State mandatory labeling laws, such as recently enacted in Vermont and proposed in New York State, among other states, would cost the average family of four an average of $500 in additional food costs each year and could be as high as $800, according to a new study from Cornell University.
In a study released Monday, Professor Bill Lesser of the Dyson School of Applied Economics and Management at Cornell University outlined the added costs that the industry will pass down to consumers if forced labeling becomes the law in New York. Additionally, the state of New York could be facing millions of dollars in added costs to implement and monitor a labeling initiative.
Forced labeling would impact virtually every aspect of the food production industry—from seed to store shelf. Additional costs levied on farmers and producers, warehousing and distribution centers and inventory management would all contribute to added costs to consumers.
The study calculated that between 60-66% of foods sold in New York State would be exempted. The 40% of mandated-labeled foods transcribes to 21,000-25,000 separate labeled items, or 50-58% of items available in supermarkets.
Firms can comply with the proposed labeling requirements by either labeling or by using ingredients below the specified GM threshold level of 0.9%. Labeling costs involve, in addition to the labeling function itself, the annual costs of warehousing more items as well as the charges leveled for stocking ‘new’ items by supermarkets. As estimated here those costs for a family of four range from $64-68, with a midpoint of $66.
The second approach to compliance is using non-GM ingredients, which may be either produced not using GM seeds, or organic. Those ingredients though are more costly, particularly organically grown ones. Additionally, the GM and non-GM products must be kept separate (‘Identity Preservation’) which involves both handling and record keeping costs. For the non-GM option estimated costs, again for a family of four, range from a low of $44 to a high of $412, with a midpoint of $228.
The costs for using organic ingredients are respectively $360 to $1,552 with the midpoint at $956. Additional costs to the State include the potential loss of net farmer income from producing GM corn and soybeans, which while very real for State farmers is minor compared to direct consumer costs.
There are additionally regulatory costs which are borne by the State. Adding one dollar per capita for all those costs brings the maximum range of cost, for the four person household, to $48 to $1,556 with a midpoint of $800.
“The bottom line is that food costs will increase dramatically as a result of this mandatory labeling bill, “said Rick Zimmerman, Executive Director of the Northeast Agribusiness and Feed Alliance. “This new study from Cornell illustrates how this legislation, if passed would directly impact those least able to afford it.”
Read the full study at http://dyson.cornell.edu/people/profiles/docs/LabelingNY.pdf.