The impacts of genetically modified food labeling are assessed from an industry, consumer, and legislative standpoint. An economic analysis of genetically modified food labeling, as well as challenges and opportunities related to the topic are discussed.
2. Agenda
âą Introduction
âą Food Labeling Legislation
o History
o Current Regulation
o Contributing Agencies
âą Producers
o Industry Reactions
âą Consumers
o Millennial Consumer Impacts
âą Economic Analysis
âą Challenges & Opportunities
3. Introduction
Genetically Modified Foods:
oOrganisms in which the genetic material (DNA) has been altered in a way that would not
occur naturally
âą Consumers calling for increased transparency in food industry
âą Voluntary vs. Mandatory GM food labeling
âą Labeling = Differentiation and Communication
o Food labeling functions as the primary means of communication between producers and
consumers
4. Food Labeling Legislation
Pure Food &
Drugs Act
1906
Federal Food, Drug
& Cosmetic Act
1938
Fair Packaging
& Labeling Act
1966
Nutrition Labeling
& Education Act
1990
5. Current Legislation
Safe & Accurate Food Labeling Act
âą Introduced to U.S. Senate, March 2015
âą Preempts all state laws relating to mandatory labeling of GM products
o Standards for uniform, national GM labeling
- Utilizes QR codes, websites, phone numbers
o Certification process for non-GM foods
âą Trade groups vs. Advocacy groups
6. Production
âą United States = largest global producer of GM crops
o Corn, Soybeans, Rapeseed, Cotton are the most common
o In âCorn Beltâ States as much as 90% of corn & soybeans planted are GMO
âą Consolidation among GM seed producers
o Top 10 GM Seed producing firms = 73% market share in 2013
7. Producer Reactions
âą Mandatory Labeling is Inherently misleading
o Concerns with mandatory GM labeling related to economics not safety
âą Some producers are taking matters into their own hands
ï Campbell Company Example
- Beginning January 2016, voluntarily labeling all GM food products
ï PepsiCoâs Tropicana Example
- Manufacturer choosing to label some products for GM ingredients is a marketing ploy
8. Consumers
âą 93% of American consumers want to know if food products contain GM ingredients
âą 56% of American adult consumers seek nutritional information on food labels
âą 1.3 million American consumers have signed a petition â demanding FDA mandates GM food
labeling
âIt [GM labeling] will encourage hysterical reaction and discourage thoughtful
deliberation about the risks posed by biotechnologyâ
- - Johnathan Frenzen
(Clinical Professor of Marketing, University of Chicago)
9. Millennial Consumers
âą Consumers born after 1980
âą Account for greatest percentage of food buying market share
âą Mintel reports, 2/3 of Millennials pay close attention to food labels
âReal - Searchersâ
o Millennials are quick to fact-check
âUltimate Day Tradersâ
o willing to trade up or down, depending on preferences
10. Millennial Consumers ContinuedâŠ
âą Price Elasticity increases as uniqueness, authenticity, & meaningfulness increases for product
âą Organic food purchases increasing among Millennials
o Among Household leaders purchasing organic, more than 52% are now Millennials
âą Social Media Effect
11. Economic Analysis of GM Food Labeling
âAn Economic Analysis of Nanofood Labelingâ By: Tran, Yiannaka, & Giannakas
of University of Nebraska-Lincoln
âą Consumers willing to pay more as a means of avoiding risk
o Participating consumers support argument that GM labeling results in risks & benefits
âą Adverse consumer response = slower adaptation
âą Cost Effect vs. Preference Effect Under Mandatory Labeling Regime
o Increased cost for consumers
o When Preference & Cost Effect work in same direction more consumers switch to substitute product
12. Economic Analysis ContinuedâŠ
Tran, V. T., Yiannaka, A., & Giannakas, K. (2014). An economic of nanofood labeling. American Agricultural Economics Association.
13. Consumer Impacts of GM Labeling
âą Cost Effect > Preference Effect:
o Price of GM Foods will increase
o Consumers will switch to substitute for GM food product
âą Preference Effect > Cost Effect:
o Consumers more averse to GM food products
o Price of GM Foods will increase
âą Certainty Effect > Stigma Effect
o Consumers who prefer GM food products
14. Producer Impacts
âą For GM Food Producers/Manufacturers
o Consumer preference decreases ï Leftward shift of demand curve
o Leading to Decreased Profit Margins
- Increased cost of production
- Decreased consumer demand
âą For Organic Food Producers/Manufacturers
o Increased demand & Profits
15. Conclusions: Challenges
âą Producers
o Changing Consumer Preferences
o Conforming to future GM Labeling Legislation
âą Consumers
o Unknown labeling methods
o Continued concerns with Transparency
âą Legislation/Regulatory
o International Trade
- Anti GM Food Legislation in importing countries
- Cultural Differences (Hofstedeâs Dimensions)
16. Conclusions: Opportunities
âą Producers
o Organic food markets
o Capitalizing on Millennial eating habits
âą Consumers
o USDA Certified Organic foods
o Additional information about food through Safe & Accurate Food
Labeling Act
âą Legislation/Regulatory
o Solving Food Insecurity
o Possible solution to domestic & international âFood Desertsâ
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