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Costs and risks of testing and blending for essential amino acids in soybeans

Hertsgaard, David J., Wilson, William W., Dahl, Bruce
Agribusiness 2019 v.35 no.2 pp. 265-280
decision making, essential amino acids, marketing, mixing, models, purchasing, risk assessment, soybeans
An important emerging problem in soybean marketing is the variability in quality, which is typically measured by protein and ultimately results in mispricing. This study analyzes the effects of testing soybeans for specific quality traits including essential amino acids. A model was developed to analyze costs and risks that may arise for grain handlers to segregate soybeans into high‐ and low‐quality grain flows based on alternative importer purchasing specifications. A stochastic optimization model is used to determine optimal testing locations and intensities in addition to the costs and risks to grain handlers. The model allows for blending to determine optimal shipments from separate locations with differing quality distributions. This paper provides a framework for agribusinesses, grain handlers, and marketers to make decisions in response to importers’ purchasing requirements and strategies.