The benefits and costs of transporting an identity preserved product from Iowa to Taiwan

Tun-hsiang Yu

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: High oil corn (HOC) is a genetically improved corn variety that has recently gained importance as an animal feed ingredient in the U.S. This study evaluates the economics of exporting HOC from the U.S. to Taiwan. It focuses attention on two types of HOC: HOC[Subscript a] and HOC[Subscript b]. A linear programming model was used to obtain the potential added value of the two types of HOC. The additional cost of exporting HOC includes additional production, identity preservation and seed costs to U.S. grain suppliers. These costs were obtained from data released by U.S. firms which develop and distribute HOC. The decision-making rule for a grower in Taiwan is based on the difference between the potential added value and the premium he has to pay. The feed targets are broilers and swine. The prices of feed ingredients, the nutritional requirements of the animals and the stevedoring and cargo handling data were gathered from The Taiwan Livestock Research Institute and Taiwan Provincial Department of Agriculture and Forestry.;The results indicate that the potential added values of both types of HOC are significantly higher when added to the diets of broilers and swine weighing 6-10 kilograms than when used in the feed of swine weighing 11-100 kilograms. The findings of the paper also indicate that at prices of 50.7 cents per bushel importing HOC[Subscript a] is non-profitable for the Taiwanese livestock grower. This study takes a look at some of the non-measurable benefits of importing HOC[Subscript a] such as its ability to alleviate problems of heat stress and nutritionally inconsistent diets to explain why Taiwan does in fact import HOC[Subscript a]. The study concludes that the benefits of importing HOC are realized only in certain circumstances that include the quality of the differentiated grain, the animal for which HOC is intended to be used and the premium charged to the importers.

Date: 1998-01-01
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