Journal of Agricultural & FoodIndustrial Organization

Volume Article

Controversies Over the Adoption of GeneticallyModified Organisms

Effects of Information on Consumers’

Willingness to Pay for GM-Corn-Fed Beef

Quan Li∗ Jill J. McCluskey†

Thomas I. Wahl‡

∗Washington State University, li quan 9@yahoo.com†Washington State University, mccluskey@wsu.edu‡Washington State University, wahl@wsu.edu

Copyright c©2004 by the authors. All rights reserved. No part of this publication maybe reproduced, stored in a retrieval system, or transmitted, in any form or by any means,electronic, mechanical, photocopying, recording, or otherwise, without the prior writtenpermission of the publisher, bepress, which has been given certain exclusive rights bythe author. Journal of Agricultural & Food Industrial Organization is produced by TheBerkeley Electronic Press (bepress). http://www.bepress.com/jafio

Effects of Information on Consumers’

Willingness to Pay for GM-Corn-Fed Beef∗

Quan Li, Jill J. McCluskey, and Thomas I. Wahl

Abstract

There has been growing public opposition against genetically modified (GM) foods.Using a dichotomous choice contingent valuation methodology, we analyze the factors thataffect the willingness to pay for GM-corn-fed beef by consumers in Spokane, Washington.The mean discount required to choose the GM-fed beef is small at 8% compared to otherstudies in Europe and Japan. Further, half the sample was provided information aboutbiotechnology, and the effect of this information is analyzed.

KEYWORDS: GM-food, consumer demand, willingness to pay

∗Quan Li is a Ph.D. candidate at Washington State University, Jill J. McCluskey is anassociate professor in the School of Economic Sciences and Food Policy Fellow in theInternational Marketing Program for Agricultural Commodities and Trade (IMPACT)Center, Washington State University and Thomas I. Wahl is Professor, School of EconomicSciences and Director, IMPACT Center, Washington State University, Pullman. Theauthors gratefully acknowledge financial support from the IMPACT Center at WashingtonState University. The authors wish to thank without implicating Phil Wandschneider forhelpful discussion and comments.

1. Introduction

From 1996 to 2002, the acreage of transgenic crops increased thirty-five fold worldwide, from 1.7 million hectares in 1996 to 58.7 million hectares in 2002 (ISAAA, 2003). While U.S. farmers have adopted genetically modified (GM) crops in large numbers, the consumer response to GM food products has varied. The long-term economic success or failure of applications of biotechnology in agricultural-food products depends critically on consumer acceptance. Agribusi-ness leaders, producers, and scientists involved in biotechnology did not foresee how controversial GM foods would be with consumers, particularly for certain export markets. Consumer attitudes and preferences toward GM food products are complex and differ across cultures.

Since 60 percent of the U.S. corn production is used for livestock and poultry feed (USDA/NASS, 2000), we investigate the consumer acceptance of beef from cattle that were fed GM corn. Studies have found that consumer acceptance of GM food is low in Europe and Japan (McCluskey et al., 2003; Lusk, Roosen, and Fox, 2003). Particularly relevant to the valuation aspect of this study, Lusk, Roosen, and Fox (2003) find that consumer participants in France, Germany, and the United Kingdom place a higher value on steaks from cattle that have not been fed GM corn compared to their U.S. counterparts. With little success, Japanese authorities are making efforts to ease these fears. Such anxiety is also widespread in Europe, where a number of supermarket chains have begun to advertise chicken and pork raised on GM-free feeds, and where Greenpeace has long been advocating mandatory labeling of meat based on whether or not it comes from GM-fed livestock. Some European countries, such as France and Belgium, have already requested a mandatory labeling of meats derived from GM feed (Paarl-berg, 2001).

There is general agreement among scientists on the safety of meats from animals fed on GM feeds. The Swiss Association for Research and Nutrition finds that meat, milk, and eggs from animals given GM feeds are just as harmless for human consumption as those from animals given conventional feeds (Bodenmul-ler, 2001). In response to the StarLink™ crisis, Japan’s Scientific Feed Associa-tion recently conducted tests on 256 chickens to ascertain whether those that were fed StarLink corn had traces of genetically modified DNA or GM protein in the muscles, blood, or livers of the mature chickens. “Based on the safety analyses required for each crop, consumption of milk, meat, and eggs produced from ani-mals fed GM crops should be considered to be as safe as those from traditional practices,” (Beever and Kemp, 2000). However, consumers may not trust scien-tists, especially after they were told in the mid-1990s that humans could not get

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bovine spongiform encephalopathy (BSE), also known as “mad cow disease,” from ingesting meat.

If the trend for consumers to reject GM-food products continues to grow in the United States, U.S. agriculture and agricultural biotechnology companies will be affected deeply. Two major baby-food companies, Gerber and Heinz, have al-ready promised to keep their products free of genetically modified organisms (GMOs). Quick-service restaurants, such as McDonald’s, have refused to use GM potatoes to make their fries. This effectively stopped producers from using Bt po-tatoes. In Starbuck’s coffee drinks, public pressure made Starbucks pledge to use only milk that is free of recombinant Bovine Growth Hormone (rBGH), which increases milk production in cows.

Our study investigates the U.S. market for GM-corn-fed beef and examines the challenges and opportunities confronted by the biotech industry in the United States. Specifically, we address the obvious valuation and acceptance questions of U.S. Pacific Northwest consumers. Further, we investigate if the provision of in-formation has a significant impact on the consumer willingness-to-pay and whether this effect, if any, differs by subgroup. Finally, we compare our valuation to another U.S. study that uses a different elicitation approach for its cross valida-tion of methods.

2. Previous Studies

There has been a great deal of research recently on consumer attitudes and re-sponses to GM foods (Lusk et al., 2004). In this section, we focus on the subgroup of this research that considers information effects. Tegene et al. (2003) conduct an experimental auction to elicit the consumer willingness-to-pay for GM-labeled and standard-labeled foods under different information regimes in two Midwest-ern U.S. cities. Under all information treatments, consumers discounted food items labeled “GM” by an average of 14 percent. While gender, income, and other demographic characteristics appeared to have only a slight impact on the con-sumer willingness-to-pay for GM foods, information from interested parties and from independent third-party sources was found to have a strong impact. Our re-sults are consistent with other studies that show individuals place a greater weight on negative information than they do on positive information.

Scholderer and Frewer (2003) test communication strategies for changing the consumer attitude toward GM foods in an experimental study involving consumer samples from Denmark, Germany, Italy, and the United Kingdom. Using a con-trol group, different information strategies were employed in an attempt to change consumer attitudes. Scholderer and Frewer (2003) find that no attitude change oc-curred. However, unlike attitudes, the consumer-product choices were sensitive to the provision of information they received about the product. All information ma-

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terials decreased significantly the probability of the consumer to choose GM products.

Frewer et al. (1999) investigate the British consumer response to a number of messages that all stressed the benefits of GM foods but the responses varied in persuasiveness. None of the messages had a significant impact on the consumer attitude.

3. Data

We collected data through in-person “convenience” surveys in Spokane, Wash-ington. The survey instrument was pre-tested with students and conducted during February 2003 in four separate locations, including three conventional grocery stores and one natural-foods grocery store. These particular locations were chosen to ensure a broad sample of Spokane shoppers. By collecting data from consum-ers where their decisions for purchasing beef are actually made, we hoped to ob-tain data that would elicit consumers’ true preferences about GM-corn-fed beef. Respondents were selected randomly and were asked to fill out the questionnaire. Every respondent who completed a questionnaire was given the choice of a box of cookies or a chocolate bar worth between two and three dollars. The approximate turndown rate for the cookies or the bar of chocolate was 50 percent of the 603 surveys completed.

Of the 603 respondents, 509 people indicated that they ate beef. The subse-quent analysis was limited to these 509 respondents, of which 61.4 percent were female, 55.2 percent were employed full-time, and 69.2 percent were over the age of 35. The average age of the respondents was 42.6 years and 32.4 percent of re-spondents had children under the age of 18 living in their household. For our sample, an average of 2.6 people lived in each household. Also, 79.4 percent of the respondents lived in either urban or suburban areas. The mode of the respon-dents’ household income reported in the survey ranged between U.S. $30,000 and U.S. $50,0001 for the 2002 fiscal year, and their average education included some college (equivalent to a two-year degree). Summary statistics for the demographic variables are presented in Table 1.

The survey elicited information regarding respondents’ attitudes about envi-ronmental and food safety, their attitudes and knowledge about biotechnology, their beef-consumption habits, and other factors influencing their purchase deci-sions (Table 2).

1 To obtain a higher response rate, respondents were asked to place themselves in income brackets. This method was used because respondents are typically reluctant to divulge exact income infor-mation.

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Table 1. Summary Statistics for Demographic Variables

Variable Description (Coding) Distribution of Survey Re-

sponses Percent Site 0 if Natural Foods Store

1 if Convention Grocery Store 51.1 48.9

Age 0 if > 35 years 1 if ≤ 35 years

69.2 29.5

Mean = 42.6 Std. dev. = 16.3

Gender 0 if male 1 if female

37.8 61.4

Education 1 if Compulsory Education 2 if High School 3 if 2-year college 4 if 4-year college or university 5 if advanced/professional degree 6 if refuse

1.4 20.4 22.6 26.5 25.9

1.6

Children 0 if children under 18 in household 1 otherwise

32.4 63.9

Income 1 if <30,000 USD 2 if 30,000-50,000 USD 3 if 50,000-70,000 USD 4 if 70,000-100,000 USD 5 if >100,000 USD 6 if refused

25.1 23.6 20.4 12.0 11.0

7.9

Coding for esti-mation: 0 if

<U.S. $50,0001 if > U.S. $50,000

annual income

Employment Status

1 if full time employed 2 if part time employed 3 if unemployed 4 if house maker 5 if retired 6 if refused 7 if student

55.2 14.7

4.9 8.1

12.2 1.8 0.6

Coding for esti-mation:

0 if full time em-ployed

1 if otherwise

Location of Residence

1 if urban 2 if suburban 3 if rural

41.5 37.9 19.6

Coding for esti-mation: 0 if ur-ban, suburban

1 if rural

Family Size

Number of people shopped for

Mean = 2.6 Std. dev. = 1.4

Source: Authors’ compilations.

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Table 2. Summary Statistics for Consumer Information and Perception Variables

Variable Description (Coding) Distribution of Responses

Information Benefit information provided to respondents 0 if information is given 1 if information is not given

49.1 50.1

.

Opinion Opinion about use of GM corn to feed cattle 0 if positive or neutral opinion 1 if negative opinion or don’t know

44.6 55.4

.

Safety vs. Price

Importance of food safety vs. food price Scale from 1 to 10 where 1 food safety is all important 2-4 food safety is somewhat more important 5-6 the same importance 7-9 food price is somewhat more important 10 food price is all important

24.1 32.4 23.8 15.9

3.8

Risk Risk associated with GM corn-fed beef 0 if high risk 1 if low risk, no risk, or do not know

19.3 80.7

Labeling GM corn-fed beef should be labeled. 1 if strongly agree 2 if somewhat agree 3 if somewhat disagree 4 if strongly disagree

47.5 42.4

5.7 2.4

Environment Importance of economic growth vs. saving the environ-ment Scale form 1 to 10 where 1 economic growth at all costs is all important 2-4 economic growth is somewhat more important 5-6 the same importance 7-9 saving environment is somewhat more important 10 saving the environment is all important

1.9 11.9 35.6 39.1 11.5

Knowledge Knowledge about beef from cattle fed with GM corn 1 if very knowledgeable 2 if somewhat knowledgeable 3 if not informed

8.2

46.0 44.8

Source: Authors’ compilations.

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We found that 55.8 percent of respondents ate beef at least once a week, 76.3 per-cent felt that beef is safe, and 72.1 percent read nutritional labels. Next, the re-spondents, on average, valued food safety slightly more than they valued low prices when asked if they would trade off food safety for food price (see the Ap-pendix of this article for actual question). Also, when a similar question was asked concerning economic growth versus preserving the environment, we found the respondents, on average, valued saving the environment more than they val-ued economic growth (see the Appendix of this article for the actual question). The distribution of the responses to the trade-off questions is also presented in Table 2.

Our 509-person sample was split into equal groups to check the effect infor-mation had on their responses. Before the consumers were asked about their pref-erences for GM-corn-fed beef products, however, one-half of the sample was pro-vided a paragraph that contained scientific information about GM-corn-fed beef. The paragraph is also presented in the Appendix of this article.

Our survey included contingent-valuation questions regarding willingness to purchase beef from cattle fed GM corn. Consumers were first asked if they were willing to pay the same price for GM-fed beef as they would be willing to pay for the non-GM-fed beef. If the respondent’s answer to this question was “no,” a fol-low-up question was asked and the respondent was offered a percentage discount on the GM-fed beef relative to the non-GM-fed beef. The discount was set at one of the following levels: 10 percent, 20 percent, 25 percent, 50 percent, or 100 per-cent. Each level of discount was used for one-fifth of the surveys. The assignment of survey version (and thus, discount) was random to the respondent. Similarly, if the respondent’s answer to the first question was “yes,” a follow-up question was asked in which the respondent was asked if he or she would still choose the GM-fed beef if the price were higher relative to the non-GM-fed beef. The premium was set at one of the following levels: 5 percent, 10 percent, 20 percent, 25 percent, or 50 percent. The distribution and range of the response rates to the randomly assigned discounts and premiums are presented in Tables 3 and 4. Table 3. Range and Distribution of Response Rates to the Randomly Assigned Dis-count

Yes to Discount No to

Discount Total Percent Percent Discount 10.0 20.0 25.0 50.0 100.0

GM-Corn-Fed Beef 0.7 2.4 2.0 2.2 2.2 34.1 43.6 Source: Authors’ compilations.

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Table 4. Range and Distribution of Response Rates to the Randomly Assigned Pre-mium

Yes to Discount No to

Discount Total Percent Percent Discount 5.0 10.0 20.0 25.0 50.0

GM-Corn-Fed Beef 6.2 6.2 5.1 2.7 5.3 31.0 56.4Source: Authors’ compilations.

4. Econometric Model

The contingent-valuation method (CVM) is a standard approach to elicit people’s willingness-to-pay or willingness-to-accept through a dichotomous choice. A market-type questioning format with a direct survey via telephone, mail, and/or an in-person questionnaire is used (Kanninen, 1993). In the dichotomous choice CVM, each respondent is asked whether or not he or she would be willing to ac-cept a particular discount for a particular good in a hypothetical market, letting him or her answer with “yes” or “no” along with the discount bid amounts offered to each individual.

The standard double-bounded logit model is used to examine the outcomes of the survey (Hanemann, Loomis, and Kanninen, 1991). The double-bounded model is asymptotically more efficient than is the single-bounded model, includ-ing decreased variances and covariances, which results in higher t and R2 statis-tics. There may be drawbacks however, to using the double-bounded model. If the second round of follow-up bids are made sufficiently small when the response to the first bid is a “no” or if the second round is sufficiently large when the response to the first bid is “yes,” then no additional information is retrieved over that which was obtained from the first bid. Hanemann, Loomis, and Kanninen (1999) note that there is some bias with the double-bounded model, due primarily to inconsis-tencies that may be present between the consumers’ first and second bid. How-ever, the authors point out that the bias is greatly out-weighed by the gain in effi-ciency.

In the standard double-bounded model applied to our data, there were four possible outcomes: (1) the respondent was not willing to purchase the GM prod-uct at the same price as the non-GM product, nor was he willing to purchase the GM product at a discount relative to the non-GM product (i.e., “no” to both bids); (2) the respondent was not willing to purchase the GM product at the same price as the non-GM product, but was willing to purchase the GM product at the ran-dom discount offered (i.e., “no” followed by a “yes”); (3) the respondent was willing to purchase the GM product at the same price as the non-GM product, but was not willing to purchase the GM product at a premium (i.e., a “yes” followed

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by a “no”); (4) the respondent was willing to purchase the GM product at the same price as the non-GM product and also was willing to purchase the GM product at a random premium offered relative to the non-GM product (i.e., “yes” to both bids).

The questioning sequence isolates the range in which the respondents’ true willingness-to-pay WTP lies (Equation 1), placing it into one of the following four intervals: (-∞, BL), [BL, BI), [BI, BH), or [BH, +∞). The second bid, in conjunction with the response to the initial preference decision, allows for both an upper and a lower bound to be placed on the respondent’s unobservable true WTP. In particu-lar, when the second decision is in the same direction as the first (“yes, yes”; “no, no”), it raises the lower bound or lowers the upper bound, respectively. Therefore, the following discrete outcomes of the bidding process are observable:

1234 ,

L

L

I H

H

WTP B

IB WTP BD

B WTP BB WTP

<⎧⎪ ≤ <⎪= ⎨ ≤ <⎪⎪ ≤⎩

(1)

where WTP denotes the individual’s willingness-to-pay (or bid function) for GM corn-fed beef products.2 The WTP function is represented as:

,WTP B z′= α −ρ + λ + ε (2)

where B is the ultimate bid amount each consumer faces, z is a column vector of observable characteristics of the individual, ε is a random variable accounting for unobservable characteristics, and , , and ′α ρ λ are unknown parameters to be es-timated. Assuming linearity in z3 and letting 2~ (0, ),Gε σ where de-notes a cumulative distribution function with mean zero and variance the choice probabilities can be characterized as:

2(0, )G σ2 ,σ

2 The distribution of each group is presented in Tables 3 and 4. 3 The condition of linearity on z is a simplifying assumption widely used in random utility models. This assumption implies that the consumer willingness-to-pay of c dollars is generally represented as:

0 1(0, , ) (1, , )U x m U x m c≤ − ,

0 0 1 1 0 1 1 0Pr{ } Pr{ } Pr{ }WTP c V V V V≥ = + ε ≤ + ε = ε − ε ≤ − ,

where . 1 0V V c− = α +β

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)( jDprob = =

( )

( ' ) (

( ' ) (

)

1 ( )

L

I L

H I

H

G B z

G B z G B z

G B z G B z

G B z

⎧ ⎫′α − ρ + λ⎪ ⎪

)

′α − ρ + λ − α −ρ + λ ⎪⎪⎨ ⎬

′α − ρ + λ − α −ρ + λ⎪ ⎪⎪ ⎪′− α −ρ + λ⎩ ⎭

%% %

% %% % % %

% %% % % %

%% % ⎪⎪⎭

⎪⎪⎬

⎫

⎪⎪⎩

⎪⎪⎨

⎧

=

4321

j

i

i

for . (3)

Thus, the log likelihood function becomes:

1

2

3

4

ln ( )

ln[ ( ) ( )]

ln[ ( ) ( )]

ln[1 ( ' )]

D Li ii

D Ii i Lii

i D Hi i Iii

D Hi ii

I G B z

I G B z G B zL

I G B z G B z

I G z

=

=

=

=

⎧ ⎫′α − ρ + λ +⎪ ⎪⎪ ⎪′ ′α − ρ + λ − α −ρ + λ +⎪ ⎪= ⎨ ⎬

′ ′α − ρ + λ − α −ρ + λ +⎪ ⎪⎪ ⎪

− α −ρΒ + λ⎪ ⎪⎩ ⎭

∑

%% %

% %% % % %

%% % % %

%% %

(4)

where KI is an indicator function for the event K, Di = j denotes that the jth alter-native occurred, and i denotes individual i. In the empirical implementation of the model, we define to be the standard logistic distribution with mean zero and standard deviation

(.)G/ 3σ = π . The empirical representation of Equation (2) is for-

mulated as:

(5) 1 2

3 4 5* *i i i i

i i

WTP B Info Opin

Risk Info Env Info Edu

= α −ρ +λ + λ +

λ + λ + λ +i iε

where represents the random bid offered to respondent i; InfoiB i is an indicator variable representing whether or not respondent i received information; Opini is an indicator variable representing respondent i’s opinion regarding the application of biotechnology to food products; Riski is an indicator variable representing re-spondent i’s perception of risk associated with GM-corn-fed beef; Envi is a vari-able representing the respondents environment concern; and Edui represents the respondents reported years of education.4

5. Estimation Results

Equation 5 was estimated, and the parameter estimates are presented in Table 5. Other variables are not included because of multicolinearity problems or lack of statistical significance. The estimation results show that variables representing the

4 Other models, including the respondent’s income, age, education, household size and employ-ment status as regressors, were fitted. None of these variables were significant statistically.

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Table 5. Parameter Estimates for Willingness-to-Pay Model Parameter Variable Description Estimate Standard Error t-value p-valueα Intercept -2.2990 0.7740 -2.9702 0.0030ρ Bid 2.0299 0.3235 6.2744 0.0000

1λ Info 1.3231 0.6740 1.9629 0.0497

2λ Opin -0.5554 0.2466 -2.2516 0.0243

3λ Risk 0.9062 0.3911 2.3169 0.0205

4λ Info*Env 0.0836 0.0480 1.7393 0.0820

5λ Info*Edu 0.0680 0.0381 1.7818 0.0748Source: Author’s compilations. provision of information, positive opinions regarding biotechnology, and low-risk perceptions associated with GM-corn-fed beef increase significantly the consumer willingness-to-pay for GM products. Moreover, the results indicate that there are interactions between information provision and environmental attitudes and be-tween information provision and the level of education. This means that informa-tion provision has greater effects for particular groups of consumers. The envi-ronmentally conscious educated respondents who receive scientific information are willing to pay more for the food item relative to their less-environmentally conscious less-educated counterparts. The information provided to half of the sample included that there have been no findings of genetic problems in GM-corn-fed beef and benefit information. Since the benefit information included that GM corn can be beneficial to the environment through less exposure to insecti-cides, it is not surprising that environmentally conscious respondents are affected to a greater degree than others. Interestingly, more educated respondents are also influenced to a greater degree than others are. A possible explanation is that the more educated respondents are less skeptical of the scientific consensus.

The mean willingness-to-pay WTP, is commonly estimated by restricting the s equal to zero and then calculating the empirical mean WTP of -′λ α ρ% % (Hane-

mann, Loomis, and Kanninen, 1991). Using this methodology, our results indicate that across the two information treatments, consumers require an average of 8 percent discount to choose GM corn-fed-beef products over regular beef prod-ucts.5 The mean WTP for the group that was provided the scientific and benefit information is a 6 percent premium, while the mean required discount for the 5A 95 percent confidence interval around this estimated mean WTP is (–.238, .067) for GM-corn-fed-beef products. This confidence interval was calculated using the delta method, which ap-proximated the asymptotic variance of the ratio of two random variables according to Kanninen (1993) as: ( ) ( ) ( )22 2 2 2a 1 ( ) 2 cov( )a⎡ ⎤σ −α ρ ≅ ρ ρ σ α − α ρ αρ + σ ρ⎢ ⎥⎣ ⎦

( ) .

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group without information is 23 percent. When compared to other studies in Europe and Japan, consumer acceptance to GM food is less negative in our U.S. sample than it is in other parts of the world. For example, in a study of consumer attitudes toward GM foods in the United Kingdom, Burton et al. (2001) find that male shoppers are willing to pay an extra 26 percent to avoid animal and plant GM technology, while female shoppers are willing to pay an extra 49.3 percent. McCluskey et al. (2003) find that Japanese consumers in their sample, require an average discount of greater than 50 percent for noodles made with GM ingredi-ents relative to GM-free noodles.

Our results support the findings of Lusk, Roosen, and Fox (2003) that Ameri-can consumers need a modest discount compared to European consumers for GM-corn-fed beef. Further, Lusk, Roosen, and Fox (2003) use a conjoint approach as opposed to the double-bounded model we used in this article. Even under differ-ent elicitation methods, our findings are similar (Anonymous Reviewer, 2003). Cross validation of valuation approaches provides support for policy decisions that are based solely on results from stated-preference data.

The scientific consensus is that the food product in this survey, GM-corn-fed beef, is equivalent to the conventional beef product. However, on average, con-sumers want a small discount in order to choose the GM-corn-fed beef over the conventional product. This reminds us that it is the public’s perception of risk, rather than scientifically proven risk, that affect markets directly. This brings up the issue of scientific versus consumer sovereignty (Roberts, 1999). Although the scientific consensus is that GM foods are completely safe for consumption aside from potential allergens, it may still be the case that a majority of the population in a given country prefers to avoid GM foods.

There is still a general lack of consumer knowledge about biotechnology. According to our survey, 44.8 percent of the respondents reported that they are not informed, and only 8.4 percent of the respondents think they are very knowl-edgeable about GM-corn-fed beef. When GM corn was first introduced to the United States, there was not much media coverage (Shoemaker, 2001) although they were given the same public notification as for all other regulations related to food safety. Hence, there are concerns pertaining to the risk associated with con-suming GM-corn-fed beef. In our survey, only 12.6 percent of the respondents believe there is no risk with this product.

6. Conclusions

Most consumers in our survey agree that GM-corn-fed beef should be labeled (47.5 percent strongly agree and 42.4 percent somewhat agree). However, the U.S. government does not require mandatory labeling because the U.S. Food and Drug Administration (FDA) concluded that GM foods are nutritionally equivalent

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to non-GM foods. The FDA’s argument is that as long as the food is free of impu-rities and allergens and is nutritionally equivalent, labeling is not needed. GM-corn-fed beef producers, of course, do not voluntarily label their products because of concerns over the possibility that consumers will choose to avoid their products or consumers will demand a discount for them relative to the non-GM counter-part. Our results provide support for the concern that GM labels could cause con-sumers to avoid GM products if stores do not offer a small discount.

Although there are no mandatory labeling requirements in 2004, there are groups who are lobbying the state and local government for such legislation. Con-sumer groups in Oregon proposed a law that “Requires Labeling of Genetically Engineered Foods Sold or Distributed in or from Oregon” on the state’s 2002 bal-lot. Although it was defeated, these lobby groups are planning a similar initiative for California. There are also possibilities that retail corporations will adopt their own standard to please consumers. Several large European retail food chains al-ready ban products from animals reared on feed produced from GM crops. These bans exceed EU regulatory standards and affect substantially larger markets, be-cause GM crops are used mostly for animal feed production (Kalaitzandonakes and Bijman, 2003).

A strategy to reduce the need for discounts and to avoid potential bans and mandatory labeling is to convey scientific and benefit information, which would provide uninformed consumers with basic knowledge of GM food. Also, it will likely make the products more acceptable to certain subgroups of consumers. This explains why biotechnology companies have invested heavily in advertising the positive aspects of biotechnology (Thrane, 2001).

Based on the results of this study, we argue that better education and infor-mation may help to improve the acceptance of GM foods. Further, the relevance of the information to specific consumer groups matters and should also be tar-geted. As for information distribution, a wide range of formats, including product information in grocery stores and brochures about manufacturing technologies, could be utilized to improve the image of biotech foods. Still, there are important issues of consumer skepticism and trust that in many cases will not be overcome. That said, our findings indicate that, for at least a statistically significant part of our sample, information matters.

Furthermore, we must recall that the product in this study belongs to the first-generation of genetic modifications that address production conditions (pests) and have “input traits;” thus they are producer friendly rather than consumer friendly. As second-generation GM products that will include “quality traits” enter the market, consumers may be more accepting of biotechnology in food. With bene-fits directly accruing to the consumers, those consumer-friendly GM products could be accepted without discounts or could receive a premium. For example,

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healthier corn oil would be more desirable from a consumer point of view than would Roundup Ready™ soybeans.

Further research should examine a number of issues surrounding information provision and consumer trust, including what types of benefits would convince consumers to accept GM products, how the information should be communicated so that consumers could make an informed choice, and which organizations con-sumers trust to provide information.

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Appendix

QUESTION USED TO ELICIT FOOD SAFETY ATTITUDES When you are purchasing food, how important are lower food safety risks versus lower cost food. Please, place yourself on a scale of 1 to 10, where 1 means food safety is all-important and 10 means lower food prices all important? (CIRCLE JUST ONE) 1 2 3 4 5 6 7 8 9 10

QUESTION USED TO ELICIT EVIRONMENTAL ATTITUDES Where would you place yourself on a scale from 1 to 10, if economic growth at all costs is a 1 and saving the environment at all costs is a 10? (CIRCLE JUST ONE) 1 2 3 4 5 6 7 8 9 10 INFORMATION ON GM CORN-FED BEEF PROVIDED TO HALF THE SAMPLE Beef from cattle fed with GM corn is known to be effectively non-GM. There have been no findings of genetic problems in the beef. Using GM corn can benefit the corn farmer through higher yields and improved profitability. Also using GM corn can be beneficial to the environment through less exposure to insecticides.

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