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Costs and Risks of Segregating GM Wheat in Canada

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  • William W. Wilson
  • Bruce Dahl

Abstract

An analytical model was developed to explore prospective costs and risks of alternative testing strategies for a marketing system in Canada which markets both genetically modified (GM) and Non‐GM wheats. The problem is solved using stochastic optimization, base case results are defined, and sensitivities conducted to evaluate impacts of selected variables. Added costs include: testing, rejection, and a risk premium which is required for handlers to be indifferent between the current and the proposed dual system. Protocols would require testing at the point of loading at the primary elevator, and export elevator, and supplementing this information with some form of grower variety declaration. There are several sources of inherent risks in such a system. For buyers, the cumulative impact of these is the risk of receiving GM content in a Non‐GM shipment. For sellers, it is the risk of having a Non‐GM shipment rejected. For sellers, the risk of rejection was typically less than 2%, and for buyers, the risk was typically less than 0.02%. Nous avons élaboré un modèle analytique pour explorer les coûts et les risques potentiels de la mise en place de nouvelles stratégies pour analyser le grain si le Canada décidait de commercialiser du blé génétiquement modifié (GM) et du blé non génétiquement modifié (NGM). Le problème est résolu à l'aide d'une optimisation stochastique; des scénarios de référence sont définis et des tests de sensitivité sont effectués pour évaluer l'impact de variables sélectionnées. Les coûts supplémentaires comprennent les coûts d'analyses, les coûts liés au rejet ainsi qu'une prime de risque exigée pour que les manutentionnaires demeurent indifférents entre le système actuel et le système double proposé. Les protocoles obligeraient la tenue d'analyses au point de chargement du silo primaire ainsi qu'au silo terminal, auxquelles s'ajouterait une certaine forme de déclaration du céréaliculteur sur la variété. Ce genre de système comporte plusieurs sources de risques inhérents. Pour les acheteurs, l'impact cumulatif est le risque de recevoir un chargement de blé NGM contenant du blé GM. Pour les vendeurs, c'est le risque qu'un chargement de blé NGM soit rejeté. Pour les vendeurs, le risque de rejet était généralement inférieur à 2%, et pour les acheteurs, le risque était généralement inférieur à 0.02%.

Suggested Citation

  • 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.
  • Handle: RePEc:bla:canjag:v:54:y:2006:i:3:p:341-359
    DOI: 10.1111/j.1744-7976.2006.00054.x
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    References listed on IDEAS

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    1. 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.
    2. Qasmi, Bashir A. & Wilhelm, Clayton J. & Van der Sluis, Evert, 2003. "Segregating Transgenic Grains: Results Of A Survey Among Country Elevators In South Dakota," Economics Research Papers 32039, South Dakota State University, Department of Economics.
    3. 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).
    4. Bashir A. Qasmi & Wilhelm, Clayton J. & Van der Sluis, Evert, 2003. "Segregating Transgenic Grains:Results of a Survey Among Country Elevators in South Dakota," Research Reports 200302, South Dakota State University, Department of Economics.
    5. 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.
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    Cited by:

    1. 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.
    2. Kalaitzandonakes, Nicholas & Magnier, Alexandre, 2013. "The economics of adventitious presence thresholds in the EU seed market," Food Policy, Elsevier, vol. 43(C), pages 237-247.
    3. Kalaitzandonakes, Nicholas & Kaufman, James & Miller, Douglas, 2014. "Potential economic impacts of zero thresholds for unapproved GMOs: The EU case," Food Policy, Elsevier, vol. 45(C), pages 146-157.
    4. William, Wilson & Dahl, Bruce & Hertsgaard, David, 2020. "Soybean quality differentials, blending, testing and spatial arbitrage," Journal of Commodity Markets, Elsevier, vol. 18(C).
    5. Prithviraj Lakkakula & David W. Bullock & William W. Wilson, 2022. "Asymmetric information and blockchains in soybean commodity markets," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(1), pages 273-298, March.
    6. Ge, Houtian & Nolan, James & Gray, Richard & Goetz, Stephan & Han, Yicheol, 2016. "Supply chain complexity and risk mitigation – A hybrid optimization–simulation model," International Journal of Production Economics, Elsevier, vol. 179(C), pages 228-238.
    7. Ge, Houtian & Gray, Richard & Nolan, James, 2015. "Agricultural supply chain optimization and complexity: A comparison of analytic vs simulated solutions and policies," International Journal of Production Economics, Elsevier, vol. 159(C), pages 208-220.

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    1. 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.
    2. William W. Wilson & Bruce L. Dahl, 2005. "Costs and Risks of Testing and Segregating Genetically Modified Wheat," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(2), pages 212-228.
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