"An analytical model was developed to explore prospective costs and risks of alternative testing strategies for a marketing system in Canada which markets both genetically modified (GM) and Non-GM wheats. The problem is solved using stochastic optimization, base case results are defined, and sensitivities conducted to evaluate impacts of selected variables. Added costs include: testing, rejection, and a risk premium which is required for handlers to be indifferent between the current and the proposed dual system. Protocols would require testing at the point of loading at the primary elevator, and export elevator, and supplementing this information with some form of grower variety declaration. There are several sources of inherent risks in such a system. For buyers, the cumulative impact of these is the risk of receiving GM content in a Non-GM shipment. For sellers, it is the risk of having a Non-GM shipment rejected. For sellers, the risk of rejection was typically less than 2%, and for buyers, the risk was typically less than 0.02%." Copyright 2006 Canadian Agricultural Economics Society.

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This study provides a framework to value investments to mitigate possible agroterrorism occurrences in the food supply chain and to determine where these investments would reduce the most risk. This framework is applied to the milk industry, which is one sector of the food industry that could be at risk. Stochastic optimization method is used to determine the costs and risk premiums of alternative investments with real‐time tracking possibilities. The real options method along with a portfolio of options, also referred to as the “tomato garden” framework, is used to determine where and when alternative intervention strategies should be implemented to reduce the most risk.