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Supported by the CGIAR
GM food labeling policies Drawing lessons from research
Dr. Guillaume GRUERE
Research Fellow
Environment and Production Technology Division
IFPRI, Washington DC
Email: [email protected]
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
GM food labeling policies
• Middle of 1990s, Switzerland and EU 15 started to mandate labeling of GM food. Other followed with different approaches: Japan, Korea, Australia, Canada…
• South Africa only African country with a labeling policy
• Note: All labeling countries require labeling for future non-substantially equivalent GM food (2nd gen.).
Purpose of GM food labeling
• Mandatory labeling: officially for consumer choice and consumer information, not for food safety reasons. It follows safety approval.
• Voluntary labeling: avoiding misleading claims.Page 2
1. Introduction
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
2. National GM food labeling policies
Page 3
M(1%)
V
M(3%)
M(2%)
M (0.9%)
M
(2%)
M(1%)M(0%)
M(0.9%)
M,V(5%)
M(1%)
M(1%)
M(5%)
M(5%)
M(5%)
V
V(5%)
M?M?
M?
M/M: Mandatory labeling (enforced), V/V:Voluntary labeling (enforced),
%: tolerance level
M(0.9%)
V(5%)
M(0.5%0
M(0 %)
M?
M(0%)
M?
M(5%)
M?
V
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
A multiplicity of national approaches
Type of approach
• Voluntary (non-GM) versus mandatory (contains GM)
Characteristics
1.Coverage: wide differences, exceptions
2.Threshold level for labeling of GM ingredients: from detection level (0%) to 5%
3.Labeling content: message and format differ
Degree of implementation
• Implementation visible only in Developed countries +China
Why these differences?
• Production, political pressures, perceived trade advantagesPage 4
Source: Carter and Gruere (2003a), Gruere and Rao (2007), Gruere, Carter and Farzin (2009)
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
3. Effects of GM food labeling policies
Basic evidence: comparing the effects of labeling in supermarket in France and Canada
• Canada: voluntary labeling, used for non-GM
• France: mandatory labeling: “contains/ derived from GM soybean” on ingredient list.
• Qualitative evidence: survey of major chain stores in selected cities, for 72 types of packaged products in September 2004.
Page 5
Source: Gruere (2006)
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Canada: Ottawa and Montreal
Types of stores Products with non-
GM labels
Supermarkets -Vegetable broth
Specialty stores
(Natural food stores)
-Melba Toast
-Organic brownie
-Cereal bar
-Safflower oil
-Corn oil
-Soy proteins
Page 6
Labeled non-GM products
In addition, many non-GM
organic products: 36/72 types
> Consumer choice: consumer willing to avoid GM can do,
others can buy products potentially containing approved GMSource: Gruere (2006)
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
France: Paris supermarkets
Types of stores Products with GM labels on
ingredient list
Supermarkets -BBQ sauce
-Mix for popcorn natural *
One specialty store
(import specialized store)
-BBQ sauce
-Root beer *
-Marshmallow paste *
-Light or dark corn oil *
-Blue Cheese
-Ranch dressing
-Caesar dressing
-Mix for popcorn
Page 7
Labeled GM products
Very rare regular
product with GM label,
some non-GM
labeled& organic
products > limited
consumer choiceSource: Gruere (2006)
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Why? Labeling policy decision making
Page 8
Regulator decides:
-label or not
-type of label
-coverage
-threshold level
Food processor
decides:
-to label or not
(reformulate, change
ingredients, retire
products)
Consumers decide to
purchase GM and non-
GM based on quality
perception and prices
No consumer choice:
Only one type of
product available
Some
products
labeled
No product
labeled (or
all products
labeled)
Source: Gruere , Carter and Farzin (2008)
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Effects of labeling policies on processor choice
Page 9
Non-GM
GM
Isoprofit
X
Z
Y
EU
Can
ad
a
1/20 1
1
Non-GM to
GM profit
ratio
Expected
market share
of GM
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Mandatory labeling less likely to lead to consumer choice due to :
1. Expected consumer reaction: hazard warning effect, despite the low use of labels- confirmed by experiments
2. Expected adverse effect on company’s reputation
3. Relatively low cost differences (until recently)
4. First-mover disadvantage, and
5. Targeted campaigns against labeled products
Moreover, mandatory labeling is less responsive to change in consumer views than voluntary labeling
Page 10
Voluntary vs. mandatory labeling
Source: Carter and Gruere (2003b), Gruere , Carter and Farzin (2008)
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Market implications of mandatory labeling policies
Domestic market
• Current mandatory labeling policies:
– Very limited consumer choice or consumer information,
– inconsistent exemptions creating more confusion,
– lack of informative message: ambiguous labels.
International market
• No consensus at the Codex Alimentarius after 16 years
• Trade effects: non-tariff barriers? / diversion
• Spillover effect on developing countries policies:
– imitation, despite the lack of any food labeling policies
– rejection of GM for fear of export loss Page 11
Source: Bansal and Ramaswami (2007),Gruere (2006),Gruere and Rao (2007), Gruere and Sengupta (2009)
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
4. Costs of mandatory labeling
Cost of labeling is not trivial:
• It is not “just a sticker”- it :
– changes ingredients used
– affect demand and prices of GM and non-GM
– requires systematic testing for full enforcement
– implies segregation of non-GM
Several cost studies, but all ex-ante:• Australia, Canada, UK, Philippines, Oregon, Quebec, India
• Cost estimates from $0.2-$10 up to $20 per capita.
• Price increase depends- Philippines study 11% increase.
• India: unenforceable, lead to market changes Page 12
Source: Gruere and Rao (2007), Bansal and Gruere (2009)
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Page 13
5. Conclusions (1)
Labeling GM food is not just adding a sticker•It can result in significant market changes
•It does not automatically provide any consumer benefit
•It should respond to a genuine consumer demand
Results from economic research show that:1. Mandatory labeling involves costs and tends to
result in corner solutions: “no GM or all GM”
2. Voluntary labeling can be an effective alternative,
as it replies more directly to non-GM consumer
demand if it is well defined and applied.
3. Well defined rules and enforcement are critical
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Page 14
Conclusions (2)
Implication of GM labeling on African countries•Mandatory labeling in developed countries has
contributed to rise fears of export losses with GM use
•Despite the lack of observable benefits, the costs and
enforcement challenges, mandatory labeling of GM food is
seen as absolutely necessary in a number of African
countries.
Ultimately, when policy makers take a decision
on this complex issue, benefits and costs should
be carefully considered.
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Eight critical questions for policy makersbefore labeling decisions
1) Is GM labeling necessary and if so for what reason?
2) Is it demanded by a majority of consumers and considered a labeling priority?
3) If labeling is requested, what type of GM labeling approach will best fulfill its objective?
4) What will be the reaction of the food industry to labeling, and would it result in consumer choice?
5) What should be the labeling content, what are the coverage and the threshold of labeling?
6) How will implementation be done and at what costs?
7) Would the chosen labeling have any effect on the potential use of GM crop technology?
8) Would it be compatible with the country’s general economic goals and its international obligations?
Page 15
Labeling Policies of Genetically Modified Food: Lessons from a International Review of Existing Approaches.
2007. IFPRI/Program for Biosafety Systems- Policy Brief 7. http://www.ifpri.org/pbs/pdf/pbsbrieflabeling.pdf
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
THANK YOU FOR YOUR ATTENTION!
Page 16
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
References used in this presentation
Page 17
Bansal, S. and G. Gruere, 2009. Economic implications of GM food labeling in four marketing channels in India. Unpublished Report. IFPRI: Washington, DC
Bansal, S., and B. Ramaswami. 2007. The economics of GM food labels:: An evaluation of mandatory labeling proposals in India. IFPRI Discussion Paper 704. IFPRI: Washington, DC.
Carter C.A. and G.P. Gruere, International Approaches to the Labeling of Genetically Modified Food. Choices, Second Quarter, 2003a. http://www.choicesmagazine.org/2003-2/2003-2-01.htm
Carter C.A., and G.P. Gruere. 2003b. Mandatory Labeling of Genetically Modified Food: Does it Really Provide Consumer Choice? AgBioForum, vol. 6n. 1&2, p68-70. http://www.agbioforum.org/v6n12/v6n12a13-carter.htm
Carter C.A. and G.P. Gruere. 2006. International Approval and Labeling Policies of Genetically Modified Food in Major Trading Countries. In Just, R.E. Alston, J.M., and D. Zilberman (eds), Regulating Agricultural Biotechnology. Economics and Policy, Springer Publisher: New York.
Cloutier, M. 2006. Etude economique sur les couts relatifs a l’etiquetage obligatoire des filieres genetiquement modifiees versus non-GM au niveau Quebecois. Universite du Quebec a Montreal, Departement Managemetn et Technologie: Montreal, Canada.
Gruere, G.P. 2006. A preliminary comparison of the retail level effects of genetically modified food labelling policies in Canada and France. Food Policy, 31: 148-161.
Gruere, G.P., C.A. Carter and Y.H. Farzin. 2008. What labelling policy for consumer choice? The case of Genetically Modified Food in Canada and Europe. Canadian Journal of Economics 41(4): 1472-97.
Gruere, G.P., C.A. Carter and Y.H. Farzin. 2009. Explaining International Differences in Genetically Modified Food Labeling Regulations. Upcoming in Review of International Economics
Gruere, G.P. and S.R. Rao. 2007. A Review of International Labeling Policies of GM Food to Assess India’s Proposed Rule. AgBioForum, 10 (1): 51-64. http://www.agbioforum.org/v10n1/v10n1a06-gruere.htm
Gruere, G. and D. Sengupta. 2009. Biosafety and perceived commercial risks: the role of GM-free private standards. IFPRI Discussion paper 847. Washington, DC: IFPRI.