The economics of non-GMO segregation and identity preservation

Abstract

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.