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Genetic Engineering and Risk in Varietal Selection Of GENETIC ENGINEERING AND RISK IN VARIETAL SELECTION OF POTATOES Downloaded from https://academic.oup.com/ajae/article-abstract/100/2/600/4840830 by Montana State University Library user on 04 September 2018 KATE BINZEN FULLER,GARY W. BRESTER, AND MICHAEL A. BOLAND The objective of this case study is to examine the farm management decision of whether to adopt a new, genetically engineered potato variety. We describe the potato supply chain from seed produc- tion to final consumer products and explore how price and production risk interact to influence deci- sion making at each link in that chain. We provide extensive supplemental material as well, including a teaching note with assignment and/or discussion questions, an introduction to and application of stakeholder theory, and a tool that assists students in calculating expected and simulated actual returns from their choice of potato variety. Key words: Agricultural pests and diseases, farm management decisions, genetic engineering, potatoes, risk analysis, seed production. JEL codes: Q12, Q13, Q16. Genetic engineering, or the direct manipula- engineered (GE) potato seed has fueled con- tion of an organism’s genome, has been a tinued discussions (Chang 2017). In March of source of debate ever since the 1970s when 2017, commercial use of three new GE potato scientists developed the first genetically mod- varieties was approved by the USDA. The ified organisms. More recently, Danny new varieties have potential human health Hakim’s (2016) New York Times article benefits over other potato varieties, resist “Doubts about the Promised Bounty of browning and bruising, and also resist Late Genetically Modified Crops,” was followed Blight, the disease that caused the Irish Potato by heated debate (e.g., Senapathy 2016; Famine. If these new potato varieties are Brester and Atwood 2017). In particular, the adopted, they would represent one of the first pace of development and introduction of new GE crops primarily consumed in a low- processes (e.g., gene editing) for genetically processed form in the United States. Currently, most GE crops such as alfalfa, corn, soybeans, and sugar beets are either highly This teaching case study was selected by the Agribusiness Economics processedintofinalconsumerproductsorfed and Management section for presentation at the 2017 Agricultural and Applied Economics Association annual meeting, after which it was to livestock. This case describes the potato in- subjected to an expedited peer-review process. dustry with a particular reference to seed pota- toes and discusses issues surrounding GE Kate Binzen Fuller is an assistant professor and extension spe- cialist, and Gary W. Brester is a professor emeritus in the potato varieties. The case is built around a Department of Agricultural Economics and Economics at leading seed potato grower in Montana. Montana State University. Michael A. Boland holds the E. Fred Koller Endowed Professorship in Agribusiness Management and Information Technology, and is Director of the Food Industry Center at the University of Minnesota. The authors would like to Kimm Brothers Farming thank the Kimm family, especially Martin and Sue Kimm, as well as the Montana Seed Potato Improvement Association and Nina Zidack at the Montana Seed Potato Lab. Erika Refsland, Westin The importance of the southwestern Kimm, Heather Smart, and Terry Smart provided research assistance. The usual disclaimers apply. A Montana Department Montana potato seed industry within the of Agriculture Specialty Crop Block Grant and the USDA scope of U.S. potato production is not at the National Institute of Food and Agriculture, Hatch/Multistate project MONB0075 provided partial funding for this work. forefront of Martin Kimm’s mind as he grabs VR Correspondence can be sent to: [email protected]. his favorite work cap and Carhartt coat and Amer. J. Agr. Econ. 100(2): 600–608; doi: 10.1093/ajae/aax098 Published online February 6, 2018 VC The Author(s) 2018. Published by Oxford University Press on behalf of the Agricultural and Applied Economics Association. This is an Open Access article distributed under the terms of the Creative Commons Attribution- NonCommercial-NoDerivs licence (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits non-commercial reproduction and distribution of the work, in any medium, provided the original work is not altered or transformed in any way, and that the work is properly cited. For commercial re-use, please [email protected] Binzen Fuller, Brester, and Boland Genetic Engineering and Risk in Varietal Selection of Potatoes 601 walks out the door of his home near Martin decided that after 30 years of produc- Manhattan, Montana. Martin has spent ing seed potatoes, he wanted to visit the this early-January morning organizing his Hawaiian operation and help with the test QuickBooksTM record-keeping system for plots. Downloaded from https://academic.oup.com/ajae/article-abstract/100/2/600/4840830 by Montana State University Library user on 04 September 2018 the coming year. After several hours of orga- While the history of seed potato produc- nizing and updating expense categories, he tion in his region is certainly important, needs a break. Although the temperature Martin has a host of other issues that de- outside hovers near 0F as he walks from his mand his consideration over the next sev- house to his machine shop, the clear blue sky, eral months. He reminds himself to focus sparkling white snow, and views of the his thoughts on personal safety as he uses Bridger Mountains make him glad that he de- his plasma cutter, grinders, and MIG cided to investigate the progress occurring in welder to fabricate his new potato-cutting his heated shop. He and one of his employees table. He will return to strategic considera- are fabricating a new multi-station seed tions of his farm operation later this potato-slicing table. The new table will improve evening. the efficiency of his seed potato production process, improve worker safety, and reduce the potential of disease contamination as he propa- Background Information on the Potato gates new generations of potato seed. Industry As Martin crunches across the snow, he smiles at the contrast between the tempera- Historically, potatoes were predominantly ture at his farmstead and that which he expe- purchased by consumers in the form of whole rienced just a week ago. baking potatoes and used for home consump- Martin has just returned from helping the tion. Over the past several decades, however, Montana Certified Seed Potato Laboratory the majority of potatoes have been consumed plant potato seed produced in Montana into in a variety of processed forms, including hash test plots in Hawaii. The laboratory is housed browns, chips, tater tots, and French fries. at Montana State University as part of the Potatoes are grown in 36 states, with Idaho Agricultural Experiment Station and and Washington representing the largest pro- Montana State University Extension, and is ducers (USDA NASS 2016). Seed potato largely funded with grower fees. Similar growers in many states grow seed used to pro- public-private relationships exist as part of duce commercial potatoes. Approximately the land grant university research and exten- 10% to 15% of all potato seed grown in the sion system, including other certified seed United States is produced in Montana (Potato certification, bull testing, crop breeding pro- Association of America 2016). Climate, a to- grams, and research facilities. The Montana pography that fosters disease isolation, and seed potato program has done much to in- coordination among producers combine to crease potato yields and quality over its create competitive advantages for seed pro- 50-year existence (Kimm 2015). Samples of duction in this region. seed potatoes are planted in Hawaii near the beginning of the calendar year to take advan- The Commercial Potato Industry tage of the tropical climate. These test plots are harvested in early spring and tested for Potatoes are a starchy vegetable rich in carbo- the presence of various potato diseases. The hydrates and potassium. Potatoes sold in pro- test results are used by seed potato growers duce sections of grocery stores are referred to selling specific potato varieties during the as table stock or “fresh pack” potatoes. These coming year. The testing in Hawaii gives a potatoes are packaged and sold based on vari- preview of crop health and disease status be- ety, size, grade, and other features. Fresh po- fore U.S. spring planting. It helps with the tatoes can be baked, mashed, fried, roasted, culling of seed potato batches that display and browned. Many potatoes, however, are disease problems prior to their sale to seed not of sufficient quality to be sold in the table growers who might plant the seed for recerti- market. In addition, many consumers prefer fication, and commercial producers. further-processed potato products that re- Although tests are conducted for all seed po- quire less preparation. As a result, over one- tato growers in Montana, individual pro- half of U.S. potato production is processed ducers are always welcome to visit the test into frozen, chipped, or dehydrated products plots and help with planting the samples. (National Potato Council 2016; see figure 1). 602 March 2018 Amer. J. Agr. Econ. 500 450 400 350 Downloaded from https://academic.oup.com/ajae/article-abstract/100/2/600/4840830 by Montana State University Library user on 04 September 2018 300 250 200 150 Million Cwts 100 50 0 2011 1979 1999 2009 2013 1971 1975 1981 1983 1985 1987 1989 1991 2003 2007 1973 1977 1993 1995 1997 2001 2005 Table Feed Seed Processed Figure 1. Table stock, feed, seed, and processed potato usage, 1971–2014 Source: National Potato Council (2016). Potato products are also used in non-food driven by fast food restaurants that have applications. Dehydrated potato starch is globally recognized brands and franchises.
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