The Economics of Testing for Biotech Grain: Application to StarLink Corn

StarLink corn, a biotech variety not approved for human food use, disrupted the marketing system in 2000 because of inadvertent commingling. Testing protocols have since been established for detection of StarLink in corn shipments to Japan. Domestic food manufacturers, anxious to avoid risks of contamination and product recalls, also test for StarLink kernels. This paper provides an overview of the economics of testing. What are the risks facing buyers and sellers, and how are these influenced by different testing protocols? How do market premiums and discounts, testing costs, and prior beliefs affect the incentives to test? A conceptual model is developed in which sellers can choose whether to pre-test grain prior to shipment. Simulation analysis is used to illustrate the impact of market premiums and other variables on testing incentives and buyer risk.Research and Development/Tech Change/Emerging Technologies,

The Economics of Testing for Biotech Grain: Application to StarLink Corn

StarLink corn, a variety not approved for human use, disrupted the marketing system in 2000 because of inadvertent commingling. This paper provides an overview of the economics of testing grain for biotech content. What are the risks facing buyers and sellers, and how are these influenced by testing protocols? How do market premiums and discounts, testing costs, and prior beliefs affect the incentives to test? A conceptual model is developed in which sellers choose whether to pre-test grain prior to shipment. Through simulation analysis, we illustrate the impact of market premiums and other variables on testing incentives and buyer risk.biotechnology, grain marketing, quality risk, StarLink, testing, Crop Production/Industries,

STARLINK: IMPACTS ON THE U.S. CORN MARKET AND WORLD TRADE

StarLink disrupted the U.S. corn market during the marketing year of 2000/01 as a result of inadvertent commingling. The potential volume of marketed StarLink-commingled corn from the 2000 crop located in areas near wet and dry millers prior to October 1, 2000, is estimated at 124 million bushels. Price differentials between StarLink-free and StarLink-commingled corn existed during the early stage of the incident, but eroded quickly. While StarLink has had a negative impact on U.S. corn exports, most of the reduction in exports to Japan and South Korea during November 2000 and March 2002 is due to Japan's increased purchases from South Africa, China's decision to continue to subsidize exports, increased competition from the large back-to-back crops in Argentina, and a record Brazilian crop.Crop Production/Industries, Research and Development/Tech Change/Emerging Technologies,

THE DISTRIBUTION OF BENEFITS RESULTING FROM BIOTECHNOLOGY ADOPTION

The purposes of this study are two-fold: (1) to estimate the size of total benefits arising from the adoption of agricultural biotechnology, and (2) to measure the distribution of total benefits among key stakeholders along the production and marketing chain, including U.S. farmers, gene developers, germplasm suppliers, U.S. consumers, and the producers and consumers in the rest of the world. This study focuses on the benefits that resulted from the adoption of herbicide-tolerant soybeans as well as insect-resistant (Bt) and herbicide-tolerant cotton in 1997. In this analysis, various data sources are examined for measuring the farm-level effects of adopting biotechnology and the resulting benefit estimates are compared. The size and distribution of the benefits arising from the adoption of biotech crops vary significantly, depending on the farm-level effects obtained from the various data sources and the supply and demand elasticity assumptions for the domestic and world markets. Estimates of the benefits derived from farm-level impacts that isolate the effects biotechnology appear to be the most plauible. This study does not lend support to the popular belief that U.S. farmers received at least one-half, or as much as two-thirds, of the total benefits realized from the adoption of biotechnology. In contrast, the results of this study indicate that in 1997, U.S. farmers realized considerably less than half of the total benefits. The bulk of the benefits appear to have gone to the gene supplier, seed companies, U.S. consumers, and the rest of the world.Research and Development/Tech Change/Emerging Technologies,

Are Urban Consumers in China Ready to Accept Biotech Foods?

Based on a large-scale survey conducted in 11 large and small eastern cities in 2002, this study employs ordered probit models to estimate the effects of demographic and socio-economic variables on the likelihood of biotech food acceptance in China. This study also employs a dichotomous choice model to estimate consumers' mean willingness to pay (WTP) for biotech foods, including soybean oil and insect-resistant biotech rice. This survey reaffirms that Chinese urban consumers had a low awareness of biotechnology. Despite the low level of awareness, a great majority of respondents had favorable or neutral attitudes toward biotech foods. Only 5-15 percent was strongly or relatively opposed to biotech foods. Results from the models suggest that mid- and small-city consumers were more supportive of the use of biotech foods than large-city consumers. In addition, consumers with poorer health were less willing to accept biotech foods. Those consumers who trusted the accuracy of media information were also more willing to accept biotech foods. A majority-60 percent or higher-of the respondents were willing to purchase biotech foods without any price discounts. However, about 20 percent would only accept non-biotech foods. Results of the WTP analysis suggest that the likely price premiums that respondents are willing to pay for non-biotech foods averaged around 23.4 percent in the case of soybean oil and 41.5 percent for rice. Mean WTPs estimated from this study are likely to be overstated due in part to the hypothetical nature of the survey data.biotech foods, ordered probit model, consumer acceptance, willingness to pay, China, Consumer/Household Economics, Research and Development/Tech Change/Emerging Technologies, Q11, Q13,

Consumers' Willingness to Pay for Biotech Foods in China

Based on a large-scale consumer survey, this study employs a semi-double-bounded dichotomous choice model to estimate the mean willingness to pay (WTP) for biotech foods in China. The study also accounts for the effects of respondents' characteristics on the probability of purchasing biotech foods and WTP. Analyses focus on biotech soybean oil and insect-resistant biotech rice.Biotech foods, willingness to pay, China, contingent valuation method, semi-double-bounded dichotomous choice model, Consumer/Household Economics,

SUPPLY RESPONSE UNDER THE 1996 FARM ACT AND IMPLICATIONS FOR THE U.S. FIELD CROPS SECTOR

The 1996 Farm Act gives farmers almost complete planting flexibility, allowing producers to respond to price changes to a greater extent than they had under previous legislation. This study measures supply responsiveness for major field crops to changes in their own prices and in prices for competing crops and indicates significant increases in responsiveness. Relative to 1986-90, the percentage increases in the responsiveness of U.S. plantings of major field crops to a 1-percent change in their own prices are wheat (1.2 percent), corn (41.6 percent), soybeans (13.5 percent), and cotton (7.9 percent). In percentage terms, the increases in the responsiveness generally become greater with respect to competing crops' price changes. The 1996 legislation has the least effect on U.S. wheat acreage, whereas the law may lead to an average increase of 2 million acres during 1996-2005 in soybean acreage, a decline of 1-2 million acres in corn acreage, and an increase of 0.7 million acres in cotton acreage. Overall, the effect of the farm legislation on regional production patterns of major field crops appears to be modest. Corn acreage expansion in the Central and Northern Plains, a long-term trend in this important wheat production region, will slow under the 1996 legislation, while soybean acreage expansion in this region will accelerate. The authors used the Policy Analysis System-Economic Research Service (POLYSYS-ERS) model that was jointly developed by USDA's Economic Research Service and the University of Tennessee's Agricultural Policy Analysis Center to estimate the effects of the 1996 legislation.Supply response, major field crops, acreage price elasticities, normal flex acreage (NFA), 1996 farm legislation., Agricultural and Food Policy, Crop Production/Industries,

Commercialization of Herbicide-Tolerant Soybeans in China: Perverse Domestic and International Trade Effects

Replaced with revised version of paper 06/12/07.Crop Production/Industries, International Relations/Trade,

A Systematic Review and Meta-Analysis of Short-Term Ambient Ozone Exposure and COPD Hospitalizations

Chronic obstructive pulmonary disease (COPD) is the third leading cause of death globally and ozone exposure is