Biotech labeling pushes public perception. Private firms take advantage.

Labeling of biotech foods has been a contentious issue in the United States and especially among U.S. trading partners. Proponents of mandatory biotech food labeling argue that consumers have a right to know how their food has been produced. Opponents argue that such labeling will confuse and, in many cases, unnecessarily alarm consumers. In the United States when biotechnology introduces a known allergen or substantially changes a food’s nutritional content or composition, federal regulations require that the label indicate this change. So far, no biotech foods on the market have required labeling.

In 2001, USDA’s Economic Research Service (ERS) and university researchers held experimental auctions to gauge consumers’ willingness to pay for food items with and without biotech labels. In the absence of sales data, experimental auctions more closely simulate purchasing behavior and better gauge consumer preferences than surveys of consumer attitudes. Auction participants could bid on and purchase three different food products (potatoes, vegetable oil and corn tortilla chips) with and without a label indicating that the food contained biotech ingredients. None of the foods had biotech-enhanced attributes or traits that could be detected without sophisticated testing technologies, if at all.

Before the bidding, each participant received one of six information packets containing statements about biotechnology gathered from a variety of sources. Information played a powerful role in shaping how the participants responded to biotech foods. They reacted not just to the information itself, but also to whether the information came from biotech firms, an environmental advocacy group or independent third-party sources.

Participants who received only pro-biotech information actually put a slight average premium of 2 percent on the biotech-labeled foods relative to foods without biotech labels for two of the three products. Participants who received only anti-biotech information discounted the biotech-labeled foods by an average of 36 percent. Those who received both pro- and anti-biotech information discounted the biotech-labeled foods by an average of 23 percent. Interestingly, participants placed a greater weight on negative information than on positive information, a result consistent with other studies.

A case of economic self interest
A separate study at the University of Missouri found that food companies battling for a competitive advantage may have influenced consumer biotechnology acceptance even more than consumers themselves.

“Since the first voluntary bans on genetically modified (GM) food occurred in Europe in 1998, European retailers and manufacturers have contended that they’ve simply responded to consumer concerns,” said Nick Kalaitzandonakes, professor and director of MU’s Economics and Management of Agrobiotechnology Center (EMAC). “But a closer look reveals that the actions of some key players in the global food industry appear to be motivated more by economic self-interest and less by consumer interests.”

In an article published this spring in the journal, Nature Biotechnology, Kalaitzandonakes and Jos Bijman, a senior researcher at Wageningen University in the Netherlands, argued that these voluntary bans—first on GM food ingredients, then on products from animals reared on GM feed—were initiated by a few key food retailers attempting to strategically position their private label brands in the marketplace.

“These retailers repeatedly preempted and exceeded regulatory requirements, inviting public attention to their actions and establishing themselves as gatekeepers for food safety,” Kalaitzandonakes said. “In order to remain competitive, other supermarket chains had to follow suit.”

After bans by food retailers became more widespread, food manufacturers also announced GM bans, he said. “The risk of brand damage from side-by-side comparison with non-GM private label products supplied a strong incentive for manufacturers to adopt bans.”

In a multi-country comparison, Kalaitzandonakes and Bijman found the intensity of GM bans correlated more closely with private label market penetration than with consumer attitudes in those markets.

“Despite similar consumer attitudes toward GM food in the United Kingdom, Switzerland, Belgium, France, Germany, Italy and Japan, the food retailers in these countries have responded very differently,” he said. “Where private label brands have enjoyed high market penetration, such as the UK and Switzerland, GM bans have been pervasive. Where private labels have a more limited market share, such as Japan, GM bans have been absent.”

Whether companies are serving as gatekeepers for food safety or strategically exploiting market conditions, Kalaitzandonakes said the industry’s actions may have influenced consumer attitudes.

“Our research indicates efforts to improve biotech acceptance through ‘consumer education’ will have little impact,” he said. “This is both an issue for biotech products currently on the market and for future innovations in biotech. The global food industry and its interests must be accounted for in the innovation process.”

Compiled from reports by Abebayehu Tegene at USDA’s Economic Research Service and University of Missouri information specialist Jason Jenkins.