Reading Time: 3 minutes
New research showing how the cost of sweetened foods in New Zealand is decreasing relative to the costs of fruit, vegetables, meat and dairy highlights health, food security and industry resilience issues.
Dr Puneet Vatsa and Professor Alan Renwick from the Faculty of Agribusiness and Commerce at Lincoln University studied the changing prices of 85 food items between 2014 and 2023 from 560 retail outlets.
In the paper Food prices in New Zealand: implications for feeding people better, the authors estimate 12-month moving averages of relative real prices of sweetened foods in relation to five other food categories: dairy, fruits, vegetables, processed meats and unprocessed meats.
The steep increase in food prices in New Zealand, brought about by a range of external and internal factors, including covid-19 disruptions, geopolitical events and climate shocks, receive considerable media attention, the study said.
But the change in relative prices of fresh produce and animal proteins compared to sweetened and processed foods has gone unnoticed.
“If prices of specific foods continue to remain high relative to those of others, households may become habituated to not consuming the expensive varieties and may [switch] to more affordable ones,” the study says.
Such trends could cause a shift to unhealthy diets with grave consequences for consumers and the healthcare system.
The study showed that prices, except for those of dairy, remained relatively flat until 2019; this is especially true of the prices of sweetened foods.
Professor Alan Renwick from the Faculty of Agribusiness and Commerce at Lincoln University says the study raised concerns about a lack of resilience in NZ’s domestic fresh fruit and vegetable chain.
All prices increased after 2021, with dairy, meat, and vegetable prices having marked inflection points in 2021, and fruit prices in 2022.
Fruit and vegetable prices increased the most steeply during 2021 and 2022, driven in part by sharp increases in the price of natural gas, a critical feedstock for producing nitrogenous fertilisers.
“While the nominal prices of sweetened foods started trending upward before the covid-19 pandemic, their real prices have, in fact, consistently decreased over the past eight years.”
Prices of sweetened foods fell sharply relative to fruit and, especially, vegetable prices, starting in 2020.
Prices of sweetened foods relative to dairy products and unprocessed meats began falling before 2016 and 2017, respectively.
The study showed while many countries witnessed food price inflation during this period, levels recently began to come down in other countries.
“The food supply chain in New Zealand may be particularly vulnerable to disruptions caused by extreme weather events because a focus on efficiency has led to increasing regional specialisation at scale.
“Localised shocks may impact supply. The vulnerability of the logistics network exacerbates this. Most freight travels by road, and many regions are served by only one or two main roads, which are often susceptible to weather events.”
Regional specialisation coupled with a vulnerable transport network makes the system less resilient to supply-side shocks, the study says.
“Unless efforts are made to increase the resilience of our fresh produce sector, elevated and volatile prices may become the norm.”
Renwick said the study raises questions about the food system and why it’s relatively cheaper to produce unhealthy food than healthy food.
“We have a food security challenge with the affordability of food in New Zealand. We’re in a situation where healthy foods are unaffordable compared to less healthy alternatives.”
Renwick said the study did not focus on the causes of the price discrepancies, but shocks seemingly hit the fresh fruit and vegetable sectors harder than the global sugar supply chain.
“We were hypothesising that our domestic fresh fruit and vegetable chain is more susceptible to shocks. We’re concerned about the lack of resilience,” he said.
As shocks became more prevalent overall infrastructure challenges need to be addressed, he said.
There are coastal sea networks that are underutilised.
“We need to have a more strategic view about our food network. Cyclone Gabrielle has been a bit of a wake-up call, 30% of our fresh produce and vegetables in that area were hit. Larger companies are beginning to think about diversifying their production.
“I think there is a realisation that perhaps we have become too specialised in [certain] regions. We do need to spread our risk out across the country,” Renwick said.
