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Costs and Risks of Testing and Segregating Genetically Modified Wheat

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  • William W. Wilson
  • Bruce L. Dahl

Abstract

Development of genetically modified (GM) crops is challenging the functions of the grain marketing system. A stochastic optimization model was developed in this study to determine optimal testing strategies. The model chooses the optimal testing strategy that maximizes utility (minimizes disutility) of additional system costs due to testing and rejection, and allows the estimation of the risk premium required for sellers to undertake the dual marketing of GM and non-GM segregations over a non-GM system. Costs are estimated for a vertically integrated grain export chain including testing, rejection, and a risk premium. The model includes elements of costs and risks of adventitious commingling at all stages of the marketing chain, variety declaration, grower truth-telling, and accuracy of testing technologies. Sensitivities were evaluated for the effects of GM adoption, risk parameters, variety declaration, and tolerance levels.

Suggested Citation

  • William W. Wilson & Bruce L. Dahl, 2005. "Costs and Risks of Testing and Segregating Genetically Modified Wheat," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(2), pages 212-228.
    • Handle: RePEc:oup:revage:v:27:y:2005:i:2:p:212-228.
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    File URL: http://hdl.handle.net/10.1111/j.1467-9353.2005.00222.x
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    References listed on IDEAS

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    1. Serrao, Amilcar & Coelho, Luis, 2000. "The Role Of Area-Yield Crop Insurance In Farmers' Adjustment Against Risk In A Dryland Region Of Portugal," 2000 Annual meeting, July 30-August 2, Tampa, FL 21841, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Sonka, Steven & Schroeder, R. Christopher & Cunningham, Carrie, 2000. "Transportation, Handling, and Logistical Implications of Bioengineered Grains and Oilseeds: A Prospective Analysis," Analysis 313481, United States Department of Agriculture, Agricultural Marketing Service, Transportation and Marketing Program.
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    Cited by:

    1. Matthew Rousu & Wallace E. Huffman & Jason F. Shogren & Abebayehu Tegene, 2007. "Effects And Value Of Verifiable Information In A Controversial Market: Evidence From Lab Auctions Of Genetically Modified Food," Economic Inquiry, Western Economic Association International, vol. 45(3), pages 409-432, July.
    2. William, Wilson & Dahl, Bruce & Hertsgaard, David, 2020. "Soybean quality differentials, blending, testing and spatial arbitrage," Journal of Commodity Markets, Elsevier, vol. 18(C).
    3. Gawron, J.-C. & Theuvsen, L., 2008. "Kosten der Verarbeitung gentechnisch veränderter Organismen: Eine Analyse am Beispiel der Raps- und Maisverarbeitung," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 43, March.
    4. Huffman, Wallace E., 2010. "Consumer Acceptance of Genetically Modified Foods: Traits, Labels and Diverse Information," Working Papers 93168, Iowa State University, Department of Economics.
    5. Gawron, Jana-Christina & Theuvsen, Ludwig, 2007. "Costs of Processing Genetically Modified Organisms: Analysis of the Rapeseed and Corn Industries," 47th Annual Conference, Weihenstephan, Germany, September 26-28, 2007 7601, German Association of Agricultural Economists (GEWISOLA).
    6. Darren Barber & Jill Hobbs & James Nolan, 2008. "Assessing Producer Stated Preferences for Identity Preservation in the Canadian Grain Handling and Transportation System," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(3), pages 243-256, September.
    7. Anderson, Kym & Jackson, Lee Ann, 2005. "GM crop technology and trade restraints: economic implications for Australia and New Zealand," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(3), pages 1-19.
    8. Shakya, Sumadhur & Wilson, William W. & Dahl, Bruce L., 2012. "Valuing New Random GM Traits: The Case of Drought Tolerant Wheat," Agribusiness & Applied Economics Report 128033, North Dakota State University, Department of Agribusiness and Applied Economics.
    9. Matthias Heyder & Ludwig Theuvsen, 2009. "Der Einsatz von GVO: Empirische Ergebnisse zum Legitimierungsdruck und zur Corporate Social Responsibility im Agribusiness," Journal of Socio-Economics in Agriculture (Until 2015: Yearbook of Socioeconomics in Agriculture), Swiss Society for Agricultural Economics and Rural Sociology, vol. 2(1), pages 143-176.
    10. Heyder, Matthias & Theuvsen, Ludwig, 2010. "Corporate Social Responsibility in the agri-food sector: the case of GMOs," Problems of World Agriculture / Problemy Rolnictwa Światowego, Warsaw University of Life Sciences, vol. 10(25), pages 1-18, September.
    11. Crowe, Bronwyn & Pluske, Johanna M., 2006. "Is it Cost Effective to Segregate Canola in WA?," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 14.
    12. Johnson, D. Demcey & Lin, William & Vocke, Gary, 2005. "Economic and welfare impacts of commercializing a herbicide-tolerant, biotech wheat," Food Policy, Elsevier, vol. 30(2), pages 162-184, April.

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