineering, Univ. of Arkansas, Fayetteville, AR 72701. *Corresponding author ([email protected]) Abbreviations: CL, Clearfield; GHG, greenhouse gas; GM, genetically modified; LCA, Life Cycle Assessment A g ro n o myJ o u r n a l • Vo l u m e10 9,I s s u e1 • 2 017 193 due to yield-improving genetic traits from parent cultivars (Yuan and Virmani, 1988). Consequently, rice producers in the Mid-South have been rapidly adopting hybrids since their commercial release in 2000. In effect, hybrid acreage in the Mid-South, as a percentage of total harvested acreage, increased from 15% in 2005 to over 40% in 2013 (Nalley et al., 2016). Previous research in the Mid-South (Arkansas) found that hybrid varieties exhibited mean paddy yield premiums of 1.6 to 2.4 Mg ha-1 relative to the best-performing conventional cultivar (‘Francis’) and were found to be associated with no increase in yield variability (Lyman and Nalley, 2013). A broad study by Nalley et al. (2016) that covered Arkansas and Mississippi observed that hybrid and Clearfield (CL) hybrid varieties had a paddy yield premium over conventional varieties of 1.66 and 1.82 Mg ha-1, respectively. The authors found that, on average, hybrid varieties outperform conventional rice varieties in terms of absolute profit per hectare and relative profit margin, defined as profit per cost of production, for both CL and non-CL varieties. The most tangible benefit from the adoption of hybrid rice in the United States is increased paddy yield. Blast resistance is another imbedded trait that all commercially released hybrid rice in the United States possesses. Rice blast, caused by the Magnaporthe oryzae fungus, is one of the most frequent and costly rice diseases in the Mid-South and in other temperate rice-growing regions worldwide (Wang and Valent, 2009). The rice blast fungus is responsible for up to 30% of losses in global rice production and therefore is a key concern in combating food insecurity (Skamnioti and Gurr, 2009). It has been estimated that the worldwide annual loss of rice to blast could feed more than 60 million people. In addition to yield loss aversion, embedded blast resistance in hybrid rice also allows producers to forgo fungicide applications, which can cost rice producers over $49 ha-1 (Tsiboe et al., 2016). This blast resistance or “maintenance breeding” is often undervalued by producers and economists because it is difficult to measure and because it does not necessarily increase maximum yield potential. In other words, productivity enhancement is traditionally estimated in terms of yield gains per hectare and increased total supply, whereas productivity maintenance (in our case, blast resistance) is measured in terms of the yield losses avoided through embedded seed technology. Marasas et al. (2003) found that the economic impact of wheat breeding efforts for pathogen resistance (maintenance breeding) can be as great if not greater than the impact of the associated yield increases of a breeding program. As such, the valuation of agricultural research is not holistic unless it accounts for the losses avoided by its continual maintenance component (Araji et al., 1978; Knutson and Tweeton, 1979; Plucknett and Smith, 1986). To demonstrate the lack of commercially available blastresistant rice varieties in the Mid-South, only 19 of the 59 varieties (32%) planted in the three largest rice-producing states in the Mid-South (Arkansas, Louisiana, and Mississippi) from 2002 to 2014 were blast resistant; 14 (74%) of those were hybrid lines. Of the nonhybrid lines that were blast resistant, only the variety Drew was ever sown to more than 5% of any MidSouth state from 2002 to 2014, indicating that blast-resistant conventional varieties were not widely adopted by producers (Rice Technical Working Group, 2001–2013). Although few 194 commercially available varieties are blast resistant, it is important in the context of producer profitability in that it does not require the application(s) of fungicide and is beneficial to the environment through reduced toxicity exposure. Applications of fungicide lead to increased toxicity as well as increased greenhouse gas (GHG) emissions. The higher yields and the lower GHG and toxicity levels associated with hybrids can result in higher efficiency levels per kilogram of grain produced. Specifically, Nalley et al. (2014) found that hybrid cultivar production in Arkansas was estimated to be 23.22% more efficient in converting GHG inputs into grain output than conventional cultivars. The authors found that, on average, the production of 1 kg of hybrid rice results in 0.001 Mg of CO2eq produced. By comparison, a conventional cultivar is estimated to release 0.00124 Mg of CO2e, a 23.22% increase over hybrid rice. However, the aforementioned authors did not account for differences in GHG emissions from blast resistance or GHG emissions from yield losses associated with blast-susceptible cultivars, which would increase the hybrid GHG efficiency level. Previous studies have analyzed various components of the economic and environmental impacts of hybrid adoption in the Mid-South but not the totality of those components. This study builds off of the existing literature but delves further into a holistic estimate of the economic and environmental impacts of hybrid adoption on various stakeholders in the rice supply chain. Specifically, this study analyzes the additional yield that hybrids have provided both from genetic enhancements and maintenance breeding (resistance to rice blast) from 2003 to 2013 in the Mid-South of the United States. This estimated additional supply from hybrid adoption was then put into the RiceFlow model to answer the counterfactual question: What would the implications be if hybrids had not been released in the United States? The RiceFlow model generates estimates of changes in rice price given a decreased supply as well as changes in consumer welfare. Finally, the counterfactual decreased yield and increased fungicide usage from the absence of hybrids were analyzed in a Life Cycle Assessment (LCA) model to assess the environmental impact that would have resulted if hybrid rice had not been commercially released. These comprehensive results provide insight into how hybrid rice adoption in the Mid-South affects producer livelihoods, food security, and environmental sustainability. Materials and Methods The Value of Blast Resistance in Hybrid Rice This study follows the methodology put forth by Tsiboe et al. (2016), who estimated the economic cost of cultivating blastsusceptible varieties in several Mid-South states (Arkansas, Louisiana, and Mississippi). The authors compiled data pertaining to the cost of mitigation per hectare as a function of (i) fungicide and application costs, (ii) probability of a blast outbreak by variety-specific blast susceptibility ratings, and (iii) variety-specific yield loss by blast susceptibility ratings for all blast-susceptible varieties planted in 2002 to 2014. In Tsiboe et al. (2016), the authors disregarded hybrid lines because they were all resistant to blast, and as such, they experienced neither yield loss nor additional production costs. This study presents the counterfactual argument: all hybrid lines are “moderately resistant” to blast, not “resistant.” Agronomy Journal • Volume 109, Issue 1 • 2017 Susceptibility ratings put forth by university extensions range from very susceptible, moderately susceptible, moderately resistant, to resistant. The more susceptible a variety is, the higher the probability of its infection being severe, and thus the higher probability of a yield loss. As such, this study takes a conservative approach and assumes that all hybrids are “moderately resistant,” which is associated with the lowest mean yield loss of all the nonresistant blast ratings. In our counterfactual situation, rice producers could replace a blast-resistant hybrid line with a blast-resistant conventional line; however, there has not been a blast-resistant conventional variety since 2002 (‘Drew’) that has been sown to more than 5% of Arkansas, Louisiana, or Mississippi (Rice Technical Working Group, 2001–2013). Therefore, given the rice varieties currently available to purchase, it is highly improbable that a producer would choose to cultivate an available blast-resistant conventional variety. Importantly, if producers could switch to a blast-resistant conventional variety then the value of blast resistance in hybrid rice would be mitigated through substitutability. Following Tsiboe et al. (2016), actual data were used on hybrid planting areas from Arkansas, Mississippi, and Louisiana, simulating two alternative “outbreak” scenarios annually from 2002 to 2014. The annual hybrid rice areas planted for each rice-growing county/parish in Arkansas, Louisiana, and Mississippi were collected from 2002 to 2014 to capture hybrid adoption rates (Rice Technical Working Group, 2001–2013). Additionally, annual potential yield (Mg ha-1) data by commercial hybrid rice and county/parish were obtained from university-run experiment stations (Arkansas Agricultural Experiment Station, 2016; Louisiana State University Ag Center, 2015; Mississippi Agricultural and Forester Experiment Station, 2015). The data consist of 14 rice hybrids, 32 ricegrowing counties in Arkansas, 27 parishes in Louisiana, and 18 counties in Mississippi totaling to 1478 area/yield observations from 2000 to 2014 (Table 1). Given that universities do not conduct yield test plots in each county/parish for each year, the missing county/parish level variety-specific yields were replaced with the average yield for that variety in all test plots that it was produced in that state for that year. The average yields by hybrid variety and by state are reported in Table 1. Blast, like other fungi, have favorable conditions for growth, which can be a function of field conditions, variety type, and climate. Blast presence one year in a specific field does not necessarily mean presence next year because a hard overwinter freeze can kill blast spores. However, if a specific field is located by a tree line then it is more likely to have consistent problems with blast because nearby trees tends to extend the dew period on rice leaves and thus provide more favorable conditions for fungus growth. Thus, blast presence is partially tied to field conditions and partially tied to climatic conditions, making it difficult for a producer to forecast from year to year and difficult to model outbreak probabilities and subsequent yield losses. To address these uncertainties, the estimates of Tsiboe et al. (2016) on (i) the blast-outbreak rate, (ii) the yield-loss rate for rice cultivars that are moderately resistant to blast, and (iii) the cost of blast mitigation per hectare were used in this study. The percentage of the “moderately blast resistant” hybrid that could have been infected with blast was simulated using data from the University of Arkansas, which indicate that, on average, 22.52% of all acreage in Arkansas had a fungicide application to help mitigate blast from 2000 to 2014. Table 1 indicates that the blast infection rate for all nonresistant varieties in the Mid-South ranged from 0.00 to 46.95% from 2000 to 2014, with a mean of 21.52. Thus, if hybrid cultivars were not blast resistant, we assume they would experience the same infection rate distribution and simulate infection rates as such. Empirical yield loss data illustrated in Table 1 indicate that rice cultivars rated as “moderately blast resistant” have averaged yield loss in the Mid-South of 9.79% of potential yield (Groth et al., 2015). The mean was 9.79 with an SD of 5.59. This was assumed to be a normal distribution, truncated at 0% and simulated 1000 times to obtain a range of possible yield losses. As such, if hybrid rice was no longer blast resistant and was instead “moderately blast resistant,” yield loss distribution would occur (Table 1). Thus, this study takes the probability of infection distribution and multiplies it by the yield loss distribution, both found on Table 1, to obtain a total yield loss. The cost of aerial application fungicide was estimated at $19.77 ha-1, and the cost of fungicide was estimated at $51.10 ha-1 (Tsiboe et al., 2016). Furthermore, the estimates of the cost of blast mitigation were based on the two most commonly used fungicides to treat blast in the Mid-South in 2015, which were Quilt Xcel (Syngenta) (active ingredients: 13.5% azoxystrobin and 11.7% propiconazole) and Quadris (Syngenta) (active ingredient: 22.9% azoxystrobin) (K. Driggs, personal communication, 2015). Because there are no accessible data on what percentage of producers used Quadris and Quilt, it was assumed that they were used in equal proportions. Other costs not included in this study include crop consulting costs associated with blast management, producers time scouting for blast, and time associated with mitigation efforts. Because these are minor costs relative to total production, it would suggest that the total costs estimated in this paper are likely conservative. Table 1. Simulated blast infection rate and yield loss rate by blast susceptibility rating. Mean Infection rate, %† 21.52 Blast yield loss rate by susceptibility rating, %‡ Resistant 0.00 Moderately resistant 9.79 Moderately susceptible 12.84 Susceptible 15.89 Very susceptible 18.32 SD 12.01 Max 46.95 Min 0.00 0.00 5.59 3.85 5.35 8.06 0.00 21.37 22.88 24.53 34.43 0.00 0.00 0.00 0.00 0.00 † Simulated using estimates of the yearly percentage of rice area that required a fungicide. application, reported by Norman and Moldenhauer (2016). ‡ Groth et al. (2015). Agronomy Journal • Volume 109, Issue 1 • 2017 195 Blast Outbreak Scenario 1 In Scenario 1, the model simulates the infected area of hybrid rice yearly, which has had its blast rating changed from “resistant” to “moderately resistant” (an average of 22.11%) based on of the estimates put forth by Groth et al. (2015). The simulated infected area was then assumed as having been treated with two applications of fungicide to mitigate this outbreak; as such, Scenario 1 was not associated with a yield loss. Current Mid-South production practices suggest two applications of fungicide when blast is observed during the vegetative stage: one application at the late booting stage and one application 7 d after the 90% panicle emergence of the main tiller when blast is spotted in a field (University of Arkansas Cooperative Extension Service, 2016). Thus, Scenario 1 was modeled as follows: parish l, and the season-average farm price for type g rice at time t (Pgt). Pgt is measured in $ Mg-1 and aggregated at the graintype level (g = 0 for medium; g = 1 for long grain) as reported by USDA (2015). The variable gi is the simulated average yield loss percentage (i.e., 9.79%) for a “moderately blast-resistant” rice variety, which was estimated by Groth et al. (2015). Scenario 1 provided the total estimated fungicide usage, which was then incorporated into the LCA (toxicity) model below, in addition to an associated cost savings value, which was used in determining the net value of hybrids. Scenario 2 provided both a cost savings value and fungicide usage as well as the volume (Mg) of rice that would have been lost to blast if hybrids had not been blast resistant. This volume of lost production was used in the RiceFlow model below to estimate the price and supply effects of the counterfactual argument, which is that hybrid rice was not released in the Mid-South. TC1t = 2C l ∑ t Ailt [1] Value of Genetic Gain where the total economic cost of hybrids moving from “blast resistant” to “moderately resistant” in year t (TC1t) is the summation of all actual historic hectares (Ailt) of hybrid rice varieties (i) sown in each rice-producing county/parish (l) in a given year (t), multiplied by the simulated infection rate of blast (l), multiplied by the cost of two applications of fungicide (C). Equation [1] is a function of time because the distribution of the county-level hybrid rice varietal and the total area sown changes yearly. In this scenario, all hybrid varieties have equal probabilities of infection because they are all assumed to be moderately resistant to blast. Blast Outbreak Scenario 2 In Scenario 2, the model simulates the area of hybrid rice varieties that are infected with blast and simulates a corresponding yield loss by variety associated with the infection. Yield losses associated with blast infection for “moderately resistant” varieties were simulated from distributions derived from Groth et al. (2015). Similar to Scenario 1, the infected areas were assumed to be associated with two applications of fungicide, but, unlike Scenario 1, there was a subsequent yield loss associated with the infection. Although a draw from the simulated distribution provided a fixed percentage of yield loss for all varieties, each hybrid variety had a different yield potential for each location and each year. As such, each variety’s average yield was denoted by county/parish, as reported by each state’s extension service. Also, a fixed percentage of that reported yield by location and year was lost to blast (Arkansas Agricultural Experiment Station, 2016; Louisiana State University Ag Center, 2015; Mississippi Agricultural and Forester Experiment Station, 2015). Thus, hybrid varieties with higher yield potential lose a higher amount of yield due to blast, although it is the same percentage as all other hybrid varieties. Scenario 2 was modeled as follows: TC2 = TC1t + ∑g iYil Pgt [2] t t where the annual total economic cost of hybrid lines moving from “blast resistant” to “moderately resistant” (TC2t) is the summation of the annual total economic cost calculated for Scenario 1 (TC1t), and the product of the simulated yield loss due to blast giYil, associated with hybrid variety i in county/ 196 Results from Nalley et al. (2016) were used to estimate the genetic gain associated with hybrid adoption in the Mid-South. The objective of their study was to quantify the economic performance of hybrid and conventional rice in the MidSouth. This objective, in partnership with their modeling approach, complemented the research goals of our study. Unlike the previously mentioned blast model, Nalley et al. (2016) only estimated the amount and dollar value of heterosis for Arkansas and Mississippi, not Louisiana. This action was taken primarily because the university test plots administered by Louisiana State University did not grow hybrid lines continuously throughout the study’s timeframe (2002–2013); as such, these data could not be estimated. Consequently, the results from Nalley et al. (2016) that were used in our study are conservative in their estimation of the total gains in the MidSouth, given that Louisiana produced 15% of the total US rice crop in 2015, whereas Arkansas produced 51% and Mississippi produced 6% (USDA–ERS, 2015). Nalley et al. (2016) used seven test plot locations in Arkansas and 16 in Mississippi. Yield data (Mg ha-1) were obtained from the University of Arkansas Division of Agriculture Arkansas Rice Performance Trials (2000–2012) and the Mississippi State Agriculture and Forestry Experiment Station (2000–2012) rice variety trials from 2003 to 2013. A total of 65 varieties were analyzed, including 14 pure hybrids, 10 CL hybrids, 10 CL lines, and 31 conventional varieties. Their multivariate ordinary least squares regression model to elicit hybrid yield advantage was defined as: yilt = ai + al + at + wiltb + wilt [3] where yilt is yield measured in Mg ha-1 for rice type i, at location l, in trial year t, and ai is a fixed effect for rice type (conventional, hybrid, CL, and CL hybrid) i. It was concluded that the use of field-trial data precluded the need to control for economic variables in the regression model because optimal management practices were followed regardless of the current price levels. The vector (wilt) included temperature, vapor pressure deficit, and solar radiation for each growth-stage window for each variety–location–year. From this, yield premiums could be determined for hybrids over conventional Agronomy Journal • Volume 109, Issue 1 • 2017 Table 2. Environmental impact categories used in the life cycle analysis for hybrid vs. conventional rice. Category Units Description Ozone depletion kg CFC-11 accumulated ozone-depleting compounds emissions accumulated greenhouse gas emissions (IPCC, 2007 characterization factors) Global warming kg CO2 eq small forming potential Smog kg O3 eq terrestrial acidification driven by acid gases Acidification kg SO2 eq Eutrophication kg N eq freshwater and marine eutrophication driven by nutrient runoff Carcinogenics CTUh human toxicity units Noncarcinogenics CTUh human toxicity units Fossil fuel depletion MJ surplus nonrenewable energy consumption Eco-toxicity CTUe ecosystems toxicity units Respiratory effects kg PM2.5 eq primary and secondary particulate emissions varieties and for CL hybrids over CL lines. As such, we use the hybrid yield coefficients as estimated by Nalley et al. (2016) in this study for Arkansas and Mississippi as well. The Nalley et al. (2016) study estimated total revenue enhancement from hybrids. By dividing their findings by annual price per megagram, the total volume enhancement (Mg) premium associated with hybrid adoption could be derived. These results provide a dollar estimate of enhanced producer revenue from hybrid adoption and an increased volume of the rice produced. The volume (Mg) of additional production resulting from genetic gains and from avoided yield losses through blast resistance was used in the RiceFlow model below to estimate the price effects of the counterfactual, which is that hybrid rice was not released in the Mid-South. Specifically, the counterfactual case was presented in this way: How much does rice price increase and consumers lose if hybrid rice is not introduced into production in the Mid-South? RiceFlow Model RiceFlow is a spatial, supply-chain, partial equilibrium model of the global rice economy in which the behaviors of producers and consumers are specified according to neoclassical economic theory (profit and utility maximizers, respectively). RiceFlow is used extensively to assess different aspects of the global rice economy. For instance, Thompson et al. (2015) used RiceFlow to assess the impact of the US Liberty Link rice contamination. Furthermore, Briones et al. (2012) and Wailes et al. (2015) used the model to assess alternative rice policy options in Southeast Asia and Western Africa, respectively. In our study, the RiceFlow model (Durand-Morat and Wailes, 2010) was used to assess the impact of hybrid rice adoption on the US rice market due to its improved yield potential and resistance to blast. That is, the yield gains (both through genetic and maintenance breeding) were summed and then run through the RiceFlow model. RiceFlow was calibrated to market conditions in the calendar year 2013. The global rice economy was disaggregated into 73 regional markets and nine rice commodities derived from the combination of rice type (long, medium, and fragrant rice) and milling degree (paddy, brown, and milled rice). Whereas the value of genetic gains and blast resistance were calculated yearly from 2003 to 2013, the consumer, export, import, and price impacts were only estimated for the production year of 2013 because this was the most recently calibrated version of the RiceFlow model. To achieve the goal of this study, the counterfactual scenario of removing all gains (from heterosis and maintenance breeding) from hybrid adoption was entered into the RiceFlow model. Thus, the results can be interpreted as the market conditions that would have prevailed in 2013 if all hybrid rice production in the Mid-South was replaced by conventional rice varieties that were moderately susceptible to rice blast. The Environmental Impacts of Hybrid Rice The LCA was performed to provide quantitative comparison of the cradle-to-farm gate environmental benefits realized by hybrid rice production. The goal was to provide a comparison for the functional unit of 1 kg of rice dried to 12% moisture at the farm gate ready for transportation to processing. The principal differences between the two (hybrid vs. conventional) systems are yield and fungicide application (no Quadris and associated aerial application emissions). The inputs for each system, in terms of planting, fertilizer, and pesticide application (except as noted) as well as harvesting, had the same of crop area. We have used the TRACI 2.1 lifecycle impact assessment framework, which was developed by the USEPA for conditions in the United States (Bare et al., 2006). The impact categories included in this method are presented in Table 2. To minimize bias in the comparison between hybrid and conventional writings, we adopted a paired Monte Carlo simulation approach using SimaPro 8.1, which selects variates from each unit process in the supply chain and computes the difference between the two (hybrid vs. conventional) product systems. This approach ensures that additional variability from independent simulations of the supply chains is not introduced. From this methodology we can ascertain the differences between hybrid and conventional rice production from a holistic environmental standpoint. Figure 1 illustrates the modeling procedure for estimating total yield gain from hybrid rice, environmental impacts from hybrid adoption, and consumer/producer welfare impacts from hybrid adoption. Results The Value of Blast Resistance Embedded in Hybrid Rice The total (aggregated annual) economic cost results of Scenarios 1 (mitigation cost with no yield loss) and 2 (mitigation cost plus yield loss) are presented in Table 3. All monetary values included in this paper are converted to 2014 USD using annual consumer price index retrieved from IMF (2016). The results from scenario 1 (all hybrids go from blast “resistant” to “moderately resistant” and as such are treated with one application of aerial fungicide) indicate that the blast tolerance offered by hybrids has a value of $4.50 million annually and Agronomy Journal • Volume 109, Issue 1 • 2017 197 Fig. 1. Data sources and flow for estimating total yield gain from hybrid rice, environmental impacts from hybrid adoption and consumer/ producer welfare impacts from hybrid adoption. Table 3. Estimated economic cost of blast mitigation in Arkansas, Louisiana, and Mississippi: 2000–2014. All hectares planted to hybrid varieties assumed to be moderately resistant to blast were infested with a simulated blast rate of 22.11% and then sprayed twice with fungicide to prevent a yield loss. Sown hybrid Blast-infested Fungicide Blast mitigation Long-grain rice, Total yield loss Total economic Year area† area‡ usage§ cost, Scenario 1 average price¶ to blast loss# -1 —————— ha —————— liters Mg $ $ Mg 2003 6,414 1,418 2,865 167,869 215.62 1,551 502,349 2004 14,805 3,274 6,613 397,396 202.82 3,444 1,095,794 2005 23,172 5,124 10,351 637,548 195.09 5,259 1,665,311 2006 71,196 15,744 31,803 2,030,517 245.17 15,346 5,792,896 2007 123,910 27,401 55,350 3,658,619 312.13 28,196 12,459,401 2008 158,044 34,949 70,597 4,825,564 401.19 36,471 19,457,459 2009 173,353 38,334 77,436 5,293,003 324.12 33,208 16,056,198 2010 254,338 56,243 113,611 7,851,076 280.00 59,758 24,583,408 2011 243,456 53,837 108,750 7,760,223 287.71 53,227 23,074,226 2012 292,491 64,680 130,654 9,519,483 311.95 62,799 29,109,979 2013 224,067 49,549 100,089 7,367,732 337.44 49,471 24,061,072 Avg. 144,113 31,868 64,374 4,500,821 283.02 31,703 14,350,736 Total 1,585,246 350,553 708,119 49,509,030 – 348,730 157,858,093 † Source: Rice Technical Working Group (2011–2013). ‡ Simulated by authors using annual varietal area planted for each rice-growing county in Arkansas, Louisiana, and Mississippi retrieved from the Proceedings of the Rice Technical Working Group (various years). § Fungicide application of 1.01 L ha-1 and at a cost of $75.87 ha-1 (aerial application at $19.77 ha-1 and $51.10 ha-1 for fungicide cost). ¶ Values in 2014 US$; deflated with consumer price index retrieved from IMF (2016). # In 2005, there was a yield loss of 30.23 Mg for medium-grain hybrid rice valued at the seasonal medium-grain average rice price of $253.62 Mg-1; this is added into the long-grain loss value. 198 Agronomy Journal • Volume 109, Issue 1 • 2017 $49.51 million over the period 2003 to 2013 (Table 3). If there is an associated yield loss, which is based on historical trials of varieties that are moderately resistant to blast, the value of blast tolerance in hybrids increases to $14.35 million dollars annually or $157.86 million over the period 2003 to 2013. This number is partially driven by rice price and adoption rates, both of which are exogenous, but also by hybrid yield potential and the protection of that yield potential through resistance to blast, both of which are endogenous to the hybrid variety. Agricultural productivity enhancement is traditionally estimated in terms of yield gains per hectare and increased total supply; however, in our study productivity maintenance (i.e., blast resistance) was measured in terms of the yield losses avoided through embedded seed technology. Thus, the results for the value of blast resistance can be viewed as the value of the costs of yield losses and fungicide application that can be avoided through breeding for blast resistance. In other words, without blast resistance embedded in hybrid rice varieties in the Mid-South, producers would incur larger costs at $4.50 million annually and less revenue at $14.35 million annually. Yield and Total Genetic Gain from Hybrid Adoption Using the regression results from Eq. [3], Nalley et al. (2016) estimated that, in Arkansas and Mississippi, hybrids and CL hybrids were associated with average yield premiums of 1.66 and 1.82 Mg ha-1, respectively. The average estimated yields for conventional varieties and CL varieties were 9.05 and 8.79 Mg ha-1, respectively, indicating that on average hybrids and CL hybrids were associated with an 18.3 and 20.1% increase in yields, respectively, relative to conventional and conventional CL varieties. From these regression results, this study was able to create Table 4, which highlights the estimated heterosis (genetic) gains associated with hybrid adoption based on the actual hybrid adoption from 2003 to 2013. On average, between 2003 and 2013, producers in Arkansas and Mississippi gained an additional $76.24 million annually from hybrid adoption. Overall, the total gains in the two states for the same time period were estimated to be $838.70 million. Combining the yield enhancement (genetic gains), the yield loss prevention, and cost savings (maintenance breeding) provided a holistic benefit of hybrid rice adoption in the Table 4. Additional yield and revenue (2014 USD) attributed to Clearfield (CL) hybrid and non-CL hybrid adoption in Arkansas and Mississippi, 2003–2013. Additional yield Additional yield Total additional CL hybrid attributed to non- Non-CL hybrid yield attributed Total revenue attributed to CL Year hybrid adoption† adjusted price CL hybrid adoption adjusted price to hybrids gain‡§ -1 -1 Mg Mg Mg 2014 $ Mg 2014 $ Mg Arkansas 2003 0 $214 14,121 $214 14,121 $3,015,939 2004 41,155 $196 18,343 $194 59,498 $11,608,892 2005 16,106 $173 19,572 $177 35,678 $6,255,727 2006 56,494 $227 39,474 $233 95,967 $21,981,728 2007 96,557 $288 46,760 $280 143,317 $40,870,778 2008 252,197 $343 1,959 $311 254,156 $87,128,409 2009 259,478 $354 29,827 $343 289,305 $102,148,301 2010 415,547 $288 25,060 $288 440,606 $126,762,482 2011 542,587 $313 53,175 $316 595,762 $186,390,914 2012 333,952 $284 29,615 $284 363,567 $103,089,337 2013 136,766 $324 99,288 $326 236,054 $76,605,103 Total 2,528,032 $765,857,610 Mississippi 2003 0 $208 0 $208 0 $0 2004 0 $189 0 $188 0 $0 2005 0 $168 0 $172 0 $0 2006 1,887 $221 2,382 $225 4,269 $953,615 2007 9,203 $282 5,859 $274 15,061 $4,200,707 2008 2,829 $332 61 $299 2,891 $957,809 2009 15,564 $346 1,853 $345 17,418 $6,033,113 2010 53,036 $280 2,836 $280 55,872 $15,649,780 2011 76,263 $303 14,055 $301 90,318 $27,345,757 2012 35,734 $275 305 $275 36,038 $9,921,664 2013 16,013 $315 8,627 $317 24,640 $7,767,804 Total 246,506 $72,830,250 Combined total 2,774,538 $838,687,860 † Source: Nalley et al. (2016). ‡ Values in 2014 US$; deflated with consumer price index retrieved from IMF (2016). § In 2005, there was a yield loss of 30.23 Mg for medium-grain hybrid rice valued at the seasonal medium-grain average rice price of $253.62 Mg-1; this is added into the long-grain loss value. Agronomy Journal • Volume 109, Issue 1 • 2017 199 Table 5. Value of genetic and maintenance breeding gains from hybrid rice adoption in the Mid-South. Maintenance breeding for Maintenance breeding for Genetic + blast resistance blast resistance maintenance Genetic gain via (no yield loss)‡ (yield loss)§ Year hybrid adoption† (no yield loss) 2003 $3,015,939 $167,869 $502,349 $3,183,808 2004 $11,608,892 $397,396 $1,095,794 $12,006,288 2005 $6,255,727 $637,548 $1,665,311 $6,893,275 2006 $22,935,344 $2,030,517 $5,792,896 $24,965,861 2007 $45,071,485 $3,658,619 $12,459,401 $48,730,104 2008 $88,086,218 $4,825,564 $19,457,459 $92,911,782 2009 $108,181,413 $5,293,003 $16,056,198 $113,474,416 2010 $142,412,262 $7,851,076 $24,583,408 $150,263,338 2011 $213,736,672 $7,760,223 $23,074,226 $221,496,895 2012 $113,011,000 $9,519,483 $29,109,979 $122,530,483 2013 $84,372,907 $7,367,732 $24,061,072 $91,740,639 Avg. $76,244,351 $4,500,821 $14,350,736 $80,745,172 Total $838,687,859 $49,509,030 $157,858,093 $888,196,889 Genetic + maintenance (yield loss) $3,518,288 $12,704,686 $7,921,038 $28,728,240 $57,530,886 $107,543,677 $124,237,611 $166,995,670 $236,810,898 $142,120,979 $108,433,979 $90,595,087 $996,545,952 † As derived by Nalley et al. (2016) for Arkansas and Mississippi and illustrated in Table 4. ‡ As derived from Eq. [1], using the mean of the simulated values from Table 3 for Arkansas, Louisiana, and Mississippi. § As derived from Eq. [2], using the mean of the simulated values from Table 3 for Arkansas, Louisiana, and Mississippi. Mid-South. Total gains assuming genetic gains plus mitigation costs (Scenario 1 in Table 3) were estimated to be $80.75 million annually or $888.20 million in total from 2003 to 2103 (Table 4). Using the assumption that evolving from “resistant” to “moderately resistant” to rice blast results in yield loss (Scenario 2 in Table 3), the value increases to $90.60 million annually or $996.55 million over the entire study period (Table 5). These values should be viewed as conservative estimates because they only analyze two (genetic gains) and three (maintenance breeding) of the six rice-growing states in the United States. That is, the benefits estimated here only account for 60% (genetic gains) and 65% (maintenance breeding) of the total rice acreage in the United States in 2013 (USDA–ERS, 2015). Other states, notably Texas and Missouri, also produce hybrid rice, but those benefits were not captured here. Impact on the US Rice Market Table 6 illustrates the effects on the US rice market if hybrid rice had not been adopted in 2013, as estimated by the RiceFlow model. The benchmark scenario accounts for hybrid adoption and the associated genetic and maintenance breeding gains as calculated in Tables 5 and 6 for 2013. Scenario 1, as presented on Table 6, removes these gains and estimates the changes in imports, exports, prices, and production. As a result of the adoption of hybrid rice in the United States, the total rice production in 2013 increased 440,000 Mg, or 5.1%, due to an 8.1% increase in the production of long-grain rice (Table 6). Medium-grain rice production decreased slightly as a result of hybrid rice adoption, which was assumed to be an exclusively long-grain rice technology in this study. The net impact of hybrid rice adoption on rice acreage showed an increase of 13,000 ha or 1.2%. Total US rice exports were 383 Mg or 9.0% higher as a result of hybrid rice adoption. By type, exports of long-grain rice were 411 Mg or 13.9% larger, and imports were 30 Mg or 17.7% lower, whereas exports of medium-grain rice decreased by 28 Mg or 2.1%. Additionally, US milling activity, represented by the domestic sales of brown rice that enter the milling process, increased by 302 Mg or 4.3% due to the adoption of hybrid rice. 200 Our findings show that the higher efficiency of hybrid rice results in greater competitiveness and lower prices across the US long-grain supply chain. Farm gate prices for longgrain rice decreased by $16 Mg-1 or 4.6%, whereas wholesale prices decreased by $62 Mg-1 or 4% (Table 6). Farm gate and wholesale prices for medium-grain rice increased slightly due to higher competition with long-grain rice for factors of production. As a result of the changes in the volume of production and the farm gate prices, the total rice output value increased by 63 million or 2.1%, attributed to the adoption of hybrid rice. All of the economic gains estimated in the RiceFlow model are in the long-grain markets. On the other hand, the increased competitiveness brought on by the adoption of hybrid rice generated lower consumer prices and therefore savings of approximately $165 million. Consequently, all savings accrued to long-grain rice because the consumer price and value of mediumgrain consumption in the United States increased slightly as a result of the technology adoption. Environmental Impact of Hybrid Rice The life cycle analysis results are shown in Fig. 2. The range of yield premiums of hybrid varieties significantly overlaps conventional varieties, and this uncertainty was fully accounted for in the assessment. It is primarily because of this overlap that there is a 70 to 75% probability in most impact categories of an improvement to the environmental impact associated with hybrid varieties. If in practice this yield variability is not random and is simulated in the Monte Carlo simulations but is correlated with annual weather conditions, then this analysis underestimates the likelihood that hybrid varieties outperform conventional strains. Figure 2 indicates that over 75% of the time (in this case drawing from the Monte Carlo simulation) hybrids had less environmental impact than conventional varieties in terms of fossil fuel depletion, ecotoxicity, respiratory effects, carcinogenics, eutrophication, acidification, smog, global warming, and ozone depletion. The only category for which hybrid rice had a negative environmental impact was with noncarcinogenics. This is due almost exclusively to zinc uptake by the hybrid plants because the removal of a metal Agronomy Journal • Volume 109, Issue 1 • 2017 Agronomy Journal • Volume 109, Issue 1 • 2017 201 7507 Value domestic demand, $ million -165 -38 63 -11 -13 -30 -27 27 383 247 -3 302 0 -2.2 -2.5 2.1 -3.0 -17.5% 1.2 -17.8 0.6 9.0 9.8 -15.4 4.3 0.0 0.0 9.8 4.1 % 5.1 4602 2073 1500 332 748 138 124 3129 3355 1770 4775 14 65 -101 1520 4826 4788 2008 1562 348 757 168 151 3101 2944 1503 4453 16 58 -101 1384 4494 -186 -62 65 -16 -9 -30 -27 28 411 267 -3 322 8 0 136 332 BENCH SCEN D ——1000 Mg, paddy basis—— 6245 5777 468 Long grain -3.9 -4.0 3.3 -4.6 -1.2 -17.7 -17.9 0.9 13.9 17.8 -15.4 7.2 13.0 0.0 9.8 7.4 % 8.1 2906 1049 1500 374 336 1 1 1573 1281 1004 2576 0 276 -46 0 2852 2885 1052 1490 371 340 1 1 1573 1308 1024 2596 0 284 -46 0 2880 -2 21 10 -0.2 0.7 0.7 -1.2 0.8 -2.1 0.0% -28 0 -4 3 -2.0 0.0 0.0 -0.8 -2.6 – -1.0 -1.0 0.0 – % -20 0 0 -21 -8 0 -28 0 0 BENCH SCEN D ——1000 Mg, paddy basis—— 2806 2834 -28 Medium grain † BENCH, benchmark; SCEN, scenario; D, BENCH - SCEN. The benchmark is with actual adoption of hybrid rice for 2013 in Arkansas and Mississippi. ‡ SCEN is the removal of the genetic yield premiums (Mg) associated with hybrids as derived from Table 4, and the increased yield loss associated with going from blast resistant to moderately blast resistant from Table 3. 7673 3060 3123 356 Wholesale consumer price, $ Value production, $ million 345 1097 1538 Mg-1 1084 169 153 4675 4252 2527 7049 1500 Paddy price at farm gate, $ Acreage, 1000 ha Mg-1 126 4702 4636 Import milled rice Domestic demand milled rice Exports 139 2774 Export milled rice Imports 7351 14 Domestic sales brown rice 341 341 Export brown rice Import brown rice 16 -147 1384 7374 0 136 304 BENCH† SCEN D ——1000 Mg, paddy basis—— 9051 8611 440 -147 1520 7678 Change stock Export paddy rice Domestic sales paddy rice Production paddy rice Variables Total Table 6. Impact of the removal of hybrid rice on the US rice supply chain. Fig. 2. Results (percentages) of the categories in the life cycle analysis comparison of hybrid vs. conventional rice based on 2500 Monte Carlo simulations. from the environment is beneficial in a life cycle analysis. Because conventionals yield less but uptake the same amount of zinc, the per unit yield of zinc uptake is higher for conventionals. This would be mitigated if the LCA was scaled on a per-hectare (not per-kilogram) basis. Figure 2 shows that using the well-established categories defined by the TRACI 2.1 life cycle impact assessment framework that hybrid rice appears to be less detrimental to the environment. Many of these environmental benefits are driven by the higher yields that hybrids possesses as well as embedded seed technology (e.g., blast resistance), which requires less toxic inputs. Conclusions We observed several key findings in our analysis. First, hybrids have increased revenue for producers in the Mid-South through their higher yields per hectare. These higher yields have contributed to increased domestic rice supplies, which have in turn resulted in larger exports. Accordingly, these additional exports are estimated to be large enough to feed an additional 5.89 million people. Given there are some 795 million people who are malnourished globally, an increase in the food supply that actually reaches their plates would be an important benefit to humanity. Second, the increase of the rice supply from hybrid adoption drives long-grain rice prices down in the United States, which makes it more accessible via exports to impoverished countries. There are two important findings from this study regarding the value of maintenance breeding: (i) the yield loss avoided through blast resistance via hybrid adoption is significant both in terms of cost savings and field yield loss and (ii) by not including the value of maintenance breeding in the economic valuation of a crop breeding program, one can vastly underestimate its true return to stakeholders. Our results indicate that the gains from the cost savings due to not applying fungicide to combat blast, as well as yield-loss avoidance, are roughly 20% as large as the gains that were 202 attributed to heterosis. This is a large benefit usually not accounted for in cost/benefit analysis. This study provides conservative estimates of the benefits of hybrid rice adoption in the United States in that it only analyzes three of the six rice-producing states. Our results indicate that hybrids, since their commercial release, have increased producer revenue, lowered domestic/global prices, and increased food supply. Overall, the two latter points are of the utmost importance given the reality of global population growth and an increased need for food in many countries. We also find large environmental benefits from hybrid rice adoption. Using a LCA, we find that hybrids lead to less fossil fuel depletion, ecotoxicity, respiratory effects, carcinogenics, eutrophication, acidification, smog, global warming, and ozone depletion than their conventional counterparts in the Mid-South of the United States. This is an important finding because in highincome countries increased consumer demand for food products with lower environmental impact have prompted row crop producers to reduce their environmental impact associated with crop production. More importantly, agricultural producers face increasing demand and in some cases requirements from private industry to reduce the impact associated with crop production. Currently, RiceTec Inc., a private company, is the sole purveyor of southern hybrid lines. In 2011 a five-state consortium was developed to create and release hybrid rice through University (Louisiana State University, University of Arkansas, Texas A&M, Mississippi State University, and Southeast Missouri State University) breeding programs. To date there have been no public releases of hybrid rice because hybrid breeding is expensive and time consuming. The results of this study should provide economic and environmental motivation for these breeding programs to continue funding their hybrid breeding programs. Furthermore, this study highlights that when policymakers fund programs such as public rice breeding, Agronomy Journal • Volume 109, Issue 1 • 2017 they need to look holistically, in terms of the economy and the environment, when making funding decisions. Globally there is no commercial production of genetically modified (GM) rice, but, given the large environmental and economic impacts between the embedded seed technology in conventional and hybrid rice, one wonders if there is the same difference between potential GM and hybrid rice. Given the findings of this study, future policymakers may want to evaluate both the economic and the environmental impacts of introducing GM rice and not simply the traditional economic side of adoption to avoid underestimating the holistic benefits of adoption. This study demonstrates that benefits to hybrid rice exceed simple yield increases. We show that, although yield increases are the most tangible and often the easiest attribute to derive a holistic comparison of agricultural substitutes, deeper research is needed. As hybrid rice adoption grows and new embedded seed technology emerges, new comparisons will inevitably need to be made. This study lays the groundwork for a holistic production, consumption, and environmental impact comparison of competing agricultural seed types. References Araji, A., R. Sim, and R. Gardner. 1978. Returns to agricultural research and extension: An ex ante approach. Am. J. Agric. Econ. 60:964–968. doi:10.2307/1240129 Arkansas Agricultural Experiment Station. 2016. Arkansas rice performance trials. Univ. of Arkansas Division Cooperative Extension Service, Little Rock. http://arkansasvarietytesting.com/home/rice/ (accessed 8 Apr. 2016). Bare, J., T. Gloria, and G. Norris. 2006. 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