Agricultural Biotechnology
2.2 Agricultural Biotechnology: an Overview of Consumer Acceptance
2.2.2 Consumer information, trust and choice
ally identify all product attributes prior to purchase and consumption.
With search goods, all information about the good is effectively trans- ferred from the producer to the consumer. Secondly, experience goods are those goods where the consumer is not able to identify all product attributes prior to purchase and consumption. There is a partial break- down in the transfer of information from the producer to the con- sumer at the time of purchase. Yet the consumer can gain the necessary information through consumption experience. Thirdly, cre- dence goods are those goods where the consumer is not able to know the full attributes of the product before or after consumption (Bureau et al., 1997; Purchase, 1997). With credence goods, there is a total breakdown in the transfer of information from the producer to the consumer – an information gap. Yet what fills the information gap is consumer trust in those developing the goods (e.g. in scientists) – there is ‘credence’ associated with them.
Defining GM crops as credence goods is intuitive since there is a large information gap between producers and consumers (Isaac and Phillips, 1999b, 2001). This is due to two factors. First, many con- sumers do not understand the scientific techniques and procedures of modern biotechnology. In fact, general knowledge about genetics is often lacking among many consumers, let alone specific knowledge about transgenic modifications to agricultural crops. For instance, a recent report by the European Commission revealed that two-thirds of those surveyed did not realize that non-GM tomatoes also have genes or DNA in them.12 Secondly, with the dominant role of the private sector, much information may be deemed proprietary and not avail- able to consumers. Further, since the research and development that underlie the application of modern biotechnology are advancing rapidly, the information gap, created by the credence nature of GM agricultural crops, is likely to widen, not narrow.
In general, the producer–consumer information gap in not insur- mountable. For instance, the credence nature of goods may be reme- died through the provision of information, permitting credence goods to shift to experience and then search goods. Evidence in the USA has shown that increasing consumer information about GM crops has pos- itively influenced consumer acceptance (James, 1997). An important element of information is transparency, as was shown in a 1998 refer- endum in Switzerland, where consumers/voters were asked about their position on the continued support of biotechnology research and development. Consumer support and acceptance rose as the industries applying biotechnology adopted the strategy of opening up their activ-
12European Commission report published in January 1999, reported in the Financial Times (1999a). Given such a lack of understanding of GM crops, it is remarkable, for instance, that Patrick Holden of the UK-based Soil Association describes the consumer rejection of GM crops as based on ‘informed public opinion’ (Independent, 1999r).
ities to the public. Eventually, referendum results revealed that two- thirds of ‘informed’ voters supported the continued research, develop- ment and application of biotechnology (European Federation of Biotechnology, 1998). However, despite the importance of trans- parency, it has been argued that transparency has not always been the chosen strategy of both supporters and critics of agricultural biotech- nology, resulting in a dual lack of transparency (Economist, 1998a).
Both sides have, at times, failed to be completely transparent about the opportunities and risks, exacerbating the information gap and con- sequently the credence nature of GM crops.
Yet simply providing transparent information will not remedy all consumer concerns. The information must be useful, but there are sev- eral challenges to providing useful consumer information. First, pro- viding all the information necessary for consumers to completely understand agricultural biotechnology is impossible, given the scien- tific sophistication of agricultural biotechnology. Consumers would soon experience an overload of information (Eurobaromètre, 1997;
Hoban, 1997; Chess, 1998). This occurs because there are important limitations to the consumer’s ability to process information. For instance, labels cannot be expected to convey all the information that consumers may want. Indeed, it has been argued that simply labelling a product as ‘genetically modified’ is meaningless, because consumers want to know more contextualized information, such as which genes have been used (Grove-White et al., 1997). Consumers must then rely upon the judgements of others and this gives rise to the second chal- lenge: who should provide the useful information?
Without first-hand knowledge of the consumption ramifications of GM crops, consumers must trust that their concerns are being ade- quately addressed by either the industry, the regulators or a third party. In both North America (Hoban, 1997) and Europe (Eurobaromètre, 1997; Grove-White et al., 1997), consumers have indi- cated that they most trust third parties with information about GM crops, especially environmental organizations at the international level. Trust is a delicate attribute of information providers, as it is hard to build but easy to lose (Chess, 1998). However, opinions are very diverse, ranging from those who believe in the global-welfare promise of GM crops to those who wish to see the technology com- pletely abandoned. The polarity of opinions, producing overly sensa- tionalized information, can leave consumers very confused.
The third challenge of providing useful information is determin- ing who the information should target. Essentially, is it practical to try to inform every consumer, or is it more practical to target information to a few, who can disseminate it to many? It has been argued that
‘instead of trying to educate the public, we should focus our attention on the media, health professionals and other opinion leaders’ (Hoban,
1996c). This position recognizes that information must be accessible for the concerned consumer, and these are the information channels that they are most likely to turn to when seeking information.
A further problem remains for consumer acceptance of GM crops.
Even if trusted information providers satisfactorily inform consumers, consumers may still lack consumer choice or ‘informed consent’.13 For instance, the global handling and distribution system for agricul- tural crops is a bulk-orientated system that involves mingling different varieties of the same crop and mingling different crops. Within this existing system, it is virtually impossible to ensure segregation of pro- duction-improved GM varieties from non-GM varieties. In order to ensure segregation, dedicated handling and storage facilities must be used, resulting in cost increases (Isaac and Phillips, 1999c). In fact, due to a purely economic decision, GM varieties approved as substan- tially equivalent to non-GM varieties were initially mingled in the food supply in both North America and Europe without effective seg- regation and labelling.
In respect of the decision not to segregate, GM-crop developers in both the North American and the European grain and oil-seed indus- try argued two main points. First, the GM crops had been approved as safe and substantially equivalent to non-GM varieties, so there were no safety reasons to segregate. Secondly, it was argued that the distrib- ution system made it virtually impossible to segregate, with zero toler- ance, GM from non-GM crops without significant economic costs, a view shared by both US and European industry participants.14 Economic studies concluded that the costs of segregating would be substantial. An experimental identity-preserved production (IPP) sys- tem for GM canola/rape-seed varieties was implemented in Canada in 1995 and 1996. From this experiment, it was concluded that an IPP system created incremental costs of between C$34 and C$37 t−1 for grains and oil-seeds (Manitoba Pool Elevators, 1997). Other estimates concluded that developing and implementing an international IPP system would require a commodity price rise of between 140 and 180% (EuropaBio, 1997). In this sense, the decision not to segregate GM crops was not taken as a cunning strategy to push GM crops into the North American and European food supply, as some have sug- gested. Instead, it was made on the basis of the economic cost of developing an effective IPP system and with the view that such rises in crop prices and, consequently, food prices could not be absorbed by the industry and consumers.
13See also Balk (1993) for a discussion of consumer choice, referred to as ‘informed consent’.
14See: Agrevo (1996); American Soybean Association (ASA, 1996); Central Soya Protein Group (1996); National Soybean Producers Association (1996a,b); Sparks Companies, (1996); Grain and Free Trade Association (GAFTA, 1997).
Yet, regardless of the industry’s intentions to keep prices down at a competitive level, the current controversy surrounding the segrega- tion issue is indicative of the danger of treating consumers as mere economic agents and failing to address their broader concerns.
The biotechnology industry currently faces another important decision associated with consumer information and choice, this time over labelling. Again, the stance of industry – one that is shared by Canada and the USA – is that, since labelling is not for safety reasons, economics should determine what type of labelling prevails. They argue that certifiably non-GM crops and food products should bear a voluntary label in pursuit of niche-market premiums. Consumers’
organizations, however, often support labelling of any use of GM crops in the production of food products as a consumer right-to-know issue. For instance, 98% in Canada, 85% in the USA and, in aggregate, 74% of European Union (EU) consumers have all indicated at various times that they want GM labelling even if the GM crop has been approved as safe.15The issue of labelling will be discussed further in both Chapter 3 and Chapter 5, but the important point to make is that, despite the negative consumer reaction to the decision to ignore the broader concerns and only focus on the economic issues of segrega- tion, it appears that some jurisdictions are willing to make the same mistake again over the labelling issue.
The discussion above demonstrates the synergistic relationship between consumer acceptance and information, trust and choice.
Even if consumers are willing to accept only partial information about credence GM crops and to trust the regulators and information providers, the bulk nature of the global handling and distribution sys- tem for agricultural commodities restricts or prevents choice when segregation cannot be ensured. In this case, the consumer is unable to make even a boundedly rational consumption decision because of the absence of choice. Furthermore, this does little to ease consumer con- cerns. On the contrary, the credence nature of GM crops coupled with the inadequate information, lack of trust and absence of choice plays directly into consumer fears and rejection.