The unified wall of companies against labeling products that contain genetically modified organisms (GMOs) appears to be cracking. Campbell Soup (NYSE:CPB) last week said it would take the lead on the issue and voluntarily label which ingredients it uses that come from genetically modified organisms. Because food manufacturers have stridently blocked efforts to require such labeling, this could lead to the opposition's crumbling.
It's clearly a momentous development. Plenty of companies have told consumers if a product or two of theirs was GMO-free, but they've never identified which ones actually contain such lab-altered organisms. They fear that if the public realizes just how widespread GMO usage is, there might be a consumer revolt.
General Mills (NYSE:GIS), for instance, made a big deal of its decision to go GMO-free with its original Cheerios brand of cereal, but was less than forthcoming about its protein-fortified Cheerios, which derive their protein punch from soy. Soybeans are the most widely engineered crop in the U.S., with 94% of the supply coming from GMOs. Corn, at 89%, is tied for second with cottonseed as the second-most-modified crop grown.
Post Holdings (NYSE:POST) was able to earn the Non-GMO Project's "verified" stamp of approval for its Grape-Nuts cereal by specifically avoiding soy. Yet it hasn't labeled its other cereals that do use soy as containing GMOs.
Other food companies, like PepsiCo (NASDAQ:PEP) -- which announced last month that its Tropicana brand orange juice will sport the Non-GMO Project Verified label -- have been criticized for merely jumping on the bandwagon because no GM oranges have been approved for commercial sale. Essentially, Pepsi's Tropicana OJ has always been GMO-free, but it's trying to gain points from the halo effect by marketing them as such.
A simmering cauldron?
Campbell's decision is notable for several reasons:
- It's a national brand willing to label all its products that contain GMOs.
- It's unabashedly in favor of GMOs, saying they've been proven safe for human consumption and can help feed the world.
- It will no longer support efforts opposing a national labeling law.
What's undoubtedly caused the soup maker to act is the various state-level initiatives to mandate labeling for products sold locally. Vermont, for example, has a law that goes into effect this July. Connecticut and Maine have also passed laws, but they won't go live unless a number of other states also pass such laws.
It becomes an untenable situation if food manufacturers have to deal with a patchwork quilt of state laws that may not all require the same thing. Congress recently passed a bill that would prohibit states from enforcing their own labeling laws, but the Senate has yet to vote on the measure, meaning Vermont's law will eventually kick in. It's why Campbell Soup says it will no longer support efforts to block a federal standard. A single rule that all food producers can follow would eliminate uncertainty and minimize the costs of compliance. But if the federal government doesn't act, Campbell Soup will do so on its own.
Like Prego, it's in there
About three-quarters of all Campbell's products contain ingredients that are likely GMO, as they contain one or more of the four most genetically modified crops: soy, corn, sugar beets, and canola.
Most GM crops crops have been engineered to resist the withering effects of herbicides like glyphosate, the key ingredient in Monsanto's (NYSE:MON) Roundup, the most widely used glyphosate-based herbicide, or Dow Chemical's (NYSE:DOW) Enlist Weed Control System, whose constituent component -- 2,4-D -- is perhaps also best known as one half of the deadly Vietnam War-era herbicide Agent Orange. Many crops have also been made to be insect-resistant, typically by having the gene from the soil bacterium Bacillus thuringiensis, or Bt, made available in them.
Can't hold back the tide
In announcing its decision to support a federal labeling law, Campbell Soup acknowledged that U.S. consumers overwhelmingly support food manufacturers identifying which ingredients are GMO. It pointed to a Consumer Reports survey showing 92% of respondents were in favor of such a measure, and Campbell says "now is the time for the federal government to act quickly to implement a federal solution."
That'll be a bitter pill for the Grocery Manufacturers Association to swallow, as it has lobbied hard against both state and federal labeling laws. But if by Campbell's actions labeling suddenly is seen not only as doable, but practical, too, the entire wall of opposition may fall.
Rich Duprey has no position in any stocks mentioned. The Motley Fool owns shares of and recommends PepsiCo and Post Holdings. 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.