Grower Response to Contracts and Risk in Genetically Modified (GM) Crops

Author

William Wilson, Bruce L. Dahl and Brett J. Maxwell

Journal of Agricultural and Resource Economics, 2007, vol. 32, issue 01

Abstract: 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.

Keywords: adoption risk; GM crops; incentives contracting; stochastic dominance; Crop Production/Industries (search for similar items in EconPapers)
Date: 2007
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