Vermont GMO law to increase costs for US food industry

posted by John Stern
22 April 2016

The American food and drinks industry is facing supply chain disruption from an unlikely source. Legislation passed in 2014 in Vermont comes into effect on 1 July this year requiring food labeling to state whether the products contain genetically modified organisms (GMO).

The industry had been pinning its hopes on a proposed federal law that would have denied individual states having the authority to do this, but this was blocked by the US Senate in March.

Under the Vermont regulations, companies that do not comply face fines of up to $1,000 a day after 1 July. Vermont may be a relatively small market, but the complex integration of supply chains mean it is impractical for most manufacturers to design packaging specifically for one area of the country. However, at least two other states, Maine and Connecticut, are poised to follow suit once the legislation is put into effect.

Foods are only exempt from the labeling if they are direct animal products like meat and eggs, or if the GMO ingredients make up less than 0.9% of the product’s weight. The label would need to state: “Partially produced with genetic engineering.”

The Grocery Manufacturers Association, an industry trade group, estimates that 70% to 80% of packaged food in the US contains GMOs through ingredients like high-fructose corn syrup or soy lecithin.

Some companies are concerned the labelling will scare off consumers. Vermont Fresh Pasta said it had swapped out canola oil, which typically contains GMOs, for olive oil, which has no genetically modified version. The company claimed its costs had increased by 10% as a result, without any corresponding boost in sales.

“There’s cost at every level,” said a spokeswoman for grocery chain, Price Chopper, who said it would carry special labels for its own-brand products like cornflakes and ice cream while ensuring its suppliers are compliant within its 15 Vermont stores.

As further evidence of cost increases, Ben & Jerry’s ice cream, a brand that began life in Vermont, decided to remove GMOs in response to consumer pressure before the state law passed. It took them three years and new products averaged 11% higher in price.

So far, the likes of Mars, General Mills, ConAgra Foods, and Kellogg’s have announced that they will comply, but political and legal challenges are ongoing.

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