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Purpose – This chapter investigates the role that mandatory genetically modified (GM) labeling versus voluntary labeling has played in the split between those countries…
Purpose – This chapter investigates the role that mandatory genetically modified (GM) labeling versus voluntary labeling has played in the split between those countries with small GM markets and those with large GM markets.
Methodology/approach – Data on product introductions and other market evidence are used to examine market outcomes and identify the likely drivers of GM market bifurcation.
Findings – Labeling has negligible effects on consumer choice or on GM differentiation costs and therefore does not explain the split in GM market outcomes. Other factors have driven market outcomes: namely, consumer confidence in government and the safety of the food supply, competition among manufacturers and retailers, market momentum, and most importantly, the affordability of a non-GM strategy. Ultimately, a non-GM market strategy is feasible only if consumers are willing to cover the additional costs associated with non-GM production and marketing. The two elements composing the cost/price wedge between GM and non-GM products – the cost-reducing benefits of the GM technology and the costs of differentiating non-GM products – therefore play an important role in market outcomes. In the mid-1990s, when producers, manufacturers, and retailers were determining their strategies, neither element was very large. As a result, both GM and non-GM marketing strategies were economically feasible.
Practical implication – Regardless of the labeling regime, changes in the cost/price wedge between GM and non-GM products could change the mix of GM and non-GM products on the market.
Originality/value of paper – This analysis extends the literature by focusing on the impact of labeling regime on both consumer behavior and the cost/price wedge between GM and non-GM products.
The purpose of this paper is to investigate the governance implications of non-genetically modified (GM) voluntary private standards on the private label poultry meat…
The purpose of this paper is to investigate the governance implications of non-genetically modified (GM) voluntary private standards on the private label poultry meat value chain of the leading Italian retailer. Considered aspects are: first, the organizational practices adopted along the chain to assure effective segregation; second, the changes in the characteristics and governance of the key transaction (meat processor-retailer); finally, what makes the chain economically sustainable.
A picture of the chain is obtained collecting information from the businesses involved; the snowball selection criterion is used in identifying people to interview. Transaction Cost Economics (TCE) is used to conceptualize the organizational changes in the meat processor-retailer transaction; the coherence of expected-actual variations in asset specificity, uncertainty and frequency, as well as of the observed governance with TCE predictions is assessed.
The creation of the non-GM chain required investments by both the key actors involved and the establishment of a partnership based on trust and mutual dependence. The increase in uncertainty coupled with the rise in asset specificity led to higher transaction costs, requiring a shift of the governance structure toward the right side of the market-hierarchy continuum to economize on costs and improve supply chain performance. TCE well explains the changes occurred. The retailer values the return on image as a strategic asset and bears the non-GM extra costs making the chain economically sustainable.
The implications of the findings are twofold. First, they help to identify the critical factors for an effective and economically sustainable segregation of non-GM products/raw materials along agro-food value chains. Second, they show how chain actors could adopt tighter governance structures in order to comply with binding technical and quality specifications, economize on transaction costs and improve supply chain performance.
Retailer-led private standards used as regulation and enforcement mechanisms in vertical relations, as well as their organizational implications in the governance of transactions between actors in agro-food value chains have received insufficient attention. This research contributes to fill out this gap.
Purpose – The chapter provides a comprehensive review of trade-related regulations of genetically modified (GM) food, identifies their main effects, and analyzes the main…
Purpose – The chapter provides a comprehensive review of trade-related regulations of genetically modified (GM) food, identifies their main effects, and analyzes the main motivations behind their support.
Methodology/approach – The analysis is substantiated by (a) results from the literature on GM food regulations and (b) comparative statics results from a simplified three-country partial equilibrium welfare and political economic model.
Findings – The analysis shows that in a non-GM producing country, trade-related regulations will benefit producers, but not necessarily consumers. Producers' support is found to be instrumental to push for a ban, for information requirements on shipments, or for mandatory labeling of GM food products. Outside pressure groups will play the role of swing voters in cases where consumers and producers do not agree.
Research limitations/implications – The analytical model is based on simplifying assumptions on the groups and market effects of each regulation. Future research is needed to empirically validate some of the main results.
Originality/value of the chapter – The goal of the chapter is to inform economic and policy researchers on the effects of GM food trade-related regulations. The chapter provides an updated comprehensive overview of the key trade regulations of GM food. It uses a unique model to derive the main welfare effects of GM food regulations. By comparing the effects of GM food regulations in different types of countries for different pressure groups, the findings provide new insights in this area.
The application of modern biotechnology to crop and food production is one of the most significant technological advances to impact modern agriculture. Barely a dozen years since their introduction, genetically modified (GM) crops are currently grown on more than 300 million acres worldwide. GM (or transgenic) crops are produced using plant biotechnology to select desirable characteristics in plants and transfer genes from one organism to another. As a result, crops can survive under harsher conditions, costs are lowered, and yields are improved. Scientists are introducing genes into plants that will give the plants resistance to herbicides, insects, disease, drought, and salt in the soil. Crop research in bioengineering is also aimed at improving the nutritional quality of food, such as providing healthier vegetable oils. Pharmaceutical and industrial crops (or “pharma” crops) are also on the horizon, with the potential to dramatically reduce drug production costs. Compared to traditional plant breeding, biotechnology can produce new varieties of plants more quickly and efficiently, and it can introduce desirable traits into plants that could not be established through conventional plant breeding techniques.
Purpose – Despite the existence of hundreds of studies and several review articles on consumer preferences for genetically modified (GM) food, it remains difficult to…
Purpose – Despite the existence of hundreds of studies and several review articles on consumer preferences for genetically modified (GM) food, it remains difficult to ascertain the current state of knowledge on the topic. The purpose of this chapter is to distill some of the key findings from the body of research on consumer preferences for GM food.
Approach – In reviewing key pieces of literature, including two meta-analyses, the chapter identifies four key unresolved questions and includes discussions on how the questions might be resolved.
Findings – The chapter identifies four questions in need of additional thought and research. The questions relate to (1) why the market for GM-free food is so small in the United States despite the large estimated willingness-to-pay premiums for GM-free food, (2) why consumers remain so uninformed about biotechnology despite their seemingly high levels of aversion, (3) why economists have generally ignored the information-content of GM food policies, and (4) why it is so difficult to determine why U.S. and European consumers have seemingly reacted so differently to GM foods.
Value – This chapter should be useful to those interested in learning about the current state of knowledge on consumer preferences for GM food, and to those seeking to identify areas in need of additional research.
Purpose – The chapter examines the international welfare effects of biotech crop adoption, based on a transversal literature review and a case study of the introduction of…
Purpose – The chapter examines the international welfare effects of biotech crop adoption, based on a transversal literature review and a case study of the introduction of genetically modified (GM) food crops in Bangladesh, India, Indonesia, and the Philippines.
Methodology/approach – The analysis is based on (a) a review of lessons from the applied economic literature and (b) simulations using an improved multimarket, multicountry, computable general equilibrium (CGE) model, calibrated with productivity hypotheses formulated with local scientists in the four Asian countries.
Findings – Results from the analysis show that, in the absence of trade-related regulations, GM crop adoption generates economic gains for adopting countries and importing non-adopters, that domestic regulations at adopters and especially non-adopters can reduce these gains, and that import regulations in other countries can also affect gains for exporting adopters. The case study illustrates these conclusions, but it also shows that net importers will mostly benefit from adoption in their terms of trade, and that segregation of non-GM crops for export markets can be beneficial if it is not too costly.
Research limitations/implications – The use of a CGE model allows for accounting for cross-sectoral effects, and for regulations affecting bilateral trade flows, but it also has a number of limitations. The model used here, like the ones used in the other papers in the literature, is static, based on an aggregated representation of the global economy (GTAP database), and assumes perfect competition. This means that the absolute results of each scenario may not perfectly represent the actual welfare effects engendered by the adoption of biotech crops. Still, what matters here is the comparison of the relative welfare effects across countries and scenarios. The simulations are also done ex-ante, so, even if the model here was calibrated with country-based data, the results do depend on hypothetical assumptions about the performance of the selected technologies.
Originality/value of the paper – The chapter aims to illustrate the welfare effects generated by GM crops for adopters, non-adopters, in a segmented and regulated international market. Unlike other papers, the review section provides key transversal lessons from the literature, accounting for results from both partial equilibrium and CGE model studies. The empirical application focuses on four populous Asian countries that have been largely left out of the literature. The model used in the simulation presents a number of improvement from the CGE literature on GM crops, including partial adoption, factor-biased productivity shock in each adopting country, GM labeling regulations modeled as trade filters, and the inclusion of costly non-GM segregation as observed in the international market.
Much of the debate surrounding genetic modification has centred on food product ingredients, in particular soya derivatives, and the supposed inability to segregate GM…
Much of the debate surrounding genetic modification has centred on food product ingredients, in particular soya derivatives, and the supposed inability to segregate GM from non‐GM soybeans. Protein Technologies International has, however, implemented a system, Identity Preservation, which ensures the delivery of non‐GM soy protein to its customers. The system covers seeds, on‐farm storage, planting, growing and harvesting, transportation, processing and distribution, with independent third‐party verification. It is, believes the company, a way of ensuring that consumers can obtain the health benefits of soy protein consumption even if they are actively avoiding GM ingredients.
The widespread introduction of genetically modified (GM) crops may change the effect of agriculture on the environment. The magnitude and direction of expected effects are…
The widespread introduction of genetically modified (GM) crops may change the effect of agriculture on the environment. The magnitude and direction of expected effects are still being hotly debated, and the interests served in this discussion arena are often far from those of science and social welfare maximization. This chapter proposes that GM crops have net positive environmental effects, while regulatory responses focus mainly on environmental concerns, giving an unbalanced picture of the regulatory context. This unbalance supports the hypothesis that environmental concerns about GM crops have been politically instrumentalized and that more attention should be paid to regulatory responses considering the environmental benefits of this technology. It is also argued that a number of environmental effects have not yet been quantified and more research is needed in this direction.
Sustainability certification of agricultural commodities might be one measure to ensure deforestation-free supply chains. The purpose of this paper is to add to previous…
Sustainability certification of agricultural commodities might be one measure to ensure deforestation-free supply chains. The purpose of this paper is to add to previous assessments of soy certification systems with respect to “zero deforestation” criteria by focusing on the aspect of traceability.
A conceptual framework for assessing certification systems is proposed based on a literature review. This concept is applied to 16 soy certification systems, considering previous studies and available chain-of-custody certification options.
Among the sample, five certification systems may contribute to ensuring deforestation-free soy supply chains, as they have relatively high “zero deforestation” and assurance requirements and support at least segregation. Other chain-of-custody systems are insufficient in terms of traceability, but still dominate the market.
The assessment considers only certification systems that have been benchmarked according to criteria developed by the European feed industry. Regular updates and further assessments of certification systems for other commodities are recommended.
Supply chain actors and policymakers are informed about certification systems that may ensure deforestation-free sourcing. However, different factors influence the implementation of zero deforestation commitments, such as adverse effects, economic trade-offs and new certification and traceability concepts.
The implementation of deforestation-free supply chains should contribute to achieving sustainable development goals. Potential adverse social effects need to be considered.
This study focuses on the so far rather neglected but essential aspect of traceability, which is required for ensuring deforestation-free sourcing along the whole supply chain.