Is There a Market for Genetically Modified Foods in Europe? Contingent Valuation of GM and Non-GM Breakfast Cereals in the

Public concerns about potential risks that genetically modified organisms (GMOs) may pose for human health and environments have stirred unprecedented turmoil and disarray in domestic and international food supply chains (Josling, 2000; Sheldon, 2001; Zepeda, 2001). The controversy over GMOs is believed to have originated from the European Union (EU), a part of the world already devastated from food-related scares such as mad cow disease. To mollify consumers concern about foods, in 1998 the EU imposed a moratorium that precluded approval of new genetically modified (GM) crops. As a result, ever since the EU approved Roundup Ready soybean and Bt corn several years ago, more recent versions of GM crops (such as Roundup Ready and Yieldgard Rootworm corn) remain unwelcome in EU markets. Evidence available thus far does not support the alleged health and environmental hazards attributed to GMOs. In fact, dissatisfied with the slow progress of the EU in eliminating the moratorium, the United States and other countries (including Argentina, Canada, and Egypt) announced in May 2003 that they would begin to file a formal World Trade Organization dispute to resolve the EUs moratorium on GM crops. The EU has been finding it increasingly difficult to justify its moratorium under these circumstances. Finally, in July 2003 the European Parliament approved mandatory traceability and labeling legislation as a preliminary step toward eventual replacement of the current moratorium. Food manufacturers and food retailers in Europe have historically avoided GM foods, in line with the prevailing popular sentiment there against agrobiotechnology. That is, European food supply chains strategically decided to focus on non-GM foods instead of allowing consumers to independently choose between non-GM and GM foods (Kalaitzandonakes & Bijman, 2003). However, the new policy regime may signal to European food manufacturers and retailers that GM foods are acceptable and marketable. In fact, Muth, Mancini, and Viator (2002) indicate that food manufacturers decisions regarding GM ingredients are influenced by the regulatory environmentparticularly approval and labeling rules. Should GM foods be introduced in the supermarkets in Europe, retail prices may differ between non-GM and GM foods, with the magnitude of the difference equal to or higher than the costs of segregation and labeling. Some food manufacturers and retailers may offer GM foods in order to entice priceconscious or GM-technology-embracing consumers. European consumers will then truly have the opportunity to choose between non-GM and GM food products. Given this potential policy shift, our study probes into how consumers in the United Kingdom would behave when faced with the choice between GM and non-GM breakfast cereals in the supermarkets. Previous research using contingent valuation or choice experiments have estimated willingness-to-pay for non-GM foods (Baker & Burnham, 2001; Burton & Pearse, 2003; Burton, Rigby, Young, & James, 2001; Chern, Rickertsen, Tsuboi, & Fu, 2003; Moon & Balasubramanian, Wanki Moon and Siva K. Balasubramanian Southern Illinois University Carbondale Our study provides a descriptive analysis of contingent valuation survey data to examine whether there is market for genetically modified (GM) foods in the European Union (EU). Thus far, consumers in the EU have not had opportunities to make choice between GM and non-GM foods largely because food manufacturers and retailers have not offered GM foods in the supermarkets. However, with the European Union likely to replace the current moratorium on approving GM crops with mandatory labeling and traceability with 0.9 % tolerance level, consumers in the EU may see GM food products in the supermarkets. Using CV survey data collected in the United Kingdom (UK), two types of UK consumers who will choose GM over non-GM foods were identified: (a) consumers who embrace GM technology, and (b) consumers who are price conscious.