The latest turmoil of production and price volatility in the global food sector has put agriculture back to the top of the development agenda. Population growth, changing consumer preferences, bioenergy demand and climate change are some of the huge challenges for agricultural production today and in the future. In the last decades, productivity has been constantly improved through the introduction of improved crop varieties and the greater use of mechanization, irrigation, chemical fertilizer and pesticides.
Recent studies in the literature examining impact of government seed price intervention on adoption of Bt cotton get different results depending on the specifics of the situation analyzed. According to one study, reduction in seed prices enables farmers to buy seeds at lower prices and this can result in surge of area sown under Bt cotton. The other view holds that seed price interventions have little impact on the adoption rates rather these interventions may adversely affect firms’ incentives to innovate. Which of the two views characterize adoption of Bt cotton in India?