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Costs
and Risks of Segregating Genetically
Modified Wheat
William W. Wilson and Bruce L. Dahl
Both Of North Dakota State University
Abstract:
Development of genetically modified crops is challenging the
functions of the grain marketing system. A stochastic optimization
model was developed in this study to determine optimal testing
strategies. The model chooses the optimal testing strategy that
maximizes utility (minimizes disutility) of additional system costs
due to testing and rejection and allows estimation of the risk
premium required for sellers to undertake the dual marketing of
Genetically Modified and Non-Genetically Modified segregations over
a Non- Genetically Modified system. Cost elements are estimated for
a vertically integrated grain export chain including testing,
rejection and a risk premium. The model includes elements of costs
and risks of adventitious commingling at all stages of the marketing
chain, variety declaration, grower truth-telling and accuracy of
testing technologies. Sensitivities were evaluated for effects of
Genetically Modified adoption, risk parameters, variety declaration
and tolerance levels.