Credence Attributes On Farm

What are the on-farm impacts of changing food production systems to deliver additional attributes that are meaningful and valuable to consumers?

Project Details Ngā taipitopito

Project Status:
Completed
Challenge funding:
$350,000
Research duration:
July 2017 – June 2019

Collaborators Ngā haumi

AsureQuality | Fonterra | Greenlea | John Vosper (organic dairy farmer) | Lincoln University | Massey University | PGG Wrightsons | Rabobank | Richard Lansdaal (farmer) | Robin Greer (organic farmer) | Scion | Sustainable Business Network | Tracey Bayliss (Grandad’s Beef)

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What are we doing?E aha ana mātou?

Organic, grass-fed, free-range and halal are examples of ‘credence attributes’: a feature of a product that cannot be perceived, but may have environmental, animal welfare, social welfare or cultural benefits. Many consumers are willing to pay more for products with these additional qualities.

If this increased value can be shared along the value chain to increase profitability for farmers and growers, this should motivate changes in land use or land management to deliver the credence attributes.

This research project filled an important gap by investigating the costs and benefits of delivering credence attributes on-farm. Organic, carbon neutral and grass-fed farm systems were selected as the credence attributes to investigate, chosen in collaboration with research stakeholders, rural professionals and farmers.

Using data for ‘average’ DairyNZ System 3 farms in the Waikato and Southland, and for a Class 4 North Island sheep and beef farm, Credence Attributes On-Farm researchers modelled the farm system changes required to deliver pasture-fed, carbon-neutral and organic products. These models also enabled nitrogen and greenhouse gas reductions to be estimated.

How can the research be used? Ka pēhea e whai take ai te rangahau?

  • Farmers can use this research to estimate the profitability increase that may be gained through delivering three modelled credence attributes: organiccarbon-neutral, and 100% pasture-fed. The greatest potential gain is for organic (increase of 42% to 67%) and pasture-fed (increase of 36% to 49%) dairy products. Carbon-neutral products are also more profitable (increase of 11% to 25%).
  • This research also provides an estimate of the environmental benefits of delivering the three credence attributes modelled. Carbon-neutral dairy has the greatest potential to reduce nitrogen leaching (-41% N reduction) and carbon footprint (-11 to -17%), if the farmer is able to use imported maize for 30% of the feed (as it was on the modelled farm). Configuring to organic dairy also reduced nitrogen leaching (-17% to -24%) and reduced carbon footprint (-11% to -20%) on the modelled farm.
  • These results show farmers they can maintain or grow profitability under carbon-neutral scenarios. The gained price premium could help a farmer cover adaptation and offset costs, and maintain or increase profitability. Additionally, a co-benefit of carbon-neutrality is a reduction in on-farm nitrogen leaching by up to 40%. This proves that it is possible to achieve multiple environmental benefits through pursuing the goal of carbon neutrality.
  • Exporters and agri-food marketers can use the meta-analysis (combining the results of 94 other studies) to learn how much more consumers are willing to pay for attributes such as organic dairy. This work showed that, on average, consumers would pay 36% more for organic, 25% more for grass-fed and 24% more for “environmentally friendly” products.
  • Beef and dairy exporters should note that these products were associated with a higher price premium for credence attributes compared to lamb. Australasian consumers value red meat products with credence attributes the highest, followed by Asian, European and North American consumers. For dairy products, willingness-to-pay is highest in the Asian market, followed by the EU and the North America.
  • Confirming the existence of price premiums for credence attributes may motivate farmers to make changes to their farming systems, or adopt good management practices and new technologies to meet the expectation of environmental regulation and the increasing demand for food products with credence attributes.
  • This study provides evidence that could assist the NZ government and primary sectors in achieving desired environmental goals while maintaining the economy. The results have been presented to staff from the Ministry for the Environment and other government agencies.

Participation & engagement Te hunga i whai wāhi mai

  • Stakeholders, including rural professionals and farmers, attended a workshop in November 2017 to identify the priority credence attributes to investigate. Carbon neutral and grass-fed farm systems were selected. The workshop also discussed on-farm impacts of producing premium products to deliver environmental, animal welfare and food quality attributes.
  • A second workshop was held in June 2018 to present the results of the modelling back to the stakeholders that helped form the direction of the project, and find out what they thought would be of most value in the second year of the project.
  • In August and September 2018 we held a workshop and a meeting to discuss how to model organic dairy systems and draft an initial model of organic dairy farming.

Research team Te hunga i whai wāhi mai

Research Lead
Gina Lucci
AgResearch
Stewart Ledgard
AgResearch
Grant Rennie
AgResearch
Geoff Mercer
AgResearch
Wendy Boyce
Ag Research
Wei Yang
Lincoln University
Michael Wang
Scion
Carel Bezuidenhout
Scion
Spring Zhou
Massey University

Tools & resources Ngā utauta me ngā rauemi

Infographic

Predicted willingness-to-pay price premium for red meat and dairy products

This infographic summarises key findings from a meta-analysis of international studies. It found the highest consumer ‘willingness to pay’ (WTP) for sustainability attributes is for…
View Infographic
Infographic

Summary of potential impacts of delivering credence attributes on dairy farms

This infographic summarises key findings from research on the potential impacts on dairy farms in New Zealand from delivering specific sustainaibility attributes that are desired…
View Infographic
Infographic

Consumer willingness-to-pay is variable

This infographic summarises the various factors that influence the additional premium that consumers in our export markets are willing to pay (WTP) for sustainabiity attributes.
View Infographic
Guidance

Consumers’ Willingness to Pay for Sustainability and Other Attributes

Evidence gathered by four separate Our Land and Water research programmes has found that food shoppers in New Zealand’s key export markets do value attributes…
View Guidance
Summary

Scenario Model to Reduce Both GHG Emissions and Nitrogen Leaching on Dairy Farms

The Credence Attributes On-Farm research project modelled several scenarios to reduce greenhouse gas emissions on an average Waikato dairy farm. The model found one path…
View Summary

Academic outputs He whakaputanga ngaio

Journal Article

Impact of delivering green dairy products on farm in New Zealand

This paper aims to explore whether consumers’ willingness-to-pay (WTP) a price premium could incentivise dairy farmers to deliver products with credence attributes (CAs) in New…
View Journal Article
Journal Article

Consumer Willingness to Pay Price Premium for Credence Attributes of Livestock Products – A Meta-Analysis

This study conducted a meta-analysis to examine consumers’ willingness to pay (WTP) for different credence attributes of livestock products based on a systematic review of…
View Journal Article

In the media Mai i te ao pāpaho

Radio New Zealand, 29 November 2019
The best case scenario delivered carbon neutral dairy products which reduced nitrogen leaching by 42 percent and greenhouse emissions by 20 percent.
Farmers Weekly, 29 November 2019
New research proving dairy farms can cut nitrogen and gas losses is welcomed by rural consultants but they say farmers now need strong leadership to help make the required changes.
Irrigation NZ News, Spring 2019 (page 46)
“Organic farming is a high-risk, high-reward system that requires learning and experimentation, and it is not going to be the answer for everyone.”
Farmers Weekly, 29 November 2019
Dairy farms can be profitable while becoming carbon-neutral and cutting nitrogen losses but the profit depends on getting a premium for being environmentally friendly, AgResearch work has found.
Newsroom, 28 November 2019
“We didn’t want to come up with things that nobody would actually do, we tried to operate within the constraints of a realistic situation because we wanted this to be applicable and not a blue sky exercise."

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