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

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

Source: USDA ERS Adoption of GE Crops

Source: USDA ERS Adoption of GE Crops

US Commercial GMO crop availability US CropApproximate % that is GMO Canola93% Corn88% Sugar Beets95% Cotton90% Soy94% Alfalfa3% Zucchini11% Yellow crookneck squash11% Hawaiian papaya75%

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

GMO labeling elsewhere

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

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

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

Existing voluntary labeling schemes

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: USDA Organic

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:

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: Non-GMO Project

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

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?