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Contracts for Grain Biosecurity and Grain Quality

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  • Abougamos, Hoda
  • White, Benedict
  • Sadler, Rohan

Abstract

The export of grain from Western Australia depends upon a grain supply network that takes grain from farm to port through Cooperative Bulk Handling receival and storage sites. The ability of the network to deliver pest free grain to the port and onto ship depends upon the quality of grain delivered by farmers and the efficacy of phosphine based fumigation in controlling stored grain pests. Phosphine fumigation is critical to the grain supply network because it is the cheapest effective fumigant. In addition, it is also residue free. Unfortunately, over time, common stored-grain pests have evolved to develop resistance to phosphine and there is a risk that phosphine will become less effective and may need to be replaced with more expensive alternative fumigants. Currently the alternative fumigants will involve substantial capital investment or leave residues in the grain which may restrict grain exports. There is some evidence that phosphine resistance develops on farm due to inadequate biosecurity management. As a first step to analysing this problem, this paper considers the design of farm biosecurity contracts using a principal-agent approach.

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Bibliographic Info

Paper provided by Australian Agricultural and Resource Economics Society in its series 2012 Conference (56th), February 7-10, 2012, Freemantle, Australia with number 124216.

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Date of creation: Feb 2012
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Handle: RePEc:ags:aare12:124216

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Related research

Keywords: Principal-agent model; supply contracts; moral hazard; stored grain; biosecurity; Crop Production/Industries;

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  1. Starbird, S. Andrew, 2005. "Supply Chain Contracts and Food Safety," Choices, Agricultural and Applied Economics Association, vol. 20(2).
  2. S. Andrew Starbird, 2005. "Moral Hazard, Inspection Policy, and Food Safety," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 15-27.
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