In 2019, researchers discovered a surprising thing. Consumers in California and China were prepared to pay a premium for grass-fed, sustainably-sourced New Zealand beef.
Okay, so that is not so unexpected. We do grow happy beef here. What was surprising was the size of the prize. The researchers discovered potential to achieve a 20% price premium in the US market, equating to extra annual revenue of $238 million in export returns.
Emboldened by the numbers, Beef+Lamb NZ launched ‘Taste Pure Nature’ a vertically integrated value chain involving 8000 beef, sheep and deer farmers. Just three years in, the campaign is show promising results. Awareness and preference are up. In California, preference for New Zealand grass-fed beef is up 5%, while preference for grass-fed lamb is up 4% since March 2020. Awareness of New Zealand beef and lamb is up 19% since March 2020.
“We could get so much more if we could prepare and process a greater portion of the frozen product we sell internationally and label it as grass-fed. That’s about innovating here, developing brands here, and moving up the value chain in terms of how we do things,” says Hugh Good, B+LNZ’s Global Market Intelligence and Research Manager.
New research
This success is not a one-off. New research reveals the extent to which producers are already capturing the ‘green premium’ – and how they could get so much more. That green premium is perceived to be 20-100% greater than non-sustainably produced equivalents.
The research, from the Agribusiness and Economics Research Unit (AERU), funded by Our Land Water, covered multiple sectors including honey, wine, dairy, beef, fruit, jewellery and an emerging cosmetics brand. It included Māori-owned, family-owned and corporate businesses. You can find more about it at The Value Project.
“The research reveals that, regardless of the sector or ownership structure, greater value can be generated when producers are part of a high-functioning value chain that’s committed to sustainable values,” says lead researcher Professor Paul Dalziel.
Other examples include:
- Manawa Honey – This Tuhoi enterprise consistently wins international taste awards for its forest honey. Its value chain attribute is Product Quality
- Reefton Distilling Co – Reefton’s gritty past has been leveraged to create meaningful connections with gin consumers. Its value chain attribute is Consumer Focus
- Mea – Ngaī Tahu has created a brand with such unique and authentic provenance that large fragrance retailers want to stock it. Its value chain attribute is Chain Leadership
- Nagī Tahu Pounamu – Formerly sold as common greenstone, this taonga has been transformed by a chain-of-custody, from whenua to carver to retailer to customer. Its value chain attribute is Co-creation.
Nine attributes
The research has identified nine attributes of these highly successful value chains. The nine attributes have been summarised in the Value Chain Compass – a tool for managers to help transform their business.
“The most important is a commitment to shared values by every part of the chain, whether it’s the retailer, distributor, or suppliers. These values could be environmental factors such as carbon neutrality or social values such as origins or whakapapa – the point is that the values are understood and expressed all the way from the growers to the consumers,” says Professor Dalziel.
From volume to value
The research adds weight to the longstanding campaign by AERU director Professor Caroline Saunders: “that not an ounce of product leaves the country without a premium being attached to it.”
Prof Saunders says the value chain research is an important contribution to New Zealand’s ongoing journey from ‘volume to value’.
“New Zealand producers are at the forefront of sustainable practices but have not enjoyed the premium they deserve. This research shows how through greater collaboration and a commitment to sustainable values, as a nation we can enjoy greater financial rewards while also enhancing our natural environment,” she says.
Key insights
- New research shows some primary producers get higher returns than others for their sustainable products
- The ‘green premium’ is generated regardless of sector, types of ownership and age of company
- Key to success is the value chain
- Successful primary-sector value chains have 9 attributes
- The two most important are ‘customer focus’ and ‘shared values’, such as environmental management, social equity or whakapapa
Discover more at TheValueProject.nz
Photo Credit: MarlboroughNZ.com
