Genetically modified organisms—commonly known as GMOs—spark debate among consumers and in scientific circles because their effect on the long-term health of human populations isn’t yet well understood (and certainly isn’t definitive). Additional concerns have arisen around how these crops are produced and what impact their production may have on the environment.
While strategies and investable vehicles in this space are limited, non-GMO demand from consumers is growing. This consumer trend could have wide-ranging implications for food producers and retailers.
Some individuals are wary of GMO products because of potential negative impacts on the planet. GMO crops may require more herbicides than their traditional counterparts, which could increase environmental pollution. Researchers are concerned that any reductions in pesticide use will be erased over time as pests develop resistances.
Not only do sustainable agribusinesses provide better stewardship of the land by their very nature, but they also stand to benefit from the public’s desire to purchase what they perceive as healthier, safer foods. 40% of consumers avoid GMOs, according to a study in Advances in Nutrition. And Whole Foods, the nation’s largest natural food retailer, reported that non-GMO demand increased 426% between 2010 and 2014.
Although there are subtle differences between non-GMO and organic crops, from a regulatory perspective they have a square/rectangle relationship. According to the USDA Economic Research Service (ERS), genetically modified foods are ineligible for a USDA Organic label. And growth in the organic market has generally increased in excess of 10% per annum for more than a decade, showing that there is strong consumer demand for products in this category.
Concern for Human Health
The herbicide use that goes along with GMOs could have wide-ranging effects on ecosystems and human populations. The New York Times reports that farmers and their family members claim that Monsanto’s Roundup product—a must-use solution on the company’s soybeans and other GMO crops—is related to a number of health issues.
And GMOs themselves are a relatively new invention. The first commercially produced genetically modified product, Calgene’s Flavr Savr tomato, came to market in 1994. A lack of longitudinal studies on GMOs effects on human health causes concern for some, further driving demand for non-GMO products.
The controversy surrounding genetic modification of foods has a long history, and the debate around the societal and environmental impacts is unlikely to stop any time soon. Investors may want to consider how increased consumer demand for non-GMO products could affect their portfolios either positively or negatively.