Food companies 'cannot expect' consumers to pay for sustainable supply chains

17 November 2014

Consumers are not willing to pay a premium for food produced with high socially and environmentally sustainable supply chains, a report has found.

Food companies promoting sustainable supply chains compete with other companies which “may not share those aspirations”, according to The Long and the Short of it.

Published by the Sustainable Food Supply Chain Commission, the report found that there is a limit “to how much companies can expect consumers to pay for higher standards – a limit in terms of the premium that consumers will be willing to pay and also in terms of the market share that can be commanded”.

In concentrated markets - such as the market for bananas - some producers are quitting due to the lower prices consumers are paying coupled with increasing production costs. Alternatively they are making use of casual labour and thereby undermining social sustainability. 

The report - whose findings will form the basis of a delegation to the European Commission and meetings with the European Parliament’s Agriculture and Rural Development Committee - investigated how the market operates, and found that there is scope for the market to reward the aspirations for high standards. It also called for a balance between voluntary approaches to sustainable supply chains and regulation, and suggested that the 2006 Companies Act could be amended to explicitly include wider social issues and the impact of the supply chain, rather than a company's own operations. 

Professor Rosemary Collier, report commissioner and director of the University of Warwick’s Crop Centre, said: “The Sustainable Food Supply Chain Commission has affirmed the considerable complexity of the ‘food system’ and the substantial linkages and interdependencies between the environmental, social and economic aspects of sustainability”. 

The commission was organised by the Industry and Parliament Trust in collaboration with the University of Warwick’s Global Research Priority on Food and the Food Ethics Council, and included academics, parliamentarians and representatives from the agricultural and food industries.

“The Sustainable Food Supply Chain Commission is a prime example of how parliamentarians, business and academia can confront an issue that is relatively underexplored,” said Nick Maher, CEO of the Industry and Parliament Trust. “Food waste, efficient supply chains and finding sustainable sources of food are challenges we need to face, and this report is a great way to start the dialogue about how we can solve some of these problems."

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