Why we should sell food cheap, to earn more

The price of food in New Zealand is a contentious issue, and is the source of several conversations, debates and news headlines across the country each year. Inextricably linked to the price of food, is the nutrition and health of New Zealanders.

Covid-19 has put the price of food front and centre to the world, with New Zealand no exception.

Global food prices have consistently broken records almost every month, reaching 33% higher in September 2021 compared to September 2020. New Zealand has followed a similar trend with our dairy, fruit and vegetable prices reaching their highest level in over a decade (albeit some notable exceptions such as avocados).

This is being felt in New Zealand’s vulnerable communities. Almost 1 in 5 children experienced severe-to-moderate food insecurity before Covid-19 existed. As of September 2021, demand for food boxes and nutrition support in New Zealand is still at unprecedented levels, with many agencies experiencing increases of 200 – 300% or even higher in comparison to pre-covid-19 levels.

Unfortunately, that’s not the end of it. New Zealand also claims the third highest obesity rate in the OECD, reaching one in three adults and continuing to increase.

These are entrenched, multi-generational and complex causes for these statistics and challenges. There are also challenges embedded in the way that our food system has developed. But that doesn’t mean our food and fibre sector should forget its opportunities for delivering solutions for the country’s more vulnerable domestic citizens.

One of the solutions being employed by the sector is food donation. Charities such as Meat the Need, and regular food donations by many large agribusiness organisations are supporting healthy nutritious food to be provided to New Zealanders in need. This drives some immediate impact and is a great start.

But is this enough?

I argue that the food and fibre sector should completely reimagine the way it provides food to the domestic market.

In New Zealand 2019, we spent 16.8% ($234 / week) of household expenditure on food, and in 2016 this was 17.0% ($214 / week). This is already higher than OECD average at 13.8%. And what this data doesn’t capture – is what volume of food is purchased, what is the nutritional quality of that food, and how is it prepared and eaten? The real results of our food system make themselves known through our poor health statistics.

We export 90-95% of our red meat, horticultural and dairy products. It is often argued that the reason our prices for high quality primary produce are high in New Zealand, is because New Zealand consumers need to pay the same price a targeted wealthy international consumer would pay.

But what if this was wrong?

The value proposition and opportunity cost of food sold in New Zealand is not simply the export value of that same food.

Why?

Because New Zealand accesses those premium export prices based on marketing the brand, stories and core values that are inherent in its products. Most of our exporters leverage some version of ‘brand New Zealand’ or a New Zealand story to capture their share of added value.

However, how strong is our story of delicious, healthy, and nutritious produce if its from a country with some of the worst food poverty and obesity rates in the developed world?

Japan is world renowned for automation and robotics, if you visit Japan – this is showcased throughout many parts of the country. Milan, Italy is the fashion capital of the world, and walking through the streets – you can tell! In New Zealand, our oxymoron is that the economy and exports are driven by food, yet our citizens have worse health statistics and poorer access to New Zealand produced nutrition than many of the countries we export to.

This is the real opportunity cost of the way we serve our domestic market.

As the world continues to emerge into its more health-conscious new-normal, the value, or potential loss of value from the way we sell food in New Zealand increases exponentially.

While New Zealand is still currently on a pathway of anti-genetic technologies, little-no cellular ag investment and maintaining a focus on natural, ‘clean’ foods; we need to protect that space by making sure we’re not giving the global consumer, or international competitors, a set of negative news headlines about NZ’s alarming food security and health statistics or causing the slow erosion of trust in our brand.

By selling a small proportion of our production volume in the domestic market at a cheaper price than we may be able to receive overseas – perhaps we can strengthen our foothold, brand, and New Zealand story of producing top quality nutrition for the world. This provides a platform to earn even greater value from the 90-95% that is exported.

We need to sell consciously in New Zealand to provide the platform for premium.

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