US Food Manufacturer Assessment of and Responses to Bioengineered Foods

In recent years, food manufacturers have begun to face choices regarding the use of agricultural commodities and food ingredients produced through bioengineering.1 Most bioengineered food technologies have been developed for farm-level (referred to as “input trait”) characteristics of agricultural crops—particularly soybeans, corn, cotton, and canola. These traits include fungal resistance, herbicide tolerance, and insect resistance. Thus far, most food manufacturers in the United States have been indifferent about whether agricultural commodities are produced through bioengineering, unless they are producing organic foods2 or foods that are labeled as nonbioengineered. Without analytical testing, which has a number of limitations, input-trait bioengineered foods are indistinguishable by consumers from their traditional counterparts. As bioengineered crops with output traits become increasingly available, food manufacturers face a different set of choices regarding the use of bioengineered ingredients. Output traits affect the food production processes (processing-level traits) or consumer demand for the finished product (consumer-level traits). Processinglevel traits include those that reduce food processing requirements (e.g., less energy or labor) or eliminate the need for particular ingredients. Consumer-level traits include improved nutritional value, extended shelf life, and improved or novel sensory attributes. In both cases, manufacturers must predict the size of the market for the introduced bioengineering innovation. In the case of processing-level traits, food manufacturers will need to weigh the reduced production costs against the increased costs of the raw commodity or ingredient. For consumer-level traits, food manufacturers will need to evaluate potential increased consumer willingness to pay (WTP) for improved attributes against the increased costs of the raw commodity or ingredient and potentially higher production costs. In addition, food manufacturers continuing to use both conventional and bioengineered ingredients in the same facility will incur the costs of developing and implementing identity preservation systems to preserve the attributes of the products they produce. We separate the discussion of the emerging bioengineered foods market into three components: (1) the nature of the regulatory environment, both domestic and foreign; (2) the expected effect of a manufacturer’s decisions on product revenues (i.e., demand-side effects); and (3) the expected effect of a manufacturer’s decisions on production costs (i.e., supply-side effects). We explored each component by reviewing available studies and conducting industry interviews. Because it is impos1. Throughout this paper, we use the term “bioengineering” to refer to the use of recombinant DNA techniques to change the characteristics of agricultural commodities. We refer to foods produced through bioengineering as “bioengineered foods” rather than the more frequently used terms “genetically modified foods” and “genetically modified organisms” because almost all foods have undergone some form of genetic modification (see the US Food and Drug Administration’s response in US General Accounting Office, 2002). 2. The National Organic Program Final Rule (USDA Agricultural Marketing Service, 2000) states that organic foods may not contain bioengineered ingredients. Mary K. Muth, Ph.D. Senior Research Economist, RTI International