A Whole lot of Trouble?

The recently opened London flagship store of Whole Foods
Market is the fullest expression yet of UK retailers’ response to
consumers’ rapidly rising concerns over climate change and other
sustainability issues.

Reputedly the largest food retailing space in London, it
occupies three floors of the old Barkers department store in High St,

From window displays as glitzy as any fashion
store, to earnest mission statements emblazoned on its walls, it seeks
to assure customers they can, with good conscience, enjoy the very best
food and drink from around the world because all the products conform
to Whole Foods’ rigorous environmental and fair trade standards.

New Zealand products are well represented: halal lamb and
organic braeburn apples from Hawke’s Bay and Grove Mill’s carbon
neutral wine from Marlborough suggest that our growers are starting to
address fast-changing UK consumer trends.

In tourism, the biggest initiative here so far is by InterCity,
the coach and boat operator that carries 500,000 tourists a year around
New Zealand. It started in 2002 when it began building coaches using
engines meeting demanding European emissions standards. The extra cost
of the engines is more than offset by fuel savings they achieve.

But in 2005, a German tour operator was the first to ask
InterCity how it was reducing its environmental impact. InterCity
realised it needed to do much more to satisfy overseas customers. The
first step was to make its corporate operations carbon neutral by
reducing energy consumption and offsetting the rest of the carbon
generated through Landcare Research’s CarboNZero programme for
regenerating native bush.

The next stage, announced in May, is
an offsets programme for its coach and boat fleet. It will cost about
20c for the first two hours of coach travel then 10c per subsequent
hour. Thus for an Auckland- Wellington fare costing about $48, the
offset will be an additional $1. Passengers can volunteer to pay when
the scheme starts this October, but the offsets will be automatically
included in fares from October 2009. InterCity says this is not a
marketing strategy simply to satisfy customers, but an “industrial
strategy” that will improve the company’s performance on fuel and other
efficiencies. But it won’t hesitate to point out a tourist will produce
90% less carbon travelling by coach than by a 2-litre car.

tour operators have responded very enthusiastically, saying they will
add the offset cost into their prices from this summer; most New
Zealand operators have been more sceptical, and one Australian company
is outright hostile to the plans and dismissive of the environmental
issues driving them.

But more companies are planning responses
to overseas consumers’ climate concerns. For example, Marks &
Spencer is exploring with farmers here how to make lamb carbon neutral.
Farmers will need to minimise energy consumed, thus carbon produced, in
growing, processing and shipping lamb to M&S’s UK stores; then
plant trees, or fund some other form of offset, to absorb the remaining

Similarly, Air New Zealand is working on a voluntary
programme so tourists who worry about their environmental impact can
buy offsets for their share of carbon generated by the aircraft
bringing them here. Wine and deer producers are also working on
sustainability standards.

All this sounds very positive but the reality is a good deal more challenging for six reasons.

UK retailers are driving hard bargains with suppliers. Far from
offering to pay premiums for products that meet higher environmental
standards, they are in many cases stubborn on price. They are demanding
farmers meet the costs themselves by achieving savings in other areas
such as lower energy use.

“You can’t price people out of this
process,” says a senior executive at one UK supermarket chain. “If
people want higher environmental standards, they shouldn’t have to pay
for them.”

Second, as the science becomes more accurate, New
Zealand’s advantage might diminish. For example, a Lincoln University
study last year showed that UK dairy products had a carbon dioxide
footprint 100% bigger than New Zealand products’. The key reason is
pastoral farming here, including sea-freight of the goods to the UK,
uses far less energy than the use of grain-fed cows in the UK.

Lincoln has just released an updated study that includes methane and
nitrous oxide, two by- products of feed and fertilisers that are more
damaging greenhouse gases than carbon dioxide. This study shows the UK
greenhouse gas footprint per tonne of milk solids is only 34% bigger
than ours. This increase in New Zealand’s footprint undermines our
claims to being the environmentally more responsible farming system.

farming trends will further diminish our case. Dairy farming is getting
more intensive here as farmers respond to high land prices, rising
global demand and high milk prices. Conversely, UK farms are becoming
less intensive, as environmental sensitivities rise and EU farming
subsidies reward better practices.

Fourth, there is a great
deal of complacency here in the farming community, as in comments
Charlie Pedersen, president of Federated Farmers, made recently to the
organisation’s conference. He said the global environment would benefit
if “inefficient food producers” overseas scaled back production and
more food was bought from New Zealand. “It may be that increasing
greenhouse gas emissions in New Zealand to produce more food is,
overall, a better way to curb climate change.”

Fifth, growing
UK consumer scepticism about claims to carbon neutrality. People are
starting to ask more penetrating questions about how a product’s carbon
footprint is measured; how big a commitment the manufacturer has to
reducing it, rather than simply offsetting it; and about the
credibility of the programmes themselves. All sorts of scams are coming
to light.

The Carbon Trust, a UK government agency, is working
with the DEFRA (the UK environment and food ministry), the British
Standards Institute and some major retailers to devise reliable carbon
labelling. And our government is seeking a role in the work to ensure
that the standards are fair and practical for our producers.

these procedures are in place, New Zealand producers will have to work
hard to ensure they comply and to make binding commitments to serious
reductions in their carbon footprints if they are to win over UK

Moreover, we will need to ensure offset programmes here are credible and appealing overseas.

example, government has set a goal of making Treasury and five other
departments carbon neutral by 2012. It and some major corporates are
looking jointly at a number of very Kiwi ideas for offset programmes.
One is to increase the funding for possum eradication on the grounds
that fewer pests mean healthier bush and thus more carbon absorbed. But
it would be difficult to measure the effectiveness of the programme.
Moreover, it would be unappealing for overseas consumers. A tourist
flying on Air New Zealand, for example, might feel killing possums here
will do less good for humankind than, say, buying offsets that help
fund a hydro-electric power plant in China.

Sixth, New Zealand
lacks a compelling message for UK consumers. We are failing to
articulate a strong environmental case and lack the emotional
connection that consumers feel, for example, with poor farmers in
developing countries. That was the blunt message from UK retailers and
communication specialists in recent interviews with this writer.

New Zealand has a long way to go before we can meet the high demands of
Whole Foods Market and other retailers in the UK.