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Optimal supplier testing and tolerance strategies for genetically modified (GM) wheat
Author(s) -
Wilson William W.,
Dahl Bruce L.,
Jabs Eric
Publication year - 2007
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/j.1574-0862.2007.00175.x
Subject(s) - dual (grammatical number) , risk aversion (psychology) , quality (philosophy) , genetically modified organism , variety (cybernetics) , declaration , economics , business , microeconomics , expected utility hypothesis , computer science , biology , art , philosophy , biochemistry , literature , mathematical economics , epistemology , artificial intelligence , gene , programming language
A stochastic optimization model was developed to determine optimal testing strategies, costs, and risks for dual marketing of genetically modified (GM) and non‐GM wheat in an export supply chain. The optimal testing strategy is derived that minimizes disutility of additional system costs due to testing and quality loss. Cost components were estimated including those related to testing, quality loss, and a risk premium to induce shippers to undertake dual marketing as opposed to handling only non‐GM crops. Uncertainties were incorporated for adventitious presence and commingling, variety declaration, and test accuracy. Sensitivities were performed for effects of variety risks and declaration, penalty differentials, buyer tolerances, risk aversion, and GM adoption. Results indicate testing and segregation can be performed at a relatively low cost and risk to buyers.