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An Economic Framework for Evaluating New Wheat Varieties

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  • Brennan, John P.
  • Godyn, Dirk L.
  • Johnston, Brian G.

Abstract

Estimation of the benefits of research using changes in producer and consumer surplus following a research-induced shift in the supply curve provides a useful framework for the analysis of new wheat varieties. However, the framework assumes an homogeneous product, which is not the case for wheat where there are changes in quality as a result of research. This aspect is particularly important where there is a trade-off between quality and yield, as in the case of a higher-yielding, but lower-quality wheat variety. The aim of this paper is to incorporate these quality aspects into an analysis based on a partial equilibrium framework by separating the wheat market into segments based on wheat quality. A change in the type of wheat produced can then be represented as a shift from one segment to another. The analysis involves identifying those who will produce the new variety, and defining supply curves for those producers and other producers separately. Empirical testing of the model with hypothetical varieties indicates that the results obtained are consistent with prior expectation.

Suggested Citation

  • Brennan, John P. & Godyn, Dirk L. & Johnston, Brian G., 1989. "An Economic Framework for Evaluating New Wheat Varieties," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 57(01-02-03), pages 1-18, December.
    • Handle: RePEc:ags:remaae:12447
    DOI: 10.22004/ag.econ.12447
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    References listed on IDEAS

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    1. Roger N. Rose, 1980. "Supply Shifts and Research Benefits: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(4), pages 834-837.
    2. Zvi Griliches, 1958. "Research Costs and Social Returns: Hybrid Corn and Related Innovations," Journal of Political Economy, University of Chicago Press, vol. 66(5), pages 419-419.
    3. Edwards, Geoff W. & Freebairn, John W., 1982. "The Social Benefits from an Increase in Productivity in a Part of an Industry," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 50(02), pages 1-18, August.
    4. C. A. Carter & R. M. A. Loyns & Z. F. Ahmadi-Esfahani, 1986. "Varietal Licensing Standards and Canadian Wheat Exports," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 34(3), pages 361-377, November.
    5. Laurian J. Unnevehr, 1986. "Consumer Demand for Rice Grain Quality and Returns to Research for Quality Improvement in Southeast Asia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(3), pages 634-641.
    6. George W. Norton & Jeffrey S. Davis, 1981. "Evaluating Returns to Agricultural Research: A Review," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(4), pages 685-699.
    7. R. K. Lindner & F. G. Jarrett, 1978. "Supply Shifts and the Size of Research Benefits," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 60(1), pages 48-58.
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    Cited by:

    1. Voon, Thomas Jan P., 1996. "Evaluating Quality Improvement in Nonhomogeneous Agricultural Commodities: The Case of Australian Beef," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 64(02), pages 1-7, August.
    2. Brennan, John P. & Thorne, Fiona S. & Kelly, Paul W. & Murray, Gordon M., 2004. "Defining the Costs of an Outbreak of Karnal Bunt of Wheat," 2004 Conference (48th), February 11-13, 2004, Melbourne, Australia 58382, Australian Agricultural and Resource Economics Society.
    3. Kingwell, Ross & Carter, Chris, 2014. "Economic issues surrounding wheat quality assurance: the case of late maturing alpha-amylase policy in Australia," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 22, pages 1-13.
    4. Ahmadi-Esfahani, Fredoun Z., 1994. "Wheat Marketing and Trade: Further Issues for Research - a Comment on Ryan," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 62(01), pages 1-7, April.
    5. You, Liangzhi & Bolwig, Simon, 2003. "Alternative growth scenarios for Ugandan coffee to 2020," EPTD discussion papers 98, International Food Policy Research Institute (IFPRI).
    6. McVey, Marty Jay, 1996. "Valuing quality differentiated grains from a total logistics perspective," ISU General Staff Papers 1996010108000012326, Iowa State University, Department of Economics.
    7. Namara, Regassa E. & Manig, Winfried, 2004. "Returns to Alternative Organisational Models of Wheat Breeding Research: Simulation Results from Ethiopia," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 59(2), pages 1-18.
    8. Alston, Julian M., 1991. "Research Benefits in a Multimarket Setting: A Review," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 59(01), pages 1-30, April.
    9. Brennan, John P. & Martin, Peter J. & Mullen, John D., 2004. "An Assessment of the Economic, Environmental and Social Impacts of NSW Agriculture's Wheat Breeding Program," Research Reports 27997, New South Wales Department of Primary Industries Research Economists.

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