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Economic and regulatory aspects of mandatory GMO
labeling
Sean B. Cash, Ph.D.
Associate Professor, Friedman School of Nutrition Science and Policy, Tufts University
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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
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Source: USDA ERS
Adoption of GE Crops
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Source: USDA ERS
Adoption of GE Crops
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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%
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State initiatives
2014 GMO Legislation Tracking Map. Source: Bain and Dandachi, 2014.
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GMO labeling elsewhere
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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
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• 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
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Economic motivations
•Information asymmetry
•Product differentiation •Price premiums
•Social/ethical motivation
Why label food voluntarily?
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Existing voluntary labeling schemes
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• 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
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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
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• 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
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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
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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?