Earlier this month, residents in the state of Washington voted down a law requiring mandatory labeling of all food products that contain ingredients created from genetically modified organisms, or GMOs. However, if you travel a few thousand miles east you can find two states that successfully passed GMO labeling laws: Connecticut and Maine.
Both states passed legislation through their state legislatures rather than putting it in the hands of citizens as California and Washington have done. At first glance the laws seem like a blow to biotech seed producers, such as Monsanto (NYSE:MON) and Dow Chemical (NYSE:DOW), and food companies, such as General Mills (NYSE:GIS), that oppose labeling at the state level. However, both bills come with caveats, which will severely delay or ultimately prevent their enforcement.
Many food companies refuse to support state-by-state GMO labeling because of the incredible costs they would incur, preferring a national label system. Why should General Mills go out of its way to print labels on food sent to Connecticut and Maine, which have a combined population of 4.9 million? It sure wouldn't make sense from a logistical standpoint, especially given the large regional manufacturing and distribution centers that handle food products for multiple states.
In an attempt to compromise on those concerns, legislation passed in Connecticut and Maine won't go into effect until the following conditions are met:
- Four other Northeastern states must enact legislation.
- One must border Connecticut/Maine (respectively).
- The four Northeastern states must have a combined population of at least 20 million.
It immediately becomes clear that Maine cannot enact its law unless New Hampshire, the only state with which it shares a border, passes its own. Other states that qualify are Vermont, New York, Pennsylvania, New Jersey, Massachusetts (which contains one of the world's leading biotechnology hubs), and Rhode Island. All nine states represent a combined population of 55.8 million, although that dips to 23.4 million if New York and Pennsylvania are excluded and just 7.9 million if you remove New Jersey and Massachusetts. Therefore, GMO labeling laws in Connecticut and Maine need New York or Pennsylvania to pass similar legislation, or every other state on the list, before they are enacted.
That lays out a pretty difficult road for the bills to become law, although things get much easier if the bills are passed through state legislatures and not through popular vote. Does that mean GMO labeling is coming to the Northeast within the next few years? Not so fast.
If the bills become law
Even if all nine Northeastern states pass GMO labeling laws, the total population of states involved will only represent 18% of all United States residents. Now, that could very well open the door to a national conversation on GMO labeling, but food manufacturers would likely take issue with such legislation. We could very well see this debate end up in a courtroom.
I've already explained several reasons why I think the call for GMO labeling is horrible policy that is difficult to support. Many food companies agree that state-by-state legislation would be cumbersome, especially considering that the USDA Organic label acts as an inverse label for GMO foods. General Mills echoed industry sentiment in a statement on Washington's I-522:
General Mills supports a national standard for labeling of non-GMO products. The U.S. standard for organic food products is an excellent model. Organic certification and labeling standards established at the national level -- not state-by-state -- allow organic food producers to reliably certify and label products as "organic." They also provide a clear, consistent labeling standard upon which organic consumers can rely.
This is helpful for consumers, and we believe organic certification and labeling could be a national model for labeling non-GMO products in the U.S. Just as consumers can rely on organic certification and labeling in purchasing organic products, a national standard for labeling non-GMO products would allow consumers to purchase products made without GM ingredients in all 50 states.
Such a system would be substantially more reliable for consumers than differing state standards, and we think it makes much more sense than a patchwork of different labels that would vary from state-to-state.
Say what you want about megacorporations controlling the national food supply -- it is difficult to argue with industry leaders on the labeling issue. Other states may pass GMO labeling laws, although I would expect them to be fought with teams of lawyers, and for sound reasons. So unfortunately for the citizens of Connecticut and Maine, I don't think local GMO-labeling laws will be enforced anytime soon.
Fool contributor Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio, his CAPS page, or follow him on Twitter @BlacknGoldFool to keep up with his writing on biopharmaceuticals, industrial biotech, and the bioeconomy.
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