As anyone who's read my rantings on Monsanto (NYSE:MON) and genetically engineered foods knows, I'm not exactly a friend of lab-altered Frankenfoods or those who help create them. I've also championed the idea that consumers have a right to know whether the food they're eating has been unnaturally engineered, so labeling products as containing GMOs or not is generally a step in the right direction.
With Washington state set to vote on the I-522 ballot initiative to require GMO-containing foods sold in-state to be labeled as such, it may come as a surprise to find out I'm not necessarily supportive of these state efforts, if for no other reason than they're designed to be more a "full-employment act" for trial lawyers than a conveyor of information to consumers. In short, consumer-food-group companies like General Mills that spent a lot of money fighting labeling laws -- it contributed $1 million to defeat a similar California initiative -- may be ultimately right about the issue, though for the wrong reasons.
I think we need only look at how the courts are getting clogged with lawsuits by trial lawyers that challenge the use of words like "all natural" and "evaporated cane juice" to understand it's not so much the consumer they care about but the fees the lawsuits will generate.
No one on either side of the debate suggests food companies ought to be able to secretly add the chemical melamine to infant formula as a means of boosting its protein profile, as occurred in China a few years back, and get away with it. But knowing whether a crop has been altered to resist the application of Monsanto's heavy-duty Roundup herbicide and still grow regardless seems a sensible addition to a product's label.
Even granting that such food is harmless for human consumption -- something I decidedly haven't bought into -- it ought to be up to the consumer to make that decision for herself and not have it surreptitiously passed along in her grocery cart.
And if the Washington state labeling proposal did only that, I'd probably be supportive. But it doesn't -- or rather, it muddies the water too much, creating such murkiness that it will invite class action lawsuits against food companies that will enrich the lawyers at the expense of companies, shareholders, and consumers.
Recently, WhiteWave Foods settled a class action lawsuit brought against it for using the term "evaporated cane juice" instead of the word "sugar." While seemingly an attempt by the organic milk producer to hide that its products contained the sweetener -- certainly something that could make consumers not want to buy it -- there's really nothing wrong or illegal in the use of ECJ on a label. The FDA may have issued guidance recommending producers not use the term ECJ, but it hasn't prohibited it, either. Still, a slew of companies are facing suits from lawyers calling the practice deceptive.
The I-522 proposal isn't much better. Some foods that are produced with genetically engineered ingredients or processing aids such as cheese, yogurt, and bakery products, all of which may use enzymes in production, would be exempt from the labeling requirements, as would all restaurants and alcoholic beverages. It's probably no coincidence that Washington is the second largest producer of premium wine in the country and that distilleries are a booming business there, too. The dairy, livestock, and poultry industries as well would also get a pass as long as the animals themselves weren't genetically engineered.
Along with burdensome record-keeping requirements and onerous fines that would fall disproportionately heavily on small farms and businesses, the totality of the proposal is a rather useless vehicle for its stated purpose.
As critics also claim, there is a labeling program of sorts consumers can already use if they're looking for GMO-free foods. Both the Non-GMO Project and Genetic ID offer consumers a verified label option, albeit it requires they seek out food manufacturers that themselves have sought the designation. Whole Foods Market (NASDAQ:WFM), for instance, has been working with the Non-GMO Project since 2009 and has committed to having all of its products labeled by 2018.
But even Whole Foods isn't immune from getting sued because its "natural" private-label soda contained caramel flavoring, citric acid, and carbon dioxide. Companies as broadly diverse as Kellogg, Kraft Foods, and PepsiCo have also been hauled into court for similarly trivial infractions.
With holes as wide as genetically modified Swiss cheese to scare-mongering tactics -- the GMO label would be front-of-package, not on the back like all other nutritional information is commonly presented, a move no doubt designed to scare away consumers -- it's clear there's an agenda with I-522 that goes beyond simple labeling as a consumer information service.
For that reason and more, I think these state initiatives leave a lot to be desired and probably ought not to be passed. I certainly support the voluntary labeling efforts of Whole Foods Market and others, and work diligently to eliminate GMO products from my own grocery cart, but as a means of transferring wealth from companies and their shareholders to the legal community, I find it difficult to read any positive outcome into these labeling efforts.
Fool contributor Rich Duprey owns shares of WhiteWave Foods. The Motley Fool recommends PepsiCo and Whole Foods Market. The Motley Fool owns shares of PepsiCo, WhiteWave Foods, and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.