Economic Aspects of Segregation between GM and Non-GM Crops in Italy

Abstract

This article assesses the food supply chain for non-GM soybean meal, with particular regard to the upstream stages between overseas producers, international trading companies, and their supply to Italian feed producers. Using transaction-cost economics as a methodological framework and the information collected from a set of interviews with industry representatives, we describe the organizational arrangements that agents adopt to minimize transaction costs. Consistently with theory, we examine the impact of uncertainty on the coordination arrangements. We focus on two dimensions of uncertainty -- product-quality uncertainty and environmental uncertainty. We argue that the actual organizational arrangements between transactors are consistent with the theory that, whereas product-quality uncertainty and some degree of asset specificity would lead to vertically integrated forms of governance, environmental uncertainty operates in the opposite direction.