A panel discussion on potential industry impact.
Introducing the panel:
• David Carter, CEO, FoodChain ID, Fairfield, IA, firstname.lastname@example.org
• Steve Peirce, President, RIBUS, Inc., St. Louis, MO, Steve@ribus.com, (314) 727-4287, ext. 105
• Courtney Pineau, Associate Director, Non-GMO Project, Bellingham, WA, www.nongmoproject.org
• Mark Vieceli, Senior Director of Sales, Marketing and Business Development, Capsugel, Greenwood, SC, (864) 942-3851, email@example.com
Driven by consumer demands for transparency and concern about the safety of genetically modified organisms (GMOs) and genetically engineered (GE) foods—consumers, suppliers, manufacturers, non-GMO certification organizations, food industry groups and politicians—have been working to address the issue of ingredient disclosure on food labels. Natural product companies have been leading the way in giving consumers what they want, in producing, certifying and labeling non-GMO products. While others in the food industry continue to promote genetically engineered foods as safe, saying there is no material difference between GMO and non-GMO foods.
The federal government has proposed legislation to address the GMO/non-GMO labeling issue, with the reintroduction of the “Genetically Engineered Food Right-to-Know Act” (H.R. 913) by Senator Barbara Boxer (D-CA) and Representative Peter DeFazio (D-OR); the “Safe and Accurate Food Labeling Act of 2015” (H.R. 1599) by Mike Pompeo (R-KS), (which passed the House on July 23, 2015 and is now under review by the Senate); and an announcement by the United States Secretary of Agriculture, Tom Vilsack, that the Agricultural Marketing Service was working on the development of a voluntary USDA (U.S. Department of Agriculture) Process Verified Program for companies wishing to receive verification for non-GMO/non-GE products. If passed into law, H.R. 1599 would make labeling of GMO and non-GMO products voluntary and override Vermont’s Act 120 and other individual state efforts to require mandatory labeling of GMOs.
This year, 2015, could mark a turning point for how this labeling issue will be resolved. Legislation and proposed bills at both state and federal levels currently undergoing review, could determine how GMOs, GE foods, non-GMO and natural products labeling will be regulated in the years ahead.
How could these proposed government regulations impact the non-GMO and natural products industries? Nutrition Industry Executive (NIE) magazine invited a panel of experts to weigh in.
NIE: What are the main factors driving companies to seek certification for non-GMO labeling of products?
Carter: 1. Non-GMO Project Verified companies see an average sales increase of five percent in the first year of getting verified.
2. To stay current with consumer and retailer demands.
3. Third-party verification increases brand loyalty and consumer confidence.
4. Opens doors to global market with non-GMO policies.
5. Compliance with emerging industry, retailer and government regulations.
6. Personal philosophies against GMOs.
Katic: The main factors driving companies to seek non-GM certification are predominantly due to negative public discussion surrounding GM ingredients. Consumers do not fully understand genetic engineering and how it is being used in agriculture. They also don’t have a solid understanding of how food is typically grown in the U.S. and what it takes to get foods from the farm to the market and ultimately the dinner table. As a result of these two voids, consumers buy into a lot of the hype and misinformation being spread about GM foods and therefore are asking for non-GM ingredients based on little knowledge and incomplete information. Companies are caught in a dilemma as they know the technology is safe, but want to provide their customers with options, hence the decision to seek non-GM certifications for their products or ingredients.
Peirce: Consumer demand. Period. As consumers have been taught to read and understand food labels (fat, protein, allergens, salt, sugar, etc.) as well as learn more about GMO concerns, they have expressed their interest in knowing about GMOs in their food as well, and they want GMO food labeled.
Pineau: The main driver of companies seeking Non-GMO Project Verification is consumer demand. According to the 2015 LOHAS MamboTrack Research Survey, a majority of shoppers (83 percent) indicated it is important that GMOs be labeled and more than half (57 percent) said that non-GMO was key to brand buying. Currently, the Non-GMO Project provides the only label in the marketplace based on third-party verification to transparent, consistent standards. It provides assurance for shoppers that a product has met rigorous best practices, including ongoing testing, and has passed third-party audits and inspections for GMO avoidance.
According to SPINS data, annual sales of Non-GMO Project Verified products are now more than $12 billion dollars. This number accounts for the sales of more than 30,000 products that are verified with 1,915 participating brands. The Project also works with more than 2,000 retailers through its supporting retailers program and education and outreach campaigns.
Pontiakos: It is customer driven. If there is demand, then there is incentive to get certification. Otherwise it is just a waste of effort and money. As with any investment, a company must do their research to weigh the costs and benefits of pursuing a certification. It is not a simple application process; it requires capital, knowledgeable personnel, time, and sometimes even modifications to existing procedures. This customer-driven model explains the many non-GMO certified ingredients/products currently out in market actually have zero risk of being genetically modified.
Vieceli: Consumer interest in non-GMO certification has grown significantly in importance in supplement decisions over the last four years. Our research shows a consumer demand for more transparency in the source of ingredients used in supplements is at the top of the list of what consumers want most.
Capsugel’s market research has shown that consumers check certification on the labels of their products before they decide to buy food and supplements—vegetarian, vegan, gluten-free, halal and kosher, among others. However, the interest in non-GMO verification is recent in comparison especially among new young Millennials (ages 15 to 35).
According to the 2013 Natural Marketing Institute SORD (Supplement, Over-the-Counter and Rx Database) Study, which Capsugel helps to underwrite, 42 percent of supplement users said they consider non-GMO compliance important in their purchase decision, 54 percent among Millennials.
This growth is tied to the top lifestyle values—including knowing the source of ingredients (71 percent of supplement users feel this is important), from natural sources (66 percent), and environmentally responsible brands (55 percent)—all of which reflect a consumer demand for more transparency in the source of ingredients used in supplements.
NIE: How is non-GMO certification of ingredients and products currently being done?
Carter: The Non-GMO Project’s (NGP) Product Verification Program (PVP), is a process based verification program. The core requirements are continual testing of high-GMO-risk inputs, supply chain traceability, obtaining inputs in accordance with uniform and meaningful specifications, accurate and clear product labeling, and maintaining operational consistency while addressing non-conformities in a prompt manner. FoodChain ID, as a technical administrator of the PVP, does a document review of input spec sheets, process flow charts, proofs of purchase, product labels, manufacturing SOPs, storage and cleanout details, etc. to ensure all documentation is strong and in compliance with the Non-GMO Project Standard. Also, if deemed necessary, we generate customized sampling and testing protocols for inputs which must be tested by an NGP approved, ISO accredited lab and review the test results as well as conduct on-site inspections where the product(s) seeking verification are last handled in permeable form. This is done annually to maintain verified status.
Katic: The most prevalent method being used to certify non-GM ingredients is to work with suppliers that can provide non-GM crops. This is often verified by creating separate supply chains that can handle these ingredients, and document that they have been sourced from non-GM farms and protected from the farm to the factory.
Peirce: There are third-party certifications, with a strong emphasis on consumer products. Many ingredients have documented their own non-GMO status and/or have gone to third-party certifiers.
Pineau: The Non-GMO Project’s Product Verification Program is a process-based and product-based program designed to assess compliance with the Non-GMO Project Standard. The three major aspects of our Standard are testing, traceability and segregation. The verification process is handled by independent, third-party technical administrators who determine if a product complies with our standard.
The Non-GMO Project seal provides consumers assurance that a product has met rigorous best practices, including ongoing testing, and has passed third-party audits and inspections for GMO avoidance.
Pontiakos: Currently, it is voluntary through industry organizations. As the non-GMO debate continues, we are seeing more customers looking elsewhere for assurance. They are accepting wildcrafted or organic ingredients as a non-GMO guarantee. Wildcrafted ingredients are inherently non-GMO; there is no incentive to gene splice a one-off ingredient only grown deep in the Andes. And organic ingredients cannot be genetically modified by requirement. Vieceli: Capsugel has always stated that its products are non-GMO based on self-certifications. We base this on the industry-standard polymerase chain reaction (PCR) testing. PCR testing has been considered the most reliable and sensitive testing method to determine genetic DNA alteration. Third-party laboratories perform PCR testing for our products. Testing results meet European regulations.
In fall 2013, however, Capsugel became the first empty-capsule manufacturer to have products that are verified by the Non-GMO Project. Those capsules were two vegetarian capsules, Vcaps Plus and Plantcaps. Since then, two more capsules—Vcaps and Licaps Vcaps Plus—have been verified by the Non-GMO Project, bringing the total to four. While these capsules have been self-certified non-GMO, this verification from the third-party Non-GMO Project brings new value to customers. We believe our Non-GMO Project verification will help our customers expedite their process for applying for verification for their finished products.
NIE: What is your opinion as to how new government regulations may directly affect suppliers of non-GMO products and non-GMO certification services over the next three years?
Carter: There will probably be little impact over the next three years as the current direction is toward voluntary labeling of products with GMOs versus non-GMO labeling. Of course, the current legislation prohibits states from creating their own labeling regulations, so current non-GMO certifications will continue to be required. Further, as the current proposed legislation will also allow products with a natural label to contain GMOs, if it is passed in that form then there may be increased demand for natural products to verify that they are non-GMO. Many consumers today may be assuming that natural products are non-GMO, but the new legislation might increase awareness that this is not the case, making the importance of third-party certifications grow.
Katic: I think government regulations can affect suppliers of non-GM products and non-GM certifiers a bit differently. In terms of the suppliers of non-GM, the playing field will become more standardized and therefore level for all those involved. The reporting requirements will be more stringent and defined, which might make it more costly and time-consuming for those wanting to provide non-GM ingredients. If new legislation is passed in Congress that seeks to define “natural” and imposes additional requirements on the use of non-GM on labels, then the cost of doing business in this space will surely increase and become more layered with bureaucracy.
For those providing verification seals and assurances for non-GM products, new regulations may decrease or diminish their business. Many of these providers are able to exist now where there are voids in the regulatory space. If this space is further defined and actualized then it can greatly impede on the verifying companies’ or organizations’ ability to do their work. In other words, they may be rendered obsolete.
Peirce: The Pompeo bill waters down the issues at hand. It allows GMO “processing aids and enzymes” to be used in foods labeled as non-GMO. It stops short of requiring GMO labeling and simply “allows” non-GMO labeling. This is an attempt to pass legislation and to close the subject. The FDA has already made its statement that GMOs pose no added food safety risk. However, the consumer wants to know whether what they are eating is “GMO or non-GMO.” This is about the only area in foods that the consumer is being told they don’t have the right to know. Why not? If there’s nothing to hide, then they should label their items proudly.
Pineau: H.R. 1599 includes a mandate for the USDA (U.S. Department of Agriculture) to create its own non-GMO certification program. This program would operate to drastically lower standards than the Non-GMO Project. While it won’t remove the Non-GMO Project Verified seal from the marketplace, as written the bill would create a competing label that would confuse shoppers and undermine the tremendous progress the Non-GMO Project has made on setting a high standard for GMO avoidance.
This is a serious concern for the Project, a nonprofit that has been working since 2007 to successfully establish a consistent and rigorous standard for non-GMO claims.
Pontiakos: It ultimately depends on two factors: the standards set forth by the government and if the supplier offers at-risk ingredients. Since the former currently does not exist, I will speak on the latter. For suppliers with at-risk ingredients, they would need to invest in non-GMO resources and verification processes if they have not done so already; some may even have to completely adjust their supply chain as well as their operations and quality procedures to meet requirements. A majority of the current supplier base is not prepared to make the change and GMO labeling regulations will force manufacturers to narrow down their supplier base to those that have an understanding of non-GMOs, heavy investments in testing and quality, and a strict vendor qualification program. For suppliers with no at-risk ingredients, only additional documentation should be required of them. Value can only be found in extensive non-GMO verification for ingredients with risk of genetic modification otherwise certification becomes just another irrelevant, marketing tool to consumers, just as the term “natural” did.
NIE: What are your thoughts as to if these government regulations/programs meet consumer demands for transparency on labeling of GMO, non-GMO or “natural” products in the marketplace?
Carter: The current legislation in the federal government appears to be focused on creating a single federal standard for labeling rather than the potential for 50 different sets of regulations in 50 states. However, it is also recommending a voluntary labeling scheme for products with genetically engineered ingredients which, most likely, will result in a minimum number of products carrying such a label. As the option for voluntary labeling has always existed and companies have not used it, it seems unlikely that companies will exercise that option in the future. If that proves to be the case, then the new legislation will not increase transparency as consumers will not be able to tell which products do or do not contains GMOs unless a product carries a third party seal such as the Non-GMO Project.
With reference to natural products, the current legislation also creates a legal definition of “natural” stating that such products may contain genetically engineered ingredients. It does not define other aspects of what “natural” might or might not legally mean. Since such products would not be required to disclose the use of GMOs, this would not improve transparency but likely further confuse consumers. Third party verification seals such as Non-GMO Project Verified might remain the only way consumers are able to know which products, other than organic but including natural, have been verified as non-GMO.
The new legislation is also calling for the USDA to develop a non-GMO labeling program. It is hard to predict how long such a program would take to develop and what it might look like. For example, if such a program did not address the issues of GMO feed in animals and animal derivatives or did not address issues such as synthetic biology or genetically engineered enzymes, bacteria and other processing aids, then the public might still look for a verification seal that addresses these issues. On the other hand, a comprehensive and rigorous USDA program would certainly have an impact on the overall landscape of non-GMO labeling and would signal the arrival of “Non-GMO” as an important and accepted category of consumer food choices.
Katic: Unfortunately, new regulations or labels on GM foods will not do much to meet consumer interest in or demand for transparency. What consumers really want and/or need is accurate information about food biotechnology and how it is being used to increase crop yields and improve certain traits in plants. A product label will not meet this need.
On the other hand, if the FDA is required to define the term “natural” and implement standards for non-GM labeling then consumers will see a more equitable use of these terms in the marketplace. Right now, these terms are undefined and therefore often overused or misused on products. Consumers perceive a term to mean one thing and a company may be defining it very differently. This can be mitigated, and standardization of these terms would be beneficial for both companies and consumers.
Peirce: Short of regulations that require GMO labeling, regulators are not giving the consumers what they are asking for. There is overwhelming support nationwide for GMO labeling. Additionally, steps are being taken to prevent States (Vermont) from doing what their citizens have voted for—require GMO labeling. What is the real opposition to required labeling at the national level?
Pineau: The House’s passage of H.R. 1599 is a blow to democracy. Nine out of ten Americans support GMO labeling, and with this vote our elected officials in the House have failed to represent the will of the people. H.R. 1599 would prohibit any current or future state law requiring GMO labeling, while at the same time dramatically undercutting federal, state and local government oversight and regulation of GMOs. By preempting all state and local oversight of GMOs, the bill would negate more than 130 existing statutes, regulations, and ordinances in 43 states at the state and municipal level.
Pontiakos: We need a precise definition and concise directives before we can determine if they meet consumer demands. We, the industry as a whole, are at the receiving end of these demands and so, we should be leading the efforts. We are the experts when it comes to GMO, non-GMO, and natural products; a third-party body does not know the nature of our products and complexities of our supply chain as we do. As mentioned above, non-GMO labeling is customer-driven and so it should be the supplier driving the cause.
NIE: Are there any other comments you would like to share on how government legislation regulating the use of GMO, non-GMO and “natural” on labels may impact the natural products industry in the future?
Katic: One last observation, if the FDA is required to define the term “natural” in the proposed “Safe and Accurate Food Labeling Act” then the natural products industry will be greatly impacted as it could limit the use of this term on labels and in marketing. It would also level the playing field for all players in this space as the term will be better understood and not left open to individual interpretation; a potential benefit for all. Peirce: GMO is an emotional topic for all sides. The consumer would simply like to know if a product contains any GMO ingredients. I also do not believe that the government will attempt to define or regulate the word “natural.”
Pineau: The natural products industry continues to grow at an incredibly fast rate in large part due to shoppers looking for products that offer ingredient transparency. It is important for manufacturers, retailers, and consumers to let the government know that they want meaningful mandatory GMO labeling. Bills like H.R. 1599 that take away the FDA’s ability to implement mandatory labeling and that create a weak labeling program undermine all of the powerful work the natural products industry has done to provide shoppers accurate information about the food they buy. NIE