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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.

1. Introduction


2. National GM food labeling policies

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


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 advantages

Source: Carter and Gruere (2003a), Gruere and Rao (2007), Gruere, Carter and Farzin (2009)


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.

Source: Gruere (2006)


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

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)


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

Labeled GM products

Very rare regular

product with GM label,

some non-GM

labeled& organic

products > limited

consumer choiceSource: Gruere (2006)


Why? Labeling policy decision making

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)


Effects of labeling policies on processor choice

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


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

Voluntary vs. mandatory labeling

Source: Carter and Gruere (2003b), Gruere , Carter and Farzin (2008)


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

Source: Bansal and Ramaswami (2007),Gruere (2006),Gruere and Rao (2007), Gruere and Sengupta (2009)


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

Source: Gruere and Rao (2007), Bansal and Gruere (2009)


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


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.


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?

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

http://www.ifpri.org/pbs/pdf/pbsbrieflabeling.pdf


THANK YOU FOR YOUR ATTENTION!


References used in this presentation

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.

http://www.choicesmagazine.org/2003-2/2003-2-01.htm







http://www.agbioforum.org/v6n12/v6n12a13-carter.htm



http://www.agbioforum.org/v10n1/v10n1a06-gruere.htm



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