Worked example 1
A farmer plants 50 hectares of maize. A typical yield is 10 tonnes per hectare. An infestation of European corn borer is expected to cause a 20% loss in yield for non-GM maize. Bt maize is 95% effective at preventing this loss. If maize sells for $200 per tonne, calculate the potential increase in revenue from planting Bt maize compared to non-GM maize.
Show solution outline
Here is a step-by-step calculation to determine the financial benefit of using Bt maize in this scenario.
Step 1: Calculate total potential yield without any loss.
- Total Area = 50 hectares
- Yield per hectare = 10 tonnes
- Maximum potential yield = 50 ha × 10 tonnes/ha = 500 tonnes
Step 2: Calculate the yield and revenue for non-GM maize.
- Yield loss percentage = 20%
- Yield loss in tonnes = 500 tonnes × 0.20 = 100 tonnes
- Final yield for non-GM maize = 500 tonnes - 100 tonnes = 400 tonnes
- Revenue from non-GM maize = 400 tonnes × $200/tonne = $80,000
Step 3: Calculate the yield and revenue for Bt maize.
- Bt maize prevents 95% of the potential loss.
- Loss prevented = 100 tonnes × 0.95 = 95 tonnes
- Remaining loss with Bt maize = 100 tonnes - 95 tonnes = 5 tonnes
- Final yield for Bt maize = 500 tonnes - 5 tonnes = 495 tonnes
- Revenue from Bt maize = 495 tonnes × $200/tonne = $99,000
Step 4: Calculate the increase in revenue.
- Increase in revenue = Revenue from Bt maize - Revenue from non-GM maize
- Increase in revenue = 80,000 =
Answer: The potential increase in revenue from planting Bt maize is **