Consumer Response to Genetically Modified Food Products in Japan

Agricultural and Resource Economics Review, Oct 2003 by McCluskey, Jill J, Grimsrud, Kristine M, Ouchi, Hiromi, Wahl, Thomas I

In Japan, a large U.S. export market, there has been growing public opposition against genetically modified (GM) foods. Using a dichotomous choice contingent valuation method, findings show the discount needed for Japanese Seikyou consumers to purchase QM food products is positively affected (i.e., a greater discount is required) by higher levels of self-reported risk perceptions toward GM food, higher levels of concern about food safety and the environment, higher self-reported knowledge about biotechnology, education levels, and income. Interestingly, gender does not significantly affect the discount needed for GM food. Further, it can be inferred from the results that a transformation of Japanese consumers ' perceptions and attitudes is needed for GM food products to successfully enter the Japanese market.

Key Words: biotechnology, consumers, genetically modified foods, Japan, willingness to purchase

Biotechnology has been touted as the future of agriculture. However, the business leaders, producers, and scientists involved in biotech did not foresee how controversial genetically modified (GM) foods would be with consumers, particularly for export markets such as Japan. A better understanding of consumer attitudes and behavior toward genetically modified food products in these export markets is essential for designing market strategies. This study focuses on consumers' choices and willingness to purchase GM food products with possible discounts.

In Japan, 34 local self-governing bodies are engaged in research and development of GM products (Asahi Shimbun, 2001). Yet, most of their products will not be marketed in Japan because of the growing public opposition to GM foods. Reflecting this trend, U.S. export orders have increased for soybeans and corn which are not genetically modified, even at premium prices.

In the United States in 1999, premiums of 80 to 15� per bushel were offered for non-GM corn, and premiums of 50 to 350 per bushel were offered for non-GM soybeans at the farm level (Nelson et al., 1999). In response, some Japanese food companies and farmers have switched to non-GM ingredients and seeds. For example, Asahi and Kirin, the two leading Japanese beer companies, have announced they will switch entirely to non-GM ingredients, and soybean farmers who do not use GM seeds are enjoying a huge demand for their beans (Tolbert, 2000).

Labeling policies for GM foods are rapidly evolving worldwide. Japan's new system of labeling GM foods went into effect on April 1, 2001. Foods made from GM crops are required to be labeled as "genetically modified." Foods made from non-GM crops, which have been identity preserved, can be voluntarily labeled as "not genetically modified." Finally, foods that have not been identity preserved must be labeled as "not segregated from GM product." While few Japanese products carry labels identifying them as "genetically modified," many products claim to be free of genetically modified organisms (Shinano Mainichi Shimbun, 2001). GM status labels not only provide consumers with information, they also give the consumer the opportunity to choose. McCluskey (2000) argues that the appropriate labeling policy for GM foods depends on the size of the market and willingness to pay for non-GM foods relative to the costs of identity preservation.

The heated debate over labeling issues in Japan reflects increasing consumer concerns about food safety issues, including effects on human health and the environment. Several Japanese consumer groups actively campaigning against genetic modification of food are insisting on mandatory labeling of GM food products. These groups assert GM products are not being adequately tested for safety. Many school lunch programs in Japan serve non-GM foods to the extent possible, despite the efforts of the Japanese Ministry of Agriculture to convince consumers that GM products are safe to eat.

The objective of this study is to identify and analyze specific factors which induce Japanese consumers to choose GM foods. The remainder of the article is organized as follows. In the section below, we discuss the previous literature on consumer preferences and attitudes toward GM foods, with particular attention given to Japanese attitudes toward food safety. A description of the survey data utilized in this analysis is then provided. The next section presents the empirical analysis, and the factors that affect consumers' willingness to purchase discounted GM food products are analyzed. Concluding remarks are offered in the final section.

Related Studies

In recent years, the issue of GM labeling has received considerable attention. However, only a few published studies have analyzed consumer willingness to pay (WTP) or willingness to accept (WTA) compensation for food products containing GM ingredients. Lusk et al. (2001) estimated willingness to pay for corn chips made without genetically modified ingredients. In their experimental study, junior- and senior-level agricultural economics students at Kansas State University indicated their WTP by exchanging a bag of GM corn chips for a bag of GM-free corn chips. WTP findings revealed that an individual who is very concerned about GM foods would be 50% more likely to pay a premium to exchange GM chips for non-GM chips compared to an individual with little concern for GM foods. However, 70% of the study participants stated they were not willing to pay a premium for non-GM chips. The average bid to exchange GM chips for non-GM chips was $0.07/ounce. Still, 20% of participants were willing to pay at least $0.25/ounce for the exchange, and 2% offered bids of $0.50/ounce, suggesting there may be a potential niche market in the United States for non-GM food products.