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

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

Abstract

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.

Suggested Citation

  • Wilson, William W. & Henry, Xavier & Dahl, Bruce L., 2005. "Costs And Risks Of Conforming To Eu Traceability Requirements: The Case Of Hard Red Spring Wheat," Agribusiness & Applied Economics Report 23484, North Dakota State University, Department of Agribusiness and Applied Economics.
  • Handle: RePEc:ags:nddaae:23484
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    References listed on IDEAS

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    1. 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.
    2. 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.
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    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, 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?," 144th Seminar, February 9-13, 2015, Innsbruck-Igls, Austria 206213, European Association of Agricultural Economists.
    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?," 2015 International European Forum, February 17-21, 2014, Innsbruck-Igls, Austria 206213, International European Forum on Innovation and System Dynamics in Food Networks.
    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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