Canada’s Labelling policy for GM food: Pragmatism or Policy Failure?

1. Canada’s Labelling policy for GM food: Pragmatism or Policy Failure? Presentation to Symposium 2003 Cooperative Chair Program in Agricultural Marketing and Business, Department of Rural Economy, University of Alberta, Michele Veeman email:michele.veeman@ualberta.ca Based on research supported by GELS program of Genome Prairie and AARI. University of Alberta

2. Outline • Introduction • Underlying Issues of Economic Theory and Public Choice • Introducing a GM Labelling Standard for Canada • The Codex process for GM Food Labelling • Some observations from GELS research program • Pragmatism or Policy Failure? • Summary/conclusions University of Alberta

3. Introduction • Increasing awareness and wariness of GM food • Increasing debate on public policy for screening, approval and commercialisation • Debate centers on: food safety; potential environmental consequences; and complex ethical issues (eg nature and distribution of benefits of GM; role and influence of trans-nationals; different views of the relative roles of science and nature in context of food; & rights of individuals to make informed choices for food). University of Alberta

4. The experts and the public may disagree, but perceptions affect both behaviour and market outcomes: • Some experts decry public concerns with GM/GE food, arguing that this is only an extension of longstanding selection methods and that substantial equivalence with traditionally modified food applies • The lack of direct consumer benefits; the concern with possible impacts on food safety and the environment and a variety of ethical and distributional issues do affect attitudes of a significant proportion of people University of Alberta

5. GM Food labelling is a central issue pitting the US and Canada vs Most of the Rest Of the World • European attention on biotechnology was sparked in 1997 by potential US exports of GM soy and maize & by food scandals and scares, leading to mandatory labelling; (subsequent tightening of regulations). • Much of the rest of the world has/is adopting mandatory labelling • The US and Canada almost alone have announced voluntary labelling policies (1999); • Neither have yet developed detailed plans or standards to put voluntary labelling into effect and to provide for negative (no GM content) claims University of Alberta

6. Implications of Imperfect Information: Implications of Imperfect Information: • GM content/absence and claims are credence goods/characteristics • Consequent information asymmetry leading to adverse selection, moral hazard, quality deterioration and market failure To counter this: • Minimum quality standards, (identity preservation, audit, certification/verification); labels as signals • Regulatory policy: Food safety; labels as warnings; mandated information; control on misleading information University of Alberta

7. Labelling Incentives for GM Food Vary in Different Labelling Regimes: Voluntary labelling regime-- No requirement to label detrimental attribute unless composition or use changes; Incentive to label beneficial attributes and to make “no content” (ie negative) claims for detrimental attribute, if C≤B; Mandatory labelling regimes—require label declarations of GM content; incentive to make “no content” claims for detrimental attribute, if C≤B. University of Alberta

8. Labelling Costs for GM Food will vary in different labelling regimes: • Voluntary labelling costs (negative claims) will tend to be borne by those consumers who wish to avoid GM food; (and producers will not label unless B≥C). • Mandatory labelling costs (positive statements) will be borne by all producers and consumers; negative claims (and IP costs) will tend to be borne by GM-averse consumers (if B≥C of negative claims); conditions of D and S will influence the distribution of costs to consumers versus producers; concern re “red flag” effects. University of Alberta

9. Labelling Costs for GM Food will also vary with the details of the labelling regime, for example: • The threshold tolerance levels for GM content notto trigger mandatory labelling (or to enable voluntary labelling) will affect costs of segregation and identity preservation. An exponential increase in costs applies moving from 5%; 3%; 1%; 0.9%; to 0.5%; and less (see the poster by I. Huygen) University of Alberta

10. Labelling Costs for GM Food will also be affected by the definitions of the labelling regime, another example: • The definitional/wording issue of whether “GM content” or “GM process” must/can be labelled will influence mandatory labelling costs for some products/producers; only the first definition would require mandatory labelling of GM canola oil, soybean oil and corn syrup; the EU is moving to the second definition. • This is a big issue in labelling prepared foods University of Alberta

11. Economic, Political and Social Pressures on GM Food Labelling Policy • The US adoption of a voluntary labelling policy can be seen as a reflection of political and economic influences on public choices for the world’s largest producer/exporter of GM crops/food; • The similar Canadian choice reflects similar influences, plus the pressures of being a small country trader highly dependent on the US market University of Alberta

12. A GM Labelling Standard is a prerequisite for GM labelling to occur: • Sought since 1999 through the Canadian General Standards Board and Canadian Council of Grocery Distributors; • Large committee of stakeholders with three working groups; • Contentious issues where stakeholders’ interests conflict—broad v. narrow definition of GM foods (Novel Foods Act vs rDNA focus);GM v GE words ---process vs content GM definition ---5% vs lower threshold levels University of Alberta

13. Introducing a GM Labelling Standard for Canada Proposed compromise standard: • Narrow definition of GM relative to Novel Foods Act [ie rDNA definition]; • GM process (not content) definition; canola oil would be considered a GM product; GE wording • Five percent threshold rather than 1% to apply to negative claims, including for processed foods • 53% approval of the CGSB committee, ie not a striking consensus; no action to this time. University of Alberta

14. The Codex process for GM Food Labelling • The lack of a Canadian consensus on a standard for GM labelling mirrors the Codex process re GM food labelling; • Codex started work on GM food labelling in 1993 and is stalled on definitions • Consensus-based risk assessment Codex work has moved much faster than GM labelling—it is easier to agree on objective risk measures than on social issues that involve very different values, beliefs and trust in national regulators University of Alberta

15. Pragmatism or Policy Failure? • Attitudes to GM and to labelling are so value laden, that the answer is in the eye of the beholder • Strongly held positions reflect two beliefs: 1. Consumers have the right to know about process issues 2. Information should not be misleading University of Alberta

16. Pragmatism or Policy Failure? • Given the decision of the government of Canada for voluntary labelling, there are strong arguments that development of an enabling standard is overdue: • fairness to the ~30 % of Canadians who are strongly averse to GM food; • facilitate niche market opportunities for producers and processors; • accommodate public expectations of a labelling policy (in a “citizen poll” context, there is strong majority support for mandatory labelling and many think such a policy applies in Canada). University of Alberta

17. Some examples of “voting” responses re GM food attitudes from a recent national study: • This study by Huennemeyer, Veeman, Adamowicz, & Hu is part of a research program on “genomics, ethics, environment, economics, law and society” (GELS); this part of the GELS study is analyzing how information affects peoples’ food trade-offs and choices, based on responses to an cross-Canada interactive computer-based survey of 882 respondents in January 2003. [See the Hu et al poster]. • Many people believe that Canada requires labelling of GM/GE content (49% of our sample) University of Alberta

18. Part 3 of recent GELS survey: Some responses to statements: • “The public is sufficiently involved in regulation” SA&A: 13%; D&SD: 80%. • “Right to know warrants mandatory labelling” SA&A: 88%; D&SD: 10%. • “Labelling decisions should be left to experts” SA&A: 57%; D&SD: 39%%. • Labelling not needed if final quality is the same SA&A: 14%; D&SD: 83%. • “Stricter regulation better than mandatory labelling” SA&A: 61%; D&SD: 34%. • Mandatory labelling preferred to voluntary labelling” SA&A: 90%; D&SD: 8%. University of Alberta

19. Part 3 of survey: risk-benefit attitudes—Respondents’ risk ratings • Ratings from 1 (“very high”) to 4 (“almost no risk”) or “don’t know” to questions on “how risky is..” for a variety of agricultural/food issues relative to environmental safety and food safety. • Most risky (v. high risk) issues for environment: water pollution by ag. chemical runoffs (61%); herbicide/pesticide resistance (50%); ag. waste disposal (41%); soil erosion (28%); GM effect on environment (27%); adverse effects of ag. on biodiversity (26%); • Most risky issues for food: bacteria contamination (41%); pesticide residuals (41%); use of antibiotics (36%); mad cow disease (32%); fat & cholesterol in food (24.9%); GM use (21%); food additives (15%) University of Alberta

20. Part 3 of survey: trusted sources re GM food information University of Alberta

21. A question for labelling policy: should the standards board process go back to the drawing table? • Seek an interim “less rigorous” standard and assess this after five years? • Might a more acceptable standard focus on GM content rather than adopting a process definition? • Compromise on the 5 % threshold rather than on a process definition? University of Alberta

22. Summary, Conclusions Extended delay in putting GM labelling into effect: 1. Suggests that food industry policy caters more to producers than to consumers’ interests, 2. Does not facilitate market opportunities for producers and processors; 3. Does not engender trust in the regulatory process; It is time for a labelling standard to be introduced! University of Alberta