TWO APPROACHES TO MEASURING THE ECONOMIC IMPACT OF STARLINK CORN ON U.S. PRODUCERS

Troy G. Schmitz, Andrew Schmitz and Charles Moss

No 20306, 2004 Annual meeting, August 1-4, Denver, CO from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: The discovery of StarLink corn in U.S. food products caused considerable disruption in the corn markets in 2000 and 2001. We estimated two models on the impact of StarLink corn over the 2000/2001 marketing year. In the first model, to segregate the U.S. corn market, identity preservation costs (IP costs) were imposed on the U.S. grain handling system to deal with both domestic and export sales of food corn and export sales of non food corn to Japan. In the second model, structural changes in corn demand were taken into account. Without taking into account Loan Deficiency Payment Program (LDP) payments, significant costs were incurred by producers as a result of StarLink. However, the effectively reduced the loss in revenue that would have been caused by StarLink, since there were periods of time immediately following the discovery of StarLink during which the market price dropped below the loan rate for corn. It was estimated that StarLink caused U.S. producers to lose between $25 and $290 million in revenue.

Keywords: Research; and; Development/Tech; Change/Emerging; Technologies (search for similar items in EconPapers)
Pages: 29
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea04:20306

DOI: 10.22004/ag.econ.20306

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