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crop production, grain production, transportation


In 2002, cash receipts from crop production in South Dakota totaled $1.76 billion, accounting for 38 % of all receipts of agricultural producers in the state (South Dakota Agricultural Statistics Service, 2003). The three most important crops grown in South Dakota are soybeans, corn, and wheat. In 2001, South Dakota ranked 8th in the production of corn and soybean and 9th in wheat production among the nation's crop producing states (South Dakota Agricultural Statistics Service, 2003). These three crops accounted for 86 % of all cash receipts from marketing crops in the state. Due to the state's reliance on grain production, the importance of an efficient and dynamic grain handling system cannot be over-emphasized. The economic vitality of South Dakota's grain producers depends, in part, on the ability of the grain handling system in the state to adapt to changing market conditions and to stay competitive. The grain handling industry in South Dakota has been changing for some years. The number of commercial grain elevators in the state has decreased considerably over the last three decades. Also, the average capacities and transportation capabilities of existing facilities are much greater than in the past. This trend is in line with the American grain handling industry as a whole, which is geared to moving large quantities of bulk commodities efficiently. A new form of agricultural biotechnology entails altering the genetic structure of existing organisms through various deoxyribonucleic acid (DNA) transfer methods between organisms. In the case of plants, the genetic engineering process involves the transfer of recombinant DNA that is expressed as a particular trait or utility into the seed of a different plant species. Grains that are genetically modified via modem biotechnology are developed to display a number of beneficial attributes. Examples of these attributes include improved tolerance to cold temperatures and resistance to otherwise harmful chemicals (Ginder, 2001 ). Genetically modified (or transgenic) varieties of com and soybeans resistant to Roundup®, a non-selective herbicide, were the first transgenic grains planted in South Dakota and have been used by agricultural producers in the state since 1996 (USDA, 2002). The popularity of these "input-trait" grains stems from their increased ease of management and, often, lower production costs. They do not, however, directly offer any increased value to the consumer. Many consumers, in fact, attempt to avoid products containing ingredients from biotech grains altogether. The technology to produce transgenic grains also may produce grain varieties with enhanced "output traits." Output-trait grains are genetically engineered for characteristics such as nutritional contents or flavors that increase the value of the product for the end-user (Ginder, 2001). Plant scientists have been breeding some output-trait specialty grains, such as high oil com, through conventional breeding methods (i.e. non-transgenic hybrids). Genetic manipulation, however, holds additional possibilities for altering output traits that would either not be possible or take much more time through conventional methods. The ability to alter the genetic structure of organisms does not come without risks. A number of consumer groups throughout the world have expressed opposition to the use of transgenic grains. Some consumer groups argue that the production of these transgenic crops has outpaced the relevant research. This has resulted in concerns about unknown negative consequences of growing genetically engineered crops and consuming their products for humans and livestock. Consequently, some consumers have been unwilling to purchase products containing ingredients from genetically modified (GM) crops (Gaskell, 2000). In a number of countries there is a strong interest in restricting the importation of genetically modified organisms (GMOs), either through a labeling system or by completely disallowing products containing ingredients from GM Os beyond a certain tolerance threshold. The European Union (EU), for example, implemented a mandatory labeling policy in 2000. According to this policy, food products containing 1 % or more GM material must be labeled as such (Rousu, et al., 2002). These trends highlight the possibility of expanded market demand for non-transgenic grains and, therefore, the need for segregating non-transgenic grains from commodity grains (which may be commingled with transgenic grains) at the farm and elevator levels.


Economics Research Report No. 03-02