GMOs, Farms and Insurance: What Is the Risk?

June 07, 2016| Von Jill Tumney | General Liability | English

Region: North America

The GMO debate continues, and many farms and their insurers are discussing what the latest developments mean to food safety and risk. A U.S. government study and new Vermont law are attracting the most attention.

First let’s start with a common definition. GMOs, or genetically modified foods, are foods derived from organisms whose genetic material has been modified in a way that does not occur naturally, i.e., through the introduction of a gene from a different organism. Another common name is GE (genetically engineered) foods.

Studies Find Foods Safe – But Not the Chemicals

The most recent study by the National Academies of Sciences, Engineering and Medicine (NASEM) found that genetically engineered crops present no more risk to humans than traditionally grown crops.1 The committee of academics found no evidence that crops had contributed to disease or posed any health risks. The World Health Organization (WHO) reached a similar conclusion while urging continuing assessment.2 NASEM noted that the food industry might want to label foods for marketing reasons, even if not required for safety reasons.

However, both groups acknowledge a secondary but still significant concern – the use of weed killers and their impact on food safety. Many GE crops result in insect and weed resistance that can lead to “major agricultural problems.” Glyphosate, a weed killer used on many GM crops, is “probably carcinogenic,” according to the WHO. In other words, it’s not the food that raises the safety risk as yet – it’s the chemicals used to grow the food.

Not being a scientist myself, I will avoid opining on the safety of genetically modified crops and leave that to the scientists. Instead, I will focus on how a law passed by one of the least populated states in the U.S. is influencing food labeling throughout the country.

Vermont’s New Labeling Requirements – A National Impact?

Vermont’s GMO labeling law, Act 120 – “The Safe and Accurate Food Labeling Act of 2015” – is scheduled to take effect on July 1, 2016.3 Packaged foods offered for sale by a retailer in Vermont are subject to the requirements if they are produced entirely or partially from genetically modified foods.

One of the following three labels will be required:

  • Partially produced with genetic engineering
  • May be produced with genetic engineering
  • Produced with genetic engineering

The Act also prohibits any product that contains GE materials from being labeled “natural.”

Because of these requirements imposed by Vermont, four of the nation’s largest packaged food producers – General Mills, Kellogg, Con Agra, and Mars – have announced they will join Campbell in labeling all products nationwide to comply with the Vermont standards. The cost of producing separate packaging for one state and the potential that products often cross state lines where noted as reasons for instituting the labeling changes across the board.

Some important exemptions in Act 120, which may limit exposure to farmers and local producers, include:

  • Food derived or entirely made of animal (including recently approved GE salmon or cultured meats now under development)
  • Raw agricultural commodities and processed food that was grown without knowledge or intentional use of genetically engineered foods or seeds
  • Alcoholic beverages
  • Processed foods with less than .09% GE materials
  • Medical foods
  • Food that is not packaged and is either for immediate consumption or will be served at a restaurant of other food establishment

Because of these exceptions, many farmers, artisan producers and larger producers will not be subject to the Act.

Risk and Insurance – Many Liability Questions

So where does the potential liability exposure lie? That will depend on who your insured is.

If you are insuring a food producer subject to the Vermont law, two of the main potential exposures will be food safety and product recall. If your insured is an organic food processor that takes in GMO crops unknowingly, the equipment will need to be cleaned to prevent contamination to organic products processed for other customers. Conversely, what if your insured is the farmer who sent the GE crop to an organic processing facility? Will there be exposure for others’ products that have been contaminated by your insured’s product?

What if a certain GE crop is later found to cause bodily injury to individuals? Does your insured sell crops to a producer that is subject to the labeling requirements? What are your insured’s contractual obligations? Is there a hold harmless or indemnification agreement in place that favors the producer? If your policy provides coverage for products recall, will the coverage apply if a GE product is mislabeled and sent to market?

Stay tuned to see how Vermont will influence other states and more companies. Whether you insure the farm, processor, packer or seller, Gen Re underwriters think that the GMO debate is worth watching. Let us know if we can help you with GMO or any other questions on your farm book.

  1. Genetically Engineered Crops: Experience and Prospects (2016).
  2. Modern Food Biotechnology, Human Health and Development (2015).
  3. H.122 (Act 120) is found at 6VSA §130 et seq.



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