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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.

Suggested Citation

  • Abougamos, Hoda & White, Benedict & Sadler, Rohan, 2012. "Contracts for Grain Biosecurity and Grain Quality," 2012 Conference (56th), February 7-10, 2012, Freemantle, Australia 124216, Australian Agricultural and Resource Economics Society.
  • Handle: RePEc:ags:aare12:124216
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    File URL: http://purl.umn.edu/124216
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    References listed on IDEAS

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    1. 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.
    2. Starbird, S. Andrew, 2005. "Supply Chain Contracts and Food Safety," Choices, Agricultural and Applied Economics Association, vol. 20(2).
    3. Olmos, Marta Fernández & Grazia, Cristina & Perito, Maria Angela, 2011. "Quality and Double Sided Moral Hazard in Share Contracts," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 12(1), January.
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    1. repec:bla:ecorec:v:93:y:2017:i:301:p:277-301 is not listed on IDEAS

    More about this item

    Keywords

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

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