Last week, the United States Congress passed new federal legislation related to the labeling of food ingredients, specifically food products made from genetically modified organisms (GMO’s).  The new regulations are expected to be signed by President Barack Obama.  These new requirements have drawn mixed perceptions among consumers as well as industry participants and will lead to further language interpretations along with process and technology changes in the months and years to come.

While the Grocery Manufacturers Association lauded the bill passing as a tremendous victory for consumers and common sense, general and business media are noting quite different perceptions.

The new labeling regulations supersede tougher measures already passed by the State of Vermont  that went into effect in July. That Vermont law required food manufacturers and grocery chains selling prepared foods in the state to explicitly label food containing GMO ingredients by January 0f 201.  Some leading food producers had already initiated efforts to comply.  According to news reports that we have reviewed, this new federal legislation renders the Vermont law null and void.

The new federal food labeling legislation allows regulators up to an additional two years to determine the new federal guidelines while smaller food manufacturers would have up to three years to comply. The compromise federal bill spreads out the timetable for conformance and introduces the ability of food manufacturers to utilize QR codes as a means of transmitting full disclose of GMO ingredients.  The new federal regulations passed in what the New York Times described as: “.. after a battle that cost food and biotech companies hundreds of millions of dollars (Of lobbying) over the last few years.

As business media notes, within the core of this ongoing debate is a reality that the vast majority of corn, soybeans and other crops grown across the United States are currently genetically engineered to avoid pest and crop losses. One U.S. Senator predicted certain future litigation challenging the new regulations.  For instance, the U.S. Food and Drug Administration (FDA) interprets the current bill’s definition of foods as not including the many products containing refined oil and sweeteners.  The U.S. Agriculture Department, designated to oversee enforcement of the new labeling regulations disagrees with the FDA interpretation.

Perhaps the most controversial aspect is that the new law allows food companies several options to disclose ingredients.   According to reports, producers can either add additional text to existing physical labels, place a yet to be determined symbol on product packaging to denote GMO ingredients, or utilize a “digital link” such as QR bar code that consumers can scam with a smartphone that would transfer detailed information from a dedicated web page. The latter option is drawing pointed controversy because current industry data seems to indicate that only 20 percent of current shoppers actually scan a digital code on grocery items to retrieve such information.  Proponents also point out anything short of full physical label disclosure will inhibit full disclosure. They further point out that the use of digital media penalizes consumers that currently do not own a smartphone with scanning capabilities.

In spite of all of this ongoing controversy, leading food manufacturers have the opportunity to rise above the noise and take the lead on measures of full disclosure.

Regardless of the ultimate timetable, there are obvious food supply chain implications.  They include the ongoing transition to more organically sourced farming and food ingredients which will take additional years of transition to complete.  The other obvious implication is greater transparency related to the entire food supply chain.

As Supply Chain Matters has noted in many prior commentaries, most all of this activity should come under the broader umbrella of incorporating broader aspects of sustainability in ongoing business objectives.  By our lens, advanced technology in providing full end-to-end visibility of product, ingredient and supplier sourcing will be the new table stakes in providing consumers the visibility they desire.  Producers who elect to drag their feet are delaying the inevitable, and open the door for industry disruptors to gain the trust and confidence of consumers and grocers that actions are being taken to assure both visibility as well as longer-term sustainability for healthier products.

Bob Ferrari

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