Economic and regulatory aspects of mandatory GMO labeling

1. Economic and regulatory aspects of mandatory GMO labeling Sean B. Cash, Ph.D. Associate Professor, Friedman School of Nutrition Science and Policy, Tufts University

2. Disclosures • Dr. 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

3. Adoption of GE Crops Source: USDA ERS

4. Adoption of GE Crops Source: USDA ERS

5. US Commercial GMO crop availability

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

7. GMO labeling elsewhere

8. 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

9. Kosher – the original third-party certified voluntary label The Kosher market in the United States • 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 Source: Timothy Lytton, Friedman Seminar Series, March 13, 2014

10. Why label food voluntarily? • Economic motivations • Information asymmetry • Product differentiation • Price premiums • Social/ethical motivation

12. Existing voluntary labeling schemes

13. USDA Organic • 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

14. 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

15. Non-GMO Project • 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

16. 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

17. 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?