Vermont is poised to become the first state to require labeling of so-called “franken-foods.”

Its landmark bill states that foods with genetically modified organisms, or GMOs, “potentially pose risks to health, safety, agriculture, and the environment,” and it requires food manufacturers to label raw packaged foods that have been produced or partially produced with genetic engineering.

Gov. Peter Shumlin says he'll sign the bill, which would not take effect until July 1, 2016.

"I am proud of Vermont for being the first state in the nation to ensure that Vermonters will know what is in their food. The Legislature has spoken loud and clear through its passage of this bill," Governor Shumlin said in a statement Wednesday. "I wholeheartedly agree with them and look forward to signing this bill into law.”

While the US Food and Drug Administration and the biotechnology industry maintain that there is no significant difference between food containing genetically modified ingredients and those that do not, the American public overwhelmingly supports labeling of food made with genetically modified ingredients. More than 90 percent of those polled by The New York Times in January 2013 said food should be labeled.

However, industry officials caution that the rules could result in higher costs for food producers that could translate to price hikes at the grocery store.

Vermont Grocers Association President Jim Harrison expressed concern over state-specific labeling requirements, in an interview with the Associated Press. Adhering to varying state rules “gets very costly, very confusing, and very difficult for the entire food industry to comply with,” Mr. Harrison told AP.

While neighboring states of Maine and Connecticut have passed similar bills, those bills will not go into effect unless a sufficient number of surrounding states pass comparable legislation.

The national Grocery Manufacturers Association (GMA), the food industry’s main trade group, is weighing whether to challenge the law in court, to make accommodations for food sold in Vermont, or to adopt labeling nationwide to avoid the costs of having different labeling requirements.

The bill “sets the nation on a costly and misguided path toward a 50-state patchwork of GMO labeling policies that will do nothing to advance the safety of consumers,” the association said in a statement Wednesday. “We encourage policymakers in Vermont and across the nation to support alternative legislation that would ensure that food labels are accurate and consistent for consumers."

In anticipation of legal challenges from GMA and the biotech industry, the Vermont bill allots $1.5 million for defense of potential lawsuits. Individuals will be able to contribute to that fund, and the state will be able to add any winnings from future lawsuits to the fund, the Burlington Free Press reports.

It is not clear how the new requirements might affect consumers. The long-term effect on prices could depend on how consumers react to the new labels. If shoppers change their buying habits on the basis of what they learn about the ingredients of foods they are already buying, manufacturers may respond by swapping genetically engineered ingredients for costlier nongenetically modified ingredients.

That’s the scenario that has played out in the European Union, which has required some form of labeling for genetically engineered products since 1997, biotech and biosafety expert Gregory Jaffe told AP. Mr. Jaffe is director of Biotechnology for the Center for Science in the Public Interest, which does not support mandatory government labeling of genetically modified foods.

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More than 64 countries do require such labeling. Several countries, including Germany, Austria, Greece, and Spain, have banned specific genetically modified crops entirely, according to the Organic Consumers Association.

Material from the Associated Press was used in this report.