The economics of non-GMO segregation and identity preservation

Rejection of genetically modified organisms (GMOs) by some consumers worlwide leads to the creation of market signals encouraging the segregation and identity preservation of non-genetically modified (GM) grain from GM grain. We examine the costs of non-GMO segregation and identity preservation for seed producers, farmers and grain handlers in the United States. We conclude that the major costs of segregation and identity preservation come not from cleaning farm machinery, nor from cleaning handling equipment, nor from testing, but rather from the "reshuffling" of the handling system. Identity preservation at the handling stage requires dedication of some grain paths to non-GM grains. The increase in the number of types of grains to be handled leads to less flexibility and causes existing storage facilities to be too few, too large, and inefficiently located. The adjustment of the handling infrastructure, however, should be expected to be gradual, because of the large fixed costs of grain handling facilities