Organic Market in US At Risk With Imports
By Peter Golbitz and Jacob Golbitz
The food landscape in America is being reshaped by shifting consumer preferences driven by a younger demographic that values transparency, sustainable farming practices, and humane treatment of animals. This dynamic is causing millennial and Gen Z consumers—as well as aging baby boomers who helped set the stage for these products—to seek out foods that can be identified as having been produced without toxic synthetic pesticides or grown and processed without the use of GMOs (genetically modified organisms), antibiotics or questionable food ingredients or additives.
First, there was the USDA Organic seal. Consumers who wanted to enjoy foods grown and processed without synthetic fertilizers or pesticides could simply purchase foods that carried the USDA Organic label. Next, came the Non-GMO Project Verified seal. Shoppers looking to avoid foods that contained ingredients derived from genetically engineered crops could look for products that carried the Non-GMO Project Verified label. Now, we have a new USDA labeling program about to roll out, the National Bioengineered Food Disclosure Standard (NBFDS), that instead of identifying products that are not genetically engineered, will actually identify foods that do contain GMO crops or ingredients.
For many consumers, there already has been mounting confusion about organic and non-GMO product claims: about how they’re different from one another, and in some cases, how they overlap. Now add to this a new mandatory label that uses radically different terminology and threshold levels to describe which foods contain, or may contain GMOs, and we have the makings of a major disruptive event for the food industry. And any major disruptive event that impacts food processing and marketing has the potential to have a direct impact on the supply, demand, and pricing for organic and non-GMO crops, foods, and ingredients.
The development of the new rule came about after years of pressure on the USDA and FDA from consumer and environmental groups that were concerned about the safety of consuming GMO foods and the potential negative impact of their use on the environment. These groups initiated various voter referendums focused on labeling GMOs and also pressured state legislatures to write laws requiring mandatory labeling of foods containing GMOs.
In 2011, for example, the Center for Food Safety, a national nonprofit public interest and environmental advocacy organization, submitted a formal legal petition to the Food and Drug Administration (FDA) asking that the FDA require mandatory labeling of genetically engineered foods. Other groups, such as Just Label It and the Organic Trade Association, began to get involved in similar initiatives, and by 2013, a number of state legislatures passed the first wave of GMO labeling laws. Eventually, 54 bills were introduced in 26 states. But it was the Vermont law, passed in 2014 and which was set to go into effect July 1, 2016, that finally made a national rule more imperative. The idea of a patchwork of differing state regulations requiring the labeling of GMO foods was a nightmare scenario for the food industry.
With the Vermont law pending, and after additional public input and debate among congressional leaders, the U.S. Congress passed an act, which President Obama signed into law July 29, 2016, requiring the USDA to develop a new rule that would require food manufacturers to disclose the content of genetically engineered ingredients in packaged food products. The law gave authority for the development of the rule to the USDA and required that the agency conduct a study on labeling options, and seek public comments on a proposed rule within two years. In addition, the law prohibited any state from developing their own mandatory GMO labeling law, which had the immediate effect of preventing Vermont’s law from being implemented.
On May 4, 2018, after the USDA Agricultural Marketing Service (AMS) received and reviewed over 112,000 responses to 30 questions it posted to the public and industry for input, AMS posted a proposed rule for final comment. The final rule was then released and published in the Federal Register Dec. 21, 2018. The implementation date for voluntary compliance of the rule is Jan. 1, 2020, but for small food manufacturers it has been extended to Jan. 1, 2021. Mandatory compliance for all regulated entities begins Jan. 1, 2022.
One major aspect of the new rule is that it essentially redefines the term that has been commonly used to describe genetically modified organisms, from GMO to “bioengineered” or “BE.” The rule defines bioengineered food as “A food that contains genetic material that has been modified through in vitro recombinant deoxyribonucleic acid (rDNA) techniques and for which the modification could not otherwise be obtained through conventional breeding or found in nature.” In essence, the rule only covers what has been commonly described as transgenic modifications, or when DNA from one organism, say a soil bacterium, is introduced into a different organism such as a soybean to give it new attributes like herbicide resistance. This would mean that CRISPR or other new gene editing techniques that do not introduce DNA from one organism to another would not need to disclose that the food is “bioengineered.”
List of Mandatory Crops
The rule also created a list of bioengineered foods that require mandatory disclosure as “bioengineered” unless testing of the food confirms the absence of modified genetic material; or, the food has undergone a refinement process that makes the modified genetic material in the food undetectable; or, the food is certified as organic under the National Organic Program. The list of foods requiring disclosure includes alfalfa, apple (Artic™ varieties), canola, corn, cotton, eggplant (BARI Bt Begun varieties), papaya (ringspot virus-resistant varieties), pineapple (pink flesh varieties), salmon (AquAdvantage®), soybean, squash (summer), and sugarbeet.
Refined Ingredients
One of the more controversial aspects of this new law is that it will not require the labeling of highly-refined ingredients produced from GMO crops, such as oils or sugars, as long as no modified genetic material is detectable in the final food. This is quite different than the current understanding of what would be considered a GMO food or ingredient based upon the rules of the Non-GMO Project or other third-party certifiers. The Non-GMO Project requires that for a food or ingredient to be considered non-GMO, the original crop that the ingredient is derived from must also be non-GMO and verified as such to be 99.1 percent free of genetic modifications, and meet or beat the 0.9 percent tolerance threshold. Under the Non-GMO Project’s rules, soybean crushers and oil refiners needed to use non-GMO soybeans to produce a non-GMO soybean oil. Under the new USDA regulation, soybean oil from a GMO soybean will not need to be labeled as “BE” or “Bioengineered” (GMO) because there is no presence of modified DNA in the oil.
Higher Thresholds for Inadvertent Contamination
Another aspect of the new rule that is not aligned with current U.S. food industry practices is the higher allowable threshold of up to 5.0 percent inadvertent or technically unavoidable BE presence. Currently, the Non-GMO Project and other third-party certifiers require that inadvertent contamination of a non-GMO product be no higher than 0.9 percent.
This wide variance in tolerance levels is certain to create some issues for buyers, but at the same time, according to the USDA, the 5.0 percent threshold aligns the new U.S. rule with a number of the U.S.’s major trading partners such as Canada, Indonesia, and Japan.
Organic Exemption
Products certified by the USDA National Organic Program (NOP) as organic are exempted from the rule as organic production does not allow the use of any genetically modified seeds, inputs, or ingredients in products labeled organic. As such, the organic label is sufficient for a marketer to make claims about the absence of bioengineering in the food without the need for additional testing or certification.
Reactions, Expectations
Upon release of the final rule, many industry and consumer watchdog groups came out strongly against the regulation.
“Specifically, we are deeply disappointed that the final rule does not clearly require the disclosure of all genetically engineered ingredients including highly refined sugars and oils, and new GMO techniques like CRISPR and RNAi,” said Gary Hirshberg, Chairman of Stonyfield Farms and who chaired the Just Label It campaign that brought together companies and groups that were asking for mandatory labeling of foods that contained GMOs. In addition, Hirshberg added, “The rule fails to require that foods be disclosed using terms that consumers understand, like ‘genetically engineered’ or ‘GMO.’”
With the new rule requiring mandatory disclosure of bioengineered ingredients, many food companies will now be facing critical decisions regarding whether or not to see this as an opportunity to educate the consuming public about their use and support of genetic engineering of food, or remove all GMO ingredients from their products in order to avoid using the new “Bioengineered” or “Derived from Bioengineering” labels. The other, but more costly option, is to source organic ingredients only.
And while the implementation of this new law is less than half a year away, it appears that many food processors have yet to begin taking action to understand how consumers are likely to react to the new food label or decide if they should consider changing some of their ingredient sources.
“The companies that are waving off the need to do anything about this rule at this time are to be shorted for the future,” said Todd Napolitano with Mérieux NutriSciences, one of the leading global food testing and certification companies. “Food products that companies produce are signs of their greater corporate culture,” Napolitano explained. “Companies can endear themselves to consumers by rolling out products that reflect their consciousness about health, or not. From our vantage point, we see that the race is on for organic certification.”
Impact on Farmers
For farmers, this new regulation is likely to produce both opportunities and challenges. Will the regulation push more companies to move to non-GMO and organic crops and ingredients, or will the “Bioengineered” labels’ wider use make consumers more comfortable with, and eventually embrace, bioengineering as a technology? Will companies currently sourcing non-GMO ingredients upgrade to organic in order to avoid the costs and hassle of testing inbound ingredients? Will the wider threshold (5 percent) for inadvertent contamination of GMOs reduce the costs and increase the supply of non-GMO ingredients? What will consumers prefer to see on their food labels, and how will they weigh this against the cost and value of the product?
“We may continue to see a market split between organic and non-GMO as many CPGs (consumer packaged goods) have been successful in creating demand for both products,” said Erin Heitkamp, Senior VP of Agriculture and Public Affairs at Pipeline Foods, a Minnesota-based supplier and processor of non-GMO and organic grains and ingredients. “But the new rule will now make it a bit more complicated, as will the regenerative initiatives and other issues that are coming to organic.”
Regardless of one’s opinion of the new regulation, it is quite likely to create an increase in demand for both non-GMO and organic crops and ingredients. Given the necessary three-year transition required to convert conventional farmland to organic, there should be two years where some of the crops, particularly canola, soybeans, corn, and alfalfa can gain a non-GMO premium on the way to organic certification.
Peter Golbitz is president of Agromeris, an advisory firm with a focus on organic, non-GMO and sustainable supply chains. His brother, Jacob, works in research and consulting spanning the global food and agribusiness supply chain.
Reprinted with permission from the July/August 2019 Issue of Organic Broadcaster, published by MOSES https://mosesorganic.org/publications/broadcaster-newspaper/gmo-label-impact/
