Diffusion of Bt Cotton in India: Impact of Seed Prices and Technological Development

Recent studies have analyzed the adoption of Bt cotton in the light of government seed price interventions. According to one view, reduction in seed prices enabled the farmers to buy seeds at lower prices and this resulted in the sudden surge in area under Bt cotton. The other view holds that seed price interventions had little impact on the adoption rates rather these interventions might have negative implications for the company to innovate in future. Which of the two views characterizes adoption of Bt cotton in India? Using three variations of dynamic logistic model, this paper analyzes the impact of certain economic factors like seed prices, technological development, cotton prices on the diffusion of Bt cotton in India. We used a panel data set covering 9 major cotton growing states and the over the years from 2002 to 2008 and found that although seed prices were significant in impacting the diffusion rates but its impact was limited. This study also sheds light on the significance of technological development in impacting the diffusion rates.