Economic Tidbits

GMO Labeling & Markets

The labeling of foods containing GMO ingredients is one of the more controversial policy issues agriculture confronted in recent years. Several states either passed mandatory label requirements or were considering such requirements. The issue was resolved with the passage of federal legislation requiring labeling and providing for national standards for the label. Research on market reactions to mandatory labels has shown labels will have impacts in markets.

Jayson Lusk, head of the Department of Agricultural Economics at Purdue, discussed the findings of a study by Colin Carter and Aleks Schaefer on mandatory labels and market impacts in a recent blog. Prior to the passage of the federal legislation, Vermont passed legislation requiring mandatory labels beginning July 2016. The Vermont law, then, provides a laboratory of sorts for economists wanting to study potential market impacts of GMO labeling. Carter and Schaefer examined the prices of sugar from January 2008 through August 2017. Sugar in the U.S. comes from both sugar cane and sugar beets. Cane sugar is non-GMO, while beet sugar is produced almost entirely from GMO seed. There is no chemical difference in sugar derived from cane or beets.

In looking at the price history for both cane and beet sugar, the researchers noted something changed around about the same time the Vermont law was implemented. Until then, there was virtually no difference between the prices for cane sugar and beet sugar. However, around July 2016, the prices diverged and the price for beet sugar dropped relative to the price for cane sugar. Carter and Schaefer estimated that beet sugar averaged a 13 percent price discount to cane sugar relative to what prices would have been without the Vermont law.

The final rule for the federal labeling law is expected to be released before the end of the year. The effective date is still unclear. When mandatory labeling does get implemented, the Carter and Schaefer research shows markets will react. Market Impacts of GMO Labeling, Jayson Lusk Blog, September 24, 2018.

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