Demand for agri-food attributes and attribute claim assurance in China and Vietnam from importers’ perspective 

Project report

Prepared by Peggy Schrobback1, Airong Zhang2, Thanh Mai Ha3, 4

1 - CSIRO Agriculture & Food, St Lucia, Australia
2 - CSIRO Health & Biosecurity, Dutton Park, Australia
3 - Vietnam National University of Agriculture, Hanoi, Vietnam
4 - Swedish University of Agricultural Sciences, Uppsala, Sweden

August 2022

Executive summary 

To gain a competitive advantage in supplying agri-food products to export markets, Australian agri-food industries require a nuanced understanding of the demand for food attributes and associated assurance systems. 
This study aims to develop an in-depth understanding about the demand for agri-food attributes and supporting evidence required by supply chain stakeholders (i.e., importers, wholesalers, retailers, consumers) in Australia’s key export markets. The focus of this study is on Australian beef and horticulture (i.e., oranges, tangerines, table grapes, and cherries) exports to China and Vietnam. Interviews with importers, who operated also as wholesalers or retailers, of Australian beef and horticulture products in both countries were conducted. 
The following key results were identified. 

Main attributes considered in procurement decisions: Key attributes for beef valued by customers in both export markets include product quality (e.g., appearance, freshness), animal breed, and the animal feeding system (e.g., pasture-fed, grain-fed). For horticulture products, the key attributes that influence procurement decisions in both markets were product quality and taste. However, for horticulture products in Vietnam there were other noted attributes such as price, packaging, and brand. This suggests that the two markets put different emphasis on product attributes in their procurement decisions. 

Key credence attributes considered in procurement decisions: The credence attributes (i.e., food characteristics that are not observable by search or experience), food safety, animal breed, whole supply chain traceability, and feeding system are important in both beef export markets. For horticulture, country of origin, variety, product safety, and product traceability ranked very high. However, for both beef and horticulture products, there were differences in the rated attribute importance across the stakeholders within a country and between countries. This could imply that different stakeholders within the supply chains value different product attributes, which could further suggest that they have different commercial incentives in demanding and supplying these food attributes. 
Credence attributes such as carbon neutral production, production with water management/preservation and biodiversity considerations, environmental health, and social/ethically responsibility appear to be currently unimportant for procurement decisions of beef and horticulture product in both countries. This finding could be due to the limited awareness that stakeholders have about these attributes in the two export markets.

Emerging food attributes: Importers from both countries regard product quality (e.g., appearance, freshness) and food safety as key emerging attributes for both products. Hormone and antibiotic free products as well as the feeding system (e.g., grain-fed/pasture-fed), breed, and marbling are considered emerging product attributes for beef. Convenience, taste, brand, and organic production method also become increasingly important attributes for horticulture customers. 

Status of product traceability: While customers in both export markets place a relatively high importance on whole supply chain traceability, most participants reported that their imported Australian beef and horticulture products don’t currently have a traceability system in place that is accessible by consumers. However, the importers regarded customs clearance documents and packaging labels as traceable product information. Furthermore, importers’ customers potential willingness to pay a premium price for product traceability appears to be very small (e.g., 1.36-2.55% in addition to the price of a product without traceability).

Quality assurance: While agri-food customers in China and Vietnam appear to highly value quality meat products, they are not willing to pay a price premium for meat quality assurance. Most trusted food attribute assurance providers in both countries appear to be food trade regulating authorities (i.e., Government authority in Australia and the import country) and associated processes (e.g., customs inspection, exporter certifications, official product labels). Customs clearance documents and product labels (not third-party certification labels) are the most common form of evidence for attributes required by customers in both export markets. 

Online vs. in-store demand for food attributes: Online and in-store customers have slightly different demands for product attributes. For example, online customers of beef in China mostly consider price, brand, and packaging in their purchase decision, while in-store customers pay more attention to quality attributes such as appearance and freshness. 

Australia’s reputation as food-exporting country: Australian products in both countries are perceived to be of high-quality, yet weaknesses are seen in high product prices. In China, the current political Sino-Australian relationships are specifically considered as a weakness in Australia’s reputation as a food exporting country. 
While the current study has developed significant insights into customer’s demand on food attributes and associated assurance systems in export markets, several limitations need to be taken into consideration. One limitation includes the small sample size. Additionally, the preferences for food attributes, specifically for credence attributes as an emerging trend in consumers’ attitudes, will change over time. Therefore, the findings of this study should be treated as a snapshot in time. Furthermore, the findings presented in this study only reflect the perception of importers and their view on their customers’ demand for food attributes, although the importers themselves are also wholesalers and some of them are also retailers.