The price of a product is the dominant factor in consumer choice. So says Martijn Snoep, chairman of the board of the Dutch Authority for Consumers and Markets (ACM). Although people say they are prepared to pay more for a more sustainable product, the actual average willingness to do so appears to be low.
“A product’s climate impact has little impact on the average consumer’s willingness to pay more for it,” Snoep said at the Rabobank and TAPP Coalition symposium.
Reduce the price difference regularly and sustainably
The major obstacle to the further development of organic production is, for example, a lack of demand, says Snoep. “The ability to influence it is limited.”
Research by ACM into the distribution of margins in the chain – the annual Agro Nutrimonitor – even shows that organic farmers get a larger share of the yield than farmers who produce conventionally. The margins for the supermarkets are lower for organic products than for conventional products.
To stimulate demand, Snoep advises reducing the price difference between conventional and more sustainable products.
The government’s exemplary role for sustainable procurement
The state’s exemplary role, by itself purchasing sustainably for, for example, company canteens or introducing quality brands, can also help to stimulate demand. WUR researcher Willy Baltween explains this.
If you are taking government action, you need to be very clear about what your goal is
Direct government policy by intervening in price via VAT rates or excise duties is often cited as a widely supported solution. Still, Reijer Janssen, director of consumption taxes in the Ministry of Finance, predicts that this is not always an option. “If you take government measures, you have to be very clear about what your goals are. And then see what the most effective measure is to achieve this.”
Disadvantages of VAT reduction healthy food
The many wishes within sustainable production, for example less CO2emissions, more animal welfare, healthier food or less nitrogen emissions, do not always go hand in hand. If you want to reduce the VAT on healthy food such as bread, the low rate automatically also applies to cake. This is because there are European agreements on VAT rates, due to the principle of tax neutrality on product groups.
Furthermore, a VAT reduction does not always reach the consumer in full, because it is not fully passed on elsewhere in the chain. There is also an international market. With a VAT measure or excise duty, the effect can be to encourage farmers abroad to produce more sustainably, while Dutch farmers actually produce more for other countries.
Janssen believes it is better to introduce a standard. As an example, he cites the commitment that all new cars from 2035 must be electric. According to him, it is much more effective than expensive subsidy schemes to stimulate electric driving.
Make store shelves more sustainable through standards
Agriculture Minister Piet Adema also alluded to making the shop shelf more sustainable by introducing a lower limit for sustainable production. However, due to international trade agreements, this is not easy.
According to ACM director Snoep, it is not impossible either. At European level, standards can be set for, for example, the CO2 footprint of products, whereby less sustainably produced products will be subject to an additional tax if they are imported into Europe.
Many small steps or one big move?
Partly because the issue of sustainability is complex, Snoep prefers to emphasize taking many small steps. According to him, it is so complex to solve the whole problem at once that it takes far too long to get things moving.
Jaap Seidell, professor of nutrition and health, sees more in solving the problems at once, for example through food price policy. By reducing the consumption of meat and processed foods and increasing the consumption of fruit and vegetables, he sees many opportunities to improve public health, the environment and biodiversity at the same time.
According to him, the calculation of the actual price of meat, including the environmental impact, leads to 15 to 30% more expensive products. By supporting fruit and vegetables, healthy food must be made available to everyone.
Farmer’s income model central to the agricultural agreement
Making food production more sustainable is a topic for discussion in the agricultural agreement. Earning capacity for the farmer is central here.