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Mandatory versus voluntary labeling: The case of Prop 37

David Zilberman, professor, agriculture and resource economics | November 2, 2012

In debating Proposition 37, people ask me ‘What’s wrong with providing information to consumers?’ The answer is ‘information provisions are costly and therefore society must make a choice whether labeling should be mandatory or voluntary?’ Currently, food items and other consumer goods are covered with ‘labels’, from branding logos to certifications of kosher, halal, organic or fair trade, but most of it is voluntary. Whoever places a company logo, pays for it and backs it up. For example, fair trade coffee is backed up by an organization that certifies it the coffee growers receive fair compensation and fulfill other standards. It is costly, and it presumably adds to the price of the coffee but the consumer that is interested in this property is ready to pay. There are few mandatory informational labeling requirements. They include basic information about nutritional content and the most prominent example of mandatory labeling is the Surgeons General warning on cigarettes. Mandatory labeling is justified if the overall societal benefit from labeling exceeds the cost. In the case of cigarettes, the cost of the labeling is relatively small but the benefit may be very high because it is proven by the scientific community that cigarettes are detrimental to human health. In the case of nutritional content, the labeling entails some expense that may add to price of the food but for most of public, the value of the information is higher than the cost and at least in principle, the democratic process resulted in mandatory labeling.

Now let’s look at GMO. It is far from the case of cigarettes. Several reputable scientific societies and academies have suggested that GM is as safe as conventional food or organic food and furthermore is good for developing countries (Councils of The Royal Society of London, the U.S. National Academy of Sciences, the Brazilian Academy of Science, the Chinese Academy of Science, the Indian National Science Academy, the Mexican Academy of Science, and the Third World Academy of Science). The American Academy of Arts and Sciences have actually also recommended against voting for Prop 37 ( So there is no obvious risk that justifies the mandatory labeling. But still, consumers may be need this information to make decisions. Therefore, there is a case to be made for it to be subject to the electoral process. Introducing the labeling is costly and it will increase the cost of food and has other implications. People that value this informational and are willing to pay can vote in favor of this proposition. In this case, people that are not willing to pay the implied premium will vote against the proposition. If the proposition fails, then people that really value the information and are ready to pay the premium will have to rely on voluntary labeling. Already there are private certifiers that label or assist in identification of ‘GMO-free’ food and then there is always to option to buy organic. Obviously, life is not always fair. If the proposition passes, people who do not value the information will have to pay extra for their food (and/or consume less), and if it fails, some people that would have benefited from mandatory labeling would not be willing the pay the extra cost of voluntary labeling.

Thus the real issue is, ‘what are the costs?’ We can distinguish between direct and indirect costs. The direct costs are estimated by respected economists to be approximately $350- $400/year for the average Californian family. Even if one assumes distrusts this estimate, and assumes that this study doubled the cost, then $200/year is not insubstantial especially for poorer families. Then there are the indirect effects. Labeling in California will lead to labeling elsewhere and will be an indicator of researchers and investors that investment in agricultural biotechnology is not as favorable as they thought, which will reduce the development of these technologies. Already even the limited use of GM in corn and soybean has reduced the price of food to consumers by about 3-4%. Future investment in these technologies allows for the increase supply of food, reduce the cost of adaptation to changing weather patterns due to climate change and the overall cost of food. Less investment in GM will reduce all of these potential benefits and the losers will be the poor people in the US and overseas. Thus to some extent, I see Proposition 37 is a mechanism to address the anxieties of the well to do on the back of the poor, who are sometimes unaware of these processes.

Then there are other issues that are attached to do with the Proposition that have nothing to do with it. Some people that advocate for diversified farming systems are against the proposition. I am also for diversified farming, but improved genetic technologies can contribute to DFS; GM allows for more flexibility to reduce chemicals in agriculture and actually enables the resurrection of old varieties that were not used before due to pest problems that can be addressed by GM. Others object to GM because of agribusiness. Agribusiness will thrive anyway, with or without GM; actually some big chemical companies, mostly European, will be the big beneficiaries of reducing GM products. Thus I will vote against Proposition 37, because I think defeating will actually benefit the poor and the environment.

Comments to “Mandatory versus voluntary labeling: The case of Prop 37

  1. We can label how many calories, trans fats, sodium, etc. is in a product, but not if the product contains crops with GENITCALLY ALTERED DNA? Come on. Since GMOs were quietly introduced into the food system in the mid nineties, we have seen doubling rates of food allergies and other immune disorders. There have been no long term human studies to prove the saftey of GMOs. We are the science experiment. Its a known fact that GMOs create new, never before seen protiens. How do you think our bodies react to new, never before seen protiens? Think about it.

  2. I don’t get it — think about it! GM crops are patented seeds (often multi-patented, with each trait requiring a fee, and frequently a dozen traits per seed) and require specifically formulated fertilizers and pesticides for each variety that Monsanto/Dow/Bayer/etc. makes the farmer buy in tandem AND YEARLY! No saving seeds for next year.

    Studies have been hidden on how much more productive they are (they’re not), yet since studies haven’t been done to prove that they’re “safe” for human consumption (or have also been hidden from us), they get to destroy our planet in the meantime. If they are obviously more expensive to grow, one would assume that this cost is passed down to the consumer.

    Growing organically or pesticide free, your initial investment is way less than conventional/GMO, and you’re allowed to save seeds for the next year (which you aren’t with GMO or you will get sued), and your saved seeds have imprinted seasonal and location specific DNA each year they are grown thereafter. Not only that, but your investment is spread over a much longer period of time, making it significantly cheaper for a farmer depending on their duration of farming and seed saving for the next year. (How this “more expensive costs” argument even started is BEYOND me…)

    YesOn37 for seed diversity and food sovereignty.

  3. While I understand the desire of consumers to be informed – and if there was a proven risk I would certainly want to be informed – I am afraid that any GM labeling will end up a nothing more than a fear factor. How does it really help a consumer to see a label indicating GM food? What does that mean? So it’s GM… consumers are in no way informed enough to make a decision based on this fact alone. There is no conclusive body of scientific study that links GM food with health risk.

  4. You are either misinformed or on some chemical companies payroll. GMO safety is not the issue, we have the right to know what is in our food, plain and simple.

  5. The proposition is about the right to know. The studies done that show food prices will increase are not independent studies.

    If one wants to know how prices will be impacted they can look to The numerous Countries who are already labeling to see if there was any impact.

    There are serious concerns with GE foods, especially bt products.

    In the very near future, the current biotech that is in use (bt) will be shown conclusively to be damaging and a poorly designed experiment, in the mean time, I suppose you do have to stay aligned with your current funding.

    Cheers !


    • Sorry but the UN-OECD Consensus document on the safety of Plants expressing Insecticidal Proteins says otherwise. They make it very clear that Bt proteins are very safe for all mammals. The world food safety opinion also disagree with you as do the global health authorities.

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