WORKING
DOCUMENT Rev. 2
Directorate-General
for Agriculture
Economic Impacts of Genetically Modified Crops on the Agri-Food Sector
4. Consumers, retailers: cascading effects
The demand can be analysed at the level of consumers, the retailing industry, and food processors. Of these three actors, the retailing industry has a pivotal position by amplifying consumer preferences and relaying them to the food industry. Whether retailers choose to label products containing GMOs, eliminate GM ingredients from own-label food, or go GM-free, their approach has cascading effects on food processors, grain companies, and ultimately on farmers. Today, the organisation of the world food market more and more reflects the variable public opinion and power of civil society groups from one region to another and their unequal influence on supermarket chains.
The main argument of this chapter is that the global food market is undergoing a reorganisation which transcends the European context, where public awareness and debate of GMOs first emerged. European retailers' restrictive stance on GMOs is giving birth to a bifurcated market leading food processors to adapt their products to regional conditions, and US grain elevators to segregate commodities.
The chapter first surveys consumer preferences in different regions of the world through an overview of available public opinion studies and mobilisation campaigns (section 4.1). The second section explores the strategy of the retailing industry as evidenced by their degree of anticipation and the nature of their reactions (section 4.2).
- It has become customary
to contrast North American consumers' perceptions of GMOs with those of
European consumers. While Americans and Canadians would hold benevolent
views or simply be indifferent, European consumers would display more scepticism
for reasons which are said to be: cultural (degree of faith in science,
relation to food.), historical (recent food scares in Europe), and political
(degree of trust in public/private actors).
- This dichotomy reflects
clear regional cleavages, yet needs qualifying for at least three reasons.
First, civil society groups have early on organised global, transregional
mobilisation campaigns against GMOs. Second, some differences that once
appeared readily between European and North American public opinions have
eroded with time. Finally, the two blocks overlap only loosely with geographic
boundaries. Not all European countries share the same concerns over GMOs;
conversely, some countries outside Europe-Australia, New Zealand-have joined
in the mobilisation against transgenic food.
Public controversy over GMOs crystallised in the middle of the 1990s, as the first GM crops were being harvested. Mobilisation emerged at the global level around the "Pure Food Campaign," later known as the "Campaign for Food Safety." At the core of these campaigns, international NGOs such as Greenpeace, Friends of the Earth, RAFI and others co-ordinated the movements and set up discussion fora and comprehensive GMO databases on the internet (Examples can be found in the internet database referred to in the bibliography). At the local level, grassroots participated in the campaign: women's networks, environmental groups, consumer associations, farmers, and youth.
The "Global Days of Action Against Gene-Foods" organised in the spring 1997 evidenced the transnational, and multi-faceted character of mobilisation. Table 4.1 illustrates the regional and political diversity of this campaign. According to the organisers, "activists from twenty-seven nations organised actions and press events against gene-foods and genetic engineering" (Pure Food Campain, 1997). In addition, the interests represented in this campaign ranged from the promotion of sustainable development, to the protection of consumers, through the advancement of ethical considerations with regard to genetic research.
(source: Pure Food Campain, 1997)
Global mobilisation against GMOs has continued ever since, sometimes with spectacular actions. A second "Global Days of Action Against Genetic Engineering" took place in October 1997. In February 1998, the "Physicians and Scientists Against Genetically Engineered Food" issued a declaration in which they demanded a "moratorium on the release of Genetically Engineered organisms and the use of GE-food" (Physicians and Scientists Against GE Food 1998). In September 1999, activists from thirty countries (Latin America, North America, Asia and Europe) launched a lawsuit against major biotech companies, claiming a multi-billion dollar compensation for monopolistic practices (Financial Times, 13 September 1999). A month later, Monsanto CEO Robert Shapiro announced the decision of his company "not to pursue technologies that render seed sterile." The decision, a testimony to the power of organised movements, was "based on input from you and a wide range of other experts and stakeholders, including our very important grower constituency" (Open Letter from Robert Shapiro, 4 October 1999).
NGO mobilisation on issues raised by biotechnology was also strong in the context of the WTO Ministerial meeting in Seattle in November/December 1999. Specific actions were organised in Montreal in January 2000 in the event of the conference for the Protocol on Biosafety (see chapter 5).
While protest against GMOs acquired a global dimension, interest groups and NGOs intensified their pressure in three regions: in Europe, in Australasia, and in North America. The most notable differences between these regions pertain to the timing of mobilisation-Europe was the first mover-and the degree to which counter-mobilisation has organised (table 4.2). Counter-mobilisation was stronger in North America where it centred around the agri-food business and some scientist communities. On the other hand, there was little counter-mobilisation in Europe15. This difference appeared clearly in the public hearings on GE foods organised by the FDA this year, where participants described the European "scientific establishment.[as] less protective of genetic engineering. [than] their US counterparts" (Congress Daily, 1/12/99).
In Europe, data can be found in the Eurobarometer studies on biotechnology, which provide comparative data across countries; and in a series of surveys conducted by private polling institutes for the retailing and food industry, NGOs, or the media. This corpus of studies evidences some differences among European countries, with Italians, Spaniards, and Portuguese displaying more positive perceptions of biotechnology in general than their fellow Europeans (Eurobarometer 1997 and 2000; Menrad 1999).
Beyond these variations, clear regularities emerge:
- High level of concern: A large majority of Europeans is worried about transgenic food. More than 60% of the 1997 Eurobarometer respondents are concerned about the risks associated with GM food, compared with 40% in the case of the medical applications of biotechnology. This result is consistent with those of private polling institutes16. The 2000 Eurobarometer has helped assessing the reasons for consumer concerns on GM food. Items gaining the highest support are: "even if GM food has advantages, it is against nature"; "if something went wrong, it would be a global disaster"; "GM food is simply not necessary". The share of respondents thinking that food production is a useful application of biotechnology decreased from 54% (1997) to 43% (2000).
- Knowledge and perception: Perceptions tend to "crystallize" with the degree of knowledge. Both pessimism and optimism increase with the degree of knowledge of respondents (Eurobarometer, 1997). This is consistent with a recent survey showing that "the level of knowledge and familiarity with [biotechnology]. are not so decisive in shaping general attitudes" (Menrad, 1999). According to the 2000 Eurobarometer, the use of biotechnology in food production is the most commonly known application. However, only 11% of the respondents feel adequately informed on biotechnology. Factual knowledge has hardly improved since 1997. Asked about the source of information they mainly trust, respondents cite consumer organisation first (26%), just ahead of medical profession (24%) and environmental protection organisations (14%). International organisations and national public authorities record poor results (respectively 4 and 3%).
- If knowledge is not a key variable, "cultural factors seem to prevail in shaping personal attributes towards modern biotechnology. the attachment of consumers to their national food traditions is seen as an important factor in the process of acceptance of food technology" (Menrad, 1999).
- Demand for labelling and non-GM: Only 18% of the respondents judge GM labelling useless; 8% do not have an opinion; and 74% favour a clear labelling of GM food (Eurobarometer 1997). 53% of the respondents say that they would pay more for non-GM food, 36% would not (Eurobarometer, 2000).
- Eroding trust in GM food: A 1995 USDA study of 604 New Jersey residents found that 60% would "consider buying fresh vegetables if they were labelled as having been produced by genetic engineering" (Center for Food Safety, 1999). In 1997, Novartis found that only 25% of Americans "would be likely to avoid labelled GE foods". Yet two years later, the poll commissioned by Time magazine indicated that 58% of American consumers "would avoid purchasing [labelled GE foods]" (Center for Food Safety, 1999). These results show a certain erosion in the consumers' trust in GM food17.
- Demand for labelling: In the last four years, the demand for mandatory labelling of GE foods has been high, and fairly stable: 84% of the respondents favored it in the 1995 USDA study; 93% in the 1997 Novartis survey; and 81% in the Time magazine poll. In Canada, a 1994 survey showed that "83% to 94% of Canadians polled. want labelling on foods that are produced using biotechnology" (Center for Food Safety 1999).
- This cursory review is sufficient
to stress the contrast between European and North American perceptions
of agricultural biotechnology. While Europeans are critical of GM foods
and wish to keep them at bay as long as detailed studies of the risks have
not been conducted, North American consumers have placed greater confidence
in agricultural biotechnology. Recently however, changes have been visible
in US consumers' perceptions. North American consumers have lent a more
critical support of this research, and they have clearly mandated GE labelling.
The recent public hearings on GE labelling organised by the FDA have kick-started
the public debate. The turn-out was high (Financial Times, 18 November
1999), and debates have shown "little middle ground" between the representatives
of civil society, the industry, and scientists (Detroit News, 19 November
1999). Protesters have staged media-oriented demonstrations outside the
conferences, and seized the coincidence of the second FDA hearing with
WTO ministerial meeting in Seattle (November, December 1999) to attract
world media coverage. These trends have put pressure on retailers and the
food industry.
- The retailing industry is
the linchpin in the food market due to its proximity with consumers. Over
the last years, a global concentration process has increased the market
power of retailers. The first point of contact between consumers and the
food industry, retailers do more than simply transmitting consumer preferences
to food processors and grain elevators. They amplify or moderate market
signals, contain or anticipate consumer expectations. Whatever their strategy,
it has cascading effects on the rest of the food industry at home
and abroad.
The contrasts in regional mobilisation described above have had direct consequences on the strategy of retailers. While European and Australasian retailers have early on been faced with vehement protest against GM food, their North American counterparts have not been exposed to direct consumer pressure. As a result, European retailers have moved to meet and shape the demand for non-GM food, in contrast with the "wait-and-see" approach adopted by the bulk of North American retailers.
4.2.1. Amplifying consumer preferences
Supermarket chains first moved in the UK, where Friends of the Earth organised in 1997 a campaign against the introduction of GM foods in supermarket (see Friends of the Earth Supermarket Letter). Given the absence of regulation of GM food, retailers were pressed to take quick actions, probe consumer preferences, and anticipate the development of a non-GM food market. Sainsbury's commissioned a consumer survey in the very early stages of grassroots mobilisation. This move earned the retailer "congratulat[ions from Friends of the Earth] on carrying out and publicising this timely and valuable research" (AgBiotechNet, 1997). Food and Biotechnology Campaigner for Friends of the Earth Adrian Webb declared: "Sainsbury's promotes itself on providing 'good food'. All the major retailers should now act on these findings" (Friends of the Earth Press, Release 1997). This domino effect did take place and UK supermarket chains unveiled their plans on GM food one after the other, starting with Sainsbury's and Iceland (May 1998), Tesco (September 1998), and other major food chains. In fact, a leaked Monsanto report showed that the move towards adopting a restrictive stance on GMOs was well under way at the end of 1998, retailers being determined to resist the introduction of GM foods18.
The movement spread to continental Europe in 1999. In March, Sainsbury's announced the formation of a consortium with six European supermarket chains to organise the supply chain: Carrefour (France); Delhaize (Belgium); Esselunga (Italy); Marks & Spencer (UK); Migros (Switzerland) and Superquinn (Ireland) joined in. In May, Spain's biggest retailer, Pryca, announced its policy, followed by Rewe in July; Edeka (under the pressure of Greenpeace) in August; and Aldi in October 1999 (the list is not exhaustive).
In the Netherlands however, the biggest retailer, Albert Heijn, is a notable exception to this trend. In 1997, the Dutch supermarket chain took a proactive stance to enhance consumers' acceptance of GMOs. In one of its free monthly brochures, the chain advertised GM soya as having the same quality as conventional soya. The Dutch Natural Law Party brought the case before the Advertisement Code Commission for "false and misleading advertisement" (Campaign to ban genetically engineered foods, Press Release 1997) and won it. On that occasion, the environmental organisation noted that "In contrast with the food retailers in some other countries the Dutch branch forms a closed front, which in fact is against the interests of its customers" (Campaign to ban genetically engineered foods, Press Release 1997).
By the end of 1999, many European supermarket chains have thus adopted a restrictive policy on GM food. Contrary to common views, they did not align on a single non-GM model. Rather, they adopted various types of actions.
4.2.2. Types of supermarket actions
Faced with legal uncertainties
on GM food labelling19
and growing popular pressure to phase out GMOs, retailers have adopted
different strategies. Table 4.3 illustrates the variations that currently
exist between chains' policies on GM food20.
Some supermarket chains, like Sainsbury's and Marks & Spencer, have
adopted fairly comprehensive strategies whereby they commit themselves
to phase out GE ingredients from their own-label products and eventually
to sell non-GM fed meat. Other supermarkets, like Asda and Safeway, have
chosen narrower policies to eliminate GE ingredients in their own-brand
products, but also label own-brand products for which they have not been
able to do so.
This table combines three axes along which supermarket chains' actions can be differentiated:
- Group v. individual initiatives: Group initiatives, such as the Sainsbury consortium or the GM-free working group, enable group members to share the burden of reorganisation of the supply chain and give them additional weight with respect to the food processing industry. On the other hand, individual initiatives are likely to diminish the negotiating power of the chain with regard to food processing.
- GM labelling v. non-GM labelling: some chains have opted for labelling products containing GMOs (Safeway; Asda), others for labelling non-GM products (Leclerc).
- Choice v. no choice: some supermarkets allow GM-labelled foods (Safeway; Asda); others will not sell products labelled as containing GMOs (Adeg; BML; Hofer). Yet, other like Aldi and other discount chains do not officially exclude GM labelled foods, but give the consumer little choice as own-label products, from which they have eliminated GMOs, represent 90% of their product range.
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