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Summary of full report
Part of the EcoRange project report series
Edited by Lester Pahl
January 2004
RIRDC Publication No 03/132 RIRDC Project No DAQ-276A
Executive Summary
Background
EcoRange is the name given to the project Development of Market-Oriented
Environmental Certification for Rangeland Pastoral Industries. This project
arose from a desire of community, government, and industry for agricultural
enterprises to achieve and demonstrate ecologically sustainable use of
natural resources. In particular, there is considerable interest in harnessing
the power of markets or supply chains to the goal of ecologically sustainable
production.
A focus for this project was the growing world-wide consumer interest in ‘environment-friendly’ food and fibre and the role this may play in rewarding good environmental performance in agriculture.
Market-driven environmental assurance in agriculture should provide commercial opportunities for primary producers who implement the production practices and achieve the environmental outcomes demanded by consumers. This is potentially a powerful ‘win–win’ process for consumers and producers alike. However, food and fibre chains, from producers through to consumers, can only influence the environmental aspects of production if this ‘win–win’ situation prevails. For this reason, environmental assurance must be profitable for producers, and it must deliver value-formoney products to consumers.
Project purpose and outputs
The purpose of EcoRange was to identify forms of market-oriented environmental
assurance, aligned with wider community expectations, which are capable
of motivating and building the capacity of pastoral producers to improve
their environmental performance.
The outputs of EcoRange are:
This project overview is a synthesis of the project findings and
as such recommends objectives and procedures for market-oriented environmental
assurance in rangeland pastoral industries. These recommendations were
informed by extensive consultation undertaken by the EcoRange project.
This included surveys of domestic consumers, rangeland pastoralists and
members of environmental groups, interviews with companies in Australian
and international meat and wool supply chains, interviews with representatives
of agricultural industry, environmental and consumer organisations, and
a review of on-farm standards that could be used to deliver the requirements
of these stakeholders.
These findings are presented in six separate reports (see page v).
While EcoRange was mainly focused on meat and wool, the major products of rangeland pastoral industries, much of its research findings are relevant to the production and marketing of ‘environment-friendly’ fresh foods and natural fibres generally. For this reason, this report mainly discusses environmental assurance in the context of food and fibre, with occasional more specific references to meat and wool.
Methods
EcoRange set out to identify suitable forms of environmental assurance
for the pastoral industries, based on supply-chain and market requirements,
and other stakeholder expectations. The project commenced with a review
of reports, conference papers, web sites and media articles concerning
environmental and other requirements of markets for agricultural products,
the types of standards and schemes used to give assurances on these issues,
and their use in global markets. This provided a foundation that was built
on by recording current views and expectations of key stakeholders.
Three quantitative surveys were undertaken to record the views and requirements of major stakeholders for environmental assurance in agriculture. ACNielsen conducted phone surveys of 605 domestic consumers and 300 rangeland graziers, and CSIRO Sustainable Ecosystems carried out a mail survey of 1,106 members of environmental groups.
Meat and wool supply-chain research occurred through a series of interviews with domestic and international processors, wholesalers and retailers. Thirteen Australian wool processors and manufacturers and 14 Australian meat processors and retailers were interviewed by phone or personal visit. Face-to-face interviews were also conducted with 6 organisations in Belgium, France, and the United Kingdom that were associated with meat importing, retailing and regulation. Similarly, 18 inmarket interviews were conducted with meat importers, cooperatives, retailers and food service companies in Japan, and 5 leading beef and lamb importers in the United States.
Eight agricultural industry organisations, eight consumer or consumer-related organisations, and eight environmental groups were consulted during personal and phone interviews. The key issues and concerns of these groups for environmental assurance in agriculture were identified and recorded using a convergent interviewing process (King 2003).
Results and discussion
The sections below address the main findings of the EcoRange project,
covering domestic and international market potential and requirements,
stakeholder expectations for environmental assurance in agriculture, and
the standards that could be used to meet these expectations.
Consumer perceptions and market potential for ‘environment-friendly’
products
Research undertaken by the EcoRange project has indicated that to some
degree the environment now influences the purchasing decisions of mainstream
consumers, but it remains the most important consideration only for a niche
segment of consumers. For most consumers, the environmental impact of the
production system is just one issue that motivates their purchase decision
but is rarely the major issue. However, they are beginning to place increasing
importance on extrinsic attributes of products, including the environment
and animal welfare. Where concern for environmental aspects of the production
system is a motivating factor, consumers are often primarily driven by
the perceived effect of elements of the production system, such as chemicals,
on their personal health, rather than on the environment.
Consumers in Australia are beginning to show an interest in environmental and other production practices associated with food. However, while the environmental status of a product is a factor that influences the purchasing decisions of around 30 per cent of consumers, quality, price, and brand are the most important factors influencing such decisions. Many Australian consumers believe ‘environment-friendly’ food to be equivalent with organic, and it seems that their interest in the former is based more on a belief that ‘environment-friendly’ food is healthy and good for them.
Around 22 per cent of consumers would purchase ‘environment-friendly’ meat if it was the same price as regular meat, falling to 18 per cent if a price premium of 10 per cent applied, and falling further to 13 per cent when the price premium was 25 per cent.
A number of studies of affluent international consumers such as those in the United Kingdom, Europe and the United States, have found that as many as 50 per cent are willing to buy ‘environment-friendly’ products, provided other priority attributes such as brand, price, quality and performance are equivalent to those of conventional products. However, these consumers purchase few if any ‘environment-friendly’ products. Consumers claim that very few products are available that meet all of these requirements, and they seldom have confidence in the claims made. For these reasons sales of ‘environment-friendly’ products are low, with market share often around just one per cent.
The United Kingdom, Europe and the United States also have around 5–15 per cent of consumers who are considered ‘deep green’, as they regularly purchase ‘environment-friendly’ products and are prepared to pay moderately higher prices for them. These consumers place the environment above other purchase criteria, and are willing to pay 5–10 per cent more for these food products.
Japanese consumers appear to be less interested in ‘environment-friendly’ food, unless this can be closely linked with the production of safe and healthy food. For example, their interest in organic foods appears to be largely due to these being safe and healthy, rather than the lower environmental impacts of organic production practices.
It is concluded that there are some opportunities for ‘environment-friendly’ products in niche markets. The opportunities are probably greater for meat than wool, but they could be significantly enhanced for both products by greater education of consumers about agricultural production systems.
Those niche markets with the greatest demand for ‘environment-friendly’ products are probably in Europe, although research has indicated that the US and Australian domestic markets also provide some limited opportunities.
Australian agricultural and associated organisations have a keen interest in the national and global mechanisms for guiding and verifying environmental claims about production systems and products.
Many now wish to implement these processes in Australian agriculture, either to gain some marketing advantage and/or to achieve environmental and social objectives.
Stakeholder expectations of environmental assurance
The EcoRange project consulted a wide range of stakeholders (see Appendix
1) with regard to their expectations for environmental assurance in agriculture.
These are summarised under the headings:
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