Can Bt Technology Reduce Poverty Among African Cotton Growers? An Ex Ante Analysis of the Private and Social Profitability of Bt Cotton Seed in Mozambique

This paper presents an ex ante analysis of the private and social profitability of the introduction of Bt cotton for a major cotton producing area of northern Mozambique. Cotton is especially relevant to rural poverty reduction because smallholders often have few alternative cash earning activities, and yields are among the lowest in Africa. Multivariate regression is used to quantify the relationship between pest control and yield loss at farm level as a basis for estimating the expected yield gain from the introduction of Bt cotton. Partial budget analysis of technical packages with and without Bt cotton seed reveals a strong divergence between private (negative) and social (positive) profitability. The Mozambique case indicates that effective bio-safety and legal frameworks may be a necessary but not sufficient condition for Bt cotton technology adoption and poverty reduction. Policy changes to align private and social profitability of cotton production with Bt seed, as well as complementary improvements in crop management, especially timely planting and weed control, are also necessary for Bt technology to change the fortunes of Mozambican cotton growers. With improved policy and technology in place the adoption of Bt cotton varieties could result in a sizeable reduction in poverty as measured by the predicted change in squared poverty gap.