Economic benefit of co-regulation to manage aflatoxin risk in maize

Abstract

Aflatoxins are toxic fungal metabolites that occur naturally in the field among cereals, oilseeds, and nuts that may increase during storage. Texas grown maize, commonly referred as corn, has some of the highest aflatoxin levels in the US. In 2011, the Office of the Texas State Chemist (OTSC) collaborated with the Risk Management Agency (RMA) of the United States Department of Agriculture (USDA) and the Texas grain industry to implement the state's first co-regulation governance option to manage aflatoxin risk. Co-regulation is a form of risk management that relies upon a government-private partnership in regulation; utilizing government-backed codes of practice that result in a more connected and transparent marketplace. To measure the economic benefit of co-regulation to manage aflatoxin risk, interviews were conducted among twenty-seven participants in the OTSC aflatoxin co-regulation program who represented 31% of the grain companies that handled maize contaminated by aflatoxin according to Texas Commercial Feed Rules. A comparative approach was used by gathering evidence from 2010 to 2018, in order to evaluate the results before and after the OTSC implemented its co-regulation strategy. The results were evaluated by using the data gathered from the interviews to measure the specific costs and benefits incurred by producers and grain handlers. The findings were modeled in the form of an income statement. From the income statement, the total economic benefit of the One Sample Strategy in 2018 was $14,572,180. This study provides a more realistic characterization of cost drivers associated with aflatoxin risk management and counters exaggerated economic losses associated with aflatoxin in maize from prior studies.

Keywords: Aflatoxin; Benefit; Blending; Co-regulation; Crop insurance; Economic; Income; Mycotoxins; Risk management; Shared governance.