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By Greg Stiles Mail Tribune October 12. 2014 12:07AM The hidden costs of GMO labeling Shelf tags identify products at the Medford Food Co-op that have been tested for GMOs. Many manufacturers of organic products have added GMO-free labels to woo consumers worried over genetically modified foods. Mail Tribune / file photo Supporters of a measure that would require labeling genetically modified foods in Oregon say it's a straightforward matter of alerting consumers about what they're eating. "It's a simple label, based on an international standard adopted by the European Union back in 1997," said Sandeep Kaushik, spokesman for Oregon Right to Know, the measure's sponsor. "If the food contains more than 0.9 percent of genetically engineered material, it requires a label." Growers and manufacturers whose products are at stake, however, say the costs of Measure 92 are not that simple. They argue that labeling foods made with genetically modified organisms would place a heavy burden on producers, processors and retailers by requiring new bar codes, separate manufacturing processes and separate shipping — all for Oregon. A study by Portland consulting firm ECONorthwest, released last month, concluded GMO labeling in Oregon would cost a median $2.30 per consumer each year. Its authors, Andrew Dyke and Robert Whelan, pulled together some 30 studies on the cost of labeling done in both the U.S. and internationally. Measure 92 supporters have made the study a key component in their campaign, countering opponents' ads that claim that the measure could cost consumers hundreds of dollars each year. They also point to a Huffington Post interview quoting Scott Faber, a former Grocery Manufacturers Association vice president, who said adding a few words to a label has no impact on the price of making or selling food. "That’s because food manufacturers are constantly changing their labels to highlight product innovations or to make health claims," Faber told the Huffington Post. "Although it varies from product to product, the average 'refresh' cycle for a food label is about a year. Adding the words 'may contain genetically engineered ingredients' will add as much to the cost of making food as adding the words 'can help reduce cholesterol' — nothing.” His perspective, however, is not in keeping with the Grocery Manufacturers Association's position. The association and other Measure 92 opponents say the ECONorthwest study fails to address the bigger impact on farmers, food manufacturers and consumers by creating an Oregon-specific labeling law. And some companies may opt to replace genetically modified ingredients with more costly, organic ingredients to avoid the stigma of GMOs, thus passing those costs onto consumers. "This new study only looked at label change costs  — just one minor element of the supply chain production process," said Brian Kennedy, a spokesman for the Grocery Manufacturers Association. "It conveniently overlooks the costs to farming, shipping, inventory and production that would ultimately be passed on to consumers." Michael Gruber, the Grocery Manufacturers Association's vice president for governmental affairs, said Measure 92 would have a substantial impact on product stock keeping unit identification codes, more commonly known as SKUs. "The average grocery store has approximately 40,000 SKU products and there are about 250,000 nationwide that can be used anywhere in the country," Gruber said. "Having to produce a separate SKU for every product sold in Oregon would be very costly." Gruber said labeling GMO products sold in Oregon would require creating separate manufacturing lines or stopping manufacturing lines to load new film that prints on the packages. "That can take as much as 45 minutes," he said. "You're losing production time, paying for labor and depreciation costs. Over the course of a year, that's a significant cost for each product. You've got to set aside pallets for Oregon-specific product lines. It's highly disruptive and highly inefficient, because you've got to make sure whatever has an Oregon label is going directly to Oregon." Corn, soybeans, sugar beets and cotton seed oil account for 90 percent of genetically modified crops, Gruber said. Corn and sugar beets are mainstay sweeteners in the majority of processed foods. Candies, alone, account for a large number of SKUs. "Corn can be turned into a lot of things," he said. The battle over Measure 92 has been one of the most costly campaigns in the Nov. 4 general election. The No on 92 Coalition has raised more than $7 million to Vote Yes on Measure 92's nearly $4 million. The majority of contributions in both campaigns have come from out of state. If Measure 92 passes, Oregon could become the first state to implement GMO product labeling. But it wouldn't be the first to pass such a law. Maine and Connecticut previously passed laws requiring labels on GMO food, but both had clauses holding off implementation until other states follow suit.  Vermont's legislature passed a GMO labeling bill last spring that would have gone into effect in July 2016. Within weeks, however, the Grocery Manufacturers Association filed suit to block its implementation, joined by the Snack Food Association, International Dairy Foods Association and the National Association of Manufacturers. "A multiple-state patchwork of laws is simply not workable," Gruber said. "We feel there should be a national standard, and the FDA has been managing labels for 100 years and should continue in that role." If passed, Measure 92 won't go into effect until Jan. 1, 2016, to give the state time to wrestle with issues of oversight and enforcement. The time frame would also provide a window for possible court or legislative action. "We are very early in the process of determining what role, if any, the Oregon Department of Agriculture might play on label requirements, including enforcement," said ODA spokesman Bruce Pokarney. The measure would require manufacturers to label products in clear and conspicuous language with the words “produced with genetic engineering” or “partially produced with genetic engineering," he said. "Those statements are not to interfere with (nutrition) label information required or overseen by the Food and Drug Administration, but can be located anywhere else on the label, as far as I know." The measure includes a provision for the ODA and/or the Oregon Health Authority to prescribe, enact and enforce rules, Pokarney said. "It’s not clear if any rules will need to be proposed and adopted, but it opens up the possibility," he said. "I would not be surprised to see the Legislature provide more direction and instructions to agencies if and when this ballot measure passes." Whatever such rules look like, Central Oregon farmer Kevin Richards said the measure's passage would have a two-fold impact at his 600-acre Fox Hollow Ranch. "The direct impact will be that it suddenly becomes much more difficult to market our products in state or out of state," said Richards, who raises carrots, Kentucky bluegrass seed, peppermint, wheat and genetically engineered, herbicide-tolerant alfalfa. "It will entirely divert and transform crop rotation or it's going to require a significant amount of segregation and isolation." To operate as he does now would require purchase of a new fleet of equipment to avoid unintended commingling of genetically modified crops with non-GMO materials. "It would mean buffer strips, making the land less productive and entirely changing the landscape of your farm," Richards said. "It would require precise record keeping and signing and affidavit. You're taking on legal risks by certifying you're growing non-GMO crops. It's a lot more burdensome and risky than the current production." Richards believes small food manufacturers may skip Oregon markets all together because of the special requirements. "The indirect consequences are larger and more scary to me," he said. "We have a lot of crops that are more disease-resistant and tolerant of drought. If the labeling bill passes, it will change the incentive to research and invest in new technology. We won't be on the cutting edge and basically we'll be handicapping ourselves." Oregon Right to Know's Kaushik rejects the notion that passage of Measure 92 would become a hardship for farmers, producers or retailers. "Farmers can grow exactly the same as they do now," Kaushik said. "And retailers will be able to sell exactly the same things they currently sell with just one additional bit added to the label. If they decided in the future they want to reformulate because of consumer demand, that's voluntary and that's not a direct cost." The National Center for Public Policy Research, which doesn't take a stand on ballot measures, points out manufacturers that want to present themselves as non-GMO already have the ability to change their formulation. "General Mills is the most infamous case when it dropped GMO materials from Cheerios so it could put non-GMO on its boxes," said Justin Danhof, general counsel for NCPPR.  But Danhof also said the costs of implementing state-specific labeling laws can be substantial. He pointed to a May 2014 study by Cornell professor William Lesser evaluating a proposed New York state GMO law, finding an average family of four would pay about $500 more for food annually. "The consequences of a labeling law will be so significant in terms of the number of food items affected and the presentation of additional choices to consumers, no one at this point can be certain of the eventual outcome beyond the fact there will be costs which will largely be passed on to consumers," Lesser wrote. Among the components Lesser evaluated were expenditures by major food groups, supermarket sales by department, warehousing costs and supermarket costs. Danhof said grocery companies would have to separate non-genetically engineered food from genetically engineered crops, and each grocery system would have to create separate supply chains. "You would have to have a different product for state A as opposed to state B that didn't have the requirements," he said. "Suppliers with the same exact product would have to label one with and one without, and it would add costs through the entire chain. Grocery stores already run on tight margins, so don't think they are going to swallow the increases. If they're going to pay a mark-up, you will, too. If all 50 states passed laws like this, pretty soon no one would be able to afford food." Reach reporter Greg Stiles at 541-776-4463 or [email protected]. Follow him on Twitter at www.twitter.com/GregMTBusiness, on Facebook at https://www.facebook.com/greg.stiles.31, and read his blog at www.mailtribune.com/Economic Edge.     Genetically modified foods These are the eight U.S. Department of Agriculture-approved GMO commercial crops allowable in the country:• Corn• Soy• Cotton• Papaya• Squash• Sugar beets• Canola• Alfalfa http://www.mailtribune.com/article/20141012/NEWS/141019881 © 2015 Copyright © 1995-2011 Crain Communications Inc. All Rights Reserved. Terms of Use Privacy Statement -->