Whole Foods Market (NASDAQ:WFM) has become a champion for the Right to Know movement, which aims to allow consumers to make better grocery purchasing decisions by calling for the labeling of all foods containing ingredients produced from genetically modified organisms, or GMOs. In fact, the supermarket chain has decided to implement mandatory labeling of all foods containing genetically modified ingredients within the next few years. The policy certainly reverberates with the anti-GMO community that targets biotech seed and agricultural sciences firm Monsanto Company (NYSE:MON), and it's a smart business decision, although I think it only works to foster consumer mistrust in science and biotechnology.
Nonetheless, did you know the Right to Know movement actually borrows its name from a series of laws enforced by the U.S. Environmental Protection Agency? Does that fact add any credibility to the movement? Let's explore just what it means and how it could affect Whole Foods Market and Monsanto.
The customer is always* right
According to the EPA website, "Every American has the right to know the chemicals to which they may be exposed in their daily living. Right-to-know laws provide information about possible chemical exposures." The laws cover chemicals stored, produced, and emitted by various facilities across the country, releases of toxic substances, air and water pollution, lead exposure, hazardous waste sites, and other important disclosures. Since genetically engineered crops produce food with the same nutritional properties as crops grown from traditional breeding methods, they are not classified any differently from traditional foods once they pass the gauntlet of regulatory tests examining their safety.
Still think transgenic crops pose a risk to human health or are any less safe than their conventional counterparts? A recent study (link opens PDF) found that a genetically modified corn variety, MON810, demonstrated protein variance of just 3.1% compared to related non-GM varieties grown under similar conditions. Since nearly 5% variance could be expected by random chance, the study suggests transgene crop varieties do not pose health risks on the merits of production methods (genetic modification vs. plant breeding) alone.
Of course, right-to-know laws also include the Food Quality Protection Act of 1996, which regulates pesticide residue levels in and on food. Despite popular belief and misinformation, not all biotech seeds are engineered to produce or resist a pesticide. There are numerous varieties that do, however, such as Monsanto's now-infamous Roundup Ready soybeans and corn. Shouldn't they be labeled?
Not quite. What anti-GMO activists tend to forget is that most crops, even those not genetically modified, are grown with pesticides. That's why the law was passed in the first place: to set acceptable pesticide residue thresholds for all foods. Therefore, production method -- foods grown organically, from genetically modified seeds, or 3-D printed -- is immaterial to the labeling debate until scientific evidence shows a real cause for concern.
What does it mean for Whole Foods Market and Monsanto?
While Whole Foods Market may believe its loyal and growing customer base is always right, the EPA has a different take. However, the fact that the GMO Right to Know movement won't be rescued by the agency's right-to-know laws likely won't affect the grocer, which will soon require labeling throughout its stores. That fact is also unlikely to improve the public image of Monsanto, which will continue to bear the brunt of activist consumers regardless of the amount of evidence provided. It may be an encouraging sign to shareholders, though, since labeling efforts will face huge obstacles in the justice system, but it doesn't guarantee the failure of labeling laws. For now, investors will just have to wait and see.