1. 1 Wuyang Hu, Michele Veeman, Vic Adamowicz Dept. of Rural Economy University of Alberta Anne Huennemeyer KFW Group, Germany Financial assistance from Genome Canada, Genome Prairie, and the Alberta Agricultural Research Institute is greatly acknowledged Assessing How Different Genetically Modified Food Labelling Policies May Affect Consumers’ Choice Behaviour – A Canadian Case Study International Symposium on Food Safety: Consumer, Trade, and Regulation Issues Hangzhou, Zhejiang, China October 10-11, 2003

2. 2 Introduction  Transgenic agricultural biotechnology termed Genetic Modification (GM) is fast expanding  An annual growth of more than 10% has been achieved every year for the last six years, since transgenic crops are introduced in 1996.  From 1996 to 2002, the global area of transgenic crops increased 35-fold.  The global area of transgenic crops for 2002 is 58.7 million hectares.  In 2002, for the first time more than half of the world’s population lived in countries where GM crops are grown.

3. 3 Purpose of Study  Apply and examine the power of internet- based choice experiment in marketing research.  Identify consumers’ opinions on various issues surrounding the labelling of GM foods.  Investigate how different GM labelling systems may affect consumers’ behaviour.

4. 4 Information and Labelling  There may be uncertainties about the quality and other features of food produced through GM technology.  In polls consumers tend to “vote for” the right to know the ingredients of their food, reflecting a preference for information.  Increasingly government regulations apply to information that is provided through GM labelling.  Different countries have different GM labelling policies.

5. 5 Currently Announced International Labelling Policies

6. 6 Preference Elicitation  Revealed Preference  Directly observed and convenient to obtain.  Reflect consumers’ actual choices  Poses difficulties for environmental evaluation and new product evaluation.  Stated Preference  Hypothetical scenarios and highly controlled.  Can provide useful information for hypothetical variables or new products.  Can generate unrealistic predictions and introduce hypothetical bias.

7. 7 Stated Preferences in Marketing Science  Conjoint Analysis  Rankings  Ratings  Pairwise comparisons  Adaptive Conjoint Analysis (ACA)  Choice-Based Conjoint (CBC)  Discrete Choice Analysis  Simulated Auctions  Flexible and consistent with decision making.  Suitable for controlled lab environment.

8. 8 Conjoint Models in Marketing

9. 9 Survey Data and Scenarios  Pre-packaged sliced bread  Commonly consumed  GM product is not yet available  Attributes  Brand name (store/national)  Type of flour (white/partial whole wheat/whole wheat/multigrain)  Price ($0.99/$1.49/$2.49/$3.49)  GM (presence/absence)  Labelling scenarios

10. 10 Survey Design and Implementation  Computerized design  Attributes  Labelling contexts: mandatory, voluntary and a mixed scenario for statistical purpose  Fractional factorial design with appropriate blocking  Online implementation  Faster and may be less biased than traditional methods in that more realism may be sought  Allows highly interactive designs

11. 11 Sample Choice Set

12. 12 Perceptions of Labelling Issues S1: The public is sufficiently involved in the regulation of GM foods. S2: Even if food prices were higher, the consumers’ “right to know” warrants mandatory labelling. S3: The decision about introduction of GM foods to Canada should be left to experts. S4: There is no need for mandatory labelling of GM foods if the final product quality is the same. S5: Voluntary labelling might be used as a marketing tool rather than providing useful consumer information. S6: Stricter regulations for approving GM foods are better than a mandatory labelling system for GM foods. S7: Overall mandatory labelling is preferable to voluntary labelling.

13. 13 Econometric Model and Variable Definition  Panel conditional logit model (CBC Conjoint approach)  Some variables used in the model are:

14. 14 Estimation Results

15. 15 Conclusions  Conjoint (especially CBC) analysis is well- suited to evaluating consumers’ behaviour in the context of GM foods.  In general, Canadian consumers strongly “vote for” product information associated with labelling.  Mandatory GM labelling raises a “red flag” to consumers.  Voluntary GM labelling does not change consumers’ welfare significantly compared with no labelling.