Consumer - Chap 00 Prelims 5/3/04 15:54 Page i Consumer Acceptance of Genetically Modified Foods Consumer - Chap 00 Prelims 5/3/04 15:54 Page iii Consumer Acceptance of Genetically Modified Foods Edited by Robert E. Evenson Economic Growth Center Department of Economics Yale University Connecticut, USA and Vittorio Santaniello Dipartimento di Economia e Istituzioni Universita degli Studi Roma ‘Tor Vergata’ Rome, Italy CABI Publishing Consumer - Chap 00 Prelims 5/3/04 15:54 Page iv CABI Publishing is a division of CAB International CABI Publishing CABI Publishing CAB International 875 Massachusetts Avenue Wallingford 7th Floor Oxon OX10 8DE Cambridge, MA 02139 UK USA Tel: +44 (0)1491 832111 Tel: +1 617395 4056 Fax: +44 (0)1491 833508 Fax: +1 617354 6875 E-mail: [email protected] E-mail: [email protected] Website: www.cabi-publishing.org © CAB International 2004. All rights reserved. No part of this publication may be reproduced in any form or by any means, electronically, mechanically, by photocopying, recording or otherwise, without the prior permission of the copyright owners. A catalogue record for this book is available from the British Library, London, UK. Library of Congress Cataloging-in-Publication Data Consumer acceptance of genetically modified foods / edited by Robert E. Evenson and Vittorio Santaniello. p. cm. Includes bibliographical references and index. ISBN 0-85199-747-3 (alk. paper) 1. Genetically modified foods. 2. Food--Biotechnology. 3. Consumers’ preferences. 4. Food preferences. I. Evenson, Robert E. (Robert Eugene), 1934- II. Santaniello, V. TP248.65.F66C66 2004 381(cid:2).45664--dc22 2003018019 ISBN 0 85199 747 3 Typeset in 9pt Souvenir by Columns Design Ltd, Reading Printed and bound in the UK by Biddles Ltd, King’s Lynn Consumer - Chap 00 Prelims 5/3/04 15:54 Page v Contents Contributors vii Acknowledgements ix Introduction xi PART I: STUDIES UTILIZING PRICE AND EXPENDITURE DATA 1 Do Agricultural Commodity Prices Respond to GMO Bans? 1 Joe L. Parcell and Nicholas G. Kalaitzandonakes 2 Consumer Acceptance and Labelling of GMOs in Food Products: 9 a Study of Fluid Milk Demand Kristin Kiesel, David Buschena and Vincent Smith 3 Consumer Purchasing Behaviour towards GM Foods in 23 The Netherlands Leonie Marks, Nicholas G. Kalaitzandonakes and Steven Vickner PART II: STUDIES UTILIZING EXPERIMENTAL METHODS 4. The Welfare Effects of Implementing Mandatory GM Labelling 41 in the USA Wallace E. Huffman, Matthew Rousu, Jason F. Shogren and Abebayehu Tegene 5 Using Simulated Test Marketing to Examine Purchase Interest in Food 53 Products that are Positioned as GMO-free Marianne McGarry Wolf, Angela Stephens and Nicci Pedrazzi PART III: STUDIES UTILIZING WILLINGNESS-TO-PAY METHODS 6. Measuring the Value of GM Traits: the Theory and Practice of 61 Willingness-to-pay Analysis Simbo Olubobokun and Peter W.B. Phillips 7. Willingness to Pay for GM Food Labelling in New Zealand 73 William Kaye-Blake, Kathryn Bicknell and Charles Lamb v Consumer - Chap 00 Prelims 5/3/04 15:54 Page vi vi Contents 8 Contingent Valuation of Breakfast Cereals Made of Non-biotech 83 Ingredients Wanki Moon and Siva Balasubramanian 9 A Comparative Analysis of Consumer Acceptance of GM Foods in 95 Norway and in the USA Wen D. Chern and Kyrre Rickertsen 10Comparing Consumer Responses toward GM Foods in Japan and 111 Norway Jill J. McCluskey, Kristine M. Grimsrud and Thomas I. Wahl 11Willingness to Pay for GM Foods: Results from a Public Survey in 117 the USA Hsin-Yi Chen and Wen S. Chern PART IV: STUDIES OF CONSUMER ACCEPTANCE 12A Comparison of Consumer Attitudes Towards GM Food in Italy and 131 the USA Marianne McGarry Wolf, Paola Bertolini and Jacob Parker-Garcia 13Consumer Attitudes Towards GM Food in Ireland and the USA 143 Marianne McGarry Wolf, Juliana McDonnell, Christine Domegan and Heidi Yount 14Attitudes toward GM Food in Colombia 155 Douglas Pachico and Marianne McGarry Wolf 15Consumer Acceptance and Development Perspectives of Functional 163 Food in Germany Heiko Dustmann and H. Weindlmaier 16Factors Explaining Opposition to GMOs in France and the Rest of 169 Europe Sylvie Bonny PART V: STUDIES OF ECONOMIC CONSEQUENCES 17Introducing Novel Protein Foods in the EU: Economic and 189 Environmental Impacts Xueqin Zhu, Ekko van Ierland and Justus Wesseler 18Consumer Attitudes Towards GM Foods: the Modelling of Preference 209 Changes Chantal Pohl Nielsen, Karen Thierfelder and Sherman Robinson Index 231 Consumer - Chap 00 Prelims 5/3/04 15:54 Page vii Contributors Balasubramanian, S., Department of Marketing, Southern Illinois University, Carbondale, IL 62901, USA. Bertolini, P., Dip. Economia Politica, Facolt`a di Economia, Moderna, Italy. Bicknell, K., Commerce Division, PO Box 84, Lincoln University, Canterbury 8150, New Zealand. Bonny, S., INRA, UMR d’Economie Publique INRA-INAPG, BP1, 78850 Grignon, France. Buschene, D., Department of Agricultural Economics, Montana State University, Bozeman, MT 59717, USA. Chen, H.-Y., Department of Agricultural, Environmental, and Development Economics, The Ohio State University, Agricultural Admin Building, 2120 Fyffe Road, Columbus, OH 43210-1067, USA. Chern, W.S., Department of Agricultural, Environmental, and Development Economics, The Ohio State University, Agricultural Admin Building, 2120 Fyffe Road, Columbus, OH 43210-1067, USA. Domegan, C., National University of Ireland, Galway, Ireland. Dustmann, H., Forschungszentrum für Milch und Lebensmittel Weihenstephan, Technische Universität, München, Germany. Grimsrud, K.M., Department of Food Sciences, University of Guelph, Ontario, Canada N1G 2W1. Huffman, W.E., Department of Economics, Iowa State University, Ames, IA 50011, USA. Kalaitzandonakes, N.G., The Economics and Management of Agrobiotechnology Center (EMAC), University of Missouri-Columbia, Columbia, MO 65211, USA. Kaye-Blake, W., Commerce Division, PO Box 84, Lincoln University, Canterbury 8150, New Zealand. Kiesel, K., Department of Agricultural Economics, Montana State University, Bozeman, MT 59717, USA. Lamb, C., Commerce Division, PO Box 84, Lincoln University, Canterbury 8150, New Zealand Marks, L., The Economics and Management of Agrobiotechnology Center (EMAC), University of Missouri-Columbia, Columbia, MO 65211, USA. McCluskey, J.J., Department of Agricultural Economics, Washington State University, 211J Hubert Hall, Pullman, WA 99163, USA. vii Consumer - Chap 00 Prelims 5/3/04 15:54 Page viii viii Contributors McDonnell, J., National University of Ireland, Galway, Ireland. Moon, W., Department of Agribusiness Economics, Southern Illinois University, Carbondale, IL 62901, USA. Nielsen, C.P., Danish Institute of Agricultural and Fisheries Economics, Rolighedsvej 25, 1958 Frederiksberg C, Denmark. Olubobokum, S., Department of Agricultural Economics, University of Saskatchewan, 51 Campus Drive, Saskatoon, Canada S7W 5AB. Pachico, D., International Center for Tropical Agriculture (CIAT), AA 6713, Cali, Colombia. Parcell, J.L., The Economics and Management of Agrobiotechnology Center (EMAC), University of Missouri-Columbia, Columbia, MO 65211, USA. Parker-Garcia, J., Agribusiness Department, California Polytechnic State University, San Luis Obispo, CA 93407, USA Pedrazzi, N., Agribusiness Department, California Polytechnic State University, San Luis Obispo, CA 93407, USA. Phillips, P.W.B., Department of Agricultural Economics, University of Saskatchewan, 51 Campus Drive, Saskatoon, Canada S7W 5AB. Rickertsen, K., Department of Economics and Social Sciences, Agricultural University of Norway, Aas, Norway. Robinson, S., International Food Policy Research Institute, 2033K Street NW, Washington, DC 20006, USA. Rousu, M., RTI International, 3040 Cornwallis Road, Research Triangle Park, NC 27709, USA. Shogren, J.F., Department of Economics and Finance, University of Wyoming, Laramie, WY 82070, USA. Smith, V., Department of Agricultural Economics, Montana State University, Bozeman, MT 59717, USA. Stephens, A., Agribusiness Department, California Polytechnic State University, San Luis Obispo, CA 93407, USA. Tegene, A., Food and Rural Economics Division, Economic Research Service, US Department of Agriculture, Washington, DC 20036, USA. Thierfelder, K., US Naval Academy, USA. van Ierland, E., Environmental Economics and Natural Resources Group, Wageningen University, Hollandsweg 1, 6706 KN, Wageningen, The Netherlands. Vickner, S., Department of Agricultural Economics, 400 Charles E. Barnhart Bldg, University of Kentucky, Lexington, KY 40546-0276, USA. Wahl, T.I., International Marketing Program for Agricultural Commodities and Trade (IMPACT) Center, Washington State University, Hulbert Hall, Rm 123, PO Box 646214, Pullman, WA 99164-6210, USA. Weindlmaier, H., Forschungszentrum für Milch und Lebensmittel Weihenstephan, Technische Universität, München, Germany. Wesseler, J., Environmental Economics and Natural Resources Group, Wageningen University, Hollandsweg 1, 6706 KN, Wageningen, The Netherlands. Wolf, M.M., Agribusiness Department, California Polytechnic State University, San Luis Obispo, CA 93407, USA. Yount, H., Agribusiness Department, California Polytechnic State University, San Luis Obispo, CA 93407, USA. Zhu, X., Environmental Economics and Natural Resources Group, Wageningen University, Hollandsweg 1, 6706 KN, Wageningen, The Netherlands. Consumer - Chap 00 Prelims 5/3/04 15:54 Page ix Acknowledgements The chapters in this volume were originally presented at the Sixth International Conference of the International Consortium on Agricultural Biotechnology Research (ICABR), held at Ravello, Italy, in July 2002. They have since been edited and revised. The editors acknowledge sponsorship by the following: ● CEIS – University of Rome ‘Tor Vergata’ ● Economic Growth Center, Yale University ix Consumer - Chap 000 Intro 5/3/04 15:54 Page xi Introduction Consumer Acceptance of Genetically Modified Foods Robert E. Evenson1 and Vittorio Santaniello2 1Economic Growth Center, Department of Economics, Yale University, Connecticut, USA; 2Dipartimento di Economia &Instituzioni, Universita degli StudiRoma ‘Tor Vergata’, Rome,Italy Consumers of food have expressed concerns years after almost universal scientific agree- regarding the health risks of genetically modified ment on its benefits). And this was for a (GM) foods. These concerns vary by country, process that had clear health benefits. Virtually being most pronounced in Europe and least all GM crops and food products in the market pronounced in North America (at least by popu- today have cost advantages to producers but lar perception). These differences in consumer few endow food products with enhanced qual- perceptions are partly related to the degree of ity or health benefits. confidence in existing food safety regulation sys- It is also not surprising that consumer atti- tems. The Food and Drug Administration (FDA) tudes are tied to other political issues. in the USA is generally regarded to attract more Fluoridation of drinking water (another case of consumer confidence than is the case for consumer resistance), for example, was often European counterpart systems. linked to fears of government control. The It is of some interest to note that several ‘Frankenfoods’ politicization of GM foods and years of GM food consumption experience the linkage of GM foods to environmental issues have now been realized. Each year approxi- [regulated by the Environmental Protection mately 5000 deaths and 375,000 hospitaliza- Agency (EPA) in the USA] is a case in point. tions from food-borne illnesses (food The contrast between consumer accep- poisoning) occur in the USA. But none has tance of GM foods and GM health products is been linked to GM food consumption (many particularly striking. Approximately 250GM of the foods are GM but the deaths and ill- health products are now in varying stages of nesses have not been linked to GM content). testing and in many cases therapeutic use. But, this experience is not given very much The rate of product development is truly extra- weight by consumers. Nor is opposition and ordinary. Yet, these products have produced scepticism regarding new foods or changes in little controversy. In some cases they are said food-processing technology a new phenome- to raise ‘ethical’ issues (a mild form of opposi- non. The pasteurization of milk, for example, tion in most cases). In most cases these prod- was greeted with great scepticism and con- ucts are given ‘life-saving’ and ‘life-enhancing’ cern. Today, the health benefits of pasteuriza- attributes, and they enjoy broad acceptance. tion are not debated, but full acceptance of But it is also clear that in food markets the pasteurization was not attained until after 40 ‘customer is always right’. The strategy of years of experience with pasteurization (20 agrobiotechnology firms in resisting labelling © CAB International 2004. Consumer Acceptance of Genetically Modified Food (eds R.E. Evenson and V. Santaniello) xi Consumer - Chap 000 Intro 5/3/04 15:54 Page xii xii Introduction and related regulations (identity preservation milk demanded. This result is obtained for dif- and traceability) on the grounds that GM ferent fat content and container size cate- foods approved by the FDA and the EPA do gories. The study also concluded that the not have safety and environmental risks positive consumer preferences for rBGH-free greater than foods in general did not recog- milk persisted over time. nize this market dictum. (Food industry firms Chapter 3 reports a study of consumer would have acted very differently.) The oppo- expenditure response to GM-free labelling in sition to voluntary labelling in the USA was supermarkets in The Netherlands. Weekly probably a factor in the development of point-of-purchase data for four separate food mandatory labelling and traceability regula- categories, including products with GM labels, tions in the European Union(EU). were analysed. Over the period analysed, GM This volume provides a compilation of labelling was introduced, then removed as the recent studies of consumer attitudes. These supermarkets sourced non-GM ingredients studies utilized different methods and evidence (i.e. all products became GM-free). This study and the volume is organized to reflect this. differs from the study of Chapter 2 in that the Part I reports evidence from studies utilizing labelling was for GM food products, not for price and expenditure data in a ‘before–after’ GM-free products. assessment associated with the EU ban on new The study asked whether consumers GM food approval in 1998. Part II reports responded negatively to products when they evidence from studies utilizing experimental were labelled as GM products. The study con- methods. Part III includes studies utilizing cluded that consumers in The Netherlands did ‘contingent evaluation’ or ‘willingness-to-pay’ not respond negatively to the GM-labelled methods. Part IV reports evidence from studies products. in the consumer marketing tradition. Part II of this volume includes two studies Part I includes three chapters utilizing price utilizing experimental evidence to infer con- data to infer the potential discounts/premiums sumer acceptance or ‘tolerance’ of GM food. that might emerge in GM/non-GM markets. Chapter 4 (Huffman et al.) sets up experi- In Chapter 1, Parcell and Kalaitzandonakes ments designed to compare mandatory and vol- utilize Chicago Board of Trade soybean futures untary labelling practices. The EU has a prices to infer price effects associated with mandatory labelling requirement that all foods announced GM bans by a consortium of seven with any ingredients in the food with at least 1% major European food retailers. Eight ban content be labelled as a GM product. The US announcements were evaluated over the FDA in contrast issued a ‘Guideline for Industry’ period January 1999 to December 2001. statement in January 2001 stating that GM The study did find a negative but very small labelling is not required unless the GM product impact of ban announcements on soybean has different characteristics to its non-GM ver- prices, but concluded that the market quickly sion. But firms do have the option of voluntarily adjusted to the ban information. A non-GMO labelling products as ‘GM-free’ or non-GM. soybean contract was also analysed. Some The experimental design called for a set of evidence for a positive ban announcement experimental auctions in which adult con- effect for these products is reported. sumers are randomly assigned to treatment In Chapter 2, Kiesel et al. analyse the groups and submit bids on actual foods that impact of voluntary labelling (i.e. of non- differ only by the types of labels on the foods. GMO or recombinant bovine growth hor- The study concluded that a voluntary mone (rBGH)-free labelling) on fluid milk labelling system is more efficient than a consumption in the USA. The authors utilize mandatory labelling system. This is because national-level supermarket scanner data for the identity preservation traceability and fluid milk demand over a 13-week period for related costs associated with voluntary January 1998 and December 1999. Fat con- labelling are lower. But more importantly, tent and container size categories were used consumers in the auctions treat non-labelled in the study. products as though they are GM products. This study concluded that rBGH-free Chapter 5 (Wolf et al.) uses a simulated labelling increases the quantity of rBGH-free test marketing methodology to examine the