Vietnamese consumers seem willing to pay for products labeled as organic or eco-friendly. Similar results were found in a study investigating consumer willingness to pay for sustainably produced rice in Vietnam. Results indicate that domestic consumers are willing to pay a 9% premium for certified sustainably produced rice, increasing up to 33% when incremental levels of information on certification and traceability are provided.
In the last decades, Vietnam has been at the forefront of improving rice farming methods to reach a stable rice production of about 44 million tons a year. Rice production contributes 3% to Vietnam’s GDP but is responsible for 15% of the country’s total greenhouse gas (GHG) emissions. In Vietnam, irrigated rice production emits 50% more carbon dioxide equivalent (CO2e) than the entire transportation sector, including airplanes, ships, cars, buses, trains, and motorcycles.
Therefore, efforts have been made to change rice production in Vietnam, especially in the Mekong River Delta where the majority of rice is grown, to promote sustainable production methods through crop management technologies such as “Three Reductions, three Gains” or “One Must Do, Five Reductions“.
Additionally, the Sustainable Rice Platform (SRP) standards—the world’s first sustainable production standard for rice—has recently been introduced in Vietnam, but the market demand and potential for price premiums for SRP-certified rice is not known.
The SRP standard consists of 41 requirements spanning good crop management, efficient use of resources and inputs, low emissions, biodiversity conservation, worker safety, labor rights, and fair and equitable working conditions and wages. Altogether, these requirements cover social, economic, and environmental aspects that make up the concept of ‘sustainability’ as a whole.
The SRP recognizes that many farmers are already on the path of working towards sustainable rice cultivation and that improving sustainability performance is an incremental process. The standard is based on a point system with a minimum required score and a set of mandatory compliance levels (thresholds) that must be met to claim that a farmer is “working towards sustainable rice cultivation”.
Farmers are incentivized to produce sustainably mainly through a reduction in production costs and opportunities for accessing markets, gaining market share, and capturing price premiums through market mechanisms that encourage the aforementioned sustainable production methods throughout the rice value chain. However, the system largely operates through middle-men collectors, which can disrupt the chain of custody. Rice companies that are members of SRP are both supportive of a global sustainable production standard specific to rice and expect that certified SRP rice can garner a price premium, but thus far, there is no evidence to support this, a knowledge gap that motivated this study.
The interaction of sustainable production and consumption is crucial to mitigating climate change and reaching a more sustainable future. Vietnam has become one of the leading rice exporters in just a few decades, due primarily to intensive chemical inputs in double- and triple-rice cropping systems, which resulted in high yields and high economic growth leading to a rapidly growing middle class.
This burgeoning middle class in Vietnam has been shown to care about food safety, organic agricultural products, and eco-labeled aquaculture products. Similarly, highlighting sustainable production in packaged rice can be communicated through labeling, though in other research, the use of eco-labels and guidelines only marginally increased consumers’ accuracy in selecting environmentally friendly products.
Less research has been conducted on consumers’ perceptions of sustainability or sustainable production in emerging economies such as Vietnam. However, there is a link between consumers’ choices and the impact on the environment. Still, most sustainability research has been conducted in the developed world.
Yet, some authors argue that for quickly developing countries such as Vietnam, the question of sustainability has a higher degree of urgency due to the effects of rapid economic growth, increasing wealth in combination with a growing population and changing purchasing behaviours, domestic food safety concerns and Vietnam’s important role in contributing to global food security as a major rice exporter.
Furthermore, sustainability aspects in food production are gaining importance worldwide but also in Vietnam, where sustainable behavior of 604 urban middle-class consumers was investigated and showed that the majority were engaging in sustainable activities such as the intention to purchase sustainable products. It has been shown that motivation to live healthy lifestyles and protect the planet is high but that awareness of environmental issues needs to increase.
The authors argue that knowledge about sustainability needs to be made available and accessible, and they conclude that health in combination with food is the most important reason for people to pursue a sustainable lifestyle. Similarly, a survey conducted in South Vietnam revealed that less than half of the participants understood the meaning of good agricultural practices, organic food, or sustainability.
Nonetheless, Vietnamese consumers seem willing to pay for products labeled as organic or eco-friendly. Similar results were found in a study investigating consumer willingness to pay for sustainably produced rice (VietGAP and GlobalG.A.P.) in Vietnam. Results indicate that domestic consumers are willing to pay a 9% premium for certified sustainably produced rice, increasing up to 33% when incremental levels of information on certification and traceability are provided.
The consumers who were willing to pay the premium were generally more health-conscious and had a better knowledge of and greater trust in food quality certification of rice. Furthermore, these consumers also tended to be more environmentally conscious and read labels before purchasing. However, it has been suggested that consumers are unable to fully conceptualize the meaning of sustainability.
Misconceptions were found and consumers tended to underestimate the climate impacts of organic and nationally produced meat products as well as of vegetarian protein-rich products. Little is known, however, about consumers’ perceptions of sustainably produced rice in middle-income countries such as Vietnam and the effect knowledge about climate change has on the latter.
Sustainable production standards are prominent in higher-value crops such as coffee, cocoa, and palm oil, but they are less prevalent in staple crops such as rice, maize, and wheat which provide the majority of globally consumed calories and occupy 46% of the global crop area.
The present study investigated further how the SRP attributes and knowledge about climate change in combination with socio-demographic factors influence consumers’ willingness to pay for SRP-labeled rice. Results firstly show that consumers are willing to pay an average of USD 1.14), which is 29% above the primed base price of USD 0.87 for 1 kg of uncertified rice in the same package.
This price premium is within the 9–33% range of premiums that were elicited for VietGAP and GlobalG.A.P. rice with urban consumers in the same city in Vietnam in 2016. Results of the regression analysis show that willingness to pay for SRP-labeled rice was influenced by household income and knowledge about CO2 and the greenhouse effect.
Furthermore, knowledge about climate change consequences can also be interpreted as being an important predictor of consumers’ willingness to pay for SRP-labelled rice. Participants’ perceptions of SRP attributes did not influence participants’ willingness to pay for SRP-labeled rice, nor did gender, education, or age. The model controlled for participants’ knowledge about SRP, which half (54%) of the participants stated to have, and their general decision to purchase certified products, which over 80% of the participants stated to do. Neither of the two variables was a significant predictor of willingness to pay for SRP-certified rice.
These results indicate that willingness to pay for SRP-labeled rice is driven by household income and climate change knowledge factors. Knowledge about climate change has been shown to influence purchase decisions; for example, environmental knowledge and eco-label knowledge positively influenced consumer attitudes towards the environment in driving ecologically conscious consumer behavior.
Knowledge about climate change, in particular, has been shown to shape the public’s perceptions and concerns about climate change. These perceptions and concerns about climate change influence consumers’ purchase decisions, willingness to change behaviors, and accept climate change policies.
However, our results also indicate that consumers’ access to certified rice is currently not inclusive towards the poor or less educated in Vietnam. The base market price in an open market for 1 kg of rice is considerably lower at around USD 0.52. The difference from the open market base price of USD 0.52 to the supermarket base price of USD 0.87 is for higher quality premium rice that is not certified but has been regulated as export quality, meaning it has passed quality tests for pesticide residue.
This shows that it is not just certified rice that is inaccessible but also high-quality rice that passes pesticide regulations that are out of reach to the poor in Vietnam. Furthermore, the variance our model explains is rather low. There are several ways to explain this; the branding of the label we presented is unknown to participants and includes the aspects they currently do not take into account for rice purchase, such as low emission production.
We have not investigated participants’ concerns about climate change, which has been shown to be shaped by knowledge about climate change and to have a greater impact on behavior change. Furthermore, we have not controlled for participants’ trust in rice quality labels which has been shown to be important. There are other facts that we have not measured, e.g. affect, participants’ general eco-friendly behavior, participants’ perception of how much they are affected by climate change, and participants’ knowledge about the contribution of rice to climate change, to name a few.
However, the results of the present study are important for policymakers to increase the inclusiveness of SRP rice by creating an enabling environment for investment in the supply and demand for SRP rice. We did not ask consumers about purchase quantities at different price points, and, therefore, cannot speak to potential heterogeneity across quantity levels to estimate price elasticity. Understanding the unit demand for a hypothetical single unit (1 kg of SRP-certified rice) provides valuable insights that can be used for pricing. However, future research should examine changes in planned purchase quantities at different price levels to measure the responsiveness of demand to a change in price due to labeling.
We would also like to discuss the findings with respect to sustainable rice production. If consumer demand for sustainably produced rice can be increased – production will need to follow. Even if only a small amount of the premium consumers stated they might be willing to pay for sustainable rice went to farmers as a price premium for producing rice sustainably, the impact on farmer livelihoods would be significant.
Furthermore, rice farmers in Vietnam have started to follow sustainable production methods specified under the national policy “1Must Do, 5 Reductions” and are willing to adopt sustainable residue management practices, which are also specified under SRP. The findings of the present study should be encouraging for the SRP as it is rolling out sustainability certification in 21 countries, reaching approximately 500,000 farmers worldwide and other sustainability certification schemes for domestic food production (e.g. vegetables, meat, fish, and dairy).
By endorsing and encouraging the implementation of certification schemes such as SRP in combination with the investment in national outreach and communication programs, policymakers can create an enabling environment for crowding-in of private sector investment in the certification of rice resulting in simultaneous demand and awareness creation and therefore, stimulation of supply. This will increase the affordability of certified rice and foster the inclusiveness of consumer access to sustainably produced crops such as rice in Vietnam.
Read the study:
Connor M, Cuong OQ, Demont M, Sander BO, Nelson K. (2022) The influence of climate change knowledge on consumer valuation of sustainably produced rice in Vietnam.
Sustainable Production and Consumption, Volume 31, pp 1-12.
