Want non-GMO? How much more will it cost?

The journal Food Policy just released a new paper I co-authored with Nicholas Kalaitzandonakes and Alexandre Magnier entitled, "The price of non-genetically modified (non-GM) food." 

As retailers consider reformulating products or how they'll respond to new mandatory labeling laws, it is important to consider how these decisions may affect the prices consumers pay for foods that avoid GMOs.  The matter is increasingly of note because sales of non-GMO products have significantly risen over time (below is a graph from the paper showing the trend in sales of breakfast cereal making non-GMO claims).


In the paper, we used a U.S. national sample of grocery store scanner data from the years 2009- 2016 to investigate the prices stores charged for 144 different salad and cooking oil products (or Universal Product Codes, UPCs), 1,288 tortilla chip UPCs, 2,227 breakfast cereal UPCs, and 5,626 ice cream UPCs. We picked these product categories because they represent classes of products for which the potential impact of changes in the raw ingredients on the final retail price might be large (i.e., soybean or corn oil for which the supply is primarily GMO) to small (i.e., ice cream where the value share of GMO crops and their derivatives (e.g. corn syrup) is probably less than 5%).

Here's a short summary:

we use hedonic modeling to estimate the retail price premiums consumers paid during the 2009–2016 period for non-GM and organic foods in four product categories: breakfast cereal, tortilla chips, salad and cooking oil, and ice cream. There are almost 11,000 ready-to-eat foods in our sample, 1350 of which are labeled as non-GM or organic. We selected these four product categories for their differences in the value shares of GM ingredients and hence their potential differences in reformulation costs. We show that the estimated price premiums for non-GM and organic foods in these four product categories are in line with the expected added costs for supplying such products.

The key results are summarized in the table below:


We write:

The estimated price premiums paid by US consumers over the 2009–2016 period, 9.8% to 61.8% for non-GM products and 13.8% to 91% for organic products in the four categories examined here, are orders of magnitude higher than those projected by economic impact analyses of proposed mandatory GM labeling produced in recent years


Perhaps the most important conclusion to be drawn from our results is that non-GM foods are more costly than GM foods, and policies that encourage food companies to shift toward non-GM ingredients are likely to increase food costs. Our results therefore suggest that there is a pressing need for further research in order to clarify the added costs consumers may have to pay under mandatory disclosure of GM ingredients and how such added costs might be distributed.