Introducing a genetically modified banana in Uganda: social benefits, costs, and consumer perceptions

This report examines the potential social welfare impacts of adopting a Genetically Modified (GM) banana in Uganda. Banana is a staple crop consumed by the majority of Ugandan households. The study applies a real option approach to estimate, ex ante, the maximum incremental social tolerable irreversible costs (MISTICs) that would justify immediate introduction of the technology. Results of MISTICs estimation for different scenarios indicate that in delaying the approval of a GM banana, Uganda foregoes potential annual benefits ranging approximately from US$179 million to US$365 million. Average annual MISTICs per household vary between US$34 and US$ 69. Results indicate that only if the average household is willing to give up at least US$38 per year to avoid introduction of a GM banana, should postponing an immediate release be considered.

The paper concludes that there are several implications to numerous stakeholders on the economic value and the effect of the foregone benefits as a result of waiting to release a GM banana. These include:

• that with each year of delay in the introduction of a GM banana, Uganda loses about US$179 million to US$365 million to all households
• there is an urgent need for National Agriculture Research Organisation (NARO) and other institutions to conduct research to understand how consumers feel about GM banana biosafetyrisks and the potential challenges for marketing the product
• the losses caused by banana constraints, therefore, make the opportunity cost to farmers of not using the GM banana technology extremely high - this implies that a farm household would naturally benefit disproportionately from a GM banana technology that is likely to ensure a return to sustainable production.