Agro-Nutri Monitor 2022: the price-formation process of foodstuffs, and the reasons for purchasing organic products
This third Agro-Nutri Monitor aims to provide insights into price formation in the Dutch agricultural value chain, from farmers through to supermarkets, and to identify any problems in price formation that are impeding progress towards sustainability in those value chains. The monitor has tracked the price formation processes of seven products: table stock potatoes, onions, pears, tomatoes, mushrooms, fresh milk, and pork.
The research questions of the third Agro-Nutri Monitor:
- To what extent do the payments (and any additional premiums) that farmers and horticulturalists receive for both conventional products and organic products correlate to the costs and investments incurred in production?
- How are the gross and net margins per unit of product distributed along value chain participants for both conventional and organic products?
- What are some of the key reasons that account for why different consumer segments – both in the Netherlands and in major overseas sales markets – are not prepared to pay extra for more sustainable products?
Some of this monitor’s conclusions:
- In 2018-2020, market prices covered the additional costs associated with organic production for most of the surveyed products, but not for milk.
- Producers incur substantial costs when switching from conventional to organic, but these costs are not insurmountable. Most producers indicated that they switched to organic because of the environment or because the production method suits the farm better, rather than because of financial reasons.
- Cost recovery for conventional sustainability quality labels varies by product.
- There are limited opportunities for selling products with Dutch non-organic quality labels abroad. However, efforts are underway to benchmark quality labels to enable mutual recognition of equivalent Dutch and non-Dutch labels (benchmarking).
- In the period 2017-2020, the distribution of gross margins in the chains looks more or less the same.
- For most products, farmers' and growers' share of the consumer price for organic products is higher than for conventional products.
- Farmers and horticulturalists perceive an unfair distribution of production risk. They believe they incur a disproportionate amount of risk, for example, because of changes to legislation and the weather.
- The willingness to pay among Dutch consumers for sustainable products is low. When faced with a choice in the supermarket or shop, consumers weigh up how valuable that food product is to them, how it contributes to sustainability, and the price they have to pay for it.
- Consumers that opt for conventional products expect the higher price of organic products to be paired with higher quality, a better flavor and that the product ought to be healthier as well as having a positive impact on the environment, animal welfare, or other aspects of sustainability.
- Summary of Agro-Nutri Monitor 2022
- Agro-Nutri Monitor 2022 in full (in Dutch)
- Agro-Nutri Monitor 2022 – background to the report (in Dutch)
- Background report of the consumer segmentation study (in Dutch)
20-10-2022 ACM: create a clear label for sustainable Dutch products
20-10-2022 Letter to the Dutch Minister of Agriculture, Nature and Food Quality (LNV) Agro-Nutri Monitor 2022 (in Dutch)
20-10-2022 Sub-study: sales strategies of Dutch supermarkets (in Dutch)
20-10-2022 Case study: organic consumption in Denmark (in Dutch)
11-10-2021 Agro-Nutri Monitor 2021: Monitor of foodstuffs’ prices, and analysis of obstacles to transition to sustainable production (in Dutch)
09-10-2020 ACM: food price monitor offers a first insight into pricing and obstacles for organic production