OPINION: Could Mandatory GMO Labelling Hurt Food Co-ops?

While cooperatives tend to stay silent on most political topics (perhaps in subtle deference to the original Rochdale Principle of “Political Neutrality”?), one issue has been recently bucking the trend: GMO labelling. A sandwich-board advocating the Vermont labelling bill recently appeared in front of my food co-op, and the topic has been popping up quite frequently on local and national co-op social media streams.

I personally find GMOs to be problematic for a number of reasons (particularly the fact that genetic information has been granted the status of intellectual property). However, I’ve come to worry that this “mandatory labelling” approach being promoted by many food co-ops might, in the long run, have unintended consequences that might end up undermining the vitality and success of the food co-op movement.

The reason for this lies in one of the key competitive advantages of the cooperative model: trustworthiness. Because consumer co-ops operate on a not-for-profit basis in relation to their members, they have no incentive to behave in a predatory or exploitative manner, since any surplus profits so generated are simply returned to the members at the end of the year in the patronage refund/dividend.

Historically, this structural trustworthiness has been a major motivation for people choosing to patronize co-ops over for-profit businesses, which is made abundantly clear by the example of the very first known food co-op. A century before the Rochdale Pioneers opened their shop on Toad Lane in 1844, newly proletarianized English dock-workers discovered that a local miller had been using powdered lead to adulterate the flour he’d been selling to them. Needless to say, the dock-workers were not pleased, and, after burning down the establishment of the man who’d been poisoning them, they took up a subscription and used the proceeds to create their own consumer-owned mill. Since they owned it, they could be confident about the quality of the product that fed their families.

Similarly, up until the Great Depression of the 1930s, the vast majority of demand deposits in financial institutions were held by mutual banks and savings and loans. In the absence of meaningful regulation and deposit insurance schemes, consumers recognized that their hard-earned savings would be far safer in an institution that had no incentive to screw them over. However, this key cooperative advantage was neutralized when the Federal Government stepped in with its guarantee of deposits in all banks through the FDIC. By artificially levelling the playing field in terms of safety, the regulatory interventions of the 1930s had the perverse effect of forcing mutual banks to effectively subsidize their commercial competitors (for more on this dynamic, see this book). Since commercial banks are able to raise capital more easily than mutual institutions, this dynamic led to the growth of commercial banks at the expense of mutual banks, and ultimately to the horrifically screwed-up Too Big to Fail financial system with which we are currently saddled.

Unfortunately, a GMO labelling law could potentially have a similar detrimental effect on food co-ops. At the moment, a substantial market exists of consumers who desire to consume non-GMO foods. Since for-profit food purveyors have an economic incentive to cheat these customers by claiming non-GMO status for products that contain GMOs, conscious consumers currently have the same reason to patronize cooperatives as dock-workers did in the 1740s.

However, if the State assumes the role of determining whether or not any particular food contains GMOs, co-ops will lose what is presently a leg up against for-profit grocers, while the dynamics of regulatory capture will ensure that the definition of “GMO-free” will cater to the interests of powerful corporations. As such, if we want to advance the agenda of expanding access to honest food, food co-ops should prioritize expanding the number of consumers who have access to co-ops through the active support for cooperative start-up projects such as those in Barre and Morrisville. The success of such endeavours will constitute a far more important and sustainable gain than the passage of legislation that might well have the effect of slowing the spread of a truly democratically accountable cooperative food system.

Matt Cropp lives in Burlington and is the co-host of Cooperative Vermont. Opinions expressed in Cooperative Vermont opinion pieces are the author’s and don’t necessarily reflect the views of all Cooperative Vermont participants