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Costs and risks of conforming to EU traceability requirements: the case of hard red spring wheat
Author(s) -
Wilson William W.,
Henry Xavier,
Dahl Bruce L.
Publication year - 2008
Publication title -
agribusiness
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.57
H-Index - 43
eISSN - 1520-6297
pISSN - 0742-4477
DOI - 10.1002/agr.20148
Subject(s) - traceability , certification , risk analysis (engineering) , quality (philosophy) , european union , requirements traceability , audit , business , computer science , economics , accounting , requirements analysis , international trade , requirement , software , philosophy , software engineering , management , epistemology , programming language
European Union (EU) traceability requirements impose added costs and risks on suppliers. A stochastic simulation model is developed to determine optimal testing strategies and marginal costs to conform to EU traceability requirements for exports of non‐genetically modified (non‐GM) wheat from the United States. The optimal strategy is chosen to maximize an integrator's utility. Cost components include certified seed, certification and auditing, testing, traceability, quality loss, and a premium for the added risk of a dual traceability system over a single non‐traceability system. Adventitious commingling risks are defined stochastically. Results indicate that traceability requirements can be conformed to with reasonable buyer and seller risk at a total cost of $18/non‐GM mt. [EconLit Subject Descriptors: C150, C610, D810] © 2008 Wiley Periodicals, Inc.