Risk premiums due to Fusarium Head Blight (FHB) in wheat and barley

Fusarium Head Blight (FHB) is an important problem to the agricultural production and marketing system, and has led to major economic losses for wheat and barley producers in the United States, Canada and many other countries. Deoxynivalenol (DON) is a mycotoxin associated with FHB. Grain products and feed grain contaminated with DON (commonly known as vomitoxin) are subject to FDA advisory limits and as a result end users place restrictions on this factor. This has led to steep price discounts, as well as higher risks for producers and grain merchandisers. Research has led to development of varieties that are resistant to moderately resistant to FHB. Also, studies indicate combinations of genetic resistance, fungicides and some management practices (combine settings, tillage practices, etc.) can be used to decrease losses due to FHB. This increases cost to the industry and imputes a value related to reduced FHB. The purpose of this paper is to analyze risk and determine risk premiums necessary to induce growers to adopt risk reducing technologies in the case of wheat and barley grown in the United States.