There are several promising and feasible food-pricing strategies for stimulating healthier food choices, says agricultural economist Thulasizwe Mkhabela.
There are several promising and feasible food-pricing strategies for stimulating healthier food choices, says agricultural economist Thulasizwe Mkhabela.

OPINION: Food policy instruments to stimulate healthy eating and food security

By Thulasizwe Mkhabela Time of article published Jun 18, 2020

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JOHANNESBURG - South Africa is a country of dichotomies and ironies and there is no economic sector that that typifies this more than the agri-food sector. 

South Africa is food secure at a national level, but food insecure at the individual household level. Thus, food security and healthy eating present policy a dilemma for policy makers in the country. Balancing economic and welfare policy making is a precarious endeavour. 

Addressing food security, inclusive agri-food sector and healthy eating is a case in point. The raison d′ȇtre of the agri-food sector is to provide food at a profit rather than balancing societal welfare. However, the importance of the latter cannot be overlooked. Pricing strategies are important in the marketing mix and useful in addressing food security issues, market access by smallholder farmers and stimulating healthier food choices. 

Economic theory postulates that price is an important determinant of consumers’ choice. Therefore, pricing can be employed as a policy tool to deal with the issues of both food security and healthy eating. However, competing interests and feasibility problems between producers, retailers and consumers compound pricing strategies.

Food presents ironies in that in some countries, there is food insecurity and in other countries, a large proportion of the population is obese. South Africa models this irony. South Africa ranks among the most obese societies together with the likes of the US  and Australia. Furthermore, South Africa is food secure at national level while food insecure at household. 

Obesity is a result of unhealthy eating and food insecurity is the result of not having enough food on a daily basis to live a normal life. Of major concern is the large number of low income people who do not eat according to the dietary guidelines and policies needed to stimulate affordable healthy eating. 

A school of thought postulates that healthy eating can be stimulated using pricing strategies. This option relies on the success that price promotions have brought to the marketing world as they form part of the pricing mix, and have been utilised widely to entice consumers to buy certain products.  There is consensus that pricing strategies can be a useful tool in changing dietary behaviour. 

A wide exploration of potential pricing strategies, including and going beyond taxes and subsidies, might form a solution for the listed barriers. This exploration could include the potential use of strategies known from marketing literature such as ‘premium promotions’ or ‘sampling promotions’ and could focus on strategies that are approved by different sectors involved. 

This article discusses pricing strategies that may be feasible for implementation and are promising in stimulating healthier food choices in South Africa thus addressing both food security and health problems associated with unhealthy food choices.

In reality, there is often tension in the available pricing strategies regarding feasibility on one hand and effectiveness on the other. For example, the introduction of a sudden price rise for unhealthy food products is considered very effective in inducing healthy eating choices, but may score low on political feasibility and industry acceptance. For the actual implementation of pricing strategies, it is important to consider this discrepancy. 

A second point to consider is that strategies’ acceptability will differ among involved sectors, supposedly influenced by implementation responsibilities. Government experts prefer measures that should be performed by the industry (best example: offering the healthy food option of comparable products for a lower price), while the industry experts mainly prefer measures that should be performed by the government (best example: putting healthy food options at a lower VAT rate). 

It is important to consider this carefully. Promoting a healthy diet is important worldwide, but apart from economic conditions in developing countries, the political view of a liberal market and the industrial view of profit making are important competing issues. Due to these financial and political interests, factual interference in the food market is not favoured.

In South Africa, discounting healthy food options more frequently is a strategy that fits well with issues of conflicting interests in terms of being feasible, effective, affordable and acceptable by the industry. Price promotions have a larger impact than price reductions since consumers tend to buy a product simply because it is on sale. This implies that near constant discounting of different types of healthy food items would be the best option to stimulate more healthy food purchases. The best way to solve the payment issue of such a strategy is to combine forces of the retailers, agribusinesses and government sectors. 

There is a divergent list of promising pricing strategies that could be explored to stimulate healthier food choices. It is important to learn how to make solid agreements on responsibility and implementation issues. Currently, different authorities do not feel responsible for introducing financial incentives on food. 

In addition, it is significant to study consumer perspectives and the effectiveness of the proposed pricing strategies in stimulating healthier food choices. This should include large-scale experiments studying whether consumers would actually buy more healthy foods if they would become more financially attractive.

Due to competing interests and feasibility problems, the introduction of pricing strategies is complicated. It is essential to explore incentives that are realisable and acceptable to the different sectors involved. 

There are several promising and feasible food-pricing strategies for stimulating healthier food choice and being for implementation. This result is an essential first step for the future design of pricing strategies.

In conclusion, there are eight suitable all-encompassing criteria for judgement on food pricing strategies that should guide any healthy eating promotion policies and these are:

• Political feasibility: Is the intervention achievable from a political viewpoint?

 • Practical workability: Is the intervention practically attainable?

• Opportunities for implementation: Is the intervention sustainable in the long run?

• Effectiveness: Would the intervention have sufficient impact?

• Affordability: To what extent is the intervention affordable in the long term?

• Social justice: To what extent is the intervention justifiable for different socio-economical groups?

• Consumer acceptance: To what extent is the intervention acceptable from the viewpoint of consumers?

• Industry acceptance: To what extent is the intervention acceptable from the viewpoint of the industry (producers, agribusiness, retailers, etc.)?

Dr Thulasizwe Mkhabela is an agricultural economist and is the group executive: impact & partnerships at the Agricultural Research Council; [email protected]

BUSINESS REPORT 

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