Analyzing the Effects of Weather and Biotechnology Adoption on Corn Yields and Crop Insurance Performance in the U.S. Corn Belt

Favorable weather and the adoption of Genetically Modified (GM) corn hybrids are often argued to be factors that explain recent corn yield increases and risk reduction in the U.S. Corn Belt. The focus of this analysis is to determine whether favorable weather is the main factor explaining increased and more stable yields or if biotechnology adoption is the more relevant driving force. The hypothesis that recent biotechnology advances have increased yields and reduced risks by making corn more resistant to pests, pesticides, and/or drought is tested. Fixed effects models of yields and crop insurance losses as functions of weather variables and genetically modified corn adoption rates are estimated taking into account the non-linear agronomic response of crop yields to weather. Preliminary results show that genetically modified corn adoption rates, especially insect- resistant corn adoption, have had a significant and positive effect on average corn yields in the U.S. Corn Belt over the last years. Furthermore, genetically modified corn adoption has not only increased corn's tolerance to extreme heat but has also improved corn's tolerance to excessive and insufficient rainfall.