Abstract
Full text: Medfly control is a public good. In economics, a public good is defined as a good that cannot or will not be produced for individual profit, since it is difficult to get people to pay for its large beneficial externalities. Within an area-wide approach, it would be useless and not 'technically-sound' to sell sterilised medflies to the individual grower, just as it is not possible to effectively spray a single orchard with malathion: the flight capability of the fly necessitates spraying on a regional basis, and organisation on a regional basis necessitates the intervention of a regulator. Until now, everything has been simple and known. This is how things have been managed throughout the years. The difficulty begins with the question: Where does the region (or country) purchase the pesticides? As long as malathion was used, it was obvious that the pesticides had to be obtained from the chemical companies, who competed among themselves in the private sector. However, with the introduction of SIT technology, the policies have changed: instead of buying the sterilised pupae in the private sector, the countries have built the factories with government funding{exclamation_point} Not only the initial investment, but the annual expenditure is
More>>
Bassi, Y
[1]
- Bio-Bee Sde Eliyahu Ltd. (Israel)
Citation Formats
Bassi, Y.
The 'sheep' of the private sector among the 'wolves' of the public good.
IAEA: N. p.,
2005.
Web.
Bassi, Y.
The 'sheep' of the private sector among the 'wolves' of the public good.
IAEA.
Bassi, Y.
2005.
"The 'sheep' of the private sector among the 'wolves' of the public good."
IAEA.
@misc{etde_20617638,
title = {The 'sheep' of the private sector among the 'wolves' of the public good}
author = {Bassi, Y}
abstractNote = {Full text: Medfly control is a public good. In economics, a public good is defined as a good that cannot or will not be produced for individual profit, since it is difficult to get people to pay for its large beneficial externalities. Within an area-wide approach, it would be useless and not 'technically-sound' to sell sterilised medflies to the individual grower, just as it is not possible to effectively spray a single orchard with malathion: the flight capability of the fly necessitates spraying on a regional basis, and organisation on a regional basis necessitates the intervention of a regulator. Until now, everything has been simple and known. This is how things have been managed throughout the years. The difficulty begins with the question: Where does the region (or country) purchase the pesticides? As long as malathion was used, it was obvious that the pesticides had to be obtained from the chemical companies, who competed among themselves in the private sector. However, with the introduction of SIT technology, the policies have changed: instead of buying the sterilised pupae in the private sector, the countries have built the factories with government funding{exclamation_point} Not only the initial investment, but the annual expenditure is subsidised as well. This is the situation in the western hemisphere, and apparently it will also be like this is Europe. There is an advantage in this: the pupae are sold at a very low price to the growers, who, in most cases, are unaware of the real cost, since the factory does not have to take the cost of capital into account in its calculation. But there are two major disadvantages: firstly, this prevents the private sector from entering this field, which is not conducted according to economic criteria; and secondly, that limitations in capital of most of the countries that suffer from Mediterranean fruit fly (mainly the poorer countries{exclamation_point}), prevent the introduction of the modern technology of SIT at the desired pace. In this way, the current method perpetuates the continued spraying of organophosphates over the heads of the population for many years to come. This is indeed a paradox: as long as the price of the pupae is lower (further subsidized by governmental budgets), the rate of increase of demand for them by countries will be lower{exclamation_point} In the real price of one million pupae is concealed a capital cost of 22%. There is no chance that a private company will agree to deal with a governmental competitor who is not obligated by a return on the investment in it. Also a similar difficulty exists on the other side: why should a country agree to sign a longterm contract with a private company, when it has a cheaper alternative, in a governmental company? If this is so, why did Bio-Bee decide to build Bio-Fly, for the weekly production of 150 million sterilised pupae as the short to medium term target? First of all, because a worldwide shortage of this product is expected in the coming years. Secondly, in sales to Israel and its neighbors (Jordanians and Palestinians as well as the entire Mediterranean Basin), the expensive element of transport from Guatemala, the present supplier of sterile medfly pupae to the local SIT programme, will be saved. However, this is not a solution for the long term. If in the next year a subsidized factory is built in Israel, or even in Spain or Italy, citrus growers in Israel and Jordan will also prefer its cheaper product to the actual price at which Bio-Fly has to sell its product. If the international community wants to encourage a decrease in the use of malathion while replacing it with SIT, it must build a model that will allow the flow of capital from the private sector into the world of medfly control. This - while negotiating with the countries wearing both their 'hats': the hat of the medfly consumer, and the hat of the medfly producer. If no way is found to disconnect the two 'hats', the efforts to commercialise the SIT might fade away in the world, as a result of Government capital limitations, despite the proven effic acy of the technique. (author)}
place = {IAEA}
year = {2005}
month = {Jul}
}
title = {The 'sheep' of the private sector among the 'wolves' of the public good}
author = {Bassi, Y}
abstractNote = {Full text: Medfly control is a public good. In economics, a public good is defined as a good that cannot or will not be produced for individual profit, since it is difficult to get people to pay for its large beneficial externalities. Within an area-wide approach, it would be useless and not 'technically-sound' to sell sterilised medflies to the individual grower, just as it is not possible to effectively spray a single orchard with malathion: the flight capability of the fly necessitates spraying on a regional basis, and organisation on a regional basis necessitates the intervention of a regulator. Until now, everything has been simple and known. This is how things have been managed throughout the years. The difficulty begins with the question: Where does the region (or country) purchase the pesticides? As long as malathion was used, it was obvious that the pesticides had to be obtained from the chemical companies, who competed among themselves in the private sector. However, with the introduction of SIT technology, the policies have changed: instead of buying the sterilised pupae in the private sector, the countries have built the factories with government funding{exclamation_point} Not only the initial investment, but the annual expenditure is subsidised as well. This is the situation in the western hemisphere, and apparently it will also be like this is Europe. There is an advantage in this: the pupae are sold at a very low price to the growers, who, in most cases, are unaware of the real cost, since the factory does not have to take the cost of capital into account in its calculation. But there are two major disadvantages: firstly, this prevents the private sector from entering this field, which is not conducted according to economic criteria; and secondly, that limitations in capital of most of the countries that suffer from Mediterranean fruit fly (mainly the poorer countries{exclamation_point}), prevent the introduction of the modern technology of SIT at the desired pace. In this way, the current method perpetuates the continued spraying of organophosphates over the heads of the population for many years to come. This is indeed a paradox: as long as the price of the pupae is lower (further subsidized by governmental budgets), the rate of increase of demand for them by countries will be lower{exclamation_point} In the real price of one million pupae is concealed a capital cost of 22%. There is no chance that a private company will agree to deal with a governmental competitor who is not obligated by a return on the investment in it. Also a similar difficulty exists on the other side: why should a country agree to sign a longterm contract with a private company, when it has a cheaper alternative, in a governmental company? If this is so, why did Bio-Bee decide to build Bio-Fly, for the weekly production of 150 million sterilised pupae as the short to medium term target? First of all, because a worldwide shortage of this product is expected in the coming years. Secondly, in sales to Israel and its neighbors (Jordanians and Palestinians as well as the entire Mediterranean Basin), the expensive element of transport from Guatemala, the present supplier of sterile medfly pupae to the local SIT programme, will be saved. However, this is not a solution for the long term. If in the next year a subsidized factory is built in Israel, or even in Spain or Italy, citrus growers in Israel and Jordan will also prefer its cheaper product to the actual price at which Bio-Fly has to sell its product. If the international community wants to encourage a decrease in the use of malathion while replacing it with SIT, it must build a model that will allow the flow of capital from the private sector into the world of medfly control. This - while negotiating with the countries wearing both their 'hats': the hat of the medfly consumer, and the hat of the medfly producer. If no way is found to disconnect the two 'hats', the efforts to commercialise the SIT might fade away in the world, as a result of Government capital limitations, despite the proven effic acy of the technique. (author)}
place = {IAEA}
year = {2005}
month = {Jul}
}