Stanford phd candidate Calvin schmidt posts about investing opportunities in synthetic biology. Available for consulting on potential investments in this area.

Federal GMO Labeling Bill

After Vermont passed a bill requiring the labeling of food products derived from genetically modified organisms, the federal government quickly responded by passing their own, S. 764, which sets a federal standard for GMO labeling. This bill is fairly simple, only instructing the Secretary of Agriculture to begin a two-year process of defining the standards for GMO labeling, but it still contains some important information for entrepreneurs and investors in the field of agricultural biotechnology worried about the GMO labeling process.

The bill supersedes any state labeling bills. One of the main motivations for the bill is to avoid a regulatory environment where each state has its own labeling law, forcing companies to customize packaging by state. For entrepreneurs, this means they only need to look to the Department of Agriculture as they develop their labeling guidelines. In addition to creating a stable regulatory system, placing the regulations in the hands of the federal government avoids state laws that may be biased towards local industries, like the Vermont law which exempted the cheese industry from labeling.

Regulations may allow for labels that refer customers to more detailed online or over the phone labels. Much of the controversy around this bill relates to the fact to the labeling guidelines may allow for companies to put a QR code on their products referring customers to an online label. Entrepreneurs should see this as an opportunity to explain the benefits, environmental, economic, or ethical, that genetically modifying their product has to the consumer. This labeling method is not set in stone, however, as the Department of Agriculture must conduct a study in order to determine if a labeling system that requires electronic devices presents a significant technical barrier to customers who wish to know about their food.

Animals raised with GMO feed are not required to be labeled. Section 293.2.A states, “A regulation promulgated by the Secretary in carrying out this subtitle shall prohibit a food derived from an animal to be considered a bioengineered food solely because the animal consumed feed produced from, containing, or consisting of a bioengineered substance;”. This leaves a window for genetically modified crops to still be economically viable and avoid the GMO label if they are used solely as feedstock. Companies looking to buy feedstock likely won’t care if the stock is genetically modified, so long as it is cheap and nutritious, which offers a market for entrepreneurs developing new organisms to capture.

Though it will be important for entrepreneurs and investors to keep these labeling standards in mind while they develop their ventures, these standards will likely change over the next two years. In addition, depending on how the labeling system is implemented, it may not affect consumer attitudes as much as expected. Perhaps of more importance to those looking to commercialize GMOs are the regulatory pathways of FDA, USDA, and EPA, which will determine whether the products can be sold at all.

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