Grower Response to Contracts and Risk in Genetically Modified (GM) Crops
By: Wilson, William W.; Dahl, Bruce L.; Maxwell, Brett J.
Wilson, William W.; Dahl, Bruce L.; Maxwell, Brett J., Grower Response to Contracts and Risk in Genetically Modified (GM) Crops, Journal of Agricultural and Resource Economics, Volume 32, Issue 1, April 2007, Pages 135-153
Contract strategies can resolve some of the challenges that exist for property rights conformance of genetically modified (GM) crops. The purpose of this research is to determine how contract terms impact adoption decisions related to GM grain production and marketing. A simulation model was developed for prospective GM introduction in hard red spring (HRS) wheat, and distributions of net returns for growers were analyzed using stochastic dominance and stochastic efficiency. Results illustrate that contracts can be designed to induce desired behavior. Technology fees, probabilities of detection, and the level of non-GM premiums were the most notable factors influencing adoption decisions. In addition, point-of-delivery pricing and premiums for non-GM production impact adoption decisions.