August 07, 2007

Study suggests ways to market modified foods

by K.C. Jaehnig


CARBONDALE, Ill. — To succeed in European markets, genetically modified foods will have to present a friendlier face, an agribusiness economist from Southern Illinois University Carbondale believes.

"If the industry can transfer this technology to Africa and other developing countries and have a major impact there using it as a tool to solve hunger, drought and other problems in these countries, that could change the perceptions of consumers in developed countries," says Wanki Moon, who has been studying consumer acceptance of genetically modified foods for a little more than five years.

"It's an indirect solution, but that's one of the only ways I can see to market them."

Moon, along with colleague Siva K. Balasubramanian of SIUC's College of Business and Administration and Arbindra Rimal from Missouri State University, has just published an article in this month's issue of the "Journal of Agricultural and Resource Economics" on the possibilities of discounts and premiums as marketing tools for these foods.

Based on data from a subset of 2,568 Britons surveyed in 2002, the researchers conclude that a substantial number of British consumers do not see genetically modified foods as the equal of food without the extra genes, which helps explain why the European food industry thus far has refused to use modified ingredients in manufacturing edible products.

Should the food industry change its stance in the future, it could expect roughly 12 percent of British consumers would buy genetically modified foods without hesitation — the origin simply doesn't matter to them. Roughly 35 percent would buy such foods given a large enough discount — on average, in the neighborhood of about 23 percent per item or roughly 22 percent shaved from their weekly grocery bill.

The actual discounts required at the store could be smaller. Survey respondents often overstate their anticipated responses in hypothetical situations. In this piece of research, the trio performed a sort of "reality check" by telling some of the respondents about this tendency before they completed the survey. The researchers found that those who heard about potential bias tended to choose lower discounts.

They also found that nearly 58 percent of British consumers were willing to pay extra to make sure their food didn't contain "foreign" genes — up to 20 percent more per item on average and 16.5 percent more on their weekly grocery tab.

In classic economic theory, the premiums consumers would pay to avoid modified food should equal the discounts they'd require to buy it. But that didn't happen here. The difference reflects a difference in the perception of the risks involved in eating genetically modified food, the researchers say.

Those who believed they risked more wanted larger discounts for taking their chances. This underscored earlier research by Moon and Balasubramanian, published in 2004 in the "Review of Agricultural Economics," on how risk perceptions affect public attitudes toward agrobiotechnology. In that article, they reported that British consumers would likely give more weight to potential risks than potential benefits, a tendency that occurs throughout Europe, despite lack of scientific evidence that genetically modified foods pose any kind of danger.

"So far, we have seen no negative impacts from this technology on health or the environment," Moon said.

Consumers tend to overestimate risk when they have no choice about taking chances, Moon said. In this respect, the industry shot itself in the proverbial foot.

"This whole issue of consumer acceptance was a backlash," he said.

"The industry just assumed consumers would accept it, but they didn't. They saw these products as giving most of the benefits to the producers and most of the risks to themselves, so the industry lost the huge potential for profits it could have had had it taken the time to present the technology and its products and worked with regulators from the beginning."

In their 2004 article, Moon and Balasubramanian concluded that the risks/benefits debate would dominate the future of genetically modified food. They recommended that the industry develop and commercialize what they called "second-generation" crops — those that clearly provide consumer benefits. To some degree, this has occurred. Golden rice, for example, modified to contain more Vitamin A, has helped many children in the Third World.

"In the Philippines, thousands of kids go blind because of lack of Vitamin A," Moon pointed out.

Yet, these crops have had no effect on European consumers for a very simple reason, Moon believes.

"They benefit developing countries," he said. "What the industry needs is products that affect European consumers. If it can develop those, it could change the outcome dramatically. It has a number of second-generation products in the pipeline that could improve taste or nutritional content, but few are on the market yet."

In the United States, where Moon and Balasubramanian surveyed more than 3,000 consumers, negative attitudes toward genetically modified foods play a far smaller role in the marketplace. And overall, genetically modified organisms of all types aren't the hot buttons they were when first introduced. Nonetheless, true global acceptance will depend largely on Europe, Moon believes.

"This whole issue started there, and they have the key to resolve it," he said.