New research from New Zealand highlights significant concerns regarding health, food security, and industry resilience due to the decreasing cost of sweetened foods relative to fruit, vegetables, meat, and dairy. Dr. Puneet Vatsa and Professor Alan Renwick from the Faculty of Agribusiness and Commerce at Lincoln University conducted a study examining the changing prices of 85 food items between 2014 and 2023, sourced from 560 retail outlets.
In their paper, Food prices in New Zealand: implications for feeding people better, the authors analyzed 12-month moving averages of the relative real prices of sweetened foods compared to five other food categories: dairy, fruits, vegetables, processed meats, and unprocessed meats. They observed that while the overall food prices in New Zealand have steeply increased due to various external and internal factors—such as COVID-19 disruptions, geopolitical events, and climate shocks—the relative prices of fresh produce and animal proteins have increased more sharply than those of sweetened and processed foods.
The study noted, “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.” This trend could lead to a shift towards unhealthy diets, with serious consequences for consumers and the healthcare system.
Prices, except for dairy, remained relatively stable until 2019, particularly those of sweetened foods. However, after 2021, prices for dairy, meat, and vegetables showed marked inflection points, with fruit prices increasing sharply in 2022. This was partly driven by significant increases in the price of natural gas, a crucial component for producing nitrogenous fertilizers. In contrast, while nominal prices of sweetened foods started to trend upwards before the COVID-19 pandemic, their real prices have consistently decreased over the past eight years.
Professor Renwick emphasized the vulnerability of New Zealand’s domestic fresh fruit and vegetable chain, noting that the supply chain’s focus on efficiency has led to increased regional specialization, making it more susceptible to disruptions caused by extreme weather events. “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.”
The study highlighted the necessity of increasing the resilience of the fresh produce sector to avoid elevated and volatile prices becoming the norm. Renwick pointed out the need to rethink the food system to make healthy foods more affordable compared to less healthy alternatives, addressing the root causes of the price discrepancies.
As shocks become more prevalent, infrastructure challenges need to be addressed, including the underutilization of coastal sea networks. “We need to have a more strategic view about our food network,” Renwick stated. Cyclone Gabrielle, which impacted 30% of the fresh produce and vegetables in the affected area, served as a wake-up call. “Larger companies are beginning to think about diversifying their production. I think there is a realisation that perhaps we have become too specialized in [certain] regions. We do need to spread our risk out across the country,” Renwick added.