GMO Labeling And The China Scenario

(This post originally appeared on Biofortified on 4/4/12)
When asked, "Do you want foods that contain GMOs to be labeled?" most US consumers say, "Yes."  To those unfamiliar with the food system, this sounds like a simple request.  The reality is that GMO labeling would be very complicated because it involves "negative identity preservation in low value, commodity channels." (I'll unpack that terminology below).  The best precedent for what that would mean is what has happened with certified Organic, grains and grain-based ingredients.  Over time, the Organic industry has shifted towards more and more off-shore sourcing of such foods - particularly from places like China.  Many of the same groups promoting GMO labeling have been also been concerned about the integrity of imported "Organic" foods.  The irony is that if the GMO labeling campaign is successful, it is very likely that the "Non-GMO" segment will follow the same"China Scenario*," and its associated risks.

Specialty Crops vs Commodity Crops

There is a broad spectrum of food and beverage crops ranging from very high-value, specialty items to low-value, bulk commodities.   Elite wine grapes are a high value crop that is "identity preserved."  Because climate and soil are so important for wine quality, the exact region, variety and even vineyard are carefully associated with the grapes after harvest, and great care is taken not to mix them with grapes of lesser or different value.  Field corn ("#2 dent corn”) is at the opposite end of the spectrum.  For most uses, corn is corn and it generally does not matter where it came from.  It is handled in huge quantities (like 110 car trains, giant barges…) and is "co-mingled" with corn from many sources.  If it moves into milling steps, the resulting "ingredients" also flow into more, low-margin, high-volume, and commingled streams.
Wine grapes are used in an extremely "high margin" business since the grapes are worth a great deal (~$1-3 per pound) and the resulting wine is worth far more.  Corn, even at current high prices, is only worth 10-12 cents per pound to the grower and only slightly more at each subsequent step in the food chain.  Keeping track of separate lots of grapes, handling them in small specific containers, and tracking the information costs money, but for the grapes it is more than worth it.  To keep track of individual lots of corn in the vast river that is the commodity corn market would also cost money - vastly too much money to be practical.  Corn is a "high volume, low value commodity," as are most of the other crops that are "GMO." (soybeans, cotton, canola).  For purely economic reasons, GMO crops will almost always be confined to high volume commodity crops because those are the only markets that involved enough acres to justify the investment in the generation and regulatory approval of a GMO crop.

The Organic Precedent

The rules for production of Organic crops include a requirement for "chain of custody," another term for "identity preservation."  That is one of several reasons why Organic is more costly.  In this case, the tracking is based solely on a paper trail and there is not any regular or even random testing.  That is unlikely to be a reason for suspicion in the US and Canada, but whether such a self-policing system is suitable for some other foreign countries is doubted by many (PRI, Grist,USDA, Seattle Times, Treehugger, Organic Consumers Union).  The cost of identity preservation has not been too limiting for high value Organic fruit and vegetable crops as they have increased to a few percent of the total.  For low value, commodity crops, Organic has made extremely limited inroads (Corn 0.25%, Soybeans 0.13%, Winter Wheat 0.51%, Spring Wheat 0.69%.  Also because these are crops that can be shipped long distances, the domestic Organic production has had difficulty competing with foreign (and sometimes suspect) sources.  That is the first example of the "China Scenario."

Would Labeling Create A Significant “Non-GMO Market?”

If mandatory GMO labeling were to be instituted, the only practical option would be to label any product that contains any ingredient from the major GMO crops as "may contain ingredients from crops modified by genetic engineering."  That would include the vast majority of "processed foods," but not almost any fruits or vegetables.  Even though these GMO containing foods have been on the market for 16 years without incident, and even though there has been abundant information about this in the press and on the web, a sudden wave of labeling might alarm some segment of the population and induce them to look for non-GMO alternatives.  That is almost surely the hope of some of the commercial interests that are promoting labeling.  Consumer alarm might establish a new, "Non-GMO" sub-market which goes beyond the current Organic market (The Organic community decided rejected genetically engineered crops long before they were ever commercialized).

Who Would End Up Fulfilling That Demand?

A new group of non-GMO customers might be willing to pay somewhat of a price premium, but probably less than that which is tolerated for Organic.  Foreign sources of grains and related ingredients would be very likely to enter the market, and that would make trying to supply non-GMO crops even less attractive to domestic grain growers.  Exactly how unattractive will depend on what is described by another, obscure, food industry term: “adventitious presence.”  There are some medium value commodities that are “identity preserved” in the normal system.  High protein, Hard Red Spring Wheat is segregated and identity preserved because it has a “positive attribute” that is valued by the baking industry (high dough strength).  If there is a little bit of other wheat mixed in because of carryover in bins or harvesting equipment (this is how adventitious presence happens), it is no problem because the 95-99% of desired wheat will still provide the desired properties.  In the case of a non-GMO grain, it is being bought for what itisn’t, and a decision will have to be made about what level of “adventitious presence” to tolerate.  The lower that threshold, the harder it will be for any American or Canadian farmer to sell into the non-GMO market.  A consumer market based on fear is likely to favor a “zero tolerance” which would make it extremely difficult to source these grains domestically.

Unintended Consequences

The more this market might grow based on off-shore sources, the more likely it would be that there will eventually be a major food scandal.  It might involve adulteration (e.g. as in themelamine milk disaster), unregistered pesticide residues, heavy metals, or most likely of all -mycotoxin contamination.

Mycotoxins – Not Just An Abstract Concern

Just because low value commodity markets don't track "identity" does not mean that they are unprotected from real threats.  Corn, for instance, can be contaminated in the field or in storage with certain fungi, which can make seriously nasty toxins.  The levels of these are closely regulated in the domestic food and feed industry with limits set by the FDA and enforced by the USDA.  Our industry does a great job overall of making sure that contaminated grain does not makes its way into the system in the first place.  Such testing and exclusion mechanisms arepractically non-existent in places like China.  In recent years the Chinese government has begun to do some mycotoxin testing and they find serious contamination with things like Aflatoxin on a frighteningly regular basis.  Thus, if the GMO labeling campaigners generate the non-GMO market they desire, they will be setting-up consumers for a very real health risk.   This exposure already exists in the imported segment of the Organic market, but even a moderately large non-GMO segment would magnify that risk.

It would be interesting to poll the average American after they were told about the risks associated with "the China scenario," and to see how that influences their support for a labeling law.


You are welcome to comment here and/or to email me at savage.sd@gmail.com.

*BTW: I'm not a "China Basher." I think that China does many things extremely well, but when it comes to certain food safety issues, the story gets to be complex.

non-GMO label image from decorat