The International Consortium on Agricultural Biotechnology Research (ICABR)
Is European Consumers Refusal of GM Food a Serious Obstacle or a Transient Fashion ?
Andreas Böcker, Justus-Liebig-University Gießen, Germany
In recent years, several genetically modified (GM) crop varieties have been introduced. In less than 5 years, almost half of the US acreage of cotton, soy beans and maize has been planted with GM varieties. In many other countries, the adoption of GM products started well, too. In the seeding season 2000, however, the adoption seems to be interrupted, and even in the US hesitation is observed.
This stagnation has its origin in the rejection of GM food by consumers in European countries. The EU responded to the massive protests of lobbying groups by introducing a compulsory labelling system for all GM food. This labelling system burdens food supply with the cost of separating non GM from GM food.
Occasionally, the European consumer is characterized as extremely anxious, only trusting advocacy groups like Greenpeace, and deeply mistrusting governments and scientists. In this paper we argue that consumers act rationally in the sense of bounded rationality. The food purchasing habits of a bounded rational consumer may be characterized by an alternation between periods of sticking to an established buying rule and periods of deliberately decision making.
When the consumer is first confronted with GM food, he has to make a deliberate decision. He has usually only a vague reminiscence of arguments relating GM food to a danger with an extremely small probability, but causing enormous disutility, if it occurs. Being aware of the complexity of the topic, he perceives informing himself to produce high search costs, but little improvement in the quality of his decision. Thus, considering expected disutility and information costs he will only buy the GM product when it offers considerable advantages that could compensate for possible risks.
The University of Kiel carried out several studies to identify the size of such compensations. General results are: One fifth of the sample would accept GM food without hesitation, one fifth would never accept it, and the rest would accept it, if a compensation in the range from 0.05 to 0.15 EURO for products costing about 1 EURO was paid.
Such compensation payments are not very high compared to the usual price variation which ranges from 0.15 to 0.25 EURO for an item of that price. However, the requested compensation is too high for most food products.
Some scientists hope for greater acceptance of GM food when crops will be available that directly increase consumers utility through enhanced quality or new tastes and properties. Nevertheless, the situation for such quality improvements is similar to that for cost decreasing varieties. Most of the improvements can also be achieved through conservative technological measures like e.g. selecting, mixing, supplementing. We show in our analysis that the necessary additional costs in most cases price differentials that make GM food sufficiently attractive. Hence, the empirical part of our study does not give rise to the expectation that Europeans scepticism against GM food is short lived and easily overcome.