variety can be expressed as . For example, a breeding operation with a direct annual cost of $100,000 plus an overhead rate of 50%, facing a real interest rate of 4%, needing 10 years to develop a new variety, and introducing a new variety every 3 years would develop new varieties at an average cost of about $553,000 each.

The literature contains few estimates of breeding costs. McMullen (1987) estimated that the average time to breed new varieties with traditional methods ranged from 7.5 years for corn and safflower to a high of 14-15 years for squash and watermelon and almost 19 years for cauliflower (table A.8). He cited published estimates indicating costs of around $1.5-3.0 million for developing a new crop variety, corresponding to $2.0-4.0 million in 1998 dollars. He estimated the direct cost of public breeding programs at around $250,000 ($340,000 in 1998 dollars) per year. The cost of introducing a new tomato variety has been estimated at $315,000-630,000 in 1998 dollars (NRC 1989).

Conversations with public-sector crop breeders indicate that the costs of new varieties can vary substantially. The cost of breeding a new small fruit (such as strawberry or raspberry) variety in a public program, calculating with the model presented above, appears to be about $200,000. Breeding soybeans appears to exhibit economies of scale, that is, the cost per variety is lower in larger programs. Large programs appear to breed new varieties at a cost of $215,000-285,000, small programs at about $550,000. The cost of breeding celery in a public program is about $425,000 per variety. The cost of breeding small grains is considerably higher: on the order of $2.1 million for oats and $2.8-3.0 million for wheat.

The preceding analysis ignores the cost of developing germplasm and considers only the cost of developing a new variety from existing germplasm. It was not possible to estimate the cost of developing new germplasm for use in breeding programs via traditional breeding methods or genetic engineering. That would require estimating the costs of screening germplasm and identifying useful traits and the costs and success rates of introducing identified traits into existing germplasm. None of those dimensions could be estimated for this study, although unpublished Monsanto estimates indicate that the total costs of developing Bt corn were in the range of $10 to $25 million, inclusive of germplasm development (molecular biology, gene expression, transformation) and development of commercial varieties (insect evaluation, event screening, field evaluation, and product development). In general, however, one would expect germplasm with useful traits to be used in developing a large number of varieties. As a result, the average per-variety cost of germplasm is likely to be small. For example, if Monsanto's Bt corn germplasm were used in 1,000 varieties, the average per variety cost of

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