consumers behaviors(demand side)

GENETICALLY MODIFIED ORGANISMS

Group 7:Monica HuLeanne CastilloAndres EscobarAngel LiuLeo Sato

What is a GMO or GM-food?Genetically modified foods produced from organisms that have had specific changes introduced into their DNA using the method of genetic engineering.

Who are the players? Oligopoly

Government subsidy (pricing)

GMO examplesDo you know what you are eating?The way we eat has changed more in the last 50 years than in the previous 10,000 !

Food availability all year long

Kids meals nowadays composed of 80% GMOs

WHAT ?!No way!Seriously?How is this possible ?

Some other examples

Salmon vs. Franken-Salmon

GMO = inferior goodsCheap, low quality goods and GMOs areinferior goodsfor many people.If their income would increase, the amount of GMO based food would decrease and they would tend to buy healthier food (organic).

Use them or not?The current debate over GMOsDebateProsCons(1)Healthier?Lower calorie, lower fat, but higher nutrition.Create new allergen from GM goods?

The current debate over GMOsDebateProsCons(2)Good for Environment?Increase ability of resisting insects for crops, and fewer consumption of pesticide.Damage ecosystem? (ex. DDT, PCBs..)

The current debate over GMOsDebateProsCons(3)BiologyCreate evolution?Plants & animals would genetically modify themselves.Against Nature?Threaten the biological diversity, and reduce the choices of our food supply.

DebateProsCons(4)Benefit or hurt farmers?Cost-saving & more efficient due to less pests.Widen the gap between Rich and Poor by using patenting genetically altered crops.The current debate over GMOs

Cost of managing pests is decreasing19DebateProsConsThe current debate over GMOs(5)Overwhelmed GMOs market?High revenue support investment in costly R&D.Underestimate possible health, socioeconomic, and environmental hazards.

DebateProsConsThe current debate over GMOs(6)Loose regulation?Biotech firms claim they ensure foods products meet federal safety standards.Widely develop and deploy GM crops without adequate testing or public debate. FDA is too lax in their scrutiny and regulation.

Approved! Check list21GMO labeling1997 first GMO soybean import to E.U.

1997/1998 start labeling(regulation EC No.258/97)

Impacts of GMO Labelling:Increase consumer awareness Promoting informed decisions based on customer beliefs and lifestyle needsSupport small/local organic farmsEncourages further studies and analysis of GMO traits and consequences on all levels of the supply chain

Remedy for asymmetric information. (93% of consumers favor GMO labelling New York Times published surveyIncrease in demand for Non GMO products increases the growth of organic market segmentHealth or religious beliefsForces us to take another look into the foods we eat, forces suppliers to investigate further into raw materials being used in their products

23Impacts of GMO Labelling:May increase costs for suppliers due to new labeling productionCreation of stigma towards GMOs and the stores that offer such productsSmall/Conventional Farmers may be unable to supply the increased demandPossible barrier to enter/access foreign markets

Suppliers must decide whether to label all products or those solely for Whole FoodsDemand may decrease as raw material suppliers and farmers will now require and demand non GMOTherefore may result in decrease in demand for GMO products and investment in the industryDue to domestic regulations towards GMOs

24GMO Labelling War

Fast Food industry fought us on providing Calorie and Transfat informationMeat packaging industry fought us on Country of origin labellingAnd now Food companies are fighting against GMO labelling At present there is over 70% processed foods in supermarkets with GMO ingredients25GMO Transparency?Whole Foods Market announced that, by 2018, all products in its U.S. and Canadian stores must be labeled to indicateif they contain GMOs. Whole Foods Market is the first national grocery chain to set a deadline for full GMO transparency.

Whole Foods MarketOne of the worlds largest retailer of natural and organic foods with stores throughout the US and UK.Store brand products:More than 2,600 natural and organic products under the Whole Foods Market, 365 Everyday Value and Whole Catch brandsSize:Eighth largest food and drug store in the U.S.Fortune 500 list: Number 232Stock Exchange symbol:WFM (NASDAQ), member since Jan. 23, 1992Sales:$12.9 billion in fiscal year 2013

Also known as Whole PaycheckOrganic food tends to have higher prices due to the perceived value of being healthierFurthermore GMO products tend to be more affordable due to heavy GOVT subsidies.

27Food Companies reaction to current trend:Competitors are Re Branding to organic Take over of small Organic stores by Food Companies with established reputations Exit of suppliers from Whole FoodsEntrance of up and coming organic stores

Example of Walmart that provides lower price options to customers Organic Isles Take overs of organic supermarkets by established Food Companies which may vary in cost structures may drive down prices Suppliers that wish not to comply w/ labelling will exit or due to the magnitude of decreased demand for GMO may be forced to exitImproves overall product selection for Whole Foods

28MonsantoA sustainable agriculture company?1901 Monsanto was founded1976 Roundup Herbicide is commercialized in the US1982 First company to genetically modify a plant cell 1996-1998 Roundup Ready soybean, Canola, Cotton and corn are introduced to farmers (1st Generation)

Agricultural Seed Brands:

Weed Control Brands:Any mention of GMOs amongst farmers and consumers always results in the power that is Monster Monsanto (agro/chemical)1982 also the year that a soybean company was acquired by Monsanto over 50 companies in different countriesMystique of cheap food but what about the other costs placed on Biodiversity, society and health costs arent those also relevant factors to be considered?

29Monsanto contd:Monsanto is best known for their Roundup ready seeds.What is it? Seeds sold to farmers that are resistant to the Round up ready pesticides, also a product of Monsanto.By 2008 there is 90% of soybeans in the US have GMO genes present Farmers have become dependent which has increase their costs and debts30Food Industry PowerExample of this power Moe Parr (seed cleaner) being sued by Monsanto for clients that were saving seeds which is an infringement of patent laws.They gained access to his Banking records for the past 10 years; access to his Dell laptop containing client listingDue to extensive legal bills, Mr. Parr was forced to settle with MonsantoThis is just one example of at over 400 lawsuit cases brought against farmers by Monsanto due to patent protections granted on seeds31SummaryGMO usage has completely changed the way we eat People that suffer the most are those with lower incomes More and more countries are adopting mandatory labeling Banning or regulating GMOs93% of US consumers favor labeling

One things for sure, the GMO debate is far from being over.

DISCUSSION QUESTIONSHow would your consumption change? How would your elasticity be modified?