The report said that while some drug and biotechnology companies may profit from these "pharma crops," aggregate farmer benefits are likely to be small and rural community benefits may be much more modest than often portrayed.
In particular the report highlights a serious issue involved in pharma-crops and whether they can be separated from food and feed supplies so there's no risk of commingling.
"Proponents of pharmaceutical crops have inflated the rewards and downplayed the risks," said Dr. Jane Rissler, deputy director of the Food and Environment Program at the Union of Concerned Scientists, which commissioned the study.
"State officials, farmers and rural communities should be wary of rosily optimistic claims."
According to the report, major benefits of a successful pharma crop industry would be expected to go to companies in the form of reduced production costs. If the companies pass cost savings along to consumers, society may benefit from cheaper drugs.
The net savings in production costs will be at least partially offset by the costs of containment needed to protect the food supply from pharma crop commingling.
Contamination from open-air production is considered likely because most drug-producing crops are food crops such as corn, rice, and soybeans, and most pharma crop production occurs in areas where food versions of the crops are grown.
Farmers are unlikely to benefit because they would be unable to negotiate with pharma crop companies from a position of strength.
Market forces, including potential foreign competition, will drive farmer compensation down to the lowest levels that pharma crop companies can achieve.
Moreover, the acreage likely required if the pharma crop industry meets its expectations is so small that only a few growers would be needed. Rural communities, then, are likely to benefit in a substantial way only if a drug-processing company locates in their town or a local university or private businesses win large research contracts.
In addition, those growers who produce food and feed versions of the pharma crop could be put at risk because of the potential for contamination.
The report points to the recent case of temporarily derailed plans to grow pharma-rice in the Missouri Bootheel, in the US.
The pharma-rice and barley acreage planned for this site was reportedly for just under 10,000 acres. This is less than 1 per cent of the total crop acres in the northwest part of Missouri, where the rice would be grown.
Whilst there could be more significant acreage later on as the industry develops, no short-term benefits for producers were identified.
One study indicated approximately 10,000 acres of transgenic tobacco would be needed to supply the world's needs. That is small acreage compared to the 230 million acres US farmers devote to grains and other major crops.
"Given the limited bargaining power of farmers and small acreage that's anticipated, the primary impact of pharma-crops would likely be on two business sectors: research work (either private, university or a combination of the two) and processing," said Wisner.
"This is something that needs constant monitoring. There may well be changes (requiring number adjustments) in five to 10 years. The success of pharma-crops hinges heavily on keeping them separate from food and feed supplies," he added.
"If that challenge is successfully dealt with, many of the other challenges in this industry are greatly diminished."
Wisner's full report, "The Economics of Pharmaceutical Crops: Potential Benefits and Risks for Farmers and Rural Communities," can be accessed here.