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D. S. BULLOCK¹, M. Desquilbet², K. L. Bender¹, and M. W. Rosegrant³. (1) Department of Agricultural and Consumer Economics, University of Illinois, 326 Mumford Hall, 1301 W. Gregory Drive, Urbana, IL 61801, (2) INRA ESR, Institut National de la Recherche Agronomique, rue Adolphe Bobierre, CS 61103, 35011 Rennes cedex, France, (3) International Food Policy Research Institute, 2033 K St. NW, Washington, DC 20006

The widespread nature of recent calls for labeling and/or banning of genetically modified corn and soybeans suggests that the development of alternative identity-preserving marketing channels is imminent. The European Union, Japan, Austrailia, and New Zealand have already announced plans to introduce mandatory labeling of GMOs in the near future. Import of certain varieties of GMOs is currently allowed in these countries, but other varieties await government approval. Even without government intervention, crop processors and food distributors are already encountering economic incentives, created by consumer demand, to provide labeling for GMO and non-GMO products.

Preserving the identity of GMO and non-GMO crops in order to satisfy government regulations and/or consumer demands will create extra economic costs, the size and economic impacts of which are currently unknown. Following the methods used by Bender, et al. (1999) in examining the economics of identity preservation for specialty crops, we will collect and analyze survey data from grain and soybean handlers and producers in the U.S. and the EU in order to estimate the additional costs that will be incurred to preserve the identity of GMO and non-GMO crops in the marketing channels. The additional costs incurred from production, segregation, testing, and risk will be compared across alternative market channels, to highlight how different linkage and contract choices impact system costs. Having obtained estimates of increases in marketing costs due to the identity preservation of GMO and non-GMO crops, we will introduce our estimates into the International Food Policy Research Institute’s IMPACT model of world agricultural markets, in order to estimate the effect of identity preservation on world crop prices and production levels. We will use these empirical results to simulate the effects of identity preservation on farm incomes and consumer well-being under various assumptions about the extent of government-mandated labeling requirements and import restrictions.