Boston, MA 05/14/2014 (wallstreetpr) – Packaged food makers are likely to face challenges as state law requires them to label their products that may produce based on genetic engineering. Vermont is the only state that requires labeling as the state Governor will sign the GMO labeling bill on May 8, which will be effective in July 2016 onwards. Though the state is small by population compared to California and Washington, but, the law may trigger other states and will continue to gain the momentum as the bill is pending in at least 13 states.
Genetically modified organisms (GMO) law
Genetically modified foods usually develop under the genetic engineering techniques. It may produce cost-effective, high quality nutritious products that will have some medical benefits; however, it needs pre-market safety assessment related to toxicity and allergic reactions.
GMO labeling law will bring knowledge on GM products among consumers. The law is not applicable on certain products such as meat, milk, restaurant fare and raw agricultural commodities. Vermont will impose $1,000 per day as penalty to the processors as well as grocers for the violation of the labeling law. It will help the state government to compensate legal expenses.
But, there is hardly any scientific evidence to prove that GM products are unhealthy. Also, half of the U.S. consumers concerned about the safety of GM products according to NPD Group’s research, but, they prefer to go with it due to their benefits. Moreover, only 11% of total populations prefer non-GMO products as per the Port Washington’s study. So, the labeling laws for such products may create a false perception against GM products.
In addition, the labeling law expects to annual food bill by $520 for a family of four as it will increase the manufacturing and retail costs for processors and grocers. Even, state-wise customization of labels will further increase the costs to consumers. So, the food industry prefers the regulation from the federal government if the law requires labeling.
Impact on industry
The food industry prefers consumer centric labeling on products for their ingredients that help to create awareness as well as maintaining the costs instead of misguiding the consumer through state driven GMO labeling policies. In addition, industry leaders like General Mills, Inc. (NYSE:GIS) and other makers also believe that GMO crops are safe and such bill will certainly misguide the consumers.
Since 2002, organic food sales grew at a CAGR of 11% and generated revenue of $32 billion in 2013, according Bloomberg Industries’ analyst. The industry growth will end if the law spread across the U.S., as companies stop selling their GM products.
General Mills, Inc. (NYSE:GIS) has already made its Cheerios cereal, a GMO free ingredient to target Europe market and continues focusing on initiatives to increase global sales.
