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Wuyang Hu, Michele Veeman, Vic Adamowicz Dept. of Rural Economy University of Alberta

Anne HuennemeyerKFW Group, Germany

Financial assistance from Genome Canada, Genome Prairie, and the Alberta Agricultural Research Institute is greatly

acknowledged

Assessing How Different Genetically Modified Food Labelling Policies May

Affect Consumers’ Choice Behaviour – A Canadian Case Study

International Symposium on Food Safety: Consumer, Trade, and Regulation Issues Hangzhou, Zhejiang, China

October 10-11, 2003

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Introduction

Transgenic agricultural biotechnology termed Genetic Modification (GM) is fast expanding An annual growth of more than 10% has been

achieved every year for the last six years, since transgenic crops are introduced in 1996.

From 1996 to 2002, the global area of transgenic crops increased 35-fold.

The global area of transgenic crops for 2002 is 58.7 million hectares.

In 2002, for the first time more than half of the world’s population lived in countries where GM crops are grown.

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Purpose of Study

Apply and examine the power of internet-based choice experiment in marketing research.

Identify consumers’ opinions on various issues surrounding the labelling of GM foods.

Investigate how different GM labelling systems may affect consumers’ behaviour.

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Information and Labelling

There may be uncertainties about the quality and other features of food produced through GM technology.

In polls consumers tend to “vote for” the right to know the ingredients of their food, reflecting a preference for information.

Increasingly government regulations apply to information that is provided through GM labelling.

Different countries have different GM labelling policies.

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Currently Announced International Labelling Policies

Countries/Regions Type of Policy GM Content Threshold

Australia/New Zealand Mandatory 1%

China Mandatory n/a

Czech Mandatory 1%

European Union/UK Mandatory 0.9%

Hong Kong Mandatory 5%

Japan Mandatory 5%

Russia Mandatory 5%

Switzerland Mandatory2% or 3% depending on

different situations

Brazil (draft) Mandatory n/a

India (draft) Mandatory n/a

Israel (draft) Mandatory 1%

Malaysia (draft) Mandatory 3%

Korea (draft) Mandatory 3%

Taiwan (draft) Mandatory 5%

Thailand (draft) Mandatory 5%Canada Voluntary 5%USA Voluntary 5%

* Sources: International Service for the Acquisition of Agri-biotech Applications

(http://www.isaaa.org) and the United State Department of Agriculture

(http://www.fas.usda.gov)

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Preference Elicitation

Revealed Preference Directly observed and convenient to obtain. Reflect consumers’ actual choices Poses difficulties for environmental evaluation

and new product evaluation.

Stated Preference Hypothetical scenarios and highly controlled. Can provide useful information for hypothetical

variables or new products. Can generate unrealistic predictions and

introduce hypothetical bias.

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Stated Preferences in Marketing Science

Conjoint Analysis Rankings Ratings Pairwise comparisons Adaptive Conjoint Analysis (ACA) Choice-Based Conjoint (CBC)

Discrete Choice Analysis Simulated Auctions

Flexible and consistent with decision making. Suitable for controlled lab environment.

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Conjoint Models in Marketing

Single ProfilePairwise

Comparison

Full Profile Partial Profile Traditional Survey Methods Dynamic Computer Advantage Exploded Logit Ordered Logit/Probit Multinomial/Conditional Logit Multinomial Probit

CBCRating RankingPairwise

Comparison

ACA

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Survey Data and Scenarios

Pre-packaged sliced bread Commonly consumed GM product is not yet available

Attributes Brand name (store/national) Type of flour (white/partial whole wheat/whole

wheat/multigrain) Price ($0.99/$1.49/$2.49/$3.49) GM (presence/absence)

Labelling scenarios

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Survey Design and Implementation

Computerized design Attributes Labelling contexts: mandatory, voluntary and a

mixed scenario for statistical purpose Fractional factorial design with appropriate

blocking Online implementation

Faster and may be less biased than traditional methods in that more realism may be sought

Allows highly interactive designs

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Sample Choice Set

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Perceptions of Labelling Issues

S1: The public is sufficientlyinvolved in the regulation of GM foods.S2: Even if food prices were higher, the consumers’ “right to know” warrants mandatory labelling.S3: The decision about introduction of GM foods to Canada should be left to experts.

S4: There is no need for mandatory labelling of GM foods if the final product quality is the same.

S5: Voluntary labelling might be used as a marketing tool rather than providing useful consumer information.

S6: Stricter regulations for approving GM foods are better than a mandatory labelling system for GM foods.

S7: Overall mandatory labelling is preferable to voluntary labelling.

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60

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S1 S2 S3 S4 S5 S6 S7

Statements

Pe

rce

nta

ge

Tend toAgree

Tend toDisagree

Don'tKnow

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Econometric Model and Variable Definition

Panel conditional logit model (CBC Conjoint approach) Some variables used in the model are:

Variables Definition

MGMO Interaction between mandatory labelling context and GMO

VNOGMO Interaction between voluntary labelling context and NOGMO

BRIGM Interaction between factor score on "bright future" with GMO

BRINOGM Interaction between factor score on "bright future" with NOGMO

HARMGM Interaction between factor score on "could be harmful" with GMO

HARMNOGM Interaction between factor score on "could be harmful" with NOGMO

ANIGM Interaction between factor score on "concerns for animals" with GMO

ANINOGM Interaction between factor score on "concerns for animals" with NOGMO

KNOWGM Interaction between GM knowledge with GMO

KNOWNOGM Interaction between GM knowledge with NOGMO

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Estimation Results

Variables Coefficient Variables Coefficient

PRICE -0.7293*** VNOGMO -0.1352

BUYNO -2.2253*** BRIGM 0.2352***

STOREB -0.1110*** BRINOGM -0.0793**

WHITE -0.3926*** HARMGM -0.1972***

PARTIAL -0.2134*** HARMNOGM 0.0895***

WHOLE 0.2005*** ANIGM -0.0490

GMO -0.3278*** ANINOGM 0.1005***

NOGMO 0.1822*** KNOWGM -0.128*

MGMO -0.2641** KNOWNOGM 0.0117

* Significant at the 10% significance level **Significant at the 5% significance level

*** Significant at the 1% significance level

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Conclusions

Conjoint (especially CBC) analysis is well-suited to evaluating consumers’ behaviour in the context of GM foods.

In general, Canadian consumers strongly “vote for” product information associated with labelling.

Mandatory GM labelling raises a “red flag” to consumers.

Voluntary GM labelling does not change consumers’ welfare significantly compared with no labelling.