01 May, 2017
A new study by the Food and Agriculture Organization of the United Nations (FAO) and the European Bank for Reconstruction and Development (EBRD) aims at understanding the business case for high-quality poultry products in Turkey.
The study “Turkey: premium poultry products, willingness-to-pay and investment opportunities" analyses consumer preferences in the country and the potential return on investment for new product lines with premium attributes, such as free-range eggs and organic chicken.
Turkey’s poultry industry has expanded rapidly in recent years. In 2013, the country became the tenth largest producer of chicken meat and hen eggs. It is also a competitive exporter of poultry products, mainly to countries in the Middle East. These trends might continue, as domestic and international demand for poultry products is likely to rise in the coming years.
Price and trusted brands matter
Throughout the world, consumers want more assurances that their food is safe, nutritious and of good quality. Interest in how animals are treated - from farm to slaughterhouse - is also growing, and compliance with animal welfare standards has become an important factor in international trade agreements.
The FAO/EBRD study drew on survey work, cluster analyses and market simulations to understand Turkish consumers’ purchasing habits and preferences, and to analyse their willingness to pay for different premium poultry product attributes.
“We found that awareness in Turkey of quality attributes, especially animal welfare practices, was still in the early stages,” said Nuno Santos, FAO economist and co-author of the study. “We also found that Turkish consumers were still very price-sensitive when choosing poultry products.”
Another highlight of the study was that Turkish consumers tend to buy recognized brands, as they feel more confident that they deliver the required quality, reliability and product safety.
Animal welfare vs. human health
While most Turkish consumers do not seem to be willing to pay for substantially higher prices for products that follow animal welfare standards, they show interest in attributes related to human health. They prefer labels certifying that animal feed is free from hormones, antibiotics and slaughter by-products, and they pay attention to proof of regular food safety controls.
While animal welfare practices, such as the use of enriched cages, which are roomier than traditional cages, or free-range options, are less of a factor, the study showed some concern over the handling of animals during loading and unloading.
Uncertainty about organic products
“The benefits of organic production are not yet clear to Turkish consumers,” said Carl-Johan Lagerkvist, an agricultural economist from the Swedish University of Agricultural Sciences, who contributed to the study. “But despite these barriers, a premium market does exist for known and trusted brands that sell organic products. Consumers will pay for certainty.”
Organic eggs cost two to three times the price of standard eggs in Turkey, while organic chicken is four to five times more expensive. Given the price differentials, consumers need to be sure that displayed standards are actually enforced.
But the study found that, due to certain regulatory issues, the enforcement of free-range and organic labelling was not fully reliable.
“Despite the improved institutional environment, there’s still misuse in terms of organic labelling, making it difficult for consumers to distinguish which products are truly certified organic and what that means exactly,” Santos said. “It limits the interest of producers to invest in these premium lines because they face unfair competition from misused labels and wouldn’t reap the benefits from higher production costs.”
More competitive sector
In addition to ensuring greater control over quality labelling, the study identified other areas where improved government regulations could help Turkey’s poultry sector become more competitive.
These include setting definite timelines for converting existing cages into enriched cages, which is a requirement for exporting premium eggs to the European Union (EU).
Other areas include enforcing the ban on the use of rendering products (process that converts waste animal tissue products usually from the meat industry) in poultry feed, developing plans for manure treatment – including manure-based fertilizers and biogas production – and working on a more competitive environment given the high concentration of the industry in the country.
This study adds to a growing body of work by FAO and the EBRD on food safety and quality standards, which includes a review of animal welfare legislation in three EU countries, Turkey and five other non-EU countries.
“Even when there’s a good business case for investing in higher quality products, there is often a lack of information on which product attributes are most valued, have the largest market potential and best returns on investment,” said Nadia Petkova, and Associate Director for Turkey, Caucasus, Central Asia and Mongolia, Agribusiness, EBRD. “This type of analysis fills those key information gaps, and provides valuable insights to other transition economies.”
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