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To Label or Not to Label?

To Label or Not to Label?
That's the question resource economist Mario Teisl's been asking about genetically engineered food

About the Photo: "It is well known that the flow of information between consumers and producers plays a critical role in the efficient operation of markets. Simply stated, labeling policies can make markets work better. Consumers are more informed about the exact attributes of products, and firms producing goods with desirable attributes are rewarded with sales." Mario Teisl

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In recent years, food labels have become a battleground for consumer groups, the food industry and government regulators.

Advocates promote mandatory labeling of all products that contain genetically modified ingredients (foods whose genetic makeup has been changed to offer agronomic or nutritional benefits). In opposition, companies and industry associations argue that the cost and complexity of such labeling outweigh the benefits.

Both the Clinton and Bush administrations have gone on record as opposing mandatory labeling of GM foods. However, a bill introduced in the United States House of Representatives, first in 1999 and again in 2002, would require the labels on any foods containing genetically modified ingredients.

The issue has been debated by the Maine State Legislature. This fall, Oregon may be the first state to vote on a GM labeling law after Oregon Concerned Citizens for Safe Food got the issue on the November ballot.

Many of America's trading partners, especially the European Union and Japan, already require such labels, and recent polls indicate that a majority of U.S. consumers want GM foods labeled.

That's why Teisl, an associate professor in The University of Maine's Department of Resource Economics and Policy, is asking consumers their opinions on how GM labeling should be done. His survey is part of a nationwide labeling study, supported by a $180,000 grant from the U.S. Department of Agriculture (USDA).

If legislation mandates such labeling in the U.S., Teisl's analysis of consumer attitudes will provide a basis for developing standards for label content, size and appearance.

What's at stake is consumers' trust in the food they buy. The sticker shock also could translate into millions of dollars in labeling and food handling costs to industry, and a potential shift in purchasing habits.

"Knowledge of consumer attitudes helps to determine what and how information is presented on the label. To be helpful to consumers, label information must be simple to use and be seen as credible," says Teisl, whose research focuses on measuring the effects of health and environmental information on consumer markets, and on designing effective environmental information policies.

Teisl and his colleagues began their project in 2001 by meeting with six groups of people (a total of 56 adults) in Orono, Maine; Columbus, Ohio; and Phoenix, Ariz. This fall, the researchers will expand the project by mailing questionnaires to 7,000 people, including 1,000 Maine residents.

In his USDA research, Teisl is collaborating with UMaine faculty members Mike Vayda in the Department of Biochemistry, Microbiology and Molecular Biology, and Kelly O'Brien in Resource Economics and Policy, as well as Nancy Ross of Unity College, and Brian Roe of Ohio State University.

The University's Maine Agricultural and Forestry Experiment Station is publishing the results of the meetings in the three states.

From those meetings, it was found that some participants opposed any genetic modification of food ingredients, and others were surprised that such ingredients are already common in processed foods.

Participants were generally uncomfortable with the idea of genetic manipulation of food products, and they desired more information on labels and through educational efforts. They also noted that details on labels need to be clear and certified by either the federal government or a trusted third-party organization.

Many participants said that labels should not say that the food product "may contain genetically modified ingredients." That simple phrase, they noted, was too ambiguous.

They also discussed the "GMO Free" labels already appearing voluntarily on some products. The new labels are designed to indicate that the food does not contain GM ingredients. Most survey participants did not know what "GMO Free" means; others viewed it simply as a marketing tool. As a result, they have been simply ignoring the labels.

The debate surrounding GM food labeling centers on two issues, Teisl says. First, what are the benefits of labeling GM foods (and which consumers are benefiting)? Second, what are the costs of providing those benefits?

Benefits of labels can be measured by their ability to inform consumers about a product's positive and negative attributes. When such information is well understood and credible, consumers' purchases match their preferences.

However, it's been estimated that a labeling program could increase food prices by about 5 percent, Teisl says.

"In addition, some people believe that international support for GM food labeling is driven not by consumer protection concerns but by a desire to protect domestic farmers," says Teisl. "Given most GM foods are produced by U.S. farmers, mandatory labeling effectively provides a barrier to U.S. agricultural trade.

"The on-going struggle between proponents and opponents of GM labeling, both within countries and at the international level, makes the analysis of the benefits and costs of these programs particularly important."

In many ways, labeling programs and policies have helped to develop or improve the workings of a diverse set of markets, says Teisl, who also has studied labels for forest products and power supply promotions.

"Nutrition labeling of food is an obvious recent example, but examples abound: safety labeling of bicycle helmets, dolphin-safe labeling of tuna, safe-use labeling for household pesticides and cleaners, unit pricing of foods, fuel efficiency labeling of cars and trucks. U.S. markets would be quite different without the use of labeling."

by Nick Houtman
September-October, 2002

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