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Abstract
In this paper we study U.S. wheat farmers’ willingness to pay for near infrared
(NIR) sensor that can segregates wheat grains according to their protein concentration.
We first develop a microeconomic optimization model of wheat farmers’
segregating and commingling decisions. Then we use U.S. wheat prices and stocks
to estimate a wheat protein stock demand system. This allows us to establish the
effects of changes in the protein profile of wheat stocks on protein premiums. The
paper’s simulation section combines the results from the microeconomic optimization
model and from the econometric estimations to simulate wheat farmers’ WTP
for the sorting technology. Preliminary findings from the simulation show that a typical
hard red winter (hard red spring) wheat farmer’s WTP for the sorting technology
is 5.6 (4.8) cents per bushel.