Food labels create costly confusion

Producers and marketers see labelling and branding as key ways to build markets — for their own products.


However, labelling mayhem is creating real market problems for farmers and anyone else who produces a bulk commodity. 


Acts of market disruption can help specific companies or producers, but it’s a bad thing for everybody else when it derails efficient, low-cost production. 


When activists jump on labelling “initiatives,” that’s often their goal.


It’s something the food industry needs to sort out, and unfortunately many of the potential solutions require government backing, which makes them political and not likely to be resolved any time soon.


Here are recent labelling and branding situations that have been disruptive, with some already costly.


Some U.S. states have begun producing laws requiring food that includes GM ingredients to be labelled as such. It’s forcing hundreds of companies to revise their packages or switch ingredients.


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They have to be labelled in the United States and Canada, which has prompted companies to switch from one ingredient to another, such as replacing partially hydrogenated oil with palm oil. 


Canadian hog farmers found themselves cut off from many reliable U.S. buyers when COOL resulted in some packers refusing to deal with the packaging complications of the law. The industry is adjusting now that COOL is gone, which is disruptive in its own way.


These announcements by A & W and Earls reduce demand for Canadian-produced beef and damage its reputation. (Earls has reversed its move.)


There are national standards in the U.S. and Canada but little policing, which creates the potential for product fraud and consumer upset when bogus products are found.


Descriptions like this are being included in many products’ packaging without actually having clear meanings.


These cases reveal a bewildering multitude of issues that can’t be easily sorted out. 


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Some deal with mandatory labelling, while others deal with voluntary product claims. 


Some are based on scientifically supported health concerns, while others have little merit but are perception problems created by activists.


It would be nice to have a single principle or approach that would deal with all of these issues, but there is no simple solution.


So get used to labelling being a disruptive factor in the food industry and having a bigger impact on the commodities you produce. 


What can you do about it? Probably the only useful way to react is to pay attention to what’s happening in the food marketplace and be prepared to face the disruptions that are sure to come.


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