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Position Paper
THE ECONOMIC AND PRACTICAL COSTS OF BIOTECH LABELING TO DEVELOPING
NATIONS
Executive Summary
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The process by which the Codex biotech labeling guidelines
were developed lacks transparency . The majority of developing
member nations were effectively excluded from participating
in the development process and debating the substance of the
guidelines.
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Anything short of vigorous debate- which should include consideration
of all of the economic and practical implications of any labeling
regime- constitutes a rush to judgment at the expense of the
billions of people in developing countries who are most dependent
on Codex's standard-setting activities for their internal regulatory
processes.
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The guidelines were developed without exploring the tremendous
costs and benefits associated with a mandatory or voluntary
biotech labeling system. For example, economic costs and regulatory
burdens inherent in a production method mandatory biotech labeling
system will have the greatest impact on developing countries.
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The guidelines have no objective, affordable and accurate mechanism
for testing or identity preservation and will cause confusion
in international food trade. This set of optional, or menu-style
standards or guidelines, provide no international standard or
specific guidance to countries and is stark evidence of the
lack of consensus on an appropriate standard.
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The objectives of Codex are to protect the health of consumers
and facilitate fair practices in food trade. Non-science based
biotech labeling does not protect the health of consumers, and
serves as a political barrier to international food trade.
THE COSTS OF BIOTECH LABELING
The costs inherent in establishment of non-science based biotechnology
labeling standards or guidelines are high. The costs will accrue
to producers, consumers and implementing governments alike, and
will have a cumulative negative effect on the global food economy.
In order to avoid placing a bioengineered food or product label
on their food products, food processors would have to rely on farmers
and a supply chain that utilizes “identity preserved”
systems to ensure that ingredients are not bioengineered. To implement
such systems would necessitate drastic changes in the traditional
food processing chain from farm to table, which would increase the
cost of processed food products.
The costs of implementing safeguards to ensure that non-bioengineered
agricultural commodities and bioengineered commodities can be kept
separate and accounted for all the way through the food processing
chain would result in added costs at each step, as evidenced by
recent studies to determine the economic impact of various proposed
bioengineered labeling requirements.
For example, a recent study, conducted to determine the potential
economic impact of mandatory bioengineered labeling requirements
in Canada, found that the requirements would cost consumers between
$457 and $621 million U.S. dollars annually, likely increasing the
overall retail price of processed foods by at least 9-10%.[1]
According to the study, the key factor driving the cost of the labeling
would be the need for all segments of the food industry supply chain
to keep bioengineered and non-bioengineered product variants physically
separate, and to be able to demonstrate the presence or absence
of modified material to comply with, or avoid, the labeling regulations.[2]
In particular, the study estimated that the cost of identity preservation
needed at each stage of the supply chain to avoid labeling requirements
could likely be as follows: elevator/grain handling costs could
increase retail prices between 3.4% and 3.6%; processing costs could
increase retail prices between 1.3% and 1.7%; and manufacturing
costs could increase retail prices between 1.5% and 2.2 %.[3]
A similar study, commissioned by the Australia New Zealand Food
Authority to determine the economic impact of proposed bioengineered
labeling requirements in the two countries, revealed that it would
cost the equivalent of approximately $113 million U.S. dollars to
simply establish such a labeling regime.[4] Furthermore,
the study found that the annual cost of maintaining the labeling
system would be an additional $58.4 million.[5]
There can be little question that the requirements of identity
preservation will result in an increase in the cost of goods sold,
and, accordingly, in consumer prices. The real cost, however, of
bioengineered labeling would be felt most acutely by the virtual
unavailability in many markets of bioengineered food. Since adverse
publicity and stigmatization will make any product with a “contains
genetically modified soya [or corn]” label unsaleable in many
nations, the result is that an entire market will be virtually closed
for food products and derivatives that are already viewed as being
safe by regulators around the world. As bioengineered labeling requirements
increase worldwide, so will market access to bioengineered foods
diminish. There will undoubtedly also be lost opportunities if the
benefits of increased crop yields and better nutrition are denied
to the developing world. Thus, false or misleading labels, which
suggest an absence of safety when quite the opposite is true, are
a real and tangible technical barrier to trade, contrary both the
letter and the spirit of Codex.
It is noteworthy that, throughout the course of this debate, very
little mention has been made either of the importance of consulting
developing nations regarding the need for, and the cost of, labeling
regimes. Additionally, there has not been serious discussion regarding
the capacity and resources required by developing nations to implement
or enforce these regimes. Testing laboratories, trained personnel,
both in the labs and in the enforcement and rulemaking branches
of government, would be required. Public education, of course, would
also be required.
Codex is on the verge of taking irrevocable political action- Action
that could bind developing countries for years to come with costs
and severe administrative and testing burdens. Action and could
disrupt international food trade. Action that could deprive consumers
in developing countries of the benefits of an innovation that many
developing nations are rushing to invest in and embrace. These actions
come at a steep price, without any demonstrable benefit to consumers
health. Just as important, this Codex action may be taken with virtually
no input from developing nation stakeholders who stand to lose more
than any of the other parties to this debate.
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