How California’s GMO Labeling Law Could Limit Your Food Choices and Hurt the Poor

Don’t miss this analysis of the beyond-ridiculous California anti-GMO project.  Steve Sexton is a Ph.D. candidate in agricultural and resource economics at UC Berkeley, and a regular Freakonomics Blog contributor. You can read more of Sexton’s papers on his page at BEpress.

 There are so many serious, unintended consequences of such a “feel good” labeling law. Hopefully this excerpt will motivate you to study the analysis and extensive resources:

The American Medical Association resolved this week that ‘there is no scientific justification for special labeling of bioengineered foods.’

The association has long-held that nothing about the process of recombinant DNA makes genetically engineered (GE) crop plants inherently more dangerous to the environment or to human health than the traditional crop plants that have been deliberately but slowly bred for human purposes for millennia. It is a view shared by the National Academy of Sciences, the World Health Organization, the Food and Agriculture Organization of the U.N., the European Commission, and countless other national science academies and non-governmental organizations.

And yet Californians will consider on their November ballots a law that mandates cigarette-like labeling of food derived from GE plants. Proponents claim to promote opportunities for consumers to make informed choices about the foods they eat. But to build support for the measure, they have played on consumer fears about a promising technology that is nevertheless prone to ‘Frankenfoods’ demagoguery. If successful, they may well imperil the ability of Californians, and consumers around the world, to choose a technology that scientists contend could end hunger and malnutrition, lift hundreds of millions from poverty, and reduce the environmental impact of feeding an evermore populous world.

 ‘Currently available genetically modified foods are safe to eat.’ That was the conclusion of a 2003 inquiry by the International Council for Science, an NGO representing the national science academies of 140 countries, including the U.S. It is a finding repeatedly made by the U.S. National Research Council. The U.S. Department of Agriculture, the Food and Drug Administration, and the U.S. EPA all regulate the use of genetically engineered plants in the U.S. according to a philosophy endorsed by the scientific community that the content and characteristics of plants and foods should govern their regulatory scrutiny, not the process by which they are made.

Voluntary certified organic labels already allow consumers to avoid GE foods. Given the dramatic fissure between scientific opinion and public perception—only one in four consumers thinks GE foods are ‘basically safe’—a mandatory labeling regime is likely only to cripple crop science by reducing market share and revenues to GE food producers. 

More devastating than the label itself, could be the cost of avoiding the label on non-GE foods that may nevertheless contain trace amounts of GE material. In the U.S., the highest-grade corn can contain as much as 2% foreign material, like crop residues. In Europe, a food product can contain as much as 0.9% genetically engineered material and avoid a GE label. But the California law would impose a nearly twice as stringent purity standard, tolerating only 0.5% GE content in non-GE food.

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As I have come to expect, the anti-GMO campaigners show up armed with their copy-paste arguments. Steve Sexton responded with a short rejoinder and a sampling of the peer-reviewed literature:

In the U.S., food products have historically been required to provide two types of information: nutrition content (ingredient lists), and health warnings, e.g. the Surgeon General’s warning on tobacco products. As the process of genetic engineering does not, itself, change the nutritional content of food products or ingredients, a GMO label is certainly not in keeping with that tradition. Moreover, front-of-packaging labels, like those the California law would mandate for some GE foods, have historically been voluntary and regulated only to ensure the accuracy of claims. Voluntary front-of-package labels could assert valid “GMO-free” claims today, irrespective of the proposed California law. That the market has not voluntarily provided this information suggests it is not demanded by consumers.

Even free market economists acknowledge perfect information as a precondition for well-functioning markets. In this case, there is asymmetric information. Consumers cannot independently verify the safety of the foods they eat, which is why food safety is regulated by government agencies that must retain the public’s trust. The California labeling law does not propose to correct the information asymmetry. And, in fact, the “Findings and Declarations” in the preamble to the California law provide misinformation, misleading consumers to believe that there are substantial health risks from consuming GMOs and that GMO foods are unregulated. Neither claim is true. Given the misinformation campaign perpetuated by environmental groups and organic farmers, who are, themselves, interested parties, there is hardly perfect information in the market for food. Market participants are not stupid, but they have been duped. My commentary is an attempt to educate. But as long as the schism between scientific reality and consumer perceptions exist, a labeling regime that claims to promote consumer choice may affect a reduction in consumer choice and make society worse off. A consumer who avoids GMOs on the basis of incorrect information is not made better off by his choice. All interested parties should undertake to communicate the scientific consensus against the headwinds of environmental groups and the organic lobby.

Below is a sampling of the peer-reviewed literature on yield improvements, chemical reductions and other farm-level impacts of GE crops from around the world. The evidence of yield gains with GE technologies in some places, including developing countries, is overwhelming. And products that will come online in the next several years (barring any major contraction in ag biotech investment) will further enhance the technology’s usefulness in a development context.

Ag biotech firms are not saints. They are intent on making profits, which they can do by developing products that farmers and informed consumers demand. May profit motives cause private firms to overlook potentially beneficial applications for regions that cannot afford them? Yes. So there is a role for public support for agricultural biotechnology, too. Major research universities and many major international NGOs and private foundations are supporting research that applies the tools of genetic engineering to applications for developing countries. In many cases, these efforts are in cooperation with the Monsanto’s of the world, which often provide technologies to poor farmers for free. Seehttp://www.aatf-africa.org/wema/partners/partner_institutions/en/. And let us also not forget that patents are not evil. Intellectual property rights are conferred in exchange for costly R&D investments that would not be made by private firms if their investment returns were arbitraged away by competitors immediately replicating their discoveries.

Qaim, M. and D. Zilberman. 2003. “Yield Effects of Genetically Modified Crops in Developing Countries.” Science 299, pp900-902
http://www.sciencemag.org/content/299/5608/900.short

Huang, J., S. Rozelle, and C. Pray. 2002. “Plant Biotechnology in China.” Science 295, pp674-676.

Yorobe JMJr, Quicoy CB. 2006. Economic impact of Bt corn in the Philippines. Philipp. Agric. Sci. 89:258–67

Huang J, Hu R, Rozelle S, Qiao F, Pray CE. 2002a. Transgenic varieties and productivity of smallholder cotton farmers in China. Aust. J. Agric. Resour. Econ. 46:367–87 [Web of Science ®]

Qaim M, Subramanian A, Naik G, Zilberman D. 2006. Adoption of Bt cotton and impact variability: insights from India. Rev. Agric. Econ. 28:48–58

Thirtle C, Beyers L, Ismael Y, Piesse J. 2003. Can GM-technologies help the poor? The impact of Bt cotton in Makhathini Flats, KwaZulu-Natal. World Dev. 31:717–32 [Web of Science ®]

Kambhampati U, Morse S, Bennett R, Ismael Y. 2006. Farm-level performance of genetically modified cotton—a frontier analysis of cotton production in Maharashtra. Outlook Agric. 35:291–97 [Web of Science ®]

Crost B, Shankar B, Bennett R, Morse S. 2007. Bias from farmer self-selection in genetically modified crop productivity estimates: evidence from Indian data. J. Agric. Econ. 58:24–36 [Web of Science ®]

Krishna VV, Qaim M. 2008b. Potential impacts of Bt eggplant on economic surplus and farmers’ health in India. Agric. Econ. 38:167–80 [Web of Science ®]

Gouse M, Pray C, Schimmelpfennig D, Kirsten J. 2006. Three seasons of subsistence insect-resistant maize in South Africa: Have smallholders benefited? AgBioForum 9:15–22

Brookes G, Barfoot P. 2008. GM Crops: Global Socioeconomic and Environmental Impacts 1996–2008. Dorchester: PG Econ.

Sexton, S. and D. Zilberman. 2011. “How Agricultural Biotechnology Boosts Food Supply and Accomodates Biofuel. National Bureau of Economic Research Working Paper 16699.