Emerging markets in the world have different priorities and the New Zealand dairy industry needs to stay in control of its origin story to cater to those consumers.
The NZ dairy industry is in a unique position in that it exports 90% of its milk to a range of customers, who may prioritise different values in their food than New Zealanders, Rabobank’s general manager food and agribusiness research and advisory Tim Hunt says.
“We sell milk and dairy products to a lot of markets and not all of them prioritise the same things.
“NZ is almost unique in that the local producer community, that you live with, that is asking for you to reach certain environmental standards, is almost completely different to your customer base.”
‘Some people in China will value that sustainability, but we shouldn’t presume it’s a hot button for the majority of the market there.’
While many developed countries are moving sustainability and quality of their food up the ladder of importance, customers in emerging markets consumers value food safety and food security.
The origin sustainability of the food becomes less important, he says.
For example, China has several influencing factors which push sustainability down the list of priorities for its consumers.
China is heavily polluted, and in the major cities, people are losing six years off their life on average because of fine-particulate air pollution.
In that environment, people are concerned about any food produced in those conditions, so they want to buy imported food products.
“China values enormously lots of aspects of the food that we produce, in its safety, it’s traceability, it’s quality.
“Point of origin sustainability – like swimmable waterways – is a nice adjunct to that story, but they’re not the hot button. When I can’t even breath locally, I’m not caring that much if your waterways are swimmable.
“Some people in China will value that sustainability, but we shouldn’t presume it’s a hot button for the majority of the market there.”
Along with the terrible pollution in China, the risks of food safety in products produced locally and government information control pushes the point of origin sustainability even lower down their list of priorities.
A recent incident in China involved companies issuing faulty rabies vaccines, which they knew were ineffective, and is a reminder why Chinese consumers want offshore products.
“It’s reinforced to Chinese people, we have to be careful with domestically produced products,” Tim says.
Alongside that is the issue of government censorship and the Chinese people are aware their information is controlled.
“The Chinese consumers know that, and it’s not making them feel better about the information they get on domestic food, and food scares. As a result, imported food sales are still rising rapidly.”
There will be an increasing share of global food production, including dairy, moving long distances, across borders, into less-developed supply chains. These consumers will not necessarily have the same priorities as the NZ consumer, Tim says.
Emerging markets accounting for most of the world’s population and economic growth are already in significant food deficit, so food security will be their top priority.
Alternatively, in advanced economies, consumers are interested in environmental sustainability, animal welfare, fairness of the supply chain and provenance.
The NZ dairy industry should take advantage of its pasture-based sustainable background story to target the available opportunities.
“Bearing in mind that 90% of milk is exported, NZ has a huge incentive, I believe, in opening up markets where sustainability is higher on the agenda than in places like China.
“I believe pasture-based and sustainability generally have to be sold as part of a package, it’s an attribute in many parts of the world is admired, that’s desired.”
The NZ dairy industry must be able to sell its products with a capturing backstory and be able to prove their story is accurate.
When it comes to in environmental sustainability, animal welfare, fairness of the supply chain and provenance – when people eat that product they can not discern any of those attributes. They have to be able to trust the product and the name behind it.
“If we are going to sell these things to the consumer we have to somehow establish trust or proof.
That is becoming more tricky. Trust in many institutions is in decline.”
When making claims about a food product, a company must be able to prove it to achieve long-term sustainability, he says.
Walking the talk is incredibly important. NZ farmers must be serious about the actions the industry agrees to, for example around sustainability levels or animal welfare.
“It’s important that it’s enacted onfarm because it’s very easy to trip up industries. The scary thing is everyone has a smartphone and it only takes one person to trip up and not follow the standards that the industry is claiming.
“It’s important for the dairy industry to tell its origin story properly, clearly and resonate with the consumer. It’s complex to do that at the moment, and it’s getting harder.”
Connecting with customers is becoming increasingly difficult with new technology and a strong narrative around how food is produced, Tim says.
“In the United States the media narrative on food supply chains is very revealing and something we need to be aware of.”
For example, the documentary Super Size Me, triggered many documentaries looking closely at issues in the food supply chains with a key message.
“It’s telling you as consumers, the food supply chain is producing food that is unhealthy, in a way that’s environmentally harmful, abusive to both animals and employees, and sometimes farmers – change the way you eat or vote to address it.
“That’s a powerful narrative coming through the US consumer base at the moment.”
One of the key problems associated with this is the use of social media and the way people communicate in echo chambers.
In the US, two thirds of people get their news via social media. Facebook curates the information people get on the basis of what they think those people want, which acts as an echo chamber. Likewise, people on Twitter are generally only interacting with people that hold similar views to themselves.
“So as a Republican you get Republican-slanted news. People tweet this news between other Republicans, and you end up with people tweeting in their own echo chambers.”