OREGON STATE UNIVERSITY

OSU economist estimates cost of GM food labels

10/23/2002

CORVALLIS - An economics professor at Oregon State University reports that requiring labels for genetically modified foods could cost an average Oregonian less than a dollar a year, or as much as $10, depending on how requirements are defined and applied.

Oregonians will decide Nov. 5 whether to approve Measure 27, which would require labeling of genetically modified (GM) foods and ingredients. If voters pass the measure, Oregon would become the first state in the nation to require such labeling.

Jaeger, an economist and Extension agriculture and resource policy specialist for OSU's Department of Agricultural and Resource Economics, has produced a research paper titled "Economic Issues and Oregon's Ballot Measure 27: Labeling of Genetically Modified Foods." It estimates costs associated with labeling GM foods.

"(The paper) is based on economic studies of GM labeling programs in Great Britain, Australia, Canada and New Zealand," Jaeger said. "It examines these cost estimates and considers differences between these programs and the proposed Oregon program."

Measure 27 is similar to GM labeling options being considered in the United Kingdom, New Zealand and Australia, where the estimated cost of GM labeling is $3 - $10 a year for each person. Based on these costs, the OSU study estimates the annual government cost of the Oregon ballot measure would amount to between $100,000 and $1.25 million.

Jaeger's paper is an analysis of five alternative options for GM labeling that range in cost and complexity. These cost estimates range from 23 cents a year for each consumer for labeling only those products made directly from genetically modified foods, to $3.89 for labeling of products in which genetically modified substances were used during production or processing.

Measure 27's costs would be at the high end of the range because of how extensively genetically modified products are defined in the measure, Jaeger said. For example, the more expensive estimate includes the labeling of meat, eggs, and dairy products produced from animals fed genetically modified feed, as does Measure 27.

Some U.S. food producers and exporters already separate genetically modified foods from the rest to comply with GM labeling requirements in effect in other nations.

Twenty-two nations, including Great Britain, France, Australia, Japan, South Korea, and Mexico - and the European Union - have passed regulations that require GM food labeling. Because of this, Jaeger said, extra costs due directly to GM labeling requirements in Oregon may be reduced.

Corn, soybeans, canola and cotton account for most of the genetically manufactured crops grown in the United States. Few genetically modified crops are grown in Oregon, which would reduce the cost to farmers of complying with Measure 27 if it passes, Jaeger said.

Less than 1 percent of farm sales in Oregon come from growing genetically modified corn or soybeans. Oregon farmers grow virtually no canola or cotton.

Jaeger's analysis also addressed key questions about Measure 27, such as what effect it might have on food producers, and how it might affect the competitiveness of locally made products, product availability, transportation costs, and trade status.

Another consequence of GM labeling could be that Oregon products might be at a competitive disadvantage when sold in other states, Jaeger said. Consumers who see the words "genetically modified" or "genetically engineered" on a label might opt for an identical product that does not have the label, and this could raise the costs of Measure 27.

The entire text of Jaeger's study can be found at http://eesc.oregonstate.edu. Click on "publications and videos," then select "community development and government" to access the document.

Many foods now on grocer's shelves contain GM ingredients, including corn chips, corn taco shells; soft drinks containing high fructose corn syrup, soymilk, and canola oil.

Genetic modification, also known as genetic engineering or genetic alteration, all are terms that refer to the practice of transferring a genetic trait from one species into another. The resulting modified species has characteristics that would not have occurred naturally, or would have required years of traditional breeding methods, Jaeger said. Genetic modification in agriculture has been controversial since it came to light in the late 1990s.

At the heart of the complex and contentious debate, proponents of genetic modification in agriculture contend that it is a safe, valuable tool for efficiently producing more food, even in poor soils and dry conditions, Jaeger said. They point out that some genetically modified crops require fewer pesticides, an environmental bonus.

Those critical of applying genetic modification to agriculture contend that its safety to health and the environment is unproven, and its developers too quickly and too quietly applied the new technology to crop production in the mid-1990s, without much regard to public concerns about the potential risks of GM technology.

Supporters of labeling contend that consumers have a right to know what is in their food to make informed choices, Jaeger said.