Wise words from Tyler Cowen and Jonathan Adler
Blog
Want to Know What's In Your Food?
The Huffington Post just published a piece by Brandon McFadden and me, discussing some of the results of our recent survey of Californians on how they intend to vote on Prop 37.
Our survey revealed most voters supported Prop 37 because they said they have the right to know what is in their food. Yet:
If consumers really want to know what's in their food, a bit of web searching would tell them. Yet, our survey revealed that Californians knew next to nothing about biotechnology in food. In fact, 43 percent didn't even know the subject-matter covered by Prop 37. Survey respondents thought about 47 percent of corn and soybean acres are planted with GE seed (as indicated, the reality is actually around 90 percent) and they thought 45 percent of wheat acres were planted with GE seed (the reality is close to zero percent). More than 69 percent didn't know whether any Coke products contained GE (they likely do), and more than 59 percent didn't know whether any Kellogg's products contain GE (they likely do). Maybe that's the point of mandatory GE labels -- to tell consumers things they don't already know. But, we're doing it now. Voluntarily. For free.
After fully disclosing which crops in the US are genetically modified, we argue that:
It seems many people confuse the "right to know" with the "right to buy." Many people want to avoid foods made with GE, and fortunately there are ways for them currently to do so. Simply look at the back of the package to see if the word corn, soy, sugar beet, canola, or papaya is in the ingredient list. Even without Prop 37, consumers already have access to non-GE foods, which are currently labeled if they choose to buy organic. Sure, organic or non-GE food is more expensive, but the reality is that organic or non-GE food is more expensive to produce. Requiring labels through Prop 37 is not going to change that fact.
Don't Let the Perfect be the Enemy of the Good
That's how I'd sum up Matt Ridley's excellent piece in the Wall Street Journal. He starts by arguing that:
Generally, technologies are judged on their net benefits, not on the claim that they are harmless: The good effects of, say, the automobile and aspirin outweigh their dangers. Today, arguably, adopting certain new technologies is harder not just because of a policy of precaution but because of a bias in much of the media against reporting the benefits.
He rightly argues that negative articles on topics like biotechnology and shale gas make catchier headlines and drown out all the positive information. Case in point?
A recent French study claimed that both pesticides and GM corn fed to cancer-susceptible strains of rats produced an increase in tumors. The study has come in for withering criticism from mainstream scientists for its opaque data, small samples, unsatisfactory experimental design and unconventional statistical analysis, yet it has still gained headlines world-wide. (In published responses, the authors have stood by their results.)
The French study contradicts a Japanese paper that used larger samples, longer trials and accepted experimental designs, yet received virtually no notice because it found no increase in cancer in rats fed on GM crops. This is a problem that’s bedeviled GM technology from the start: Studies that find harm are shouted from the media rooftops, those that do not are ignored.
He goes on to document the potential environmental benefits from GMOs.
While no one would argue we should ignore the potential dangers of new technologies (particularly biotechnologies), it would be equally crazy to ignore their potential benefits.
Myths about Monsanto Seed
Earlier today, I added a post about a lawsuit brought by Monsanto against a farmer who (presumably and unwittingly) planted seed with Monsanto's protected biotechnology. As I indicated, the key issue is whether farmers can legally replant the progeny of seed originally bought from Monsanto without paying a technology fee.
In reading various blogs and listening to the anti-Monsanto crowd, I hear a number of myths that I think are important to clear up:
- Since the early to mid 1900s, most corn farmers have annually repurchased hybrid seed from seed-sellers. This is because hybrid seeds are much more productive than the progeny. So corn farmers having to repurchase seed every year is nothing new and is not a consequence of biotechnology.
- The soybeans situation is different in that soybeans are open pollinated. Thus, before biotechnology soybean farmers could save back some of their crop and replant the progeny without suffering too much in yield loss (at least in the short run). In the long-run, however, varieties become susceptible to local diseases and pests and seed companies continually develop new varieties that put the old (replanted) varieties at a competitive disadvantage. So, soybean farmers faced incentives to eventually buy new seed from seed dealers (although it was probably not on an annual basis) even before biotechnology.
- My understanding is that when a farmer currently buys soybean from Monsanto, they sign a contract saying they will not to replant the seed. It is hard for me to see malfeasance when farmers willingly buy seed at prices they are willing to pay while also willingly foregoing the right to replant. In short, it appears (since more than 90% of the soybean crop is GM) the vast majority of farmers see more benefit in buying Monsanto seed and not replanting than in buying non-biotech (or other non-property-right-protected) seed that allow the option of replanting.
- The anti-biotech crowd is often up-in-arms over the so-called "terminator gene", which would prohibit the growth of progeny and, as a consequence, force farmers to repurchase seed. Although the "terminator gene" is theoretical possibility, no commercial seeds being sold contain the genes. Moreover, back in 1999, Monsanto pledged not to commercialize seeds with the "terminator genes."
Monsanto, Lawsuits, and Economics
It appears that a Monsanto lawsuit (Bowman v. Monsanto) will be making its way to the Supreme Court sometime this summer (HT: Tyler Cowen). At issue is a case brought by Monsanto against a farmer who (presumably and unwittingly) planted seed with Monsanto's protected biotechnology. The key issue appears to hinge on whether Monsanto owns the progeny (i.e., the "kids") of the original seed it sells, and whether farmers can replant the progeny of seed originally bought from Monsanto without paying a technology fee.
Much has been said about the potential impacts of the lawsuit. I don't know whether the suit has any merit. I'm not a lawyer. But I am an economist, and much of what has been said about the impacts if Monsanto loses are just plain wrong.
The Business Week story on the issue quotes a professor at Washington State University’s Center for Sustaining Agriculture and Natural Resources who says.
If it’s overturned, it will have cataclysmic repercussions for the business model in the seed biotech industry,” Benbrook said by telephone. “It would basically end the agricultural biotech industry as we know it, certainly for soybeans.
Hardly. As my colleague Bailey Norwood rightly pointed out to me after reading the story: What do you think will happen to the price of the first generation seed if farmers are able to freely replant the progeny?
As Steven Landsburg points out in his wonderful (and recently re-released) book The Arm Chair Economist the indifference principle must always be at work. The principle suggests that at current prices, (the marginal) farmers must be indifferent to buying Monsanto seed given that he cannot replant the progeny and must buy seed again next year. However, if the Supreme Court rules that Monsanto does NOT own the progeny, then the value of the seed to farmers rises since they can re-use the seed. The marginal farmer is no longer indifferent. For the indifference principle to hold (i.e., for equilibrium to be restored), the price must rise. Monsanto will charge more for it's initial offerings if farmers can freely replant.
As an analogy, consider the market for textbooks. Bailey and I wrote an undergrad textbook on Agricultural Marketing and Price Analysis a few years ago (in which we somewhat ironically discuss the indifference principle). Buying a new copy of the book is pricey (Amazon.com has the current price of a new copy at $97.41). What do you think would happen to the price of the initial offering of the textbook (i.e., the price of a new copy) if Bailey and I (and the publishers who actually sets the price) could receive royalties when the used textbook is resold in bookstores after the semester? The initial price for a new book would almost certainly fall.
The Monsanto case is simply this example working in reverse.
