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Impacts Of Don In The Malting Barley Supply Chain: Aggregate Costs And Firm-Level Risks

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  • Johnson, D. Demcey
  • Nganje, William E.

Abstract

DON is a toxic byproduct of fusarium head blight (FHB), a fungal disease of small grains. Beginning in 1993, a prolonged outbreak of FHB occurred in the Upper Midwest, the traditional source of most six-rowed malting barley produced in the United States. Price discounts associated with DON in barley have been significant. This paper has two objectives. The first is to estimate the impact of DON on the value of malting barley grown in the Upper Midwest. Using crop quality data, we use a linear programming model to derive optimal blends of barley supplies, given discount schedules and the distribution of quality factors. The premise is that blending activities, on a regional scale, allow a larger fraction of the crop to be sold as malting. The second objective is to assess the risks associated with DON in the context of a firm-level blending model. We frame a nonlinear optimization problem in which an elevator seeks to maximize the expected sales value of the barley in its bins. Price discounts for several quality factors are incorporated in the analysis, along with probability distributions for DON. Treating DON as a random quality factor adds some interesting complexity to the standard grain blending problem. Attachments : aem187a.xls aem187b.xls aem187c.xls aem187d.xls

Suggested Citation

  • Johnson, D. Demcey & Nganje, William E., 2000. "Impacts Of Don In The Malting Barley Supply Chain: Aggregate Costs And Firm-Level Risks," Agricultural Economics Miscellaneous Reports 23103, North Dakota State University, Department of Agribusiness and Applied Economics.
    • Handle: RePEc:ags:nddmrs:23103
    DOI: 10.22004/ag.econ.23103
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    References listed on IDEAS

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    1. Diersen, Matthew A. & Wilson, William W. & Johnson, D. Demcey, 1995. "Quality Uncertainty and Grain Merchandising Risk: Vomitoxin in Spring Wheat," Agricultural Economics Reports 23365, North Dakota State University, Department of Agribusiness and Applied Economics.
    2. Johnson, D. Demcey & Flaskerud, George K. & Taylor, Richard D. & Satyanarayana, Vidyashankara, 1998. "Economic Impacts Of Fusarium Head Blight In Wheat," Agricultural Economics Reports 23437, North Dakota State University, Department of Agribusiness and Applied Economics.
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    Cited by:

    1. Nganje, William E. & Koo, Won W. & Johnson, D. Demcey & Park, Joon J. & Taylor, Richard D., 2000. "Operational Efficiency Of Us/Canada Wheat Pool: A Game Theory Analysis," 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia 36439, Western Agricultural Economics Association.
    2. DeVuyst, Eric A. & Johnson, D. Demcey & Nganje, William E., 2001. "Representations Of Multi-Attribute Grain Quality," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(1), pages 1-16, July.
    3. Gregory McKee & Christina Cowger & Ruth Dill-Macky & Andrew Friskop & Pravin Gautam & Joel Ransom & William Wilson, 2019. "Disease Management and Estimated Effects on DON (Deoxynivalenol) Contamination in Fusarium Infested Barley," Agriculture, MDPI, vol. 9(7), pages 1-14, July.
    4. Johnson, D. Demcey & DeVuyst, Eric A. & Nganje, William E., 2000. "Supply-Side Risks And Malting Barley Procurement And Storage," 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia 36367, Western Agricultural Economics Association.

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