Context

On January 15th 2003, a few weeks before the last provincial election campaign, Jean Charest and the Quebec Liberal Party promised Quebecers mandatory labelling of GMOs (genetically modified organisms). The policy priorities of the PLQ were to:

“Develop a policy to make labelling of all foods containing genetically modified organisms (GMOs) mandatory that will act on processed foods, whole foods or on inputs used in processing.”
Healthy Foods from Earth to Table, January 2003, p.10.

In June 2004, the Commission on Agriculture, Fisheries and Foods (CAPA) of the Quebec National Assembly unanimously recommended that:

“The government opt for mandatory labelling of genetically modified foods.  In the case of products derived from GMOs or containing such organisms, the obligation applies to a minimum threshold, harmonized with that of the European Union”
(Food security: an issue of society, a responsibility of all interveners in the food chain, CAPA, recommendation 18, p.37).

For years, many polls have confirmed that between 80 and 95% of Quebecers want mandatory labelling of GMOs.

But since coming to power in 2003, the Liberal government has not lived up to its promise of taking significant measures for implementing mandatory labelling of GMOs.  Four years later, Charest’s Liberals continue to deprive consumers of their fundamental rights to information about the food they eat: to know if their foods contain GMOs.

For almost four years, the Liberal government has refused to move ahead on mandatory labelling of GMOs by giving the pretext that it lacks information on how much it would cost.  After a long waiting period, an economic study by Professor Marting Cloutier from UQAM (University of Quebec in Montreal) for the Ministry of Agriculture, Fisheries and Food (MAPAQ) was made public.

Executive summary of the economic study of the costs of mandatory labelling of GMOs in Quebec.

Costs 85% lower than those claimed by industry

This detailed, 143-page study from the Quebec Ministry of Agriculture, Fisheries and Food (MAPAQ), confirms that costs associated with mandatory labelling of GMOs are much lower than claimed by the agri-food industry.  Not surprising!   The recent study of MAPAQ estimates that the costs of mandatory labelling of GMOs in Quebec would be $28 million per year for industry, and $1.7 million for the Quebec government.  This is a far cry from the estimate that KPMG wrote in 2000 for the Canadian agrifood industry.  It estimated total additional costs of between $750 and $950 million per year, or $150 to $200 million pro-rated for Quebec.   The KPMG study no doubt contributed to the defeat of MP Charles Caccia private member’s Bill C-287 in October 2001.  The federal Liberals had to promise “voluntary” labelling of GMOs to provide cover to defeat Bill C-287.

After years of procrastinations, federal voluntary labelling of GMOs finally entered into force in April 2004.  But three years later, it’s been voluntarily not labelling as neither consumers in Canada and in Quebec has seen any label identified as “GMO”.

The MAPAQ study confirms that the estimates of costs of mandatory labelling of GMOs in Quebec are much lower level than KPMG and the agrifood industry estimated.  In fact, it will 80 to 85% less.  This is also shown around the world, where the agrifood industry has used all kinds of strategies to minimize or totally evade supplemental costs.  Therefore, we can presume that Quebec’s agrifood industry would adapt very well to mandatory labelling of GMOs.

What is more, since 2000, the North American agrifood sector has already adjusted to the market realities that refuse GMOs (traceability, segregation, soya IP, etc.).  Already, the costs of non-GMO products destined for markets outside North America have largely been absorbed by the agrifood industry.  If it can offer non-GMO products abroad, it can offer non-GMO products to consumers here and label the products that contain them.

Nevertheless, most of the costs highlighted by MAPAQ remain hypothetical and vague.  It is necessary to understand why.  First, the data from the MAPAQ study are funded mainly by the agrifood industry, which opposes labelling of GMOs.  We can presume that these partial data exaggerate the costs and minimize the advantages, all to discourage government from mandatory labelling of GMOs.  If the industry had solid data, they would be already published.  Therefore, the costs identified by in the economic study by MAPAQ are probably the worst-case scenario.  Moreover, as the positive economic effects of mandatory labelling remain unknown, it is likely that the balance between costs and opportunities is underestimated.  Based on experience in other countries, MAPAQ estimates that increased production costs would be generally minimal, although there are exceptions such as margarine.

Since the cost of primary agricultural materials is only a fraction of the price paid by consumers (4-12%), we can anticipate that mandatory labelling of GMOs in Quebec will have a minimal impact on price.  In the final analysis, MAPAQ anticipates a $28 million cost—on an annual food expenditure in Quebec of $28 billion.  That’s a theoretical price increase of 0.1%.

Who should pay the costs of mandatory labelling of GMOs?

According to the MAPAQ, the agrifood industry estimates a one-time cost of $161 million for mandatory labeling. That includes $111 million to replace weighing facilities and $21 million for the labels themselves and workforce training.  One must ask who should pay.  Why should consumers and taxpayers pay to replace things when they have already done so indirectly by paying for amortization?  The same is true for labels, which agrifood businesses often change anyway.  As for the cost of training their workforce, businesses already doing it regularly fashion.  The new procedures for mandatory labelling of GMOs would be only one more subject for already existing training.

It’s clear that the agrifood industry uses mandatory labelling of GMOs to try to pass the costs of doing business onto consumers and farmers.  Making others pay is not justified in this case, and government should resist this call for industry handouts.

Moreover, one must put this in a larger context.  The three retail giants in Quebec and across Canada (Loblaws, Metro and IGA) made $1.2 billion in profits in 2005-6.  The revenues of Loblaws alone were $21 billion in 2005.  In 2006, Metro had revenues of nearly $11 billion; Sobeys (IGA) were nearly $13 billion.  Monsanto, the American multinational that commercializes 90% of all GMOs on the planet and the herbicides they bring made $ 800 million in profit in 2006.

To conclude, the costs of mandatory labelling in Quebec are infinitesimal compared to the revenues and profits.  Therefore, if the annual costs of labelling were absorbed entirely by the three big retail giants, the $28 million in costs from the MAPAQ study represent a reduction in profits of 2.33%!  Even adding in one-time costs, it is only a theoretical 3.5% of the annual revenue of the three distribution giants.  

But the principle question remains: who should pay the costs of mandatory labelling of GMOs? Why should consumers who do not want to eat GMOs pay?  Consumers who seek to avoid GMOs eat certified organic products already pay a premium.  Why should farmers who do not produce GMOs pay the costs of traceability and segregation for a product from which they do not profit?  Why should the farmers that do not grow GMOs pay to protect themselves from crop contaminations by GMO?  Why do businesses who put GMOs on the market like Monsanto not assume the costs of traceability, segregation, and labelling of GMOs as part of their normal costs of doing business?  Remember that there is currently no legal responsibility in the event of GMO contamination.  Otherwise, the users of GMOs do not pay the costs related to the risks of GMOs.

Even in trying to count the costs presented by the MAPAQ study, the next government in Quebec could allot the costs of mandatory labelling to the agrifood and GMO sectors while imposing a tax on basic food commodities that contain GMOs.  It’s clear that the large agrifood businesses (such as Loblaws, Metro, IGA, etc.) would have no problem adapting to mandatory labelling and absorbing these costs.  Nevertheless, it is small businesses and Quebec farmers that should be reimbursed for the additional costs related to the starting mandatory labelling.  Even a minimal tax on food containing GMOs would raise enough revenues to compensate small businesses and farmers based in Quebec.  Moreover, it would allow a concurrent reestablishment of a position toward imports.  Also, in adopting a traceability and mandatory labelling, Quebec could market itself to important markets outside North America, thus diversifying exports.  Elsewhere, it would encourage the local production of non-GMOs.  And it would help start a trend in other North American jurisdictions such as British Columbia, PEI, federally or in some American states. In the end, the Cartegena Biosafety Protocol (ratified by 135 countries) calls for detailed documentation for all international movements of GMOs starting in 2012.  With mandatory labelling, Quebec would be ready.

Conclusion

In light of the MAPAQ study, the Quebec’s new minority government should proceed with mandatory labelling of GMOs by proposing regulations to the Commission on Agriculture Fisheries and Food of the National Assembly (CAPA) in its public consultations. This proposal should be in the spirit of recommendation 18 of the report by CAPA unanimously adopted in June 2004.
 
Public consultations of the commission of the future of agriculture and agrifood which started last February will have a chance to evaluate the pertinence and develop alternatives to GMOs in the future in sync with the markets preferences of consumers here and abroad.  Quebec has the choice to strategically position itself with a food and agriculture system without GMOs.  But it must develop distinct niches in the future rather than trying to imitate and harmonize with what the United States and the rest of Canada is doing.  Whatever the recommendations of the Commission on the future of agriculture and agrifood in January 2008, the next provincial government must go forward as soon as the day after the election to put in place mandatory labelling of GMOs.