Ever Growing Value of Environmental Sustainability
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Ever growing value of environmental sustainability

Ever growing value of environmental sustainability

Across the globe, environmental sustainability is fast becoming a growing influence over the behaviours of major Food and Agricultural (F&A) stakeholders:

  • Local communities no longer simply accept that farmers have a license to operate as best they see fit, this has led to an increase of governmental regulations.
  • Regulators, particularly in developed countries, are progressively introducing higher environmental regulatory standards which means increasing overall production costs.
  • Consumers are embracing sustainable products in ever increasing numbers. And as a result, in many markets, sustainable production is now viewed as the basic cost of entry.
  • Global F&A companies (Processors / Traders) are re-evaluating their approach to sourcing of raw materials. Many F&A companies want to have access to a guaranteed, consistent supply of high quality sustainably produced materials.
  • Food retailers / Food services are moving away from ‘niche green consumerism’ and see sustainability as an integral part to their core business.

These dynamics will create opportunities for realising two types of value from sustained environmental farming practices:

1. Price Premium:

  • The challenge in realising a price premium is that sustainability is generally seen by many high value consumer targets as a precondition for purchasing food products, rather than a genuine value add attribute.
  • To realise price premium, sustainability should be linked to other attributes valued by consumers, to create a ‘story’ that connects with consumers.
  • To generate margin improvement, the premium that is realised must exceed the cost of achieving that premium.

2. Long-term Strategic Value:

  • There are significant long-term benefits associated with improving environmental performance that go beyond realising a price premium.
  • Positioning New Zealand as a reliable source of sustainably produced agricultural products will, at a minimum, provide protection against potential future reputational damage. Done well, it will create an opportunity to use sustainability as a competitive advantage through getting closer to consumers, and building stronger relationships with major F&A companies.
  • Adhering to high levels of environmental performance is also important for ensuring agriculture remains a legitimate industry in the eyes of the New Zealand public. Preserving agriculture’s “social license to operate” is vital for maintaining the industry’s ability to control the future direction of the agriculture in New Zealand.

For farmers and F&A companies, the type of value they can derive from sustainability will vary depending upon their agricultural sector, the products they are producing, how they are producing it, where they sit on the supply chain, and who the end consumer is.

While some may use sustainability as a basis for realizing a price premium, the greatest opportunity for the majority of New Zealand’s agricultural industry may lie in the long term strategic value of being identified as a globally trusted source of sustainably produced agricultural products. Read our tips on sustainable farm management to get started today.

How does the growing influence of environmental sustainability impact your business? let us know in the comments below. 

Information on this site about sustainable farm systems and environmental sustainability is general in nature. The information provided has not taken into account your personal circumstances, objectives and financial situation. Before making any decision on sustainable farm systems or environmental sustainability, you should seek processional advice.

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