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Costs And Risks Of Conforming To Eu Traceability Requirements: The Case Of Hard Red Spring Wheat

  • Wilson, William W.
  • Henry, Xavier
  • Dahl, Bruce L.

Stochastic simulation was used to determine the marginal cost and optimal testing strategy (location and intensity) for an integrator conforming to proposed European Union traceability requirements for imported hard red spring wheat. Cost, risks and premiums were determined for exports of non-genetically modified (non-GM) wheat from the U.S. to the EU. Cost components include certified seed, certification and auditing, testing, traceability, quality loss, and a risk premium for the added risk of a dual traceability system over a single non-traceability system. The optimal strategy is the one that maximizes the integrator's utility (minimizes disutility of integrator's additional costs). Adventitious commingling is defined stochastically. Results indicate that traceability requirements can be met with specified buyer and seller risk at a total cost of approximately 50 c/non-GM bushel. The risk premium for traceability along the vertically-integrated supply chain (farmer, integrator, and importer) is 21 c/non-GM bushel.

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File URL: http://purl.umn.edu/23484
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Paper provided by North Dakota State University, Department of Agribusiness and Applied Economics in its series Agribusiness & Applied Economics Report with number 23484.

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Date of creation: 2005
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Handle: RePEc:ags:nddaae:23484
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  1. Jill E. Hobbs, 2004. "Information asymmetry and the role of traceability systems," Agribusiness, John Wiley & Sons, Ltd., vol. 20(4), pages 397-415.
  2. 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.
  3. 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.
  4. 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.
  5. 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, 07.
  6. Sykuta, Michael E., 2005. "Agricultural Organization in an Era of Traceability," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 37(02), August.
  7. 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.
  8. 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.
  9. Bullock, David S. & Desquilbet, Marion & Nitsi, Elisavet I., 2000. "The Economics Of Non-Gmo Segregation And Identity Preservation," 2000 Annual meeting, July 30-August 2, Tampa, FL 21845, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  10. 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.
  11. 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).
  12. 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, 09.
  13. 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.
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