Overview of the Project: Netherlands Case Study

Agricultural biotechnology is a fundamental technology platform that is promising to transform the world food system and bring about an abundance of healthier foods and improve the environment. Yet consumers in some parts of the world have not been as welcoming of the technology as others. European consumer rejection of genetically modified foods (GMFs) has impacted regulation of the technology, ultimately leading to mandatory labeling schemes. The issue of consumer acceptance and whether consumers will buy GM foods labeled as such is not clear-cut. Various methods — attitudinal surveys, hypothetical surveys, and experimental auction and retail markets — have been proposed to investigate such consumer response to GMFs, and in particular predict how consumers would react to GM labels. Yet no study, that we are aware of, has answered the question of how consumers would actually behave in the presence of positively labeled GM foods. We depart from the current literature, therefore, and, instead, use national-level, syndicated point-of-purchase scanner data to estimate actual consumer demand for foods labeled as containing GM ingredients.

In order to investigate European consumer behavior towards GM foods, project funds were used to purchase a dataset which allows us to identify processed food products positively labeled as containing GM ingredients. These products were sold side-by-side with unlabeled (substitute) products in Netherlands supermarkets. Likewise, project funds were also used to assemble a 5 year Netherlands media series to overlay with the point-of-purchase data. Our statistical demand model used to evaluate consumer response is consistent with the contemporary literature and accounts for seasonality, holiday effects, media effects, time trends, own price and the price of substitutes.

Major Findings of Project

Our results indicate that, in aggregate, Netherlands consumers did not significantly alter their purchasing behavior in the presence of foods positively labeled as containing GM ingredients. Nor did they alter their purchasing behavior towards such foods after the labels were removed almost three years later. Publications from this study are forthcoming and in review (see below). Several presentations have also been made at key conferences in order to disseminate the results of this work.

Impact

European governments are going to considerable lengths to ensure rigorous, identity preserved supply chains in order to meet mandatory labeling requirements. Understanding whether a majority of consumers, irrespectively of motives, would use GM labels to discriminate against relevant products in the market is essential for effective policy decisions. Our results indicate that a majority of Netherlands consumers did not respond to the presence of such labels. It is unclear the extent to which these results can be generalized across Europe. However, our results indicate that further research that focuses on actual consumer behavior rather than stated preference approaches is needed. Likewise, qualitative studies that examine more closely the degree to which brand identity, trust, and awareness (of labels) affect consumer response are also needed.

Overview of Project: Starlink Case Study

In addition to the investigation of consumer response in European markets, we are also investigating consumer response to the Starlink food recall in the United States. In May 1998, the EPA approved a license for the marketing of Starlink corn in the United States. This biotech corn was for use in animal feed only and not for food uses. By 2000, 350,000 acres were planted with Starlink corn in the U.S. In July 2000, Larry Bohlen of Friends of the Earth purchased 23 corn-based food products from a Safeway store in Maryland and shipped them to Genetic ID in Iowa for testing. A well-known brand of taco shells — the Taco Bell brand manufactured by Kraft, initially tested positive for the Cry9C protein contained in Starlink corn. Subsequent follow up tests confirmed the initial findings and a recall of biotech foods was implemented in the U.S. food industry. From October 2000 to April 2001, over 200 packaged food products that had been manufactured with ingredients partly derived from Starlink corn were recalled. These products included corn-based taco shells, tostada shells, tortillas, tortilla chips, and chili seasonings kits.

Project funds were used to purchase a dataset which allows us to identify food products recalled as a result of Starlink in order to address the following research questions:

• Did US consumers change their purchasing patterns as a result of Starlink? (i.e., did Starlink depress or boost sales of related products that were not affected by the recall?)
• Did Starlink depress overall sales of products/brands that were contaminated over a long time period (i.e., even after the recall was over)?
• Did public statements about the resulting safety of the food supply (once the contaminated product had been removed and/or reassurances that the risk of adverse health effects was minimal) counteract the negative effect of the food recall?

Initial Findings

Our initial work has focused on one product category affected by the recall — Mexican dinners (which includes taco shell products). One key finding is that media coverage of the recall is significant in explaining changes in consumer demand for the taco shell products. On systematic inspection of media reports we found that the media focused their coverage almost exclusively on two main brands — Kraft and Mission — and one type of product — shells (as opposed to dinner kits or tortillas). Overall, Mission was mentioned far less than Kraft. As a result, Kraft taco and tortillas shells got most of the media attention. Our data indicates that these identified products and brands sustained the brunt of lost sales.

Impact

There are important conclusions that one can draw from these findings. First, acute media coverage did influence consumer purchasing behavior affecting primarily those branded products that were directly identified by the media. The overall change in consumer demand, however, was temporary and relatively small.

Second, food safety risks perceived as credible by US consumers can compromise the brand equity of recalled products. Identified brands tend to absorb the brunt of consumer reaction. So while the aggregate impact from Starlink was small and temporary, the impact on individual brands was more substantial.

More generally, media coverage of biotechnology can play an important role in shaping public perceptions over time, and negative coverage (of a credible food safety risk) can impact consumer behavior.

Publications Based on the Project

Kalaitzandonakes, N., Marks, L.A. and S.S. Vickner. Forthcoming in 2005. Sentiments and Acts Towards Genetically Modified Foods. International Journal of Biotechnology.

Marks, L.A., N. Kalaitzandonakes and S.S. Vickner. 2004. Consumer Purchasing Behavior Towards GM Foods in the Netherlands. In Consumer Acceptance of Biotechnology Foods. Robert D. Evenson and Vittorio Santaniello (eds.), Wallingford, UK: CABI Publishers Ltd., pp. 23-39.

Kalaitzandonakes, N., L.A. Marks, and S.S. Vickner. Forthcoming in 2004. Media Coverage of Biotech Foods and Influence on Consumer Choice. American Journal of Agricultural Economics.

Marks, L.A., N. Kalaitzandonakes, and S.S. Vickner. 2003. Evaluating Consumer Response to GM Foods: Some Methodological Considerations. Current Agriculture, Food and Resource Issues, 4, 80-94. Available on the World Wide Web: http://cafri.usask.ca/j_pdfs/marks4-1.pdf.

Marks, L.A., N. Kalaitzandonakes, and S.S Vickner. In Review. Consumer Purchasing Behavior Towards GM Foods in the Netherlands. American Journal of Agricultural Economics.

Presentations Disseminating Project Findings:

Marks, L.A. 2004. Media Communication About Biotech Foods in the US and UK. Invited presentation to the Ag Forum Seminar Series, Monsanto Company, March 3rd.

Vickner, S.S., Marks, L.A. and N. Kalaitzandonakes. 2003. US Consumer Response to Starlink. Selected paper presented at the American Agricultural Economics Association Meetings, Montreal, Canada July 27-30.

Marks, L.A., N. Kalaitzandonakes and S.S. Vickner. 2003. Consumer Purchasing Behavior Towards GM Foods in the Netherlands. Invited speaker at the CAES Workshop on the Economics of Food and Health, held in Vancouver B.C., May 2-3.

Vickner, S.S., Marks, L.A. and N. Kalaitzandonakes. 2003. US Consumer Response to Media Coverage of Starlink. Selected paper presented at the CAES Workshop on the Economics of Food and Health, held in Vancouver B.C., May 2-3.

Kalaitzandonakes, N., Marks, L.A. and S.S. Vickner. 2003. Consumer Response to Food Safety Recalls: The Case of Starlink. Selected paper presented at the 7th International Conference Organized by the International Consortium on Agricultural Biotechnology Research, Ravello, Italy, July 1-3.

Various departmental seminars presented by the PIs across the United States including Utah State University, University of Florida and the University of Nebraska on how consumers responded to labeled GM products and media coverage.