Study: GMO labeling bears hefty $3.8B price tag
Feb. 23, 2016
by Jeff Gelski
The estimated cost of switching all products covered in the Vermont law to non-bioengineered status could reach as high as $81.9 billion annually, or $1,050 per U.S. family.
WASHINGTON – The one-time cost to American consumers associated with the Vermont GMO labeling law could be as high as $3.8 billion, or $32 per household, according to a study funded by the Washington-based Corn Refiners Association.
But other issues, such as segregating ingredients, reformulating foods and beverages to qualify as non-bioengineered, and testing for biotech content, could add to the cost of retail products as well. For example, the estimated cost of switching all products covered in the Vermont law to non-bioengineered status could reach as high as $81.9 billion annually, or $1,050 per US family.
The Vermont law, which goes into effect July 1, requires food manufacturers to label food and beverage products that contain bioengineered ingredients/GMOs if they are offered for sale in the state.
“This means that — in order to avoid the fines imposed by the new Vermont law — manufacturers must at a minimum label all their products (even those not intended for sale in Vermont) in accordance with the Vermont law,” the study said.
Vermont, a state with 0.2 percent of the nation’s population, is setting standards that effectively require change in the nation’s food supply, which will affect more than 300 million Americans, according to the study released Feb. 21 and produced by John Dunham & Associates, an economic consulting firm based in New York.
Given consumers’ lack of science-based information on the subject, they may demand companies remove bioengineered ingredients/GMOs from products, according to the study. It is possible 100 percent of products eventually would be reformulated to be non-bioengineered.
“This would lead to extreme disruptions in the nation’s food supply chain that could take many years to overcome,” the study said.
If only a small percentage of food manufacturers were able to switch to non-bioengineered ingredients, major costs still would be associated with the Vermont law.
“Companies would be forced to segregate GMO and non-GMO grains, for example, and document them as such, leading to higher wholesaling costs,” the study said. “Food manufacturers would be required to produce multiple versions of products, which would increase overall production costs as run-lengths would decrease. Also, a system with smaller volume sales of more product lines would lead to higher wholesaling costs as more trucks and equipment would be required to handle the smaller batches.”
The costs incurred by American food processors could lead to a 1.76 percent increase in average food prices nationwide in the first year and as much as 1.61 percent ongoing.
“These costs are incurred by consumers in every state and the District of Columbia and could be as high as $723 per household in the first year and $13,250 per household over the next 20 years, a cost which is highly dependent on the assumption that non-GMO ingredients will continue to be expensive substitutes for GMO-based products,” the study said.
The Center for Food Safety, a national non-profit public interest and environmental advocacy organization based in Washington, criticized the study funded by the Corn Refiners Association.
“Campbell’s Soup has announced it will label all of its GE products but at no added cost to the consumer,” said Andrew Kimbrell, executive director for the Center for Food Safety. “If a company like Campbell’s can take this step to label their food accurately, then there is no reason the rest of the industry can’t follow suit.”
The Center for Food Safety pointed to the Consumers Union concluding in September 2014 that the median cost of GMO labeling was $2.30 per person per year. The Consumers Union said it did not take into account the assumption that companies would reformulate their products to contain only organic ingredients.
How much GMO labeling would affect retail product pricing has varied in previous studies. For example, a study from Emory University School of Law in Atlanta found the average California household would see total annual food expenditures increase, at most, by a one-time cost of $1.27 to offset labeling expenses.
A 2013 white paper from the Washington State Academy of Sciences, Olympia, Washington, said the actual labeling costs are a fraction of the costs of compliance and certification and that the bulk of private costs arise in the segregation of products along the supply chain. The paper said labeling would provide consumers with additional information but higher food prices would make consumers, especially low-income consumers, worse off.
Find out more about the study funded by the Corn Refiners Association.