On the Segregation of Genetically Modified,Conventional and Organic Products in European Agriculture: A Multi‐market Equilibrium Analysis

Evaluating the possible benefits of the introduction of genetically modified (GM) crops must address the issue of consumer resistance as well as the complex regulation that has ensued. In the European Union (EU), this regulation envisions the co‐existence of GM food with conventional and quality‐enhanced products, mandates the labelling and traceability of GM products and allows only a stringent adventitious presence of GM content in other products. All these elements are brought together within a partial equilibrium model of the EU agricultural food sector. The model comprises conventional, GM and organic food. Demand is modelled in a novel fashion, whereby organic and conventional products are treated as horizontally differentiated but GM products are vertically differentiated (weakly inferior) relative to conventional ones. Supply accounts explicitly for the land constraint at the sector level and for the need for additional resources to produce organic food. Model calibration and simulation allow insights into the qualitative and quantitative effects of the large‐scale introduction of GM products in the EU market. We find that the introduction of GM food reduces overall EU welfare, mostly because of the associated need for costly segregation of non‐GM products, but the producers of quality‐enhanced products actually benefit.     

Consumer Benefits of Labels and Bans on GM Foods—Choice Experiments with Swedish Consumers

The European Union has been relatively cautious about using biotechnology in food production. A label regime combined with the right of individual member states to ban introduction of new genetically modified (GM) strains means that GM food products in effect are banned in many countries. We show how it is possible to empirically test whether a ban can be motivated by reference to potential negative externalities. This is followed up by results from a choice experiment. We cannot reject the hypothesis of equal WTP for a ban and a labeling scheme.     

Market and Welfare Effects of Second-Generation, Consumer-Oriented GM Products

We examine the economic effects of the introduction of consumer-oriented genetically modified (GM) products into the food system by developing a model of heterogeneous consumers and producers that allows for vertical and horizontal differentiation between the products available to consumers. The model facilitates the estimation of consumer and producer surpluses in the product/utility and product/net returns spaces. Results show that the introduction of consumer-oriented GM products can change the relationship between GM and conventional and organic products from one of vertical to one of horizontal product differentiation and can enhance both economic welfare and the market acceptance and growth of agricultural biotechnology.     

A latent class approach to investigating demand for genetically modified banana in Uganda

This study explores consumer acceptance and valuation of a genetically modified (GM) staple food crop in a developing country prior to its commercialization. We focus on the hypothetical introduction of a disease‐resistant GM banana variety in Uganda, where bananas are among the most important staple crops. A choice experiment is used to investigate consumer preferences for various attributes related to the banana (such as bunch size, technology, producer benefit, and price) and examine their opinions on GM foodstuff. Choice data come from 421 banana‐consuming households randomly selected from three regions of Uganda. A latent class model is used to investigate the heterogeneity in consumers’ preferences for selected attributes related to the banana and to profile consumers who are more or less likely to accept GM bananas. Our results reveal that there is significant heterogeneity in consumer preferences across our sample. GM bananas are valued the most by poorer households located in the rural areas of the Eastern region. These food‐insecure households would experience the highest benefits (i.e., welfare gains) from the commercial release of GM bananas. In contrast, urban consumers are less accepting of GM bananas, and they would experience significant welfare losses if GM banana is released. According to our welfare estimates, both the total welfare benefits acquired by the gainers and the total welfare losses borne by the losers of this technology are significant and large. These results suggest the need for further investigation of the overall welfare effects of the introduction of GM bananas on the Ugandan society as a whole.     

GM crop technology and trade restraints: economic implications for Australia and New Zealand*

How much might the potential economic benefit from enhanced farm productivity associated with crop biotechnology adoption by Australia and New Zealand (ANZ) be offset by a loss of market access abroad for crops that may contain genetically modified (GM) organisms? This paper uses the Global Trade Analysis Project (GTAP) model to estimate effects of other countries' GM policies without and with ANZ farmers adopting GM varieties of various grains and oilseeds. The gross economic benefits to ANZ from adopting GM crops under a variety of scenarios could be positive even if the strict controls on imports from GM‐adopting countries by the European Union are maintained, but not if North‐East Asia also applied such trade restaints. From those gross economic effects would need to be subtracted society's evaluation of any new food safety concerns and negative environmental externalities (net of any new environmental and occupational health benefits), as well as any extra costs of segregation, identity preservation and consumer search.     

Economic Effects of the Consumer‐oriented Genetically Modified Products in Markets with a Labelling Regime

This paper builds on the literature on the economic effects of the second‐generation, consumer‐oriented genetically modified products (GMPs). It analyses the market and welfare impacts of the introduction of these new products in markets, like the EU, that mandate the segregation and labelling of the first‐generation, producer‐oriented GMPs. Developing an empirically relevant model of heterogeneous consumers and producers, the study determines the effects of the consumer‐oriented GMPs on the markets of conventional, GM and organic products, and the welfare of consumers and agricultural producers. Analytical results indicate that the market effects of the new GMPs are case specific and depend on: (i) the consumer valuation of the quality‐enhancing attribute of the new GMP; (ii) the level of consumer aversion to GMOs; (iii) the strength of consumer preference for organic products; and (iv) the production costs and marketing margins in the different supply channels. The policy on the labelling of the first‐generation GMPs does not affect the impacts of the second‐generation GMPs on the quantities and market shares of the different products. However, it does affect their price effects and welfare implications. The introduction of consumer‐oriented GMPs under a mandatory labelling regime can result in losses for some GM consumers and all producers of the conventional product.     

Balancing productivity and trade objectives in a competing environment: should India commercialize GM rice with or without China?

India is considering approving genetically modified (GM) rice, but it fears losing rice exports to sensitive countries with import regulations on GM food, and may wait for China to lead the way. Using a multiregion, computable general equilibrium (CGE) model, we simulate the economic effects of introducing GM rice in India with or without China in the presence of labeling and import approval regulations of GM food in GM sensitive importing countries. We find that the welfare gains with GM rice in India would largely exceed any potential export loss, and that the segregation of non-GM rice could help reduce these minor losses. We also find no significant first mover advantage for India or China on GM rice. The opportunity cost of segregation of non-GM rice is much larger for sensitive importers than for India, which suggests that these importers would have the incentive to pay for the cost of segregation.     

Consumer willingness to pay for genetically modified food in Kenya

Genetically modified (GM) crops are popular in many regions of the world, but their deployment in Africa is hindered by safety concerns and regulatory issues, although the continent is in dire need of boosting its food production. Although consumers' acceptance of GM food has been analyzed in many continents, no such studies have been conducted in Africa. Therefore, a survey of 604 consumers was conducted in Nairobi, Kenya, in 2003, to gauge consumers' awareness of GM crops, their willingness to pay (WTP) for GM food, and the factors that influence their WTP. Consumers' knowledge of GM crops was limited and only 38% of the 604 respondents were aware of GM crops. People in higher education and income groups were more aware than others. Regardless, people were generally appreciative of the technology, and a large majority (68%) would be willing to buy GM maize meal at the same price as their favorite brand. Consumers were, however, concerned about possible side effects, especially on the environment and biodiversity. WTP was estimated using a double‐bounded dichotomous choice model, and the mean WTP was found to be 13.8% higher than the average price of non‐GM maize meal. Perceptions of health risk, and ethical and equity concerns had a negative influence on the likelihood of purchasing GM maize meal, whereas trust in government to ensure food quality had a positive influence on WTP. People with at least some secondary education and those in the high‐income category were more likely to purchase GM maize meal at the same price. The study concludes that, because awareness is still low, appropriate communications are needed to involve the consumer in the debate. Consumers' acceptance in this study was high, but the research needs to be expanded to rural areas, where most consumers live, and other survey methods need to be explored.     

Genetically Modified Crops: Their Market and Welfare Impacts

A framework is developed for examining price and welfare effects of the introduction of genetically modified (GM) products. In the short run, non-GM grain generally becomes another identity-preserved product. However, more profound market effects are observed under some reasonable parameterizations. When calibrated to reflect the U.S. corn market, introducing GM technology increases aggregate welfare over a wide range of scenarios, unless the corresponding production cost savings are small and consumers are seriously concerned about GM products. The possibility that GM technology may reduce aggregate welfare is interesting because the model assumes rational agents and does not include regulatory constraints.     

Global Capitalism and the Nation State in the Struggles over GM Crops in Brazil

The introduction of biotechnology is part of a global process of structural change in agriculture characterized by an increased integration of world agriculture with high corporate control. However, as the legal competence to allow the planting and trade of genetically modified (GM) crops commonly lies at the level of the nation state, this remains strategic in the politics of GM crops, both for actors promoting the technology and for social movements struggling against it. This paper illustrates this argument with an analysis of the struggles over GM crops in Brazil. It shows how the implementation of a food regime based on biotechnology, corporate control and neoliberal globalism depended on the state and was a contested process.     

The impact of transport-and transaction-cost reductions on food markets in developing countries: evidence for tempered expectations for Burkina Faso

Reductions in transport and transaction costs are expected to have a major effect on the functioning of food markets in developing countries. For Burkina Faso, this is a relevant issue as it may have important consequences for the food markets in urban and rural deficit areas. A partial equilibrium model is presented to analyze the short-term effects of reduced costs on price formation, inter-regional cereal trade, and farmers' and traders' storage strategies. Our results show that the high expectations with regard to the direct effects of cost reductions on food prices and food availability require some nuance. The effects of a reduction of transport costs will be small. Moreover, also the unintended negative consequences on the competitive position of farmers and traders in other regions that do not profit from road construction should be taken into account. Finally, it is concluded that only if transport and transaction costs are reduced simultaneously, will both the consumers and farmers benefit significantly.     

Consumer Attitudes Towards GM Food

Abstract

To communicate effectively with consumers about genetically modified (GM) food, gaining insight in the formation of consumer attitude regarding GM food is essential. Therefore, the current paper first reviews relevant literature describing how consumer attitudes towards GM food are formed. Next, Structural Equation Modelling (SEM) is applied to own quantitative data to model the formation of consumer attitude towards GM food. Previous analysis of these quantitative data led to the identification and characterisation of four consumer segments (Halfhearted, Green Opponents, Balancers and Enthusiasts) based on beliefs and attitudes towards GM food. Based on the SEM results, recommendations are formulated for each of the four identified consumer segments.     

Assessing the Implementation Effects of the Biosafety Protocol's Proposed Stringent Information Requirements for Genetically Modified Commodities in Countries of the Asia Pacific Economic Cooperation

We analyze the potential effects of a generalized implementation of the Cartagena Protocol on Biosafety's proposed stringent information requirements on countries, members of the Asia Pacific Economic Cooperation (APEC). This rule would request all traded shipments containing living modified organisms intended for food, feed, or processing to carry a label with the list of precise genetically modified (GM) events in the shipments. We find that the benefits of such requirements are largely debatable and that this regulation would add significant implementation costs for importers of GM crops, for Protocol members adopting new GM crops, and for countries ratifying the Protocol.     

Optimal supplier testing and tolerance strategies for genetically modified (GM) wheat

A stochastic optimization model was developed to determine optimal testing strategies, costs, and risks for dual marketing of genetically modified (GM) and non‐GM wheat in an export supply chain. The optimal testing strategy is derived that minimizes disutility of additional system costs due to testing and quality loss. Cost components were estimated including those related to testing, quality loss, and a risk premium to induce shippers to undertake dual marketing as opposed to handling only non‐GM crops. Uncertainties were incorporated for adventitious presence and commingling, variety declaration, and test accuracy. Sensitivities were performed for effects of variety risks and declaration, penalty differentials, buyer tolerances, risk aversion, and GM adoption. Results indicate testing and segregation can be performed at a relatively low cost and risk to buyers.     

Consumers’ Response to Genetically Modified Ingredients in Processed Food in an Emerging Economy

Genetically modified (GM) foods are available in many countries including post–Soviet Union countries. However, empirical evidence on consumer acceptance for this region is scarce. In this study, we investigate consumers’ willingness to purchase a processed food containing GM ingredients. For this purpose, a consumer survey was conducted in 2015 in Tajikistan. In many aspects, our results confirm previous empirical findings showing that women are more skeptical toward GM food and a higher level of respondents’ education and the presence of minors in households are negatively correlated with their willingness to purchase a processed food containing GM ingredients. Moreover, a higher risk perception of GM food is negatively associated with the probability to purchase and consume such foods. However, our results indicate that risk perceptions of GM food seem to be relatively low in comparison to other studies with 41.5% of Tajik respondents connecting no risks with GM food. This result is surprising given the existing knowledge about post–Soviet Union consumers who are usually assumed to reject GM food due to their strong focus on naturalness.     

Economics of household food waste

Food waste has drawn increasing public attention, and the high levels of estimated waste are largely considered to be a failure of our current food system. Recently, economists have begun to weigh in, showing food waste can emerge as the result of a complex equilibrium affected by consumers’ preferences for convenience; expectations about future food prices and availability; food safety concerns; producers’ costs of holding inventory, transportation, and storage; government regulation; and technology. If food waste is a form of inefficiency, there are either strong economic motivations to reduce waste, or unmeasured costs or preferences affecting waste decisions. If consumers have behavioral biases, suffer from information asymmetries, or do not pay the full cost of their waste, there may be a role for government intervention to reduce waste, but most empirical models in the literature have not articulated or quantified the extent of the deadweight loss from the market failures in relation to food waste. In some cases, waste reduction efforts could harm producers if overall demand for food is reduced or harm consumers if overconsumption is encouraged, quality or safety degrades, or supply disruptions occur. Technological innovations, which lower the cost of storage or extend shelf life have the potential to improve both consumer and producer welfare.     

Costs and Risks of Testing and Segregating Genetically Modified Wheat

Development of genetically modified (GM) crops is challenging the functions of the grain marketing system. A stochastic optimization model was developed in this study to determine optimal testing strategies. The model chooses the optimal testing strategy that maximizes utility (minimizes disutility) of additional system costs due to testing and rejection, and allows the estimation of the risk premium required for sellers to undertake the dual marketing of GM and non-GM segregations over a non-GM system. Costs are estimated for a vertically integrated grain export chain including testing, rejection, and a risk premium. The model includes elements of costs and risks of adventitious commingling at all stages of the marketing chain, variety declaration, grower truth-telling, and accuracy of testing technologies. Sensitivities were evaluated for the effects of GM adoption, risk parameters, variety declaration, and tolerance levels.     

Protecting Biotechnology IPRs in Developing Countries: Simple Analytics of a Levy Solution

High transaction costs and an absence of institutional infrastructure in developing countries prevent comprehensive enforcement of intellectual property rights and generate obstacles to the adoption of genetically modified (GM) crop technology. Governments of developing countries that are members of the World Trade Organization are faced with two options when licensing GM crop technology: (1) attempt to regulate GM crops to the standards of the Agreement on Trade‐Related Aspects of Intellectual Property (TRIPS) or (2) allow a black market in GM seeds and risk trade retaliation from the GM innovator's host country through a TRIPS trade complaint. This paper develops a conceptual model that frames the adopting country's range of licensing options, including a new levy system, and derives welfare measures for each option. The model illustrates how a levy on GM technology can be a welfare‐increasing policy for developing countries, and the operation of a levy is discussed. The conceptual model is applied to Brazil's soybean market and quantitative economic surplus measures are estimated within a calibrated welfare model for a range of licensing scenarios. The model's results suggest that a levy may interfere with the long‐term prospects for innovators to collect monopoly rents in adopting countries.     

Heterogeneous Consumer Preferences for Nanotechnology and Genetic‐modification Technology in Food Products

This study investigates heterogeneous consumer preferences for nanofood and genetically‐modified (GM) food and the associated benefits using the results of choice experiments with 1,117 US consumers. We employ a latent class logit model to capture the heterogeneity in consumer preferences by identifying consumer segments. Our results show that nano‐food evokes fewer negative reactions compared with GM food. We identify four consumer groups: ‘Price Oriented/Technology Adopters’, ‘Technology Averse’, ‘Benefit Oriented’, and ‘New Technology Rejecters’. Each consumer group has a distinctive demographic background, which generates deeper insights into the diversified public acceptance of nano‐food and GM food. Our results have policy implications for the adoption of new food technologies.     

Commercial release of first-generation genetically modified food products in New Zealand: using a partial equilibrium trade model to assess the impact on producer returns in New Zealand

In the present paper, the impact of genetically modified (GM) food production on producers, consumers and trade in New Zealand is simulated under various scenarios using the Lincoln Trade and Environment Model (LTEM). The LTEM simulates, against various assumptions of proportions of GM/GM-free production, the impact of various scenarios relating to preference for or against GM production. The results from this preliminary analysis show that the greatest positive impact on New Zealand income is from following a GM-free strategy, where it is assumed such markets as the European Union and Japan have a large switch in preference away from GM food, followed by the scenario when there is a 20% preference for GM-free.