For quite sometime now, genetically modified (GM) food has been a subject of heated debates all around the world. In India, media have reported tensions between farmers, domestic seed companies, and large multinational seed firms. One also hears controversies about approval or otherwise of field trials for new GM crops. But what do we know about the Indian consumers’ perspective?
India has been a late entrant in introducing GM crops for commercial use. While China and the US introduced GM crops by the middle of 1990s, India allowed commercial production of its first GM crop, Bt Cotton, only in 2002. Since then, India has made a rapid progress in the production of GM cotton. In fact, India has now surpassed US and China to become the largest producer of cotton in the world.
However, as far as GM crops are concerned, India has made a distinction between food and fibre! While GM cotton fibre has reached record production levels, there have been apprehensions about production and consumption of GM foods. Hence, no permission has been given in India for the commercial production of GM food crops. Very recently though, Indian states like Maharashtra have given a go-ahead for field trials of five food crops.
Interestingly, in many states of India, particularly in cotton producing states such as Gujarat, cottonseed oil is commonly used as a cooking medium. Therefore, inadvertently GM edible oil might have already made its way into the market. But would correctly informed Indian consumers accept GM food? Provided with accurate information, would they buy GM food over the conventional food?
The stakes are high, not only in terms of market opportunities for the industry, but for the nation’s economy as well. A study by Neilsen and Anderson (2000) indicated that if insect resistant GM rice varieties were to be introduced internationally, then India would stand to benefit to the tune of $1178 million and benefit to the world economy would be of $6.2 billion in 1995 dollars.
With rapid development of GM food crops globally, liberalized trade environment, natural food productivity reaching a plateau, and the burgeoning population, Indian policy makers will now be asking themselves how soon should they expedite production and trade of GM food crops. In fact, India has now eliminated customs duty on import of corn due to the pressure from the poultry sector and the starch manufacturing industry. And most likely India would receive such imports from countries that produce GM corn.
It is thus necessary to have a precise idea of the level of acceptance of GM food by Indian consumers. Curiously, until 2006 researchers had focused their attention mainly on technology and production side. Little interest was shown in the demand side story, assuming that Indian consumers were indifferent between GM and non-GM crops. This assumption may have been alright in supply-side researches, however, there was increasing realization that markets cannot ignore the consumers’ potential reactions, as has been evidenced from experiences abroad.
Japanese, European and to a lesser extent Chinese consumers have shown little support if not a strong reluctance towards GM food. In these countries, public policies are much more restrictive towards GM foods than in the US where consumers seem to have accepted GM food in general. Concerns about health have a strong impact on consumption choices and GM food can be perceived in quite different ways. European consumers, for instance, express concern about GM food as opposed to natural food, but GM crops can also mean less pesticide use and can be perceived as a more healthy food.
What is the level of awareness among Indian consumers regarding GM foods? What are their perceptions and attitudes towards consumption of GM food? And what would be their willingness to pay for GM-free food, or for GM food with special qualities? For a better understanding of these questions, Sankar Ganesh, Wen S. Chern and I conducted a consumer survey in 2006 that would be one of the first of its kind in India. We employed contingent valuation survey and random utility based binary logit model to elicit consumer perceptions and willingness to pay for GM food.
Part of the challenge in designing and administering a survey questionnaire was to take into consideration the strong differences between rural towns and the modern mega-cities like Mumbai and Delhi. In this context, one is not sure if coining an expression such as “a representative Indian consumer” would have made any sense. For, in terms of education, access to information, income, and a host of other characteristics, the Indian society is extremely diverse. This is why we decided to conduct our survey in two different fields, with two different methods: household visits in the city of Ahmedabad, Gujarat (a mix of rural town and urban city dwelling households), on the one hand, and a web portal eliciting e-mail responses, on the other hand.
For ease of understanding of the questionnaire by the households, the text was also translated into Gujarati, the state language. The questionnaire consisted of seven sections. The first three sections sought to gather information on respondents’ food purchasing habits, knowledge, attitude, and perception with regard to GM (food) technology, and their views on GM food regulation. In the next three sections we covered a series of questions on three food items which form part of household consumption in Gujarat, and which have a potential for commercial introduction of GM varieties: vegetable oil (cottonseed oil), rice and a non-vegetarian product (chicken). GM varieties of these products have either already appeared in foreign markets, they have a potential for introduction in India, and/or they might have appeared in the food chain in India in some form or the other. The last section was about socioeconomic and demographic information.
A total of 602 filled and usable questionnaires were gathered within different wards representing a continuum on the socio-economic ladder of the society. 110 questionnaires were also filled on the Internet by various stakeholders including businesspersons, scientists and students.
The questionnaire started with a brief introduction to GM food, including the benefits and concerns regarding the technology, in a language a layperson can understand. It proved to be very useful, since the first outcome of our survey was that awareness about GM technology was extremely low among the Ahmedabad city respondents who in our understanding were a representative sample of India. More than 90% of them did not know about GM food. The internet savvy consumers were more aware of GM technology. After being told about the pros and cons, about 70% of the city respondents were inclined to believe that GM foods are safe. On the other hand, about 60% of the Internet based respondents seemed to be either indifferent or considered GM food somewhat risky.
Our study was not limited to consumers’ acceptance of GM food in general. We were also testing and measuring their willingness to buy GM food, which has attributes such as crop resistance to pests and enriched vitamin contents. A majority of the city survey respondents (72%) and about 28% of the web based survey respondents claimed that they were willing to consume food produced with GM ingredients. Reduction in pesticide use was considered quite favorably by respondents in both the city survey and the Internet survey. About 85% and 77% of respondents respectively were somewhat or extremely willing to consume GM food if use of pesticides was reduced. The response was very similar if GM food were to have more nutrition than conventional foods. In contrast, if GM food posed a risk of allergic reactions, the acceptance for GM food was low. The acceptance levels were very low for Internet based respondents. While only 44% of city respondents were unwilling to consume GM food, this percentage was very high at 87% for the Internet respondents.
Given the level of awareness, perceptions and willingness to consume, one would like to know how much more or less consumers are willing to pay for GM foods. Would consumers be ready to pay a premium for non-GM foods or is it vice-versa?
Circa 100 B.C.E., Publilius Syrus, a freed Roman slave and writer of famous aphorisms said, “everything is worth what its purchaser will pay for it.” To elicit consumers’ willingness to pay for GM food, we followed the contingent valuation (CV) methodology in our survey. Initially, prices of both foods were kept identical and respondents were asked to make a choice between GM food and non-GM food. Subsequent to the initial choice, the questionnaire offered the respondents price cuts varying from 10% to 40% on the variety not chosen initially. Contingent upon the new prices, once again respondents were asked to choose between GM and non-GM variety. The price difference at which respondents switched their choice is their willingness-to-pay for the initial choice. The data generated using contingent valuation survey was used to estimate binary logit model based on random utility approach. The initial and subsequent binary choice of GM food or non-GM food was expressed as a function of price difference between the two varieties and a host of other socio-economic and demographic determinants.
The logit equation showed a strong negative relation between willingness to consume GM food and its price. This makes an intuitive sense – The likelihood of respondents opting GM food went up as price of GM food went down and/or price of non-GM food went up. Respondents’ income was a very peculiar determinant of their likelihood of consuming GM food. While this likelihood increased as one moved from very low-income respondents to lower middle class and middle class respondents, it did not increase as one moved to high-income respondents. This implies that the lower middle class and middle class, who form a substantive part of Indian society, were more likely to consume GM foods as compared to the very poor and the rich. Moreover, being a woman or a joint family member increased the likelihood of choosing non-GM rice and edible oil. Interestingly, while the likelihood of consuming GM food was higher for respondents who at least had a bachelor’s degree, the result was not robust in terms of statistical significance.
Based on the estimated logit model, we calculated the mean willingness to pay for GM/non-GM foods. The results revealed that the mean willingness to pay for non-GM rice, non-GM edible oil, and non-GM-fed chicken were Rs. - 3.90, Rs. -8.06, and Rs. 0.58 respectively. The negative signs for rice and edible oil indicate that on an average the consumers are willing to pay a premium for GM food. Given the actual prices of non-GM varieties of rice and edible oil, it implied that consumers did not mind paying 19.5% and 16.12% extra for GM rice, and GM edible oil. This could be ascribed to the perceived net benefit due to high nutritive content and low pesticide usage for GM foods. In the case of chicken, however, consumers seemed to pay a very negligible premium of about 0.58% for non-GM fed chicken.
The expected premiums at the sub-sample level were quite consistent. Those, whose initial preference was for GM food, were willing to pay a premium of Rs. 9.71 and Rs. 25.00 for GM rice and GM oil respectively. On the other hand, those whose initial preference was for non-GM foods were willing to pay a premium of Rs. 8.12 and Rs. 21.32 for non-GM rice and non-GM oil respectively. Thus, premium for GM food is higher than the premium for non-GM food at the sub-sample level. Moreover, in the sub-samples, the expected premium for non-GM fed chicken (Rs.5) is higher than the premium for GM fed chicken (Rs.4). Those who were indifferent between consuming GM rice and non-GM rice agreed to pay a negligible premium of about Re.1 for GM rice. On the other hand, those who were indifferent between GM oil and non-GM oil were ready to pay a premium of about Rs. 7.30 for non-GM oil. Of course, the premiums for the indifferent households are low, and, only about 2% of the sampled households were indifferent between the two types of rice and oil.
Our results suggest that information to consumers regarding the GM food may have to be enhanced. It would be foolish to assume that Indian consumers are indifferent between GM and non-GM crops. As soon as they know the pros and cons of GM food, they make informed choices. Importantly, their sensitivity on this topic doesn’t mean that they would massively reject GM food. On the contrary, except the very poor and the very rich, a large proportion of respondents are willing to consume and pay a premium for GM food with special qualities. From the perspective of sales promotion and marketing, awareness about GM food cannot be taken for granted. In the absence of accurate information provided by trusted bodies, one would be apprehensive about a strong and adverse consumer reaction to sudden appearance of GM foods in Indian market.
One of the important sources of information is labeling. More than 85% of respondents from the city survey and more than 77% of respondents from the Internet survey opined that labeling is extremely important. In fact, more than 93% of respondents in both surveys preferred mandatory labeling over voluntary labeling. However, when it came to paying extra amount for labeling, about 28% of respondents from city survey were against it. More than 35 percent of the consumers supported labeling if the prices were raised by not more than by 5 percent. In the Internet survey, only about 5% of respondents were not willing to pay any labeling cost and about 34% were ready to pay more than 15% of price as labeling cost. Regulatory authorities will have to consider this factor seriously, at least until such time that awareness and acceptability of GM foods is not pervasive.
With stagnant productivity of green-revolution-era crops, liberalized trade environment, and the burgeoning population, policy makers do not have much time on hand to decide on allowing production and trade of GM food. Our results suggest that GM foods may become acceptable to Indian consumers, and may even be favored by a significant proportion of the population, provided they are allowed to make informed choices and GM food is sold at the right price. Our study was conducted in Ahmedabad, which in our opinion, is a representative cohort of Indian population in terms of mix of dwellers from rural town and a metropolitan city. Therefore, the study indicates that on the whole GM foods may be acceptable in the Indian market provided information about GM technology and GM food is passed-on to consumers in a planned manner through industry associations, consumer forums, and government extension services.