Kiwi food products would command premium prices with emerging trading partners if they are safety certified

Safety certified dairy products from New Zealand would be likely to command a 74 % premium in China, according to new research.

It suggests the most significant increase would likely be with whole milk powder to the tune of many millions of dollars.

Three quarters of potential customers for our products in China consider rate food safety certification as very important and they are prepared to pay considerably more for such food.

This distinction has been obvious in the response to various scares with our milk and it has been confirmed by a Lincoln University study published yesterday.

Its relevance was highlighted by the fact that it was mentioned on the ChinaDaily website this morning ... but it failed to rate a mention in the Kiwi media.

The research found that 75% of Chinese and 65% of Indian respondents rated food safety certification as very important among a range of New Zealand product attributes, compared to just 41% of UK respondents. It’s thought that underlying this notable difference may be a greater trust by UK consumers in food chain regulation and compliance.

It suggested that consumers in emerging markets show greater discernment when purchasing food, and in ways not entirely expected; and this has enormous potential for New Zealand producers. 

The AERU (Agribusiness and Research Unit) research study assessed Chinese, Indian and UK consumer preferences and willingness to pay for particular attributes in New Zealand food.

Although values, attitudes and preferences toward food attributes have been studied before, these have tended to focus on markets within developed countries. Very little research has been conducted on consumers in emerging markets, nor has there been much in the way of cross-country comparisons.

“It’s important that New Zealand understands the attributes of food that these markets value and how they differ from other markets,” says Professor of Trade and Environmental Economics, and AERU Director, Caroline Saunders. “This will allow New Zealand producers and exporters to better determine and interpret market signals d align themselves accordingly.”

As such, the research showed a much greater overall willingness by Chinese and Indian consumers to pay more for a product with food safety certification compared with UK consumers.

For example, according to the research, Chinese consumers are willing to pay 74% more than the normal price for dairy products with food safety certification, while Indian consumers were willing to spend up to 77% more for lamb products with food safety certification.

Other interesting findings from the study include just 34% of UK respondents rating animal welfare as very important in a New Zealand product, next to 42% and 50% of Chinese and Indian respondents respectively.

Likewise, one of the more surprising results of the survey was just 29% of UK respondents rating environmental quality as very important next to 58% of the Chinese and 55% of the Indian respondents.

Coupling these results with other outputs from the research which showed Chinese and Indian consumers valuing organic and GM-free attributes in a New Zealand product much more highly than UK consumers, and a picture begins to emerge of a far more sophisticated emerging market consumer than might be expected.

“As income grows, consumer behaviour changes. Product attributes other than price start to play a greater role in consumer decision-making,” says Professor Saunders. “Projections coming of the back of this research show that New Zealand can stand to gain handsomely through increased product certification.

“For instance, with just food safety certification alone, the potential increase in New Zealand producer returns from dairy and sheep meat exports to China, India and the UK is projected at US$247 million to 2020. The most significant increase would likely be with whole milk powder, accounting for some US$139 million,” she said.

When considering food safety, animal welfare, and biodiversity enhancement certifications combined, sheep meat and dairy exports to the three countries in question were projected to increase New Zealand producer returns by more than US$405 million to 2020.

“The results strongly suggest that New Zealand producers should give serious consideration to certifying their products,” says Professor Saunders.