The Non-GMO Project, the leading certifier of such foods, lists nearly 175 companies whose baked foods and bakery mixes now carry Non-GMO Project Verified seals.

Did the world end on July 1? That was when any company wanting to sell food products in Vermont had to declare on its packaging whether or not the food contains ingredients derived through genetic engineering.

No. The world did not end. But it did get more complicated, and you are likely to face big questions about bakery ingredient choices in the near future. Some of those answers may be found at IBIE 2016. Some still await discovery.

“You have government regulations and consumer activism coming together,” Joe Turano, IBIE vice-chairman and president of Turano Baking Co., recently told Baking & Snack. “The industry has no alternative but to satisfy consumer needs with labeling regulations that are looming, with the genetically modified organism topic probably the main one that we’re dealing with. It’s not only in Vermont. It’s going to become a national standard.”

Why the concern?

This effort is coming from the states. The Food and Drug Administration does not require such labels, and as it stated in a guidance document, the agency determined that the nutritional quality and safety of GMO ingredients are no different from the same ingredients derived from conventional crops.

Vermont’s labeling law reflects the growing influence — and louder voices — of food activists who claim the right of consumers to know what’s in their foods. They seek information that extends beyond the list of names given in the ingredient legend on the package. Many take sharp exception to use of genetically engineered (GE) foods, which they often term “frankenfood.” They want to know whether any food ingredients are derived from genetically modified organisms (GMOs). A good number are also outspoken about sustainable sourcing of foods.

The average American consumer is less passionate. When The NPD Group asked shoppers to describe GMOs in their own words, the answers varied from “genetically altered” to “not natural,” with many respondents indicating “don’t know.” Still, this report found 57% of consumers say they are concerned about bioengineered ingredients or GMOs. That 2014 data compared with 43% of consumers in 2002.

Up to 80% of packaged foods contain ingredients that have been biogenetically modified. Such crops are popular with farmers because they yield higher quantities and require fewer herbicides than conventionally bred crops. The two of most concern to bakers are soy at 94% of the US crop and corn at 88%. There’s also canola (90%) and sugar beets (95%). Other GE crops approved for farming in the US are papaya, zucchini and yellow summer squash, plus cotton and alfalfa.

While non-GMO soy and corn are available, their relative scarcity currently puts them into the specialty ingredient category: available, but at a price.

Wheat is not a GE crop. Some countries are experimenting with it, and China is rumored to be farming it now; however, no GE wheat has been approved for cultivation in the US or Canada. Despite favorable reports from scientists and agronomists, US experiments on GE wheat stalled, and the last field trials were in 2001.

Dave's Killer Bread is already labeling their food as Non-GMO Project Verified.

Bakers already competing

The non-GMO tide is rising. Earlier this year, the food research firm Mintel reported that 15.7% of food and beverage products introduced during 2015 in the US made non-GMO claims vs. 10.2% in 2014 and 2.8% in 2012. Organic claims rose to 13.5% of new products in 2015, compared with 2012’s 10.7%.

Packaged Facts pegged the global market for non-GMO foods at $150 billion, with the US accounting for 36% of sales, according to a forecast made in fall 2015. Organic and natural foods took the lion’s share with 60% of US domestic sales of non-GMO offerings. The researchers predicted 15% compound annual growth in this category for 2014-19.

A good number of bakers are already actively making non-GMO baked foods while others are putting themselves into position. The Non-GMO Project, the leading certifier of such foods, lists nearly 175 companies whose baked foods and bakery mixes now carry Non-GMO Project Verified seals.

That list names companies big and small. Those affiliated with multiple-unit baking companies include ACE Bakery (Weston Foods), Dave’s Killer Bread (Flowers Foods), Franz Family Bakery (United States Bakery), La Brea Bakery (ARYZTA) and Mission Foods (Gruma). Earlier this year, Flowers Foods doubled down on its capabilities with the purchase of Alpine Valley Bread, an organic baker that offers Non-GMO Project verified breads.

La Brea, for example, will transition its entire line of artisan breads to non-GMO ingredients by the end of 2016. “This is an investment we are making in our brand to stay relevant with consumer eating patterns,” said Kristina Dermody, president. “We know people want to know where their food comes from and feel good about what they are feeding their families.”

Independent bakeries offering Non-GMO Project verification are, among others, Angelic Bakehouse, Back to Nature, Boulart, Carr’s, Dancing Deer Baking Co., Doctor Kracker, Enjoy Life Foods, La Panzanella, Leclerc and Manischewitz. Producers of bakery mixes that qualify for the seal are Arrowhead Mills and Hodgson Mill. Several supermarket brands also carry verification. They are 365 Everyday Value (Whole Foods), Bloomfield Farms (Wal-Mart Stores) and Sprouts Farmers Market.

Bowing to market sentiment, a number of companies with large positions in baking and snacks announced plans to label products that contain GE ingredients. These include Campbell Soup Co., ConAgra Foods, Frito-Lay, General Mills, Kellogg Co. and Mars, Inc.

“We stand behind the health and safety of all of our products, including those with genetically modified ingredients, and believe consumers should be informed as to what’s in their food,” ConAgra said. “But addressing state-by-state labeling requirements adds significant complications and costs for food companies.” It called for a uniform, national approach to such labeling.

Denise Morrison, president and CEO of Campbell Soup, took an even more rigorous stand. “We believe GMOs are safe,” she told an analysts group in February. “We also believe these crops will play a crucial role in feeding the world on a sustainable basis.”

Campbell Soup previously opposed GMO labeling, but Ms. Morrison described a turnaround in attitude, attributing it to the company’s efforts to increase transparency. “Both the issue and Campbell have evolved,” she said. “In January, we announced our support for comprehensive federal legislation for mandatory national GMO labeling. The time has come for the federal government to level the playing field and provide food companies with clear direction, definitions and standards for disclosure. … The Vermont law is not helpful to consumers.”

Though Arrowhead Mills is a bakery supplier, it qualifies for the Non-GMO Project Verified seal.
Labeling pinch point

Although wheat poses no GE-sourcing problems, other bakery ingredients do. As supply now stands, there will not be enough non-GMO fats and oils to supply US bakeries. And while such sources exist, they will likely move preferentially into the foodservice channel whose demand for frying oil exceeds the baking industry’s need for shortening.

If sourcing issues can be solved, the conversion to non-GMO ingredients shouldn’t be difficult from a technical standpoint, although there will be costs to do the reformulation work in the lab and plant. But it’s the raw material pricing that sets the big hurdle with costs that will have to be passed along to consumers. The Corn Refiners Association estimated that switching all food products covered by the Vermont law to non-bioengineered status could reach as high as $81.9 billion annually, or $1,050 per US family. That’s the cost of labeling all a manufacturer’s products, not just those going to Vermont.

These costs are for segregating ingredients, reformulating foods and testing to determine biotech content. They also cover packaging changeover, a one-time cost that may be high as $3.8 billion nationally or $32 per household.

Packaging was on the mind of Dave Watson, vice-president of engineering, Campbell Soup Co. “[GMO labeling] hits us primarily from a packaging standpoint. For example, if you’re going to sell products in Vermont, which passed GMO label laws and is in the process of implementing them, you will be required to come up with a different set of package labels on that same product going to another state. A uniform labeling standard would be a move in the right direction.”

The potential for state-by-state GMO labeling comes fast on the heels of big alterations in the Nutrition Facts Panel, a federal mandate. Revisions require declaration of “added sugars” and change the way fats are described. Bakers, like all food manufacturers, are already dealing with these changeover costs on the packaging side because the new labels must be in place by July 26, 2018. (Manufacturers with less than $10 million in annual food sales will have an additional year to comply.) Bakers will be looking for both ingredient and packaging solutions at IBIE.

“The big concerns are labeling laws and guidelines that may vary from state to state,” said Robert Benton, senior vice-president and chief manufacturing officer, Flowers Foods. “Without a consistent federal law, it’s going to get very confusing for food companies that distribute products across state lines.”

Vermont stakes its claim

The Vermont rule requires food products containing at least 75% GE content to use verbiage on labels such as “produced with genetic engineering.” Products with less than 75% can add “partially” to that wording.

Martin Hahn, partner at Hogan Lovells LLS and general counsel for SNAC International, noted the difficulty of bucking Vermont’s rule by halting marketing efforts in the state. “The reality is that food manufacturers would have a hard time keeping their products out of Vermont,” he said. “It’s a really hard thing to do.”

The food industry turned to federal legislation as a possible solution. The first attempt to stop Vermont failed in March. As the days ticked off in late June, the Senate Agriculture Committee hustled to find a solution. A last-minute agreement emerged and was passed by the full Senate. The House approved the bill July 14 and sent it to the president for signing.

Supported by the food industry, the new law fully preempts piecemeal state labeling laws for foods containing GMOs, starting immediately. It does, however, make such on-package information mandatory nationwide, but it gives a three-year implementation period.

“Members of the baking industry deserve a great deal of credit for their tireless work in pushing the bill across the finish line,” said Fred Penny, president of Bimbo Bakeries USA and chairman of the American Bakers Association. He noted that nearly 5,000 emails, phone calls and face-to-face meetings on Capital Hill showed legislators that a patchwork of state labeling requirements would dismantle the industy’s distribution network. “Inaction was not an option,” Mr. Penny said.