The International Consortium on Agricultural Biotechnology Research (ICABR)
Consumer Attitudes Towards
Genetically Modified Foods
The Modelling of Preference Changes
Chantal Pohl Nielsen,
University of Illinois,
This paper analyzes the price, production and trade consequences of changing consumer preferences regarding the use of genetically modified organisms (GMOs) in food production. The analytical framework used is an empirical global general equilibrium model, in which the entire food processing chain from primary crops through livestock feed to processed foods is segregated into genetically modified (GM) and non-GM lines of production. This model is used to analyze the implications of widespread use of genetically engineered crops in some regions whilst consumers in Western Europe and High-income Asia adopt a critical attitude toward GM foods. Two different representations of consumer preference changes are illustrated: (1) a change in price sensitivity: i.e. consumer demand is less sensitive to a decline in the price of GM foods relative to non-GM varieties, and (2) a structural demand shift: for a given price ratio consumers simply demand less of the GM variety relative to the non-GM variety.
The results of the empirical analysis show when production and marketing systems are segregated into GM and non-GM lines all the way from primary crops through livestock feed to food processing, changing consumer attitudes toward GMOs will have substantial effects on trade, production and prices not only for the crop sectors that benefit directly from the new technology, but also for the sectors that use these crops as inputs in production. Interpreting consumer dislike of GM foods as a reduced sensitivity to relative price changes dampens the impact of the productivity difference between the two varieties. If consumer preference changes are in fact more a matter of rejection rather than reduced price sensitivity, the effects on prices, production and trade flows are much more dramatic and the direction of effects reverses. Countries that are heavily dependent on exporting GM-potential crops to the GMO-critical regions find themselves increasing exports and hence production of non-GM varieties and reducing production of GM-varieties in spite of the productivity benefit. Clearly, the results depend crucially on the extent of GMO-rejection by consumers and the size of the productivity gain foregone in comparison with the relative price premium obtainable on non-GM varieties. For some countries the development of segregated GM and non-GM food markets is a way of retaining access to important export markets if and only if the non-GM characteristic can in fact be preserved and verified throughout the marketing system at reasonable costs.