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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. Copyright 2005, Oxford University Press.

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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    Citations

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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. Huffman, Wallace E., 2010. "Consumer Acceptance of Genetically Modified Foods: Traits, Labels and Diverse Information," Working Papers 93168, Iowa State University, Department of Economics.
    3. 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.
    4. 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.
    5. repec:ags:gewipr:259633 is not listed on IDEAS
    6. 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).
    7. 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.
    8. 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.
    9. Heyder, Matthias & Theuvsen, Ludwig, 2010. "Corporate Social Responsibility in the agri-food sector: the case of GMOs," Problems of World Agriculture / Problemy Rolnictwa ƚwiatowego, Warsaw University of Life Sciences, vol. 10(25), pages 1-18, September.

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