Current state of play on ACM’s study into price-forming mechanism in food supply chain
The study into the price-forming mechanism in the food supply chain will be completed over the next few weeks. The Netherlands Authority for Consumers and Markets (ACM) will discuss the preliminary results of the price monitor with representatives of the various sectors in the food supply chain. The final results will be published in September 2020.
Wageningen Economic Research (WER) has conducted an extensive study focusing on six different food products, and looked at how their prices are formed and to what extent production processes in the food supply chain have become more sustainable. With regard to the studied products, the preliminary results paint a mixed picture. It appears there are enormous differences in margins between the different products, and also between farmers, growers and intermediaries, processers and supermarkets. The WER researchers see that same mixed picture when comparing the margins of non-organic production and organic production of the studied food products.
Furthermore, the researchers have found various problems that farmers and growers say they encounter when switching from traditional (non-organic) production to organic production, for example, uncertainty about the requirements that certain certification labels attach to sustainable production, the amount of time and the level of investment that are involved in such a switch, as well as uncertainty about lower production levels. However, there are differences between the various products that were studied.
About the monitor
At the request of the Ministry of Agriculture, Nature and Food Quality (LNV), ACM has launched the monitor on the price-forming mechanism in the food supply chain. It takes many steps for our food to get from farm to fork. The ministry wishes to know whether products that are produced in a more sustainable manner and at higher costs are also more profitable for those farmers and growers.
Price trends of six products (onions, white cabbage/sauerkraut, tomatoes, pears, milk, and pork) have been studied in detail for the period of 2017 until 2019. In the study, researchers looked at the costs and profit margins in all steps of the supply chains. In addition, they also looked at the difference between the price-forming mechanisms of non-organic products and their organic varieties. The second research question is what problems farmers and growers encounter when switching from traditional production methods to sustainable ones. In that context, researchers collected and analyzed data, conducted a survey, and interviewed parties involved.
Follow-up steps
Next, ACM will sit down with representatives of various product markets to see whether they recognize the study’s results. The report will be presented to the Minister of LNV in September.