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Costs and risks of conforming to EU traceability requirements: the case of hard red spring wheat

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  • William W. Wilson

    (Department of Agribusiness & Applied Economics, North Dakota State University, Fargo, ND 58105-5636)

  • Xavier Henry

    (Plantureux, Domaine champ clos 04100, Manosque, France)

  • Bruce L. Dahl

    (Department of Agribusiness & Applied Economics, North Dakota State University, P.O. Box 5636, Fargo, ND 58105-5636)

Abstract

European Union (EU) traceability requirements impose added costs and risks on suppliers. A stochastic simulation model is developed to determine optimal testing strategies and marginal costs to conform to EU traceability requirements for exports of non-genetically modified (non-GM) wheat from the United States. The optimal strategy is chosen to maximize an integrator's utility. Cost components include certified seed, certification and auditing, testing, traceability, quality loss, and a premium for the added risk of a dual traceability system over a single non-traceability system. Adventitious commingling risks are defined stochastically. Results indicate that traceability requirements can be conformed to with reasonable buyer and seller risk at a total cost of $18|non-GM mt. [EconLit Subject Descriptors: C150, C610, D810] © 2008 Wiley Periodicals, Inc.

Suggested Citation

  • William W. Wilson & Xavier Henry & Bruce L. Dahl, 2008. "Costs and risks of conforming to EU traceability requirements: the case of hard red spring wheat," Agribusiness, John Wiley & Sons, Ltd., vol. 24(1), pages 85-101.
  • Handle: RePEc:wly:agribz:v:24:y:2008:i:1:p:85-101
    DOI: 10.1002/agr.20148
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    References listed on IDEAS

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    1. Golan, Elise H. & Krissoff, Barry & Kuchler, Fred & Calvin, Linda & Nelson, Kenneth E. & Price, Gregory K., 2004. "Traceability In The U.S. Food Supply: Economic Theory And Industry Studies," Agricultural Economics Reports 33939, United States Department of Agriculture, Economic Research Service.
    2. W. H. Furtan & R. S. Gray & J. J. Holzman, 2003. "The Optimal Time to License a Biotech "Lemon"," Contemporary Economic Policy, Western Economic Association International, vol. 21(4), pages 433-444, October.
    3. Wilson, William W. & Dahl, Bruce L., 2002. "Costs And Risks Of Testing And Segregating Gm Wheat," Agribusiness & Applied Economics Report 23480, North Dakota State University, Department of Agribusiness and Applied Economics.
    4. Bullock, D. S. & Desquilbet, M., 2002. "The economics of non-GMO segregation and identity preservation," Food Policy, Elsevier, vol. 27(1), pages 81-99, February.
    5. GianCarlo Moschini & Harun Bulut & Luigi Cembalo, 2005. "On the Segregation of Genetically Modified, Conventional and Organic Products in European Agriculture: A Multi-market Equilibrium Analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 56(3), pages 347-372.
    6. 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).
    7. Tilley, Marcia L. & Wright, Yancy, 2004. "Wheat Segregation And Identity-Preservation Cost," 2004 Annual Meeting, February 14-18, 2004, Tulsa, Oklahoma 34742, Southern Agricultural Economics Association.
    8. Wilson, William W. & Jabs, Eric J. & Dahl, Bruce L., 2003. "Optimal Testing Strategies For Genetically Modified Wheat," Agribusiness & Applied Economics Report 23605, North Dakota State University, Department of Agribusiness and Applied Economics.
    9. Sykuta, Michael, 2005. "Agricultural Organization in an Era of Traceability," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 37(02), pages 365-377, August.
    10. Richard Shepherd & Gary Barker & Simon French & Andy Hart & John Maule & Angela Cassidy, 2006. "Managing Food Chain Risks: Integrating Technical and Stakeholder Perspectives on Uncertainty," Journal of Agricultural Economics, Wiley Blackwell, vol. 57(2), pages 313-327, July.
    11. Jill E. Hobbs, 2004. "Information asymmetry and the role of traceability systems," Agribusiness, John Wiley & Sons, Ltd., vol. 20(4), pages 397-415.
    12. Hobbs, Jill E. & Kerr, William A., 2006. "Consumer information, labelling and international trade in agri-food products," Food Policy, Elsevier, vol. 31(1), pages 78-89, February.
    13. William W. Wilson & Bruce Dahl, 2006. "Costs and Risks of Segregating GM Wheat in Canada," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 54(3), pages 341-359, September.
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    Cited by:

    1. Stranieri, S. & Cavaliere, A. & Banterle, A., 2015. "Voluntary traceability standards: which is the role of economic incentives?," 2015 International European Forum (144th EAAE Seminar), February 9-13, 2015, Innsbruck-Igls, Austria 206213, International European Forum on System Dynamics and Innovation in Food Networks.
    2. Brofman Epelbaum, Freddy Moises & Garcia Martinez, Marian, 2014. "The technological evolution of food traceability systems and their impact on firm sustainable performance: A RBV approach," International Journal of Production Economics, Elsevier, vol. 150(C), pages 215-224.
    3. Stranieri, S. & Cavaliere, A. & Banterle, A., 2015. "Voluntary traceability standards: which is the role of economic incentives?," 144th Seminar, February 9-13, 2015, Innsbruck-Igls, Austria 206213, European Association of Agricultural Economists.
    4. Fritz, Melanie & Schiefer, Gerhard, 2009. "Tracking, tracing, and business process interests in food commodities: A multi-level decision complexity," International Journal of Production Economics, Elsevier, vol. 117(2), pages 317-329, February.

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