Impacts of Mandatory GE Food Labeling: A Quasi‐Natural Experiment

Abstract

AbstractIn July 2016, Vermont became the first U.S. state to require mandatory labeling of foods containing genetically engineered (GE) ingredients. The introduction of the Vermont law serves as a quasi‐natural experiment on the economic effects of mandatory GE labeling. We investigate the market response in the U.S. sugar market. Almost all beet sugar is GE, while cane sugar is GE‐free. Prior to 2016, cane and beet sugar were regarded as homogenous. However, in mid 2016, refined cane sugar began selling at a premium over refined beet sugar. We find the mandatory labeling initiative generated about a 13% price discount for beet sugar and a premium of about 1% for cane. Food manufacturers’ concerns over mandatory labeling caused them to switch inputs. This resulted in a redistribution of welfare in the U.S. sugar industry.