Proposition 37 – California Food Labeling Initiative: Economic Implications for Farmers and the Food Industry if the Proposed Initiative were Adopted

There is a new paper by UC Davis professors Julian M. Alston and Daniel A. Sumner [PDF]. Particularly useful is Appendix C: Costs of Segregation, Monitoring, and Enforcement. We can only estimate these costs, but it is critically important that California voters learn how real-world agriculture works. If we could conduct a poll designed to test understanding of the process impact of this regulation, I will happily predict nearly zero correct responses.

Another valuable reference provides a quick overview of the farm gate to retail prices for organic premia: Table 3. Price Premia for Organic versus Non-organic Products in U.S. Markets.

The Executive Summary begins with this tidy summary:

A Costly Regulation with No Benefits.
Proposition 37, would impose significant costs on California’s food and agricultural industries, as well as consumers.

  •   Proposition 37 would cause food manufacturers and retailers to change the methods used to produce many of the foods Californians eat, and would make those foods more expensive. Among consumers, the burden would be greater on the poor who spend a larger share of their income on food.

  •   As well as imposing costs on consumers, and others in the food supply chain, Proposition 37 would be costly to farmers, including many California farmers who do not produce any genetically engineered (GE) commodities, because their products are often used as ingredients in foods that also contain ingredients from GE crops.

  •   Proposition 37 would impose about $1.2 billion in additional costs on California food processors to meet segregation, monitoring and certification costs.

  •   Proposition 37 would not provide any meaningful benefits, in the form of improved information, improved product safety, or an expanded range of choices for consumers. In fact Proposition 37 would reduce choices by driving some food products containing GE ingredients from the market.

  •   Imposing “unnatural” restrictions on the use of the word “natural” on food labels would mislead and confuse consumers because producers of farm commodities such as fruits, vegetables and tree nuts that are simply dried, roasted, juiced or otherwise lightly processed, in many instances on the farm, would be precluded from using the term “natural” on the product label. 

Lastly, it’s good to see full disclosure on the title page before the authors’ affiliations.

The work for this project was undertaken with partial funding support from No on 37. The views expressed are those of the authors, based on their analysis, and not attributable to any institution or organization with which they are affiliated or associated.