Marion Desquilbet

The economics of non-GMO segregation and identity preservation

Rejection of genetically modified organisms (GMOs) by some consumers worldwide has led to the creation of market signals encouraging the segregation and identity preservation (IP) of non-genetically modified grain from genetically modified (GM) grain. This article examines the costs of non-GMO segregation and IP for seed producers, farmers and grain handlers in the United States. We find that a small fraction of farmers’ total costs of segregation and IP actually come from the steps farmers take to clean planting and harvesting equipment. Costs appear to come mainly from the production process itself (i.e. from foregoing planting of cost-reducing GM varieties). We argue that a major cost for handlers comes from a flexibility loss due to the necessity of dedicating equipment to one of two handling channels (one for GMOs and one for non-GMOs). For maize, an additional major cost comes from the necessity of preventing pollination of non-GM varieties by GM pollen at the seed and farm production stages. Tolerance levels are a key element of costs of segregation, and zero-tolerance levels may be impossible to obtain without major organisational and economic costs.

Who Pays the Costs of Non-GMO Segregation and Identity Preservation?

Our aim is to explore who pays the costs and who reaps the benefits of maintaining a dual-market system of genetically modified organisms (GMOs) and non-GMOs. We analyze the welfare effects of the introduction of consumer “hatred” given GMO technology and the introduction of GMO technology given hatred. Making alternative assumptions of competitive and then monopolistic supply, we recognize that identity preservation (IP) of non-GMOs creates costs for IP and non-IP producers. We model these costs as depending on the sizes of the two supply channels. Copyright 2003, Oxford University Press.

Taxes and Subsidies in Vertically Related Markets

In the framework of a two-country, two-good partial equilibrium model where one of the commodities (the bulk commodity) is an intermediate input in the production of the second good (the processed good), we assume that the government wishes to transfer income to both bulk commodity and processed good producers. Our analysis is concerned with efficient redistribution. The instruments are subsidies or taxes, and there is an opportunity cost of public funds. We use the targeting principle to characterize the set of optimal subsidies or taxes applied on both the bulk commodity and the final good in this vertically related market structure. The theoretical analysis is illustrated using the example of cereals (the bulk commodity) and pork and poultry (the processed good) in the European Union.

Fees or refuges: which is better for the sustainable management of insect resistance to transgenic Bt corn?

The evolution of resistance in insect pests will imperil the efficiency of transgenic insect-resistant crops. The currently advised strategy to delay resistance evolution is to plant non-toxic crops (refuges) in close proximity to plants engineered to express the toxic protein of the bacterium Bacillus thuringiensis (Bt). We seek answers to the question of how to induce growers to plant non-toxic crops. A first strategy, applied in the United States, is to require Bt growers to plant non-Bt refuges and control their compliance with requirements. We suggest that an alternative strategy is to make Bt seed more expensive by instituting a user fee, and we compare both strategies by integrating economic processes into a spatially explicit, population genetics model. Our results indicate that although both strategies may allow the sustainable management of the common pool of Bt-susceptibility alleles in pest populations, for the European corn borer (Ostrinia nubilalis) one of the most serious pests in the US corn belt, the fee strategy is less efficient than refuge requirements.

Agricultural Export Subsidies and Intermediate Goods Trade: Comment

Paarlberg examines the impact of an export subsidy policy when one good is an intermediate input in production of a higher-value product (HVP) which is also exported. His analysis suggests that the sector receiving the subsidy is one that benefits, while an export subsidy on one good can cause the home countrys price for the other good to rise or fall, depending on the relative subsidized commodity excess demand and supply elasticities, and the relative composition of the home and foreign sectors. Paarlbergs analysis relies on a two-country, two-good, sector-specific factor partial equilibrium model. In each country, the two goods are produced under competitive conditions using technologies with constant returns to scale. The comparative statics of a home country export policy are determined through holding the industry-specific factor supplies constant and by assuming no policy intervention initially. Furthermore, in order to facilitate interpretation of the comparative static results, Paarlberg assumes that the technologies in the processing sectors of the two countries are identical, i.e., that per unit factor uses of the home and foreign HVP industries are identical for all equal factor prices. Deriving Paarlbergs comparative static results can be difficult, due to typographical errors and/or cumbersome calculations, particularly in the appendix. Perhaps this comment can then be of some assistance in so far as we show that Paarlbergs central results may readily be obtained and interpreted from the definition and the properties of export supply functions (Dixit and Norman, Feenstra). Our analytical framework is based on the use of sectoral restricted profit functions rather than unrestricted cost functions. It is more general than Paarlbergs framework in so far as we do not assume that elasticities of substitution in the HVP industries for the two countries are identical and we do not necessarily assume that returns to scale are constant. We define