Why There Should Be a Free Market in Food Labeling

Friday, January 31, 2014 by Dave Albin 
Voters in Washington State recently rejected a measure that would have required foods containing genetic engineering to be labeled. California voters did the same thing in 2012.

Genetically-modified foods are derived from genetically modified organisms (GMOs) that have been altered to contain a “new” protein or proteins. This is done by changing the code or sequence of DNA, the blueprint for making proteins. The plant (or animal, but nearly all GMOs used in production agriculture are plants) is then cultivated and produces the “new” protein (or proteins), which confers new characteristics on the plant. For example, some corn has been genetically altered to produce a protein that is toxic to insects.
The purpose of this article is not to discuss the suitability of these techniques to create food products, their effectiveness, safety, or how they came to be in the first place. The larger question I wish to address is whether or not GMO labeling should be mandated by governments.
Shortly before the GMO vote in Washington State, Michael Lipsky explained why GMO labeling requirements would not increase food prices. In the article he states:
For one thing, if labeling were required, particularly if (and when) the labeling requirement is adopted by other states, demand for non-GMO versions of corn, soybeans, and sugar beets — the basic GMO crops — would increase, production would expand, and prices for non-GMO ingredients would decline. The result would be a new price equilibrium surely less costly for food producers than the cost of current non-GMO ingredients.
He goes on to say the following: “For another, if foods with GMO ingredients indeed were cheaper to produce, there would be ongoing demand for the less expensive versions of food products, and some GMO foods would find a market niche at the lower price point.”
The analysis here is correct: producers and consumers interact, supply and demand leads to prices which reflect this information, and the market reaches some sort of equilibrium. But, all of this misses the point.
Food producers shouldn’t be required to give this information. Food companies should be able to put whatever they want on the labels of their products, and consumers will tell them if it is enough information by choosing to purchase their products, or by not purchasing them and going somewhere else. The government is simply not required in this process. And, legislation almost always creates more problems than it solves.
One problem lies in determining what exactly GMOs are. It’s not as straightforward as you might think. Could food companies simply put a boiler-plate label on each product (“May Contain GMOs,” for example) and satisfy the regulation? Who is responsible for enforcement and what is now not being dealt with as a result of this new policing requirement?
In many cases, when labels are used, it is not always clear what constitutes a GMO and what does not. The typical thinking is that a GMO is a plant that has had “foreign” genetic material inserted into its genome, and is made by one of several large agri-businesses. What this definition ignores is the natural occurrence of GMOs, including the transfer of toxins, without human intervention. On the other hand, if the goal is to label foods modified by human intervention, this would encompass virtually everything that we eat – plants and animals have been selectively bred for thousands of years by humans. This has encouraged the retention of certain genetic traits over others, and therefore, every food product could be considered a GMO.
Whenever labeling guidelines are mandated by the government, the first order of business for the manufacturer is to meet these legal requirements. This may or may not satisfy consumers. It seems that, had these labeling laws been passed in Washington or California, food manufacturers could simply put “GMO” or “may contain GMOs” or “to the best of our knowledge, this product is likely to contain GMOs” on the every label and satisfy the requirement. Examples given in the Washington state initiative seem to indicate that this generic language could be used. 
This would result in consumers actually having less information than they did before the labeling requirement went into effect. This effect was demonstrated when the FDA required nutrition information to be labeled on food products. By mandating what must be included on the label, food producers seek first to satisfy this requirement. While some products do contain additional information on the label, this is always included after all of the mandates have been met — even when consumers don’t care about the mandated information on a product they may be using for other reasons.
Enforcement is another problem with these labeling requirements. The Washington state initiative mentions the punishment portion of violating the law, but says nothing about who would take samples, conduct and pay for GMO testing, or what tests would be appropriate. If this task is forced on state agricultural officials, what other duties would now be neglected? Perhaps something more important than enforcing a GMO labeling law. Finish reading

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