MARKETING MECHANISMS TO FACILITATE CO-EXISTENCE OF GM AND NON-GM CROPS

Development of genetically modified (GM) and specialty crops has had a great impact on the grain handling industry during recent years. Added costs associated with handling these crops have become an important issue for grain handlers. For this study, data were collected from a survey of elevators in the Upper Midwest. The information focused on segregation practices, time requirements, and costs. This study shows the different costs (grading and handling) associated with segregation practices at the grain-handler level. The results revealed that the cost of modifying systems to handle GM is of major importance. A stochastic simulation model of an engineering cost function is developed to analyze costs for segregation and testing using results from the survey. Assuming no modification is required, the total cost of segregation is about 10 cents per bushel. The volume of grain tested also impacts the total segregation cost per bushel. Finally, the gross elevator margin and the premium for quality seem to be large enough to offset the increase in handling costs due to these new segregation practices.