The economic impact of StarLink corn



The discovery of StarLink corn in U.S. food products caused considerable disruption in corn markets in 2000 and 2001. Segregation costs were incurred by the U.S. grain-handling system in order to ensure that domestic and export sales of food corn and export sales of non-food corn to Japan meet stringent tolerance levels. These costs reduced the revenue that U.S. corn producers would have received in the absence of StarLink. However, the Loan Deficiency Payment Program (LDP) effectively reduced the loss in revenue attributed to StarLink. This study develops a partial equilibrium model that encompasses both segregation costs and the LDP program in order to obtain empirical estimates of the impact of StarLink on U.S. corn producers over the 2000/2001 marketing year. It is estimated that StarLink caused U.S. producers to lose between $26 and $288 million in revenue. [EconLit citations: Q18, Q17, L51.] © 2005 Wiley Periodicals, Inc. Agribusiness 21: 391–407, 2005.