PRODUCER CONTRACT STRATEGIES IN GM CROPS

Abstract

A number of challenges exist for genetically modified (GM) crop development at the production level. Contract strategies can resolve some of these challenges. Contracts can be designed to induce legal adoption of GM crops by varying technology fees, violation detection, and penalties. The objective of this research is to analyze contracting strategies to determine terms to induce legal adoption of GM wheat and to minimize technology agreement violations. A simulation model of the prospective introduction of GM technology into hard red spring wheat was developed. Results illustrate that contracts can be designed to induce desired behavior. Technology fees, probability of detection, and the level of non-GM premium were the most notable factors influencing adoption decisions.