Economic and regulatory aspects of mandatory GMO

labeling

Sean B. Cash, Ph.D.

Associate Professor, Friedman School of Nutrition Science and Policy, Tufts University

DisclosuresDr. Cash has no personal financial interests in

any agricultural, food or food-related company

Dr. Cash currently receives research support from Newman’s Own Foundation, a philanthropic organization associated with Newman’s Own Organics, a company that has supported mandatory GMO labeling initiatives

Dr. Cash has received a speaking honorarium for a talk given at ConAgra Foods, a company that has opposed mandatory GMO labeling initiatives

Source: USDA ERS

Adoption of GE Crops

Source: USDA ERS

Adoption of GE Crops

US Commercial GMO crop availability

US Crop Approximate % that is GMO

Canola 93%

Corn 88%

Sugar Beets 95%

Cotton 90%

Soy 94%

Alfalfa 3%

Zucchini 11%

Yellow crookneck squash 11%

Hawaiian papaya 75%

State initiatives

2014 GMO Legislation Tracking Map. Source: Bain and Dandachi, 2014.

GMO labeling elsewhere

Notable Points in the History of Food Labeling in the United

States

1906 – Food and Drug Act

1915 – NY Kosher Food Legislation

1924 – Start of Rabinic Certification of Kosher in the US – first modern third-party certification body

1973 – California Certified Organic Farmers (CCOF) formed – voluntary organic standards group

2002 – USDA Organic Seal introduced on products

• 10,000 companies produced 135,000 retail Kosher products

• 12 million Americans consume

• Kosher market worth $12 billion annual retail sales

• 8% of Kosher consumers are religious Jews.

• More products labeled Kosher than organic, natural, premium

• 5 major certifiers

The Kosher market in the United States

Source: Timothy Lytton, Friedman Seminar Series, March 13, 2014

Kosher – the original third-party certified voluntary label

Economic motivations

•Information asymmetry

•Product differentiation •Price premiums

•Social/ethical motivation

Why label food voluntarily?

Existing voluntary labeling schemes

• Started in 2000

• USDA oversees National Organic Program (NOP)

• Third parties certify products as organic under regulations and rules set forth by USDA NOP

• 25,000 farmers, ranchers, and other food businesses are certified organic in the U.S.

• USDA conducts audits of third-party certifiers

Source: http://www.ams.usda.gov/AMSv1.0/NOPOrganicStandards

USDA Organic

USDA Organic standards

Organic crops• No irradiation• No sewage sludge• No synthetic fertilizers • No prohibited pesticides (some allowed) • No genetically modified organisms

Organic livestock• Animal health and welfare standards• No antibiotics or growth hormones• 100% organic feed• Animals have access to outdoors

Organic multi-ingredient foods • 95% or more certified organic ingredients s

Source: http://www.ams.usda.gov/AMSv1.0/NOPOrganicStandards

• Non-profit agency (501(c) 3)

• Started in 2003 in small natural grocery store in Berkeley, CA

• 27,000 non-Genetically Modified Organism (GMO) certified products representing over 1,500 food brands

• $11 billion in annual sales

• Works with third party “technical administrators” to verify products as GMO free.

★ Polymerase Chain Reaction (PCR) analysis used to test for GMOs in inputs (not finished products)

• Companies must sign licensing agreement with the Non-GMO project once the TA has certified the product

Source: www.nongmoproject.org

Non-GMO Project

Costs of GMO labeling

Direct costs of labeling (printing, etc.)

Direct costs of traceability and product assurance

Indirect costs of product reformulation and production shifts

Mandatory vs. Voluntary Labeling

Is GMO a food safety issue (information asymmetry) or a large threat to the environment (externality)?

Is GMO labeling a strong desire of an identifiable but separable group of consumers?

Do adequate regulatory, scientific and legal frameworks exist to protect consumers from fraudulent claims in either a voluntary or mandatory framework?