Pepper farmers in the small province of Kampot, southern Cambodia, have celebrated this week having been granted protected geographical indication by the European Union.
Their peppercorns, which come in white, red and black and are considered to have a unique and highly desirable flavour, join products such as Gruyere cheese and Melton Mowbray pork pies, as only being able to be sold in the EU under their world famous names if the product actually comes from the geographical region of origin.
This protection is seen as highly desirable as it differentiates the provenance of authentic products from alternatives produced elsewhere.
Also last week, Italian lawmakers tightened the laws and penalties imposed on olive oil distributors that choose to counterfeit or misdeclare the origin of their products. The initiatives are part of a priority strategy by the Italian Prime Minister, Matteo Renzi, to promote authentic Italian-grown and pressed olive oils to secure greater value for the participants in the industry.
Both the pepper farmers of Kampot and Italian olive growers will benefit financially from these statutory protections that clearly link their products to the places they come from.
The news raised an obvious question for me. Which of our basket of premium food, beverage, fibre and timber products have we been able to secure international recognition of their unique geographical origins?
A search of the EU database of registrations showed no New Zealand entries despite the emphasis placed on our products being from New Zealand in the marketing and promotion strategies companies adopt around the world. It is worth noting that the government did take action last year to provide geographical protection to wine produced in key wine regions, such as Marlborough. In addition, some companies gain temporary protection for products through mechanisms such as plant variety rights, which provide exclusive rights to use a cultivar for a period of time.
However, there is no doubt the lack of protection afforded to the geographical origin of some of our unique products, manuka honey being the most obvious example, makes it harder for organisations to capture the full value of their products in the market. Without statutory protection, it is almost impossible to stop cheaper, commodity products being passed off as a higher-value variety, given the financial incentives to those prepared to put a high-value label on a basic product. The consequence, is many consumers buying what they believe to be a NZ product get a substandard experience and are unlikely to continue to pay a premium for genuine NZ products.
There is ongoing discussion about what the primary sector can do to protect itself from the large value losses it suffers as a result of competitors counterfeiting products and passing them off as being from NZ. Risks to the integrity of a product arise at many points along the value chain, but can also arise outside of value chains we exercise influence over (particularly in relation to counterfeit products). An effective solution needs not only to provide assurance over product integrity at every step of our controlled value chain right through to the customer, but sufficiently differentiate our value chain making it impossible for competitors to claim NZ origin for counterfeit products.
Solutions have been proposed, and in some cases developed, including chemical fingerprinting of products, edible branding of foods, app-backed barcodes that provide the consumer with certainty over supply chain integrity and authenticated distribution networks. But many of these are trying to retrofit solutions into markets already rife with counterfeiting. While these efforts need to continue, there are two areas where I believe the industry in NZ, in collaboration with the Government, should be focusing significantly more attention.
First, the counterfeiting issue is not one we can control within our own borders, it needs a global solution, yet compared to many other areas of crime, the global management tools for primary product fraud are limited. We have more to lose in this area than many, and as a consequence the NZ Government should take a lead in establishing an effective global coalition to ensure the safety and integrity of the food supply chain through verifying the origin of products.
Secondly, we need to think carefully about what are the game-changer products we may be able to develop and commercialise in coming decades. Many of these exist already in our unique native flora and fauna. We need to seek geographical protection now for these products so they can only ever come from NZ and then develop the stories and verify the science to create new opportunities to realise value for the whole of NZ.
The reality we face is that others often see greater value in products from NZ than we do ourselves and will do their upmost to capture a share of our value. In a world where value chains are becoming longer and more geographically remote, we need to be proactive, like the farmers of Kampot, if we are to increase the likelihood of capturing all the value we create.
Ian Proudfoot
KPMG Global Head of Agribusiness
