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GMO labeling goes federal

From the Huffington Post:

On Wednesday, Sen. Barbara Boxer (D-Calif.) and Rep. Peter DeFazio (D-Ore.) introduced bills to the Senate and House of Representatives that would require food manufacturers to clearly label any product containing genetically engineered ingredients -- or risk having that product classified "misbranded" by the FDA.
Boxer and DeFazio have both previously sponsored bills that would have mandated GMO labeling -- Boxer in 2000 and DeFazio on numerous occasions in concert with former Rep. Dennis Kucinich (D-Ohio). But the new "Genetically Engineered Food Right-To-Know Act" is the first genetically modified organism (GMO) labeling bill to be introduced with both bicameral and bipartisan support. Its nine co-sponsors in the Senate include Alaska Republican Sen. Lisa Murkowski, while Rep. Don Young, also a Republican from Alaska, is among its 22 cosponsors in the House.

​I've written on this topic a good deal in the past (see here or Wall Street Journal, 
Forbes.com, Foxnews.com, and the Huffington Post).  

I'm sure I'll have more to say if this heats up.​

Monsanto Protection Act

There seems to be quite a fervor on the "foodie" web sites about ​a provision included in the continuing resolution bill that was recently signed by the President.  It has been dubbed the "Monsanto Protection Act."  For just a couple examples - see here or here - or Food Democracy Now, which seems to be among the most upset.

I wanted to see what the provision actually said, so I looked it up.  If I'm not mistaken, here (or here) is the text of the provision (see section 735)​:

Sec. 735. In the event that a determination of non-regulated status made pursuant to section 411 of the Plant Protection Act is or has been invalidated or vacated, the Secretary of Agriculture shall, notwithstanding any other provision of law, upon request by a farmer, grower, farm operator, or producer, immediately grant temporary permit(s) or temporary deregulation in part, subject to necessary and appropriate conditions consistent with section 411(a) or 412(c) of the Plant Protection Act, which interim conditions shall authorize the movement, introduction, continued cultivation, commercialization and other specifically enumerated activities and requirements, including measures designed to mitigate or minimize potential adverse environmental effects, if any, relevant to the Secretary’s evaluation of the petition for non-regulated status, while ensuring that growers or other users are able to move, plant, cultivate, introduce into commerce and carry out other authorized activities in a timely manner: Provided, That all such conditions shall be applicable only for the interim period necessary for the Secretary to complete any required analyses or consultations related to the petition for non-regulated status: Provided further, That nothing in this section shall be construed as limiting the Secretary’s authority under section 411, 412 and 414 of the Plant Protection Act.
​

I'm going to have to go to law school to figure out exactly what that means.  Here is an interpretation, according to one source, by those against biotechnology:​

According to Dave Murphy, Founder and Executive Director of FoodDemocracyNow.com, the twisted language of Section 735, “authorizes the Secretary to basically allow plantings of new GMO at anytime when a court case is taking place.” 

Perhaps, although it does seem that the Secretary is required to "complete any required analysis or consultations related to the petition for non-regulated status."  Some in the ag press seem to indicate that the provision is designed to protect farmers because it:

requires that USDA allow farmers to continue growing biotech crops that USDA deregulated, but a judge later invalidated.

Honestly, I don't understand the language of the provision (or the consequences of it) well enough to offer any intelligible thoughts.  ​

I did think what Darren Hudson, an agricultural economics professor at Texas Tech University and anything but an anti-biotech crusader, had to say about the issue was interesting.  

Do I think bio-tech firms are angelic do-gooders?  No.  Do I believe they are purposely misleading consumers about health risks?  I have seen no evidence that they are (not that there are no risks; I have just seen no compelling evidence that those risks outweigh any benefits).  But, the problem is that by preemptively exempting Monsanto from any future litigation, you have effectively given them a blank pass, which could lead them to act more recklessly than they otherwise would.  Will they?  I don't know.  But, as an economist, all I can do is look at the incentives and in this case, I am not sure the benefits to society outweigh the potential costs.  This, in my opinion, was simply bad policy.

​Addendum:

I just ran across this very sensible article by David Bier which puts a lot of the paranoia over the provision in perspective.  Here is one small bit:​

The so-called “Monsanto Protection Act” actually does nothing to protect Monsanto. Rather, it protects the farmers that bought Monsanto seeds and planted them under the belief that it was legal to do so by granting them temporary permits for the existing crops in the ground, which have already been subjected to extensive USDA scrutiny. It does not allow them to keep planting even if there are proven health risks or to keep planting at all in fact. In other words, it has nothing to do with “consumer health concerns” or “stripping federal courts of the authority to halt the planting or sale of GMO seed crop” as the RT story claims. In fact, the sale of GE seeds would still be prohibited after a court finding.
The Monsanto Protection Act has nothing to do with consumer safety, limited liability, or as this ridiculous Salon.com article puts it, “protecting the biotech giant from litigation.” If GMOs actually injure your health, you are still entitled to sue. This effort is minor regulatory reform that was long overdue.

​

Whole Foods Will Require GMO Labels

​According to a number of sources (such as this one), Whole Foods will, beginning in 2018, require labels on foods in their stores that contain GMOs.  

I wrote several several editorials arguing against the mandatory labeling initiative (Prop 37) in California in places like the Wall Street Journal, Forbes.com, Foxnews.com, and the Huffington Post.  As such, you might expect me to to come out against Whole Foods new policy.  You'd be wrong (well, at least not entirely right).     ​

What's the difference between the Whole Foods policy and Prop 37?  Whole Foods is a private company.  They can shelve whatever products they want and require their suppliers to meet whatever specifications they set.  You and I don't have to shop there.  Moreover, Frito-Lay doesn't have to supply Whole Foods if they so choose.  By contrast, Prop 37 was a mandate that required adherence from everyone no matter where you shopped, who you supplied, or whether it created 1 cent or $1 billion in extra cost.  

I personally couldn't give a rip whether the foods I eat contain GMOs.  I also think it is a tad misleading to add claims or labels that imply safety risks when there are virtually none.  But, if we are going live in a free society, I suppose GoDaddy.com using Danica Patrick to sell domain names is little different than Whole Foods pursing their own marketing strategy using somewhat tangential claims.  And, if Whole Foods wants to add labels to apples that say things like "Does not cause Tuberculosis" or "Contains H2O", that's their prerogative even though I personally think it would be stupid.     

Whole Foods has probably made the calculation that requiring GMO labels will help them pick up some additional market share at a cost that they and (by implication) their customers are willing to pay.  They may lose a few suppliers, and it is possible that they may add a bunch of extra costs to inform consumers of a technology that many ultimately find innocuousness.  They may tarnish their image by appearing "anti-science."   ​

I'm sure that they have thought about these issues and much more, and they're betting that the label requirement will ultimately add more to their bottom line. (If you agree, you can buy their stock - WFM - though I'll note that it was down 1.2% on Friday when the news was released; they also had a 10% drop back in mid February amid lower than expected sales).  That's their bet to make.  If it pays off, they'll make millions.  If they're wrong, I can still shop at Wal Mart or Safeway or Albertsons or any number of other places.  Oh yes, and Whole Foods can always change their mind if things don't work out.

So what it is that makes Whole Food's decision different than Prop 37?  Competition.  Reversibility.  And, the undeniable bottom-line that no political agenda can long ignore. ​

Monsanto at the Supreme Court

According to NPR:

This week, the Supreme Court will take up a classic David-and-Goliath case. On one side, there's a 75-year-old farmer in Indiana named Vernon Hugh Bowman; on the other, the agribusiness giant Monsanto.
The farmer is fighting the long reach of Monsanto's patents on seeds — but he's up against more than just Monsanto. The biotech and computer software industries are taking Monsanto's side.

Here is what's at the issue according to the report:

Starting in 1999, he [Bowman] bought some ordinary soybeans from a small grain elevator where local farmers drop off their harvest. "They made sure they didn't sell it as seed. Their ticket said, 'Outbound grain," says Bowman.
He knew that these beans probably had Monsanto's Roundup Ready gene in them, because that's mainly what farmers plant these days. But Bowman didn't think Monsanto controlled these soybeans anymore, and in any case, he was getting a motley collection of different varieties, hardly a threat to Monsanto's seed business. "I couldn't imagine that they'd give a rat's behind," he snorts.
Bowman told his neighbors what he was doing. It turned out that Monsanto did, in fact, care.
"He wanted to use our technology without paying for it," says David Snively, Monsanto's general counsel.

I don't know if what Bowman did was legal or not.  However, I have previously commented that many people do not seem to grasp the economics of the situation.  Here's what I said back in October at the case:

What do you think will happen to the price of the first generation seed if farmers are able to freely replant the progeny?  . . . 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.  . . .  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.      

I also subsequently posted on several myths that seem to be circulating in relation to this case.

The implications of the case could be far reaching.  For example, when I sell a book, I get royalties when a new copy is sold.  But, when it is re-sold as used I no longer make any money (but it seems that perhaps I could under the logic used by Monsanto).  What about music?  Back when I was in college, Napster was a big deal, but was subsequently shut down because it was apparently illegal to share songs in this fashion.  It seems that some forms of music (electronic) are treated like Monsanto seed but other forms (old vinyl records) are not.  Picasso made money the first time he sold a painting but not when the buyer re-sold it.  But, what if he had copyrighted the image? Or patented his painting process?

The underlying issue here is when and how long do innovators hold the rights to their creations?  And, are these rights maintained even after the original invention is re-sold?