Tholen – The Dutch Authority for Consumers and Markets (ACM) offers the Minister of Agriculture, Nature and Food Quality the Agro-Nutri Monitor 2022 and two studies on sustainable food. This letter contains the main findings of the investigations and six recommendations. For example, according to ACM, measures are needed to reduce the price difference between conventional and more sustainable products. The organization also advocates greater transparency in pricing and calls for chain parties to make a greater contribution to further sustainability.
“This letter is very relevant to us as an organic sector. In my opinion, these very specific recommendations to the minister are quite ground-breaking,” replies Bionext director Michaël Wilde, who states that Bionext, on behalf of the organic sector, is already committed to five of the six points. “It’s a huge boost that ACM uses the same argument. They say action is needed because otherwise the organic market won’t grow very fast. Also the last point “It seems advisable for someone or appoint an authority to run the above. recommendations” is something we are quite confident about. We feel supported by this letter, and it will also help in the further discussions to get this kind of action done. After all, the market has to lead the transition. Everywhere I go, people are talking about the market. And in these recommendations, ACM says exactly what needs to be done.”
These are the six recommendations from ACM:
- Measures are needed to reduce the price difference between conventional and more sustainable products. This can be done, for example, through VAT reduction for more sustainable products or through subsidies to producers. For conventional products, it is important that the environmental impact of production is included in the price, so that consumers pay the ‘real price’. Production limiting measures are also advisable, such as raising the legal minimum sustainability requirements for conventional products.
- It is necessary for the sector and the government to increase consumer confidence in the sustainability of more sustainable products. Stimulate that the number of sustainability labels is reduced to a limited number of brands that are clearly recognizable to the consumer. To help consumers make sustainable choices, there must be a unique, reliable and government-backed sustainability label used in both the supermarket and the catering industry.
- Encourage the sector to benchmark brands internationally, as this improves export opportunities for products with a non-organic Dutch sustainability label.
- Promote the sale of more sustainable food not only in supermarkets, but also in specialist shops (such as greengrocers and butchers) and in the restaurant industry. The government itself can make a contribution by buying more sustainable products for restaurants or canteens in (semi)governmental institutions.
- Many producers experience problems with the transparency of pricing, such as uncertainty about what sales prices their customers realize and unpredictability of prices. Producers also experience the distribution of risks (such as weather damage and crop failure) as unfair. It is not clear whether these perceptions correspond to the actual situation. Follow-up research can provide more insight into this.
- The chain parties themselves should also make a greater contribution to further sustainability. Supermarkets, specialty shops and caterers can encourage their customers more strongly to make a more sustainable choice. Cooperation in the chain helps with this and usually fits within the competition rules. ACM recently published a guideline outlining these collaboration opportunities for farmers, processors, wholesalers, supermarkets and the catering industry.
ACM considers it advisable to appoint one or an agency to act as the driving force behind the above recommendations.
Michaël: “Point 5 is particularly relevant. Many of the organic entrepreneurs say that their products are not that much more expensive than usual, but that they are twice or three times more expensive on the store shelves. And they do not recognize this in cost differences. In this regard ACM argues for much more transparency in pricing, and that’s important.”
He is also pleased with point 6: “We have worked actively on this in recent months. The chain parties must now make a much greater contribution. For example by deciding to only offer organic courgettes. Or as Plus recently did. with steps to even more organic dairy under the private label.”
Click here for the full letter of offer to the Minister for Agriculture, Nature and Food Quality.
ACM: Working on an unequivocal quality label for sustainable Dutch products
ACM has published the following press release about the Agro-Nutri Monitor 2022 on its website:
The transition to more sustainable agriculture in the Netherlands will only succeed if consumer demand for more sustainable products increases. To help consumers with their sustainable choices, a unique and reliable quality label for sustainable products is needed. A quality brand that can be used in the supermarket as well as in the catering industry and is also recognized abroad. Through taxes and subsidies, sustainable products can be made cheaper and conventional products more expensive. To better match supply and demand, farmers, processors, wholesalers, supermarkets and the restaurant industry can enter into agreements with each other. This is the conclusion of the ACM in the Agro-Nutri Monitor 2022.
Martijn Snoep, Chairman of the Board of ACM: “We face enormous challenges to make Dutch agriculture more sustainable. This is also reflected in Mr. Remkes’ report “What is possible” on the future of the Dutch agricultural sector. The chain also helps and usually fits within the rules of competition Supermarkets and the catering industry play a crucial role because they have contact with the consumer Also, sometimes the consumer cannot see the wood for the trees because of all the quality marks clear and reliable quality mark can help.”
Quality label sustainable Dutch products
Previous research from ACM shows that the current forest of sustainability labels is causing confusion and ambiguity among consumers. This results in them losing confidence in the quality brands, even the good quality brands. A unique, well-regulated and reliable quality label for more sustainable products in shops, specialty shops and the catering industry helps consumers. If the added value of the more sustainable product is clearer, consumers are willing to pay more. The export opportunities for more sustainable Dutch products will improve if this quality mark is also accepted abroad.
Reduce the price difference
ACM believes that the government should seriously consider options to lower the prices of more sustainable products. This is possible, for example, by reducing VAT for more sustainable products. For conventional products, it is important that the environmental impact of production is included in the price, so that consumers pay the ‘real price’.
Three Agro-Nutri monitors
At the request of the Minister for Agriculture, Nature and Food Quality (LNV), ACM has over the past three years researched pricing in the food chain for common and more sustainable products and obstacles to sustainability. The studies are partly carried out by Wageningen Economic Research on behalf of ACM.
A coherent picture emerges from the three screens. An important obstacle to sustainability is the higher price of more sustainable products compared to conventional products. Consumers are only partially willing to pay more as long as the cheaper mainstream products are still available.
Manufacturers who have switched to more sustainable production are reimbursed for the additional costs for most of the products examined, but this varies from product to manufacturer.
Two additional surveys were conducted this year. The first concerns the consumption of organic products in Denmark. The second study is about the sales strategies supermarkets have for sustainable food.
ACM and the agricultural sector
ACM looks at agricultural markets to ensure they work well for people and businesses, now and in the future. The Agro-Nutri Monitor gives a good picture of how the markets work and what obstacles there are to more sustainable production. In addition, ACM has recently published Guidelines for collaboration between farmers, which outline the opportunities for collaboration for the agricultural sector. ACM has also published the Sustainability Claims Guideline with the aim of protecting consumers from misleading sustainability claims and encouraging fair competition in this area. Farmers, gardeners, fishermen and food producers can report suspected unfair trading practices to ACM. ACM can then investigate this.
Food prices and purchase motives for organic products
This third Agro-Nutri Monitor describes pricing in the chain, from the farmer to the Dutch supermarket. In addition, the monitor provides insight into which problems in pricing hinder the sustainability of the chains. The monitor followed the prices of seven products: table potatoes, onions, pears, tomatoes, mushrooms, fresh milk and pork.
Three questions were central:
- How do the payments that farmers and gardeners receive (extra) for the conventional product and the organic product relate to the (extra) costs and investments that farmers and gardeners have to make for production?
- What is the gross and net profit per product unit divided by link in the value chain for conventional and organic products?
- What are important explanations for why different consumer segments – in the Netherlands and in important sales countries – are not willing to pay extra for more sustainable products?
Some conclusions from this monitor:
- In 2018-2020, market prices recovered the additional costs of organic production for most of the products studied, but not for milk.
- The conversion costs for producers from conventional to organic are significant, but not prohibitive. Most manufacturers indicate that they switch because of the environment or because the production method suits the business better, and not so much for economic reasons.
- The compensation for common sustainability labels differs from product to product.
- There are limited sales opportunities abroad for products with a non-organic Dutch quality label. However, there is increasing mutual recognition of similar Dutch and foreign quality brands (benchmarking).
- The gross margin distribution in the chains remained more or less the same in the period 2017-2020.
- For most products, farmers’ and gardeners’ share of the consumer price for organic products is higher than for conventional products.
- The distribution of production risks for agricultural products is perceived as unfair by farmers and gardeners. They feel that they run a disproportionately large risk, among other things due to changed legislation and the weather.
- Consumers’ willingness to pay for more sustainable products is low. In the supermarket or shop, consumers weigh up the value the food has for themselves, the contribution the product makes to sustainability, and the price to be paid for the product.
- Consumers who choose the conventional expect a higher quality (better taste, healthier and a greater contribution to the environment and animal welfare) at a higher price for organic.
Click here for the monitor.