Marketing: Custom Edition for Texas A&M University 17th Edition by William Pride,Ferrell

Exercise 10

The United States is the largest producer of corn in the world. Each year, a corn farmer must decide what the end market for the corn crop will be and what type of seed to use. In approximately a decade, corn production for livestock, poultry, and fish has fallen from 80 percent of production to 40 percent. At the same time, corn produced for ethanol production has soared to 40 percent of corn production. In addition, the shift to ethanol has taken corn out of the supply chain for the agricultural feed market, causing an impact on food costs. About 12 percent of corn is used for direct human consumption, in the form of cereal and corn chips, for example. It is much less costly for farmers to produce corn for ethanol, because it can be produced using more efficient genetically modified seeds. To plant genetically modified corn for ethanol, the seed costs around $200/ bushel, and the yields are significantly higher than other corn crops because insecticides and herbicides are built into the seed. Non-genetically modified seed produces more revenue at market per bushel but will have a lower overall crop yield and is more costly to produce. If you assume that the non-genetically modified crop sells for $10.00/bushel and that the genetically modified seed crop sells for $7.00/bushel, rank each of the following variables from 1-5. Think of 1 as the most important variable and 5 as the least important. Based on health, environment, and dependency on foreign energy sources, what would you do as a farmer purchasing seed for next year's crop?
Rate the decision of whether to use genetically modified or non-genetically modified seed based on the following considerations:
Safety to the Environment
Ability to Control Production Costs
Impact on Food Prices
Overall Health Concerns
Contribution to Reducing Dependence on Foreign Energy Sources