Research Shows How Much GMO Labeling Could Affect Soybean Farmers
Mandatory labeling for food made with genetically modified organisms (GMOs) is a hot topic that pushes farmers’ — and consumers’ — buttons. With the federal government and several states considering, and in some cases passing, legislation requiring mandatory GMO labeling, the national soy checkoff commissioned research to determine how much mandatory labeling under various scenarios could cost U.S. soybean farmers and the rest of the industry.
The research suggests that American soybean farmers would have to pay $10 to $34 more per acre to raise non-biotech soybeans compared with biotech varieties that are currently planted on more than 90 percent of U.S. soybean acres, depending on the nature of the regulations introduced. The biggest impacts on farmers would be the need to manage segregated soybean streams and the loss of biotech traits such as glyphosate resistance, according to the research, which was based on interviews with industry experts and a review of prior research on the topic.
According to the report, depending on how much of the market converts to non-GMO production and how long it takes for the industry to adjust, soybean farmers could sustain losses of between nearly $4 billion and $48 billion annually in reduced prices, lower volume of soybeans produced and a decrease in the availability of cost-reducing biotechnology. And any dip in soybean oil or meal demand puts downward pressure on prices and, ultimately, farmer profits.
Since market dynamics are difficult to predict and the legislative debate is far from over, researchers came up with their estimates based on three potential scenarios:
- Consumers initially buy into the need for GMO labeling but ultimately are not willing to pay the extra cost. After a short-term increase in demand for non-GMO foods, the demand settles back to slightly higher than at present. This scenario assumes a 10-15 percent conversion of the food market to non-GMO and estimates a nearly $3.7 billion loss for U.S. soybean farmers.
- Consumers are split on their preferences, and labeling is applied broadly. Although the current channels of U.S. soybean production and processing remain intact, new ones emerge to meet consumers’ demand for non-GMOs. This scenario assumes 40-50 percent conversion of the food market to non-GMO and 25-30 percent conversion of crop acres. Under this scenario, the financial impact to America’s soybean farmers would be $10 billion more than the first scenario.
- Food companies convert all of their products to non-GMO. Consumer response and economics drive GM products out of the market because of the higher costs and risks of maintaining two streams for all food products – even meal fed to livestock. This scenario would cost farmers approximately $48 billion.