A sample of 283 cotton farmers in Northern China was surveyed in December 1999. Farmers that used cotton engineered to produce the Bacillus thuringiensis (Bt) toxin substantially reduced the use of pesticide without reducing the output/ha or quality of cotton. This resulted in substantial economic benefits for small farmers. Consumers did not benefit directly. Farmers obtained the major share of benefits and because of weak intellectual property rights very little went back to government research institutes or foreign firms that developed these varieties. Farmers using Bt cotton reported fewer pesticide poisonings than those using conventional cotton.