California’s Secretary of State recently announced that the California Right to Know Labeling Initiative will be Proposition 37 on this November’s state ballot. If passed, this initiative would require labeling by food manufacturers of any genetically modified organisms (GMOs), also known as genetically engineered organisms (GEOs).
GMOs made their first public appearance in 1994, when a tomato became the first genetically engineered product sold. Since then, GMOs have become increasingly more common in everyday products. In fact, the Grocery Manufacturers of America estimates that approximately 70 to 75% of processed foods available in U.S. grocery stores contain a GMO. Furthermore, the FDA, which oversees product labeling requirements, considers GMOs to be “generally regarded as safe” (GRAS) and does not require that they be identified on product labels. Nevertheless, despite nearly two decades of main stream retailing, it seems that the American public remains largely unfamiliar with the both the benefits and commonality of GMOs, as well the scientific community’s support for their safety.
How will Prop 37 impact the food manufacturing industry?
Should California vote in favor of Proposition 37, the imposition of similar labeling requirements is likely to follow in other states around the country. As a result, manufacturers will likely experience increases in operational costs, as they are forced to adjust their manner of handling and preparing their products to account for GMOs. Furthermore, food companies will also see increased legal costs, because increased labeling requirements would also increase the potential for litigation, namely false-labeling class actions, which are becoming increasingly more common. These class actions are not only costly to defend, but also harmful to a food company’s brand.
Where will these impacts manifest?
- Food producers will need to implement a system for maintaining separate inventories of product, so as not to mix the GMOs and non-GMOs.
- Companies will be forced to amend their HACCP plans to address the handling of GMOs.
- Overhead may increase as a result of inconsistent GMO labeling requirements nationally.
- Companies will be forced to choose between having one label which adheres to each state’s requirements and utilizing different labels depending on the state in which the GMO containing product will be sold.
- In response to potential consumer backlash against products containing GMOs, food manufacturing companies may need to raise the price of their products, discontinue certain brands, or engage in costly marketing campaigns to ensure future profitability.
- Increased labeling requirements would also increase the potential for litigation in the form of false-labeling claims.
In business, smart companies aim to do business ethically and place the health and safety of their consumers first; they have the ability to meet goals while still complying legally with an ever-changing legislative landscape.
What are smart companies in the California food industry doing to prevent consumer backlash and insulate themselves from potential lawsuits in a post-Proposition 37 market?
- Communicating: In-house counsel and litigation counsel should be having frequent conversations regarding the short and long impact of this initiative. Great litigation firms not only understand