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Presented to TASMAC & UNIVERSITY OF WALES, U.K. On 10 SEPTEMBER, 2009 By SAJI PILLAI WMPT/J07/05 MBA – III (INTERNATIONAL BUSINESS)
Total Number of Words: 18623
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CHAPTER I INTRODUCTION
The anxiety has strengthened in the recent years among people, and they are becoming more and more aware and concerned about the quality of food. Series of food scares and controversies surrounding genetically amended crops have prompted heated debates regarding food safety and reliability.(Specially after the Pepsi Cola episode.) Nowadays consumers and marketers react to popular media about health and environment effects of pesticides, genetically-modified organisms and food safety as a result, people’s interest and demand in organic food has grown rapidly and remarkably. Awareness about organic foods and ill-effects of conventional food has led consumers to switch from conventional to organic. Awareness and knowledge has become a crucial and prime factor in changing the perception of consumers towards organic foods. It is necessary to be familiar with what consumers perceive about organic food and the factors that lead them to demand organic food, due to the growing organic market and its rising potential to expand. Therefore, to increase the demand for organic food, the consumer should be educated appropriately after tracing the reasons for their demand for organic. Consumers are aware about the limitation of production of organic food. But, they are not sufficiently familiar about what is involved in organic food production. So, to increase the public knowledge about the organic practices and procedures, necessary steps are to be taken by government, growers, distributors, retailers and marketers to increase the demand of the market and to promote organic food.
1.2 Importance of the study
Consumer’s knowledge of the product and its production has a very important role. The decision about purchasing a product can be influenced by knowledge. Even Consumer is encouraged to purchase the particular product because of enhanced knowledge. It guides
them and translates them into regular purchasers and develops a positive attitude about the product in them. To promote the product and to target different segments, reasons for product’s demand could be used as a tool. The consumer’s knowledge about organic food and the reasons that influence them to demand organic food can be investigated by this research. A base to understand what consumers think about organic food is provided by this research. A positive attitude is developed organic products and it demand if the appropriate knowledge is imparted. To market their products, marketers need to explore the reasons for demands and use it as a tool to even target specific segments.
1.3 Problem statement
As discussed above, knowledge is an important aspect for the growth of the organic food market. Hughner (2007) reported that according to the researchers people are unaware about the practises and procedure used for organic produces and many of them are confused regarding the term ‘organic’. Considering the current market conditions, it very important to know what consumer means by the term ‘organic’. Few researchers have included in their studies an overview of what consumer understands by the word organic. But still the study is not enough in this area. Identifying the reasons that are increase the organic foods demand helps the marketer to understand what influences the consumers towards purchasing organic food and also helps them to focus on target groups. Even though many researches have been carried out in this area but most of them have been conducted in the US. Considering all the above, research on knowledge and reasons for increasing the demand for organic foods is a need. The survey will be conducted in the areas in Pune city.
1.4 Objective of the study
General Objective: To investigate consumer’s perception towards organic foods in India is the prime objective of this research. A quantitative study will be provided on the
information and determinants of demand of organic foods on the basis of the existing means of information and statistics. The suggestions so as to increase the number of consumers and inflate the market of organic food follow this. Specific Objectives: • • Exploring consumer’s knowledge about organic foods and its advantages, Study the reasons that increases the demand for organic foods
1.4 Research Methodology
Nature of Study The research will be both investigative as well as expressive. The study would be based on the respondents located in Pune Data • Primary data will be collected through questionnaire and personal interviews.
Secondary Data will be obtained from previous research papers, journals, books, websites, newspapers and magazines.
Sample • The sample for the research will include about 200+ people in Pune, Maharashtra, India.
Research Questions 1. To find out the Consumer Profile and their awareness level on Organic food? 2. To determine the industry and trend Awareness of the consumer on Organic Food? 3. To recognise the required effort for increasing the Demand for Organic Foods?
The research will be focused only on people in Pune-India and conducted with in limited time duration.
CHAPTER II LITERATURE REVIEW
People have a general awareness about organic food, but many do not have a very clear understanding and do not know the proper meanings of terms such as “organic”, “organic food”, and “organic farming”. Keeping this view in account, first “organic food” and “organic farming” will be clearly defined in this chapter. This chapter will also define the consumer perception and its influence in the buying behaviour Once the meaning is understood, we will go back into history and understand how it all started and the tremendous development that has been made in this sector over the years. We will then discuss the current scenario of the market and position of this sector. The organic foods sector is currently booming. The organic foods market is growing rapidly at an average rate of 27% percent per year over the last decade. This rapid growth is because of the increasing consumer awareness and the resultant increase in the demand for organic products. Hence, it is important to know the consumers’ perception towards organic foods as they form the factors for increase in the demand for organic products. This chapter will be concluded by discussing the effects of the use of organic products on the environment. This is the main concern of the government for promoting organic food.
i. Organic FoodsWhen the Universe was created, it was at its most natural form. Every grass, tree, fruit, animal, etc. was natural or, in other words, organic. The Cambridge dictionary defines the word “organic” as ‘not using artificial chemicals in the growing of plants and animals’. This means that plants and animals at that time grew naturally with the support of the environment. Hence, they were at their purest form without the harmful chemicals which are used today. Definition as per Agricultural and Processed Food Exports Development Authority (APEDA) The Department of Indian Government which helps to provide economical, social & ecological sustainability, explains that Organic products are grown without the use of chemical fertilizers and pesticides with an naturally and socially responsible approach under
the agricultural system. This is a technique of farming preserve the reproductive and regenerative ability of the soil, good plant nourishment, and sound soil management, produces healthful food rich in strength which has resistance to diseases as this method works at grass root level. Logically every food is organic as it has come from plants or animals. Another meaning from the Cambridge dictionary for the word ‘organic’ supports this statement, which defines it as ‘being or coming from living plants and animals’. “However for some fifty years the word organic has been used to describe food grown without most artificial fertilizers or pesticides and in a way that emphasizes crop rotation, making the most of natural fertilisers and ensuring that the life of the soil is maintained. Animals are kept in ways which minimise the need for medicines and other chemical treatments.” Other definitions exist for the term organic food in terms of Export is As per the National Program for Organic Production (NPOP)( Notification dated 21July-2004 72 (RE-2003)/2002-2007) Note: The wording used below is as per the Gazette Notice defined in the notification no change so ever has been made since it is a government notification for organic food exporter In exercise of the powers conferred under paragraph 2.4 and 2.29 of the export and import policy 2002-2007, the Director General of foreign Trade hereby lays down the following procedures for export of certified organic products in super session of earlier public notice No 19 dated 11th June 2001 and Public Notice No. 25 dated 2nd July, 2001:1. “An agricultural product will be allowed to be exported as “organic product” only if it is Produced, Processed and packed under a valid Organic certificate issued by a certifying agency duly accredited by the national steering committee for organic product (NSCOP) set up by the Ministry of commerce & Industry (Department of commerce). The committee will function as the national Accreditation Body for the Purpose of accreditation of inspection and certification agencies.” 2. “The inspection and certification agencies accredited till date by APEDA, spices Board, coffee Board and Tea Board Shall be Deemed to have been accredited by the NSCOP and will be under the control of national Accreditation Body for the Purposes of accreditation of inspection and certification agencies for organic product.” 3. “The national program for Organic Production (NPOP), which has been published by department of commerce in June, 2004 with a view to ensure orderly development of organic agriculture is annexed to this Public Notice.”
Accordingly organic means the food is not grown in concoction of chemicals that means using chemical fertilizers or pesticides (used from decades either present in the soil or used on the crop) and it is also not hereditarily modified or genetically engineered. Fresh Organic Produce contains many more vitamins, minerals and enzymes consensus by science. To nourish our bodies and promote good health, Organic products shield us from toxic and chemical induced diseases, While non-organic food has certain drawbacks like it appears to be cheaper, but it costs us our health, our farmland, our eco-systems and taxes to pay for the disasters that chemical farming create. Dramatic erosion of the soil, near extermination of some of our beautiful wildlife, killing off the breed of birds is the consequences of chemical farming. People around the world are being fed by sustainable Organic Agriculture. Farmer’s health can gravely be damaged by Chemical farming., Leaving the vital mass of household consumers out in the cold, central approach on organic foods has always biased toward the global market. The Definition is as per
ii. Organic Farming According to a report published by UK’s leading organic promoters Soil Association (Heaton, 2001) before organic farming/agriculture, nutrients become available to crops they are returned to the soil in fertilizers and manures have to be recycled by means of biological life of the soil. A gram of healthy soil is far from fully understandable chemical reaction, which holds some 600 million micro-organisms and tens of thousands of different sort of bacteria and fungi as well as organic and inorganic issue that go through many complexes. The action of microbiological soil life and the reactions along with the manures and fertilizers , plants are naturally provided with a complete range of nutrients that would otherwise be too far-away from inadequately supplied or physically unavailable for the plants. Hence, the biological activity within the soil is elementary in organic system that delivers the diversity and quantity of nutrients entailed by the crop for its growth. Organic farming is becoming a worldwide movement today. One of the major discovering of organic farming study done by Duchy in Home Farm in Gloucestershire, Great Britain which states as: "Evidence shows that the public will continue to play the additional premium prices for organically produced food. Support for organic farming is increasing as fears over food safety grow." The study further notes that pollution of air and water is
reduced, estimates of whole farm nutrient losses are less under organic than conventional production” Farm is viewed as an economy, in organic farming. It is mainly based on the principle: use of natural organic inputs and biological plant protection measures and excludes the use of off-farm inputs such as chemical fertilizer, pesticides, insecticides etc. Organic farming if properly managed condenses or eliminates water pollution which aids in conserving water and soil on the farm thereby enhances sustainability and agro-biodiversity. Organic in farming has been certified by a duly constituted certification authority or body and is also a labeling term which indicates that products have been produced in accordance with certain standards during food production, handling, processing and marketing stages. APEDA ( The Indian National Standards for Organic Production & India Organic Logo providers ) defines “organic farming as an ecological biodiversity production that is designed to produce optimum quantities of food of high
nutritional quality by using management practices which aim to avoid the use of agrochemical inputs and which minimise damage to the environment and wildlife.” “Their principles include: • • • • • • Working with natural systems rather than seeking to dominate them The encouragement of biological cycles involving micro-organisms, soil flora and fauna, plants and animals The maintenance of valuable existing landscape features and adequate habitats for the production of wildlife, with particular regard to endangered species Careful attention to animal welfare considerations The avoidance of pollution Consideration for the wider social and ecological impact of the farming system." A fine blend of soil, minerals, water, plants, micro flora, insects, animals and human beings has been the foundation of Organic farming. Therefore it aids in creating productive landscapes and also helps successfully merges with food production and environmental preservation. Organic farming values the ecological carrying capacities of the resources as it depends on the local human resources and their knowledge to
increase the existing natural resource processes. Thereby the main advantage of organic farming is it reduces the reliance on off-farm inputs and creates a more balanced nutrient and energy flows, food security is enhanced, the ecosystem resilience is also strengthened; and hence additional income is also generated. The socio-economic conditions of the farmers gets better as Organic farming responds positively to all sustainable agriculture methods and rural development goals and also helps in maintaining soil fertility to improve crop production. The health of the soil is energetic with favorable organisms is One of the biggest incentive of organic farming . The harmful bacteria and the fungi that cause diseases are kept away and in check by these healthy microbes, fungi and bacteria. Organic farmers who work with nature, build the soil that shields their crops from diseases. They also strive to be cautious about crop rotation. Organic farmers make sure not to plant the same crop in the same location, which discourages the build-up of diseases and pests that epidemic that particular crop. Extreme use of pesticides and fertilizers has caused immense damage to the soil and environment besides affecting crop production. Over a longer period of time the use of pesticides and fertilizer has increased considerably. The second largest agent that results in cancer is Pesticides residue, which is next to cigarettes. The degradation of soil fertility is the consequence of the pesticides and fertilizers residual that persist in the soil and which also harms to the beneficial soil micro organism and earthworms. The positive effect of fertilizers on productivity is very short term where as the negative effect on the environment where they remain for years after percolating and running off , pollute the ground water and other water bodies is a long term. We have taken the wrong path of maintainability to increase production. The farmers committing suicide in growing numbers over every passing year have already noticed these effects. The negative effect of this trend has been on the destiny of the farming communities across the globe. Farmers sensibly everywhere around the globe have seen downtimes in their current fortunes in spite of the so-called increase in productivity. The controversies of Pesticides residue in the recent past in the bottled drinking water as well in the Cold drinks in India hardly have come as a surprise. Pesticides which find their ways into ground water and water bodies polluting them and causing them unhealthy for human consumption are non-bio-degradable but very highly poisonous. The contemporary practiced agricultural system is the only cause for Pesticides to go into the ground water in the first place. Many pesticides banned abroad are manufactured were discarded and sold freely in India, since then the pesticides problem multiplied in India.
Organic foods are the products of the farm that boosts ecological harmony which are grown naturally excluding the use of any kind of man-made chemicals on and off the farm and implements the system of crop rotation, animal and plant manures. iii. Consumer Perception Consumer Perception is a consumer’s cognitive impression that is formed of "reality" which in turn influences the consumer's actions and buying behavior toward that product. iv Buying Behaviour Definition of Consumer Buying Behavior: Consumer Buying Behavior is the decision processes and acts of consumer involved in buying and using of products. Need to understand: • • • why the consumers make the purchases that they make? what are the factors that influence consumer purchases? the changing factors in our society that effect the consumer purchases.
Consumer Buying Behavior is also referred to the buying behavior of the ultimate consumer. A firm needs to analyze the buying behavior for: • • Buyer’s reactions to the firms marketing strategy which has a great impact on the firms’ success. The marketing concept stresses that a firm should create a Marketing Mix (MM) that will satisfies (gives utility to) the customers, therefore there is a need to analyze the what, where, when and how consumers buy. • Also will help marketers to predict how consumers would respond to marketing strategies. There are 6 stages that effect the consumer buying decision process The 6 stages are:
Problem Recognition (is the awareness of need)--difference between the desired state and the actual condition. Deficit in assorting the products. Eg: Hunger--Food. Hunger is stimulated by the need to eat food. This can be stimulated by the marketer through providing product information
• • • •
Information search Internal search, memory. External search if you need more information then friends and relatives (word of mouth). Marketer dominated sources like comparison shopping; public sources etc. A successful information search leaves the buyer with possible alternatives, this suggests a set. ○ Hungry, want to go out and eat, evoked set is chinese food indian food burger king klondike kates etc
Evaluation of Alternatives--need to establish criteria for evaluation, features that the buyer wants or that he does not want. Rank or weight alternatives or resume search. May decide that you want to eat something spicy, Indian gets highest rank etc. If not satisfied with the choice then returns to the search phase. Think of another restaurant? Look in the yellow pages etc. Information gathered from different sources may be treated differently. Marketers must try to influence by "framing" these alternatives.
• • •
Purchase decision--Choose buying alternative that includes product, package, store, method of purchase etc. Purchase--May differ from decision, as time lapse or product availability. Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction has the consumer made the right decision. This can be reduced by warranties, and after sales communication etc. Eg: After eating an Indian meal, may think that really you wanted a Chinese meal instead.
Other factors that effect the buying behavior is 1. Personal 2. Psychological
The marketer needs to be aware of these factors also to develop an appropriate marketing strategy for its target market. The dissertation will also try to study these factors
Uniqueness to a particular person which includes the demographic Factors like Sex, Race, Age etc. e.g. Young people purchase things for different reasons than older people.
Psychological factors include:
Motives A motive is defined as an internal energizing force that orients a person's activities toward satisfying a need or achieving a goal. Actions are effected by a set of motives, not just one. If marketers can identify motives then they can better develop a marketing mix. MASLOW hierarchy of needs!! ○ Physiological ○ Safety ○ Love and Belonging ○ Esteem ○ Self Actualization Need to determine what level of the hierarchy the consumers are at to decide what motivates their purchases. Health Organic Drinks, a product marketer targeted at consumers that needed to receive additional energy from their drinks after exercise etc., a healthy natural drink.
Perception It is defined as what do you see? Perception is the process of selecting, organizing and interpreting information inputs to produce meaning.
Ability and Knowledge It defines the need to understand individuals capacity to learn( His/her Educational Qualification). Learning, changes in a person's behavior caused by information and experience.
Attitudes It is the knowledge and positive and negative feelings about an object or activitymaybe tangible or intangible, living or non- living.....Drive perceptions Individual learns attitudes through their experience and their interaction with other people. Consumer attitudes toward a products is greatly influence the success or failure of the product’s marketing strategy.
Personality It is all the internal traits and behaviors that make a person unique, uniqueness arrives from a person's heredity and personal experience. Examples include: ○ Workaholism ○ Compulsiveness ○ Self confidence ○ Friendliness ○ Adaptability ○ Ambitiousness ○ Dogmatism ○ Authoritarianism ○ Introversion ○ Extroversion ○ Aggressiveness ○ Competitiveness. This is not included in the study as there is a weak association between personality and Buying Behavior, this may be due to unreliable measures.
It is defined as e consistent patterns people follow in their lives. EXAMPLE healthy foods for a healthy lifestyle.
The consumer wants, learning, motives etc. are also influenced by opinion leaders, person's family, reference groups, social class and culture. Because 2 income families are becoming more common, the decision maker within the family unit is changing...also, family has less time for children, and therefore tends to let them influence purchase decisions in order to alleviate some of the guilt. (Children influence about $130 billion of goods in a year) Children also have more money to spend themselves.
Social Class An open group of individuals who have similar social rank. India is a class society. The criteria; class, occupation, education, income, wealth, race, ethnic groups and possessions. A person buys or uses the types, quality, and quantity of products determines the social class to some extent. Lower class people tend to stay close to home when shopping; do not engage in much pre-purchase information gathering. Stores project definite class images. Family, reference groups and social classes are all social influences on consumer behavior. All operate within a larger culture.
Culture and Sub-culture Culture refers to the set of values, ideas, and attitudes that are accepted by a homogenous group of people and transmitted to the next generation. Culture also determines what is acceptable with product advertising. Culture determines what people wear, eat, reside and travel. Different society, different levels of needs, different cultural values. Culture can be divided into subcultures: ○ geographic regions ○ human characteristics such as age and ethnic background. Culture effects what people buy, how they buy and when they buy.
2.3 HISTORY AND DEVELOPMENT OF ORGANIC FOODS AND ITS MARKET:
In the early era when human beings were born, they lived on fruits, grass, vegetables and animals which grew on their own in their natural environment. Slowly and gradually they found out and developed the awareness of growing these plants. With the passage of time, research and experiments along with advanced technology helped them to grow vegetables faster than their natural period of growth by using different kinds of fertilizers, pesticides, modifying their genes and etc. They began to feed animals with different antibiotics and growth hormones so as to enable them to produce more than what they would naturally produce. The ill-effects and hazards of the amount of chemicals absorbed by the food were forgotten in the course of achievement by modern technology and science, given out in the environment and finally consumed by humans., The consumption of this food and also by the environment which has been polluted by the use of the chemicals has affected humans from two sides. During the First Generation Green Revolution Organic farming an age old practice in India, got disturbed. Since the Vedic times Organic manure has been in practice in Indian agriculture. A British Agronomist Sir Albert Howard, however had started the organic agriculture way back in 1900. In the early 1920s a group of practising farmers in UK ,to solve the problem of decline in the quality of soil, and the general deterioration in crop and livestock and the resultant future of agriculture, sought the advice of Dr. Rudolf Stenier (the founder of anthroposophy, who had spent all his life researching and investigating the forces that regulate life and growth), who then, with the help of a series of lectures and conversations held at the Koberwitz, Germany, in June 1924, brought forward the fundamental principles of biodynamic farming and gardening (Biodynamic Farming and Gardening Association). This was the beginning of organic farming/agriculture. “Biodynamic farming involves restoring to the soil a balanced living condition through the application and use of the completely digested form of crude organic matter known as stabilized humus. Crop rotation, correct compost and proper intercropping can all contribute to a healthier biodynamic yield.” (Saunders, 1999) The term organic farming was first used by Lord Northbroune (Sharma, 2004 and Duram, 2005) in his book, Look to the Lands which was published in 1940. He is said to have coined the term ‘organic farming’ (Northbroune, 2005). He was the one “Who embraced the teachings of Rudolph Steiner and biodynamic farming and had a vision of the
farm as a sustainable, ecologically stable, self-contained unit, biologically complete and balanced-a dynamic living organic whole.” (Sharma, 2004)
2.3.1 Organic Farming Situation in India: Only 30 per cent of India’s total cultivable area is covered with fertilizers due to assured irrigation and the balance 70 per cent of arable land is mainly rain-fed with little or no use of fertilizer hence Indian farmers had an inborn understanding on how to work closely with the nature. In organic farming the precondition is commitment to Mother Nature’s protection. In India major part of country’s land can be instantly converted to organic farming and has comparative advantage over other countries as its vast cultivated area, which has remained free of pollution from chemical fertilizers, spread over distinctly varying agro climatic conditions, for example, large area in north-east region, northern hills and rain fed regions with very low or zero use of agro chemicals fertilizers. Readily available organic manure is often used by the farmers as a source of nutrients that are either in their own farm or in their locality. Nearly 70 per cent of organic agriculture products produced in India is being exported because of the big bucks involved. In the world market Organic products do obtain a 20-30 per cent higher price than inorganic products. Indian Competence Centre for Organic Agriculture study reveals, the global market for organically produced foods is roughly about $26 billion and is estimated to increase up to $102 billion by 2020. For the promotion of sustainable agriculture in the country, as part of 10th Five Year Plan (2002-07), the government has earmarked Rs 100 crore (Rs 1 billion), but the main elements of this initiative have benefited the exports, from the establishing of national organic standards under NPOP (National Programme for Organic Production), also putting in place a system of certification for the organic products, and establishing APEDA (Agricultural and Processed Food Export Development Authority) as the nodal agency to promote exports opportunities in organic product. Conventionally the domestic retail avenues for organic produce has been the age odd cottage emporium, bakery, fruit mart, and grocery store along with retail malls and an up market provision store. Marginal growth is today slowly becoming apparent in the increase in organized producers, retailers and organic product offerings in the market, whereas previously the force of individual initiatives of the farmers, odd entrepreneur and non-governmental organizations entirely drive the movement. Standards for Organic Products
The national standards for organic products are provided by Indian Organic Logo governed by APEDA and Indian National Standards for Organic Production, through a National Accreditation guidelines and Programme. The objectives of the National Programme for organic production include: (1) Provide the resource of evaluation and certification programmes for organic agriculture & products according to the criteria approved internationally. (2) Endorse certification programmes for organic produce. (3) Facilitation of certification to organic products in agreement to the National Standards for Organic Produces. (4) Support the development of organic processing and farming in the country. According to the definition of the Indian National Organic Standards, "Organic agriculture is an ecological production biodiversity, biological cycles and soil biological activity. It is based on minimal use of off-farm inputs and on-farm management practices that restore, maintain and enhance ecological harmony." management system that promotes and enhances ii. Certification in Organic Farming For the customer’s confirmation that the product is totally organic, the certification for organic farms is required. The certificates are issued to the farmer after inspection of the Certification Agency whether the minimum requirements prescribed for organic agriculture is fully met or not. After the International Federation of Organic Agriculture Movement (IFOAM) was formed in 1972, an international framework was given to discuss and codify the internationally recognized principles of organic farming. For consumer protection and information FAO-WHO has officially stated that International guidelines for organically produced food products should also be considered important as they facilitate trade. The guidelines for the production, processing, labeling and marketing of organic food has been developed in 1991 by Codex Alimentarious Commission, a joint FAO-WHO food standards program body. Under the rule of World Trade Organization (WTO) Codex guidelines are important for the corresponding judgments. According to the Codex Alimentarious Commission’s definition, organic agriculture is a holistic food production management system that promotes and improves agro ecosystem health including
biodiversity, biological cycles and soil biological activity. It accentuates the use of management practices in inclination to the use of farm inputs, considering the regional conditions required to locally adapted systems. The commercial organic farming in India is still at a budding stage. ( According to IFOAM - SOEL (Stiftung Oekologie & Landbau) survey of February 2005, in India only 0.05 per cent of total agricultural land is managed by about 5147 certified organic farms, where as about 76,326 hectare of land is under organic management. As per (APEDA)Agricultural and Processed Food Products Export Development Authority, about 67292 tons of organic products worth of Rs 7123 lakhs are being exported from India by a nodal agency involved in promoting Indian organic agriculture. According to APEDA, 2508 thousand of hectare area is under organic farming including herbs collections from the forest area of Madhya Pradesh and Uttar Pradesh (2432500 hectare) producing 119656 tons of organic products, 165700 numbers of seedlings and cuttings and 264000 litres of effective micro organism in India. Indian organic agriculture industry is almost entirely export oriented and is approximately at US $ 20 million. Because of their farmers faith or purely for reason of fiscal deficiency, there are a number of farms in India which have either never been chemically dealt with or cultivated or has changed back to organic farming. Indian farmers are not categorized as organic though these thousands of farmers are cultivating hundreds of thousands of acres of land that is purely organic. They either sell their produce with traditionally grown produce in the open market at the same price or sell purely on conviction or goodwill as organic through selected means and usual specialist markets. Elongated documentation and the price involved that is required by certifiers prevent these farmers for opting for certification. (Organic Farming in India: by Dr Gursharan Singh Kainth )
2.3.2 Organic food picture across India
The organic market report by Siddarth Jain and Deepti Behl (2007) . There are two kinds of organic products available at present, – the one which is certified and other which is uncertified. Production process assured by an authorized and recognized certifying agency is a certified product. Product packaging is exhibited with the quality assurance logo on it. One should also find another logo - 'India Organic'.
i. Current Trend of Organic Product In India : As per the reports of the Indian Competence Centre for Organic Agriculture (ICCOA), the organic food industry in India is estimated to be presently around Rs. 600 cores where about 60-70% is being exported. The global market is estimated to increase by $102 billion by 2020 and currently the market for organically produced foods is about $26 billion. People’s awareness for a healthier lifestyle has been a surge of interest around the world for organic foods primarily. As per the studies conducted by Organic Trade Association (OTA) Organics sales raised up to nearly $16.7bn in 2006, in the USA alone a 21% increase from the previous year was recorded. However there has also been a supply scarcity of everything from organic oats to organic milk along with this double-digit growth rates. Since to a greater extent supermarkets are rapidly expanding their organic walkways, according to experts what is now an undersized problem could rise into a total crisis. WalMart, the world's largest retailer, has currently revealed his plans to double its offering of organic product across it shelf line (BW Online, 3/29/06) In the Indian consumer market it has been slow to catch up what has become a rage in the USA. The industry here is still in a initial stage and when we look at the unhealthy lifestyles led by current Indian professionals shall start be turning more heads. The International Competency Centre for Organic Agriculture (ICCOA) has been set up in India in partnership with FIBL Switzerland to promote the prolong agriculture growth in India. (ICCOA) has been informative and a studying centre for all sides motivating organic agriculture and building capability in organizations and individuals in organic agriculture, manufacturing and agribusiness that aids to contribute environmentally, financially and communally to retainable agriculture and living methods. The certification of organic produce and production centres are been carried out by primarily 10 agencies in India. Some of them are FKAL International, OneCert Asia, SGS, Indo Cert IMO Control and Ecocert International. These organisations conduct through checks on farms and issue USDA Organic and EUREP GAP certifications. Getting such a certification is a complicated and tedious process and it takes nearly three years if one tries to carry it out on his own however it has been made easy by the consultancy provided by such organisations which pursues step by step procedures involved. Since the high growth prospective for export of organic produce and certification requirement for the exports of organic produces are the major advantages farmers are progressively entering the sector in
spite of the tedious journey. Presently there are about 15,000 certified organic farmers in India. Growing supply inequality between organic and other produce is the basic reason for the world’s rising curiosity in such initiatives. The demand for Organic foods is growing at 21% whereas supply is mounting at a rate of only 15%. When it comes to certifications, IndoCert in India clearly holds the periphery with the majority of the produce being certified by them. On the other hand SGS is not the first choice among organic food farmers as it loses out because its services are pathetic and also provides various other services. ii. Organic more about B2B in India than B2C Due to lack of awareness and higher prices the off take in volumes is not much in the local consumer market as a result in India Organic food is more of a business to business activity rather than a business to consumer one and is consider as a lifestyle requirement, however organic foods in India demands a best price due to escalating export requirements. Even Sri Lankan Companies like Lanka Organics (Pvt. Ltd.) are setting up their offices here in order to acquire orders from India.
Prim ryOrg nic food a a produc s tes ing ta
Indian states have become aware or have taken to organic production is evident from the above picture. Himachal Pradesh and Uttar Pradesh are known for various organic food crops like rice, barley, mower etc, Gujarat for co-operative farming of various organic products Maharashtra for cotton, Karnataka for organic coffee and spices and Kerala is now known for its organic spices. Indeed in Karnataka Bangalore is rapidly turning out to be a hub for all organic food related activities. In the year 2005 and 2006 Bangalore has arranged for the organic trade fair. Organic Food Fair 2007 by ICCOA was organised in New Delhi in order to achieve more acceptance and enhance awareness in the masses.
iii. Demand for Organic Product in India 1
For growth of organic product market in India the demand for organic agricultural products has been a motivation. In other words farmers will be encouraged to implement the organic farming practices and also to use organic input like bio-fertilizers, bio-pesticides, vermi-compost, green manure and FYM, if there is demand in market for organically produced farm products. As there is no central agency that gathers or accumulates the information regarding organic farming, estimating the area under organic cultivation in India is a very difficult task. The studies undertaken by different agencies like FIBL and ORG-MARG (Garibay S V and Jyoti K, 2003) shows that the area under organic agriculture is 2,775 hectares (0.0015% of gross cultivated area in India) but there are other estimation undertaken by SOEL-Survey which shows that the land area under organic cropping is 41000 hectare. The total numbers of organic farms in the India as per SOEL-Survey are 5661 but FIBL and ORG-MARG survey puts it as 1426. Crops like vegetables, pulses, fruits, spices, plantation, and oil seeds etc are some of the foremost organically produced agricultural crops in India. (Table: 1) (Source: Garibay S V and Jyoti K, 2003)
Table 1 : Major products produced in India by organic farming Type of Product Commodity Spices Products Tea, Coffee, Rice, Wheat Cardamom, Black pepper, white pepper, Ginger, Turmeric, Vanilla, Tamarind, Clove, Cinnamon, Nutmeg, Mace, Chili Pulses Fruits Red gram, Black gram Mango, Banana, Pineapple, Passion fruit, Sugarcane, Orange, Cashew nut, Walnut Vegetables Oil seeds Others Okra, Brinjal, Garlic, Onion, Tomato, Potato Mustard, Sesame, Castor, Sunflower Cotton, Herbal extracts
iv. Export of Organic Products from India
In India there is great export prospective for many other organic products other than organic tea and coffee for which it is best known for. Other organic products are its spices and fruits for which India has a market. According to Org-Marg’s survey approximately 30% of respondents that includes exporters, traders and producer have responded that in India organic tea is produced and this is elevated response for any single crop, next are fruits, vegetables, spices, rice and coffee (Garibay S V and Jyoti K, 2003). There has been a little response for wheat, oil seed, cashew and pulses. From India Mangos, Bananas and oranges are among the fruit crops that are most preferred as organic product. Export Market: The major driver of greening of agriculture in India is Organic farming export market. Organic crops current production of is around 14,000 tons (Garibay S V and Jyoti K, 2003). Out of which, fruits and vegetables combine only makes 17% whereas 24% is contributed by tea and rice each, of this total production. Around 11,925 tons of organic products are being exported, that makes approximately 85% of total organic crop production is exported. France, Germany, South Africa, Saudi Arabia, Australia, Italy, Belgium, Canada, Netherlands, Sweden, UAE, UK, Japan, USA and Singapore are the major countries which form India’s major export market. India in 2002 estimated quantity of the various products that have been exported is shown in Table 2 (Source: Org-Marg, 2002).The table shows that around 3000 tons of tea was exported and in quantity term it was the highest exported produce from India, next major exports are cotton (1200 tons), fruits & vegetables (1800 tons), rice (2500 tons) and wheat (1150 tons) (Garibay S V and Jyoti K, 2003).
Table 2 : Major organic products exported from India
Product Tea Coffee
Sales (Tons) 3000 550
Spices Rice Wheat Pulses Oil Seeds Fruits & Vegetables Cashew Nut Cotton Herbal Products Total
700 2500 1150 300 100 1800 375 1200 250 11,925
The rising US and European green markets has opened the scope for Indian organic food exporters. According to the International Trade Centre’s (ITC) estimation of organic food all over the world shows high rise in retail sales in US $ 10 billion in 1997 to US$ 17.5 billion in 2000 and about US$ 21 billion in 2001 (in 16 different countries in Europe, USA and Japan). Even after excluding the demand for non certified products of Japan’s so called ‘green product’ from overall estimation, it moved up to US$ 16 billion in the year 2000 and further raised to US$ 19 billion in 2001. According to the experts, this market is likely to grow at a higher pace even though the current market share for organic produced is approximated only between one or two percent of total food products market. By 2010 around five percent of the market is anticipated to be organic market as forecasted by experts. (Minou Yussefi and Heldge Willer, 2003). Europe consumes up to half of the world’s produce of organic production as it is the largest market of organic produces in the world (Minou Yussefi and Helga Willer, 2003). Europe imports cereals, oilseeds, potatoes and vegetables from many different countries. For 2001, Organic food in European market was estimated to be around US$ 9 billion with an annual growth rate of around 20% (Table: 3) (Source: ITC,January2002) relying upon the
market, and for 2003 the retail sales for organic food in this market is anticipated to grow up to US$ 10-11billion (Rudy Korbech-Olesen, ITC, UNCTAD/WTO). Germany has been the largest market for organic products within Europe with sales value of around 2.5 billion Euros ($2.3 billion (US)). By 2000 an average per capita spending has been 23 euro per head on organic produces in Europe. In countries like Switzerland (Euros 68), Austria (Euros 40), Denmark (72 Euros per head), and Germany (Euros 31) the per capita consumption of organic products is charged much better than others as shown in (Fig: 1) Source: Garibay S V and Jyoti K, 2003). Some of the European countries like Italy are seen not only satisfying their internal demand for organic products but they also fulfil to the demands of other neighbouring countries. To meet their conjugal organic product demand there are other countries like United Kingdom, which have been highly dependent on imports. Fig: 1 Per capita sales of organic produces in selected European Countries in Euro (2000)
US has alone been contributing for $11 billion (US) as for North America, retail sales of organic products for 2002 was estimated nearly $12 billion (US) out of this. Year for the past 12 years the US retail sale for organic product has seen a growth of 20-24% per and the same growth trends is expected to continue for the future. Of total retail food sale the current retail sales for organic food is approx. 2% in US (Minou Yussefi and Heldge Willer, 2003). Japan is the largest market for organic food product in Asia and the retail sales of organic food and cold drinks is estimated at around $(US) 2.5-3.0 billion (Minou Yussefi and Heldge Willer, 2003). Imports are estimated to be, around $(US) 360 million of the total value of organic market. As per the Japanese Integrated Market Institute, imports of organic products is likely to grow by 40% (Hiraga, 2002), even though the organic food market in Japan which is not more than 0.5% of total food market of Japan. Saudi Arabia and UAE are other global markets for organic products in the Middle East. South Africa is the only country
which has organic market prospective within Africa. Since India is an agricultural producing nation and as seen from this global market growth trends for organic foods there is plenty of potentials for India to exploit the market primarily. Table: 3 Percentage of organic food and medium term growth expected in selected markets Overview for World Market for organic food & beverages in 2000 (estimates) Markets Germany U.K. Italy France Switzerland Denmark Austria Netherlands Sweden Belgium U.S.A. % of total food sales 1.6-1.8 1.0-2.5 0.9-1.1 0.8-1.0 2.0-2.5 2.5-3.0 1.8-2.0 0.9-1.2 1.0-1.2 0.9-1.1 1.5-2.0 % Expected growth - Medium term 10-15 15-20 10-20 10-15 10-15 10-15 10-15 10-20 15-20 10-15 20
FIBL & ORG- MARG survey shows that the total commodity wise demand (in volume terms) that has been estimated in some selected export markets (Holland, USA, UK, Germany, Switzerland and Japan) for wheat and soy bean is 1,000 tons, for Banana it is around 6,410 tons, for mango this is around 650 tons and for pineapple around is 900 tons (Garibay S V and Jyoti K, 2003).
Because of the price premium that these organic products have over the traditionally produced products the attractiveness of organic market is also getting boosted. Relying upon the existing distribution channels and the current market conditions these price premium for various organic produces change in different countries. This premium shows a discrepancy by 30-50% (trader level) for different organic products. There are immense opportunities for organic agricultural exports for India to exploit but some of the basics for exploiting this potential include: • • Farmers should have the capability to produce agricultural products organically that have global market and For exporting agricultural commodities to these markets exporters and traders should have prior experience of the same. In the Fig 2 development of a matrix by illustrating the conventional agricultural commodities an endeavour has been made by the case study researcher (Siddarth Jain and Deepti Behl (2007)), that has been exported by India to different countries around the world, as well as the presence of organic market for these products in these countries. The illustration shows the presence for opportunities for the Indian exporter to export organic agricultural commodities and the existence of organic agriculture market for specific commodities in different countries plus the current conventional agricultural market indicates the capacity of India to export the specific agricultural commodities to these countries. They have used annual exports of agricultural commodities published by CMIE agricultural sector reports by developing such a matrix and have used data available in the internet resources for discovering organic market in different countries for different commodities. The matrix aids us to divulge that India has exhibited the aptitude for exporting agricultural products like tea, coffee, rice, wheat, fruits & vegetables, spices, sugar, oil meals etc to countries like Saudi Arabia, South Africa, USA, U. K, Japan, Poland, Netherlands, Germany, France, CIS Countries and Italy etc. Thus in most of these countries there is an upcoming demand for organically produced commodities that will attract price premiums ranging from 10% to 100%. Indian exporters and producers of agricultural commodities have yet to be exploited to its maximum potentials as it showcases a hope of opportunity for Indian Organic product.
Fig: 2 Conventional agricultural products & their export market and prospective market for Indian organic products.
Existing conventional export market for Indian producers for particular product
Prospective market for Indian organic products.
V. Domestic Market Due to unorganized nature of the domestic organic agriculture market in India it is complex to guess the degree and trends in this growing market. The data available and the studies done so far on the sale of organic produces is limited to metros like Delhi, Kolkata, Mumbai, Chennai, Bangalore and Hyderabad. Organic agriculture study and sale is also based on Non Governmental Organizations, some entrepreneurial traders and individual initiative of the farmers etc. Data available shows that the current domestic organic products market demand is mainly for fruits, vegetables, rice and wheat. Other products which include tea, coffee and pulses (ORG-MARG Survey, 2002). There is a possible market for other commodities like organic herbal plants, spices, and cotton which are relatively high. According to (ORGMARG Survey, 2002) for next five years it is anticipated that the demand for organic fruits
would grow by 8%, spices by 14%, and that for cotton and herbal plants it is projected to be around 7%. The market for different range of organic agricultural products as shown in Table: 4 is anticipated to reach up to 1568 tons in 2006-07. Table: 4 Growth forecast for specific organic products in the domestic market Product Spices (all) Pepper Turmeric Tea Rice Fruits (all) Banana Mango Orange Pineapple Herbal extracts Cotton Coffee Oil seeds
% Projected Growth in the 5 next Years 14 5 4.5 13 10 8 15 5 5 5 7 7 5 5
Baby food Coconut
VI Retail sales of Organic Foods in India: Even though the vague patterns of retail are changing slowly into more organized retail with an estimated 2-3 million potential consumers for organically produced agricultural products in India, the problem has always been the absence of organized marketing and retailing. Companies like FabIndia, 24lettermantra, Gopalan etc have initiated organized retail which is now slowly picking up and significant growth is observed. Even if these companies are providing a wide variety of organic products, however the numbers of channels offered to organic food are very few in numbers. In fact Delhi, the capital of India has only about 3 outlets namely by 24lettermantra, FabIndia (a section of organic foods) and Dubden (Delhi’s first multibrand retail outlet for organic food). Thus it shows that the retail market for organic is in emerging stage. Supermarkets are now increasingly stocking up on organic products that command a 25-30% cost.
The Product List on Organic Food available in Retail outlets as per available data are: Fresh Fruits & Vegetables : Fresh fruits Fresh Vegetables Staples: Brown Rice & Other Rice Whole Wheat Flour, Other Flours, Rava & Amarnath (Ramdan) Flour Dals, Pulses & Beans Spices Masalas Cold Pressed Edible Oils Jaggery Sugar
Bakery Items: Cakes, Breads, Cookies Processed food: Snacks & Confectionary Dried Fruits & Nuts Honey Ghee Jams, Marmalades, Spreads Pickles Diary: Farm Fresh Handmade Natural Cheese Beverages: Tea Coffee
2.4 CONSUMER AWARENESS ON ORGANIC FOODS:
i. Organic Food Consumption in India is on the Rise. Pepsi cola controversy has brought more awareness in the consumer and so he is now watching his diet more closely. Organic food products have suddenly modified from a fad to a healthier option. Some people believed that organic food is only a “concept” well-known in the developed countries. They think that, India has only been an exporter of organic food and very little is consumed domestically which is untrue. There are many who look towards organic food for the domestic consumption market although 50% of the organic food produce in India is targeted towards exports. According to studies the Organic Trade Fair in 2007 witnessed an extraordinary rise in footfalls and sale of organic products as well as in participation of Organic Food Manufacturer. Number of enquiries recorded in trade fair shows that there exists a huge potential for organic produce sale which is possible if supply chain constraints could be eased out. ACNielsen, a leading market research firm recently conducted survey in 38 countries among 21,000 regular Internet users to find their preference for functional foods – foods that have additional health benefits. It was revealed that among the top ten countries, India was
one of them where health food, including organic food, was in great demand by the consumers. The most important reason in the survey for buying organic food in India was the concern for the health of children, with over 66 percent parents preferring organic food to non organic food. Although organic food is priced over 25 percent more than conventional food in India, many parents are willing to pay this higher price due to the perceived health benefits of organic food for their children. The increase in the organic food consumption in India is evident from the fact that many organic food stores are spurring up in India. Today (2006) every large city in India has numerous organic food stores and restaurants and every supermarket has an organic food. The first organic food store was started in Mumbai in 1997 which is considered as an immense change. in India consumers pattern of organic food consumption includes organic strawberry, organic honey, organic cashew butter, organic tea, organic marmalade and various organic flours which is much different than in the developed countries. However, the Indian consumers’ are unaware of the difference between natural and organic food hence they need to be educated. People who purchase products labelled as Natural think that they are Organic also since the requirement of certification is not compulsory for domestic retail in India, consumers are not aware about the certification system available for organic product and hence there are many fake organic products available in the market. i. Factors that drive the increase in Organic Food Sector Total food consumption in India for 2003-04 is estimated at around Rs. 8,60,000 crore. For the year 2010 and 2015 food consumption growth is projected at 5% growth in GDP i.e.appoximately Rs. 6,68,300 crore and Rs. 8,80,400 crore respectively. The foods market is undergoing a significant change in consumption patterns with the chief drivers being: a) Changing age profile The youth is typically more leaning to try out new products, including natural and organic foods. The changing age profile with growing share of population in the age bracket of 15-59 years, a large part of which constitute the active workforce, bodes well for the growth of food consumption.
b) Increasing education and exposure The demand for organic foods is likely to grow among upward mobility of income classes as has already been revealed in USA, Europe and more recently, in several countries of South East Asia. In India the middle and upper middle income groups are growing faster than the low income groups. Owing to travel as well as the media aid in building awareness of the organic products results in the increased education and exposure levels, thereby creating a high demand for organic products.
c) Increasing health consciousness Growing concern about environmental issues and mounting health consciousness with changing lifestyles will further compel growth of products which are hygienic and healthy. Health conscious consumers will certainly have an edge in the increasing demand for organic foods being healthier. d) Need for convenience Need for convenience is another important lifestyle related aspect – which includes convenience in purchase as well as convenience in carrying, cooking and eating. Ready to cook and ready to eat Organic processed foods will be increasingly in demand.
2.5 Problems faced by the organic food industry in India
Major problems facing the organic food industry can be categorised in three parts. 1. The people who are aware about organic food majority of them are not clear about the definition of organic food thus awareness about it is not high. 2. Lack of certification for identifying the organic food products can be one of the causes. 3. No efficient promotions and non availability of organic products also add to a low state of affairs in terms of organic food sales.
2.6 Future of organic industry in India
In spite of the purchase of organic food product raises the current kitchen budget approximately by 25% but still the future is definitely one that we can have a high opinion of. Rising amount education and awareness levels, disposable income and with growing health consciousness among consumers in India promises a bright future for the new found industry. Organic market will help to change the current status of the Indian agriculture which will assist in making a better future for the organic farmer. Popularity and the impact of organic food items will be mainly based on effective sales and distribution of organic produce coupled with marketing and promotion which is a big challenge. This can be certainly taken care by the industry as a whole (trade fairs being one such example) and also by upcoming retail stores. The government will analyze the current state of the industry and continue its efforts of accepting new ideas and aid the states to promote this kind of farming along with the interests of the producer. Certain private organizations and NGOs are extending their help in the promotion of both producing and distributing of organic produce which again act as advantageous for the industry. Thus, we can anticipate for a fine growth in this industry in both domestic and international (exports) market.
The definition of Organic Farming by APEDA, states that it minimises the damage to environment hence Organic agriculture is a system approach to agricultural production that is working towards an environmentally, socially and economically sustainable production (Shepherd et al., 2003). There have been many inclusive assessments over the effects of organic farming on environment. Many of the researches show positive attributes on environment. One of the assessments was done by Shepherd et al. It had the following reviews. The effect over the biodiversity of Organic farming is positive. Wildlife protection on organic farms is advantageous (also Hole et al, 2005). Maintaining and enhancing biodiversity is considered to be vital for a maintainable organic system, because raise in biodiversity plays a functional role by pest control, improving nutrient cycling, and disease control in the production system. Prohibition of synthetic fertilisers, agrochemicals and
veterinary medicines, which removes direct or indirect problems for wildlife enhances and increases biodiversity. Organic farmers pay more attention towards the soil. Fundamental principal of organic farming is crop rotation in order to maintain its organic matter content, to feed the soil, and keep it in a good condition. To produce good food from balanced living soil and place strong emphasis on protecting the environment is the main objective of organic farmers (APEDA). Soil structure is good under organic practices and it benefits from regular returns of organic matter in the soil. Constrain over the use of veterinary medicines such as antibiotics and pesticides and also benefits soil organisms. The water quality and air quality is better in organic farming as it confines the use of pesticides and fertilisers, that of conventional farming. No utilisation of pesticides and harmful chemicals in organic farming leads to unpolluted water which may be used for irrigation and drinking by the animals that are grazing on the field. In organic farming, the organic matter also temporarily stores CO2 which reduces air pollution. Major air pollution is caused due to burning of fossil fuel which is done least in organic farming. Organic methods are energy competent. They use less energy for both crops and livestock types and overall on a whole-farm basis. Organic systems operate a petite nutrient surplus which is taken as an advantage provided that nutrient reserves are not being reduced. Limitations on use of various fertilisers are for encouraging self-sufficiency in a system and also show concern about the harm they cause to the ecosystem. Organic Farming has a positive impact upon environment. However, there are still many studies and assessments going on, on this topic. It is seen that without use of pesticides and chemicals, organic farming increases biodiversity and enhances minerals in soil. It improves water quality, reduces air pollution and it is energy efficient. It uses smaller amount non-renewable resources and minimises wastage as it depends less on external inputs. As discussed above, there has been a considerable growth in the organic food market and it still has more potential to grow as consumers are positive about organic products and are concerned about their health which is making them choose food sensibly and are willing to spend more for an organic label. Government should update and make consumers aware more accurately about the organic products, so that they know that they are spending on the
right type of food. Proper research and study should be undertaken by Government and educate consumers about the benefits organic farming provides to the environment and the way it considers animal welfare.
CHAPTER III RESEARCH METHODOLOGY
To study the consumers’ perception towards organic food, this chapter presents the design of the research conducted, in which it includes objectives of the study undertaken, research design, sampling procedure, data collection, method and procedure for data collection and data analysis.
Research is to be conducted to find out the reasons which are responsible to increase the demand for organic food and also to find out what exactly consumers perceive about organic food in Indian market. The objectives of this research are• • To examine the knowledge of consumers regarding organic foods and its advantages and, To search the reasons that are raising the demand for organic foods
3.3 DATA COLLECTION:
The objective of this research is to study the knowledge of the consumers about organic foods and their reasons for demanding organic food. Hence, reliability and soundness of the collection of data is essential. Thus, both primary and secondary sources of collection of data are used. Primary data, according to Malhotra and Birks (2007), is “data originated by a researcher for the specific purpose of addressing the problem at hand”. It is the collection of
data to solve the problem under survey (McDaniel and Gates, 1999). Primary data refers to the new data gathered to solve the research problem. This method of collecting data can be expensive and time consuming as it is conducted by the researcher himself. The other type of data is Secondary data. This is the data earlier collected for a purpose of other than the problem at hand (Malhotra and Birks, 2007). This data is not collected by the researcher himself but is gathered by the researcher from different sources like computer database, government, business sources ,research companies etc. and might be relevant to the problem at hand (McDaniel and Gates, 1999). Secondary data are easily available, less time consuming and less expensive. 3.3.1 Sources: Questionnaire prepared by the researcher was distributed to the respondents in Pune city for the collection of primary data. Respondents were selected from three different places in the city, one is offices mostly IT and sectors like government/ college professor another was posh extra located on Vimannagar/Aundh, and the third one was Kalyaninagar area which is situated in the heart of the city, where huge shopping market is there. Secondary data was collected from the TASMAC library and other electronic sources main being the Internet and case studies published in the Internet. Many electronic news articles and academic journals were taken from the electronic sources of the university. Some e-books, journals, articles and news extracts were referred online. Some data was also collected from reliable websites like Indian government website/certification websites specially promoting organic agriculture and organic product.
3.4 RESEARCH DESIGN:
Research design is the base for conducting marketing research. To answer the objectives a proper research design must be selected. As defined by Malhotra and Birks (2007), “a research design is a framework or blueprint for conducting a marketing research project. It details the procedures necessary for obtaining the information needed to structure and solve marketing research problems.”
Generally Qualitative and Quantitative research designs are used. Qualitative research as defined by Malhotra and Birks (2007) is an unstructured design based on small samples, intended to provide insights and understanding. Whereas, Quantitative research is a technique that seek to quantify data and apply some form of statistical analysis. Quantitative research is the study that uses mathematical analysis (McDaniel and Gates, 1999). In qualitative research, data is collected, analysed and interpreted but not by using numbers. It is done qualitatively. On the other hand, quantitative research involves data collection, respondents’ sample and numerical calculation of the data collected (Chisnall, 2005) The Qualitative research method is used in a situation where small sample of the whole population is focussed- group interviews are conducted, in-depth interview is carried out and observations are non-structured. In organic foods case, this technique is not applicable as questioning just a few people is not considered sufficient for representing the entire population. The results may be biased. In order to know consumers’ perception towards organic food, in this research, an approach which covers a larger group is needed so as to represent the entire population. Hence, quantitative research method is used. In this method, a large sample size is selected and data is collected through a structured questionnaire. To know the consumers’ attitudes towards organic food, the Likert scale is used. Respondents are provided with statements that expresses their agreement or disagreement (McDaniel and Gates, 1999). Hence, as research has to be carried out by a large scale questionnaire, quantitative technique fits the best with this research and collection of primary data. Different statistical tools are used for analysing the data collected from the questionnaire and results are obtained.
3.5 METHOD OF DATA COLLECTION:
There are several methods of data collection like observation, experiments and survey. The observation method for research involves monitoring respondents’ action indirectly. In this research, the observation method is not appropriate as the study is about the consumers’ knowledge and reason for rise in demand for organic food. By observing the consumers’ actions, data cannot be collected regarding their knowledge. Therefore, this
method was not used. Another method for collecting data is to conduct experiments. This method studies effect of change of one or more variable on the other variable. This change of one or more variables is brought about by the researcher. As mentioned above, the study is about the knowledge and reason for demand and not the effects due to changes in the variables. Hence, this method was also eradicated. The third method was adopted which is to conduct surveys. This method of data collection is most suitable for this study as it involves conversations with the respondents to obtain opinions, behaviours, facts, awareness attitudes etc. It involves the use of a structured questionnaire given to a sample population and respondents are asked to give their first choice for the questions. This technique is different from other survey methods as it does not involve any interviewer There are several survey techniques but amongst others the self-administered questionnaire technique was selected for this research. In this technique, a previously prepared formal questionnaire is used to present the questions in a prearranged order. The advantages of using this technique for the survey are: • • • • • A questionnaire is simple to manage. The data obtained is reliable because the responses are limited to the alternatives stated. The questions can be diversified and asked, despite the absence of an interviewer. The respondents are also pledged that their identities will not be divulged and remain anonymous. The respondents’ tendency to give answers which are commonly accepted is eradicated through this technique as the researcher does not interview the respondents, nor does he monitor the respondents’ answers. • • • Sensitive information can be obtained through this technique which is difficult to obtain through an interview. It is also the quickest way, as the survey is carried out in central locations where there are potential respondents And finally coding, analysing and interpretation of data is relatively simple.
But there are disadvantages also to this technique, which are as follows:
Respondents may be not capable or reluctant to provide the required specific information. As there is no interaction with the researcher or interviewer, the respondent may not understand some question or may not be willing to answer some personal questions to which the researcher or interviewer may influence them and explain the reason for asking the question
• • •
With limited alternatives and the ‘choose any one’ option makes the respondents unable to provide correct answers to the questions asked. Use of proper language is important or else questions or respondents become biased. Wording questions is not easy task. Even though the researcher has control over which respondent to catch, the choice is limited to the people walking on the streets or the shoppers in the shop on the day of survey. The potential respondents might not be present or potential respondent may also avoid contact with the researcher.
In spite of these limitations, this method achieves the objectives and gives good results.
Questionnaire was designed in a manner which would meet the needs of the research objectives and hence was used as an instrument for this research. It was divided into three parts. The First part contained of questions about the demography such as age, gender, qualification, occupation, children if any and household income. In second part questions were designed to know the knowledge of the respondents about organic food, their buying behaviour and also to know whether they purchase organic products. The last part of the questions was related to motives of their purchase of organic food were asked. To measure the respondents’ answers, the Likert scale was used, which is easily understood by the respondents. Questions from 7 to 19 were scaled as strongly agree, agree, disagree, strongly disagree and don’t know to which respondents were asked to specify their responses.
3.7 CONTEXT OF THE RESEARCH:
The research intends to find out the perception of consumers’ towards organic food and the reasons that are increasing the demand for organic food. The research was carried out in Pune city at posh residential places, offices and retail malls. The places selected for conducting the research were Vimannagar, Aundh and Kalyaninagar where there are the major big organic food stores from where the consumers purchase organic food and the number of consumers for organic foods is increasing each year in these stores. Kalyaninagar was selected as it is a crowded place and respondents are easily available. All these places are in different parts of the city and away from each other, which proves the dependability and reliability of the collected data.
3.8 SAMPLING PROCEDURE:
A sample is a subset which is selected from a larger population (McDaniel and Gates, 1999 and Malhotra and Birks, 2007). Sampling is preferred to census because it reduces cost, time available is short and population size is large. Therefore, sampling is used as it represents larger educated and professional population. There are two techniques of sampling. • • One non-probability sampling And the other is probability sampling.
In non-probability sampling technique sample is selected based on the personal judgement of the researcher and not randomly. On the other hand, probability sampling technique is a procedure in which each element is selected by chance and probability of selecting each sample could be uncertain. For the purpose of conducting the research on organic foods, samples were selected on the basis of judgement and convenience of the researcher. Further, the researcher did not have any list of population for selecting a sample. Therefore, probability sampling technique does not apply to this research. Non-probability sampling technique was used. This technique is further classified into judgemental sampling, convenience sampling, snowball sampling and quota sampling.
To obtain a sample of convenient elements and respondents are selected because they happen to be in the right place at the right time, convenience sampling was used for the research. The benefits of convenience sampling is that sampling units are accessible, easy to measure, least expensive, less time consuming and cooperative. The researcher selected the sample from posh residential centre as it was convenient and the sample units were easily and willingly reachable. Regardless of the above advantages, this sampling technique has serious drawbacks. In convenience sampling, generalization of population is not in a statistical fashion as selected sources which look potential can be biased, including respondent selfselection itself. They do not represent a definable population. Even after considering the above stated disadvantages, this technique was selected and concluded to be suitable for this research because of the time limitation, easy access to the sample units and convenience of selecting the sample.
3.8.1 Sample size: The intension was to have 50% male and 50% female ratio in the sample. However, after the research was carried out, the actual sample consisted of 110 males and 63 females, which is 63.58% and 36.42% respectively. It is higher than 50%. It was difficult to contact the entire population. Therefore, with the help of convenience sampling, samples were selected. For this research, 173 consumers were selected as a sample and were requested to participate in the survey. Since the reach of organic food is more in the educated society the questionnaires were targeted to the residential areas of Vimannagar, Aundh and Kalyaninagar. Some of the respondent are from IT offices. The collected questionnaires were analyzed, interpreted and the result led to fulfil the objectives of this study.
3.9 PROCEDURE FOR DATA COLLECTION:
Structured questionnaire was used to collect the primary data for the purpose of this research. The survey was conducted between 5th Jun 2009 and 7th October 2009 at different timings, different days and at different locations as mentioned above as well as in the following table.
Table 5: Schedule of different place visited in Cardiff city for data collection Date/Day 6th Jul 2009 24th Jul2009 6th Jun 2009 24th Jun 2009 9th Aug 2009 Place Vimannagar Area Kalyani Nagar Office (eMail) Malls centre(Kalyani Nagar) 4:30pm to 6:00pm Timing 5:30pm to 8:30pm
In all, five hours were spent on different locations on different days and at different timings for collection of data. Usually on weekends more people are found at the supermarkets for household purchasing therefore weekends were selected to carry out the survey in Malls and residential areas. Most of the shoppers will also be available at Malls on weekends. This was done to come across different respondents in order to obtain a variety of responses so that the sample can represent the entire population. This was also done to increase reliability and creditability of the research.
3.10 DATA ANALYSIS:
After the data was collected from the sample, the next step is to analyse and interpret the data. Cross tabulation and means were used for analysis of the various types of data collected. In this research, data is represented by the use of charts and tables and the data is interpreted by the means of percentages and calculations.
CHAPTER IV ANALYSIS AND FINDINGS
This chapter examines, gives an overview and provides results for the data collected during the survey. It includes the general information, analysis and interpretation of the questions through various tools and measures. It provides answer to the objectives of the research from the findings of the data. This chapter begins with the analysis of the demographics of the respondents. The purpose of this exercise is to provide general information about the respondents. The second section of this chapter is about the findings of the first objective of the research which is related to the knowledge and advantages that consumers have about organic food. The third section deals with fulfilling the second objective which is to investigate the reasons of rise in demand for organic food. Cross tabulation and means are the measures and tools employed for the analysis of this research. Charts and Tables are used for presenting the data and results.
4.2 ANALYSIS OF DEMOGRAPHICS:
It is important to know the general profile of the respondents who participated in the survey in order to comprehend the data results. 173 respondents participated in the survey out of which some questionnaires had multiple answers. Hence, the analysis has been done on the remaining considering the best of the options in the questionnaires. Gender, age, qualification, occupation, children and household income was the information asked in the demographic section of the questionnaire.
4.2.1 Gender Profile of the Respondents: Figure 3 shows that out of 173 respondents, 110 were males and 63 respondents were female, i.e. 63.58% males and 36.42% females. The data shows that almost equal numbers of people from both the genders were targeted. Hence, the sample is not dominated by a single gender. Therefore, this question has shown that evaluating both the genders in an effective manner, which comprises almost equal males and females in the sample population, will bring out a better picture of the results to answer the research objectives. Figure 3: Gender Profile of the Respondents
No. Of Respondent 110 120 100 80 60 40 20 0 Male Female 63
4.2.2 Age Profile of the Respondents: From the questionnaire, section 1 was regarding the age profile of the respondents. The results are as follows: Figure 4: Age Profile of the Respondents
Age Profile of Respondent 100 80 60 40 20 0 3 Less than 21 - 30 20 year’s Age 31 - 40 year’s 8 84 78
It is seen from the figure that maximum number of respondents fall between the age group of 21-30. Exactly 84 respondents were in this age group. This comprised of 48.55% of the total sample. Only 3 respondents fall between the age group of less than 20(18 to 20 and 78 belong to the age group of 31-40 respectively. In the age group of 40 and above there were 7 respondents. All the questionaire were trageted at working couples or respondents under 18 were not considered. singles so
4.2.3 Qualification Profile of the Respondents: The figure below describes that maximum number of respondents which comprised 50.87% of the sample were educated upto graduate. In contrast to this, only 10.98% are under graduation and 38.15% are postgraduates. This signifies that majority of the respondents in the sample were graduate educated and on an average people were well educated. Figure 5: Qualification Profile of the Respondents
Qualification Pro file o f the Re spond e nt
P ost Graduate Graduate Undergraduate 0 20 19 40 60
4.2.4 Occupation Profile of the Respondents: Figure 6 below, shows that 58.68% of respondents were employed. Businessmen comprised of 33.53% of the total sample size. Housewife comprised of most 7.78%.
Figure 6: Occupation Profile of the Respondents
Occupation Profile of Respondent
Service Business Housewife
4.2.5 Children Profile of the Respondents: Question nos. 3, 4 of the questionnaire were related to the children profile of the respondents. Question no. 3 asked if the respondent had children. If the answer was positive, question no. 4 was to be answered. Question no. 4 is asked if the respondents had any children under 15 years of age. This question was asked to investigate the number of respondents who buy organic who have children under the age of 15 years. Figure 7 shows the number of respondents having children, and if any, under 15 years of age. Figure 7: Children Profile of the Respondents i) Childern
R e sp o n d e n t w i t h C h i l d r e n N o , 5 9 .5 4 %
ii) Children if under the age of 15 years
C h il dern if u n d er a g e o f 1 5 Y ea rs A bo ve 1 5, 12 .2 4 % U n d er 1 5 , 8 7 .7 6%
U nder 1 5 A bov e 1 5
Y e s , 4 0 .4 6 %
Y es No
The above figure depicts that the researcher has got a good sample as nearly 40.46% of the respondents answer both the questions. 40.46% of the respondents have children and 59.54% of the respondents do not have children. Out of 40.46% of the respondents having children, 87.76% said they have children under the age of 15 years and 12.24% have children above the age of 15. This gives the researcher a good data for analysis and comparison. This also help the researcher relate the buying behaviour influnced by the health issues of children . The consumers prefer organic food because they are concerned about their children’s health. By the means of cross tabulation of children profile of the respondents with the frequency of buying organic foods, results were derived to conclude whether respondents having children under 15 years of age are the major purchasers organic food or not. This will help the organic food product manufacture to define market strategies to traget this segment.
4.2.6 Household Income Profile of the Respondents: Organic is being considered as apremium product, its sale depends upon the consumers earnings. Therefore the bConsumers earning good money can afford to spend on organic products. The following figure gives the data regarding the earnings of the respondents. Figure 8: Household Income of the Respondents
Household Income of the Respondent 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 5000 10000 10001 – 20000 20001– Above50000 50000
Household Income of the Respondent
The figure 8 above, shows that the researcher’s sample consists of a people who are sound monthly earners. This will give positve results for the research. If there were more
respondents in the group of under RS 10,000 the results of the study could have been negative as people of that income group would not spend on organic products whose costs are more than the normal conventional food. From the figure it can be seen that major respondents were from the group having a household income over RS 50,000. This comprises of about 32.94% of the total sample. This was followed by RS 10,001-20,000 and Rs 20001 50,000 household income group comprising of 29.41% and 19..41% of the total sample respectively. As compared only 18.24% and respondents having household income of RS 5000-10,000 comprised mainly of on job trainees in the software company.
4.3 ANALYSIS OF THE DATA:
4.3.1 Consumers’ Perception towards Knowledge and Advantages of Organic Food: To answer the first research objective of the research, the first part of questionnaire was formed to investigate the knowledge and advantages of organic food according to consumers. Further the first part of questionnaire was divided into two sections, i.e question no.7 and 8 were designed to know the knowledge of the consumers regarding organic food and quesiton no.9 to 10 were formed to understand what they feel are the advantages of the organic food. Knowledge: i) Awareness: First question was asked if they were aware about organic food. After the analysis of the questionnaiers it was clear that all the respondents (95.38%) were aware about organic food. This tells us that people are acquainted to organic food in the market and have some idea regarding it. ii) Define Organic Food: The second question asked the respondents to define organic food. The answer to this question would help understand consumers’ opinions about organic food. It would also help understanding the awareness about organic food and its characteristic known by the consumer. In order to ease the question there was as a set of multiple choices so that people select their best known way to describe the organic food. The respondents were told to select
their best definition. Some responded with multiple selections and their rating to that particular definition. The researcher has picked only those selections with high ratings Table 6: Terms defined as Organic Food Terms defined as Organic No. Food Chemical free Soil Association symbol Naturally grown Not Genetically Modified No use of growth enhancement, additives Free range/ All Natural Home grown Healthy food Care of animals of Percentage 50.87% 5.20% 22.54% 2.31% 9.25% 0.58% 1.73% 7.51% 0.00% respondents 88 9 39 4 16 1 3 13 0
As answered by the respondents, majority of the respondents have defined organic food as chemical free, fertilizer free and pesticide free. They believe that organic foods are grown without the use of chemicals and pesticides and artificial fertilizers. Most of the consumers are not only aware, but also know that organic foods are produced without the use of harmful chemicals. This is conjunction with the defined organic food definition by APEDA and the National Program for Organic Production Board as mentioned in the literature review. They defined organic food as produce which is grown without the use of man-made chemicals, pesticides, artificial fertilizers and ensuring that the life of the soil is maintained. Some have also declared that organic foods are defined by the national steering committee
for organic product (NSCOP) set up by the Ministry of commerce & Industry (Department of commerce)
certification body. They usually look for the NSCOP symbol on the product which gives them guarantee that the produce is organic. As discussed in the literature review, for any product to be labelled as organic, it needs to be registered and have certification from the governing bodies like the NSCOP. This implies that people are aware that they should look for the symbol of the governing bodies to be assured that the product that they are buying is 100% organic.
Ample numbers of the respondents have said that organic foods are naturally grown. They are naturally produced without the use of chemicals and pesticides by using natural fertilizers and that they are environment friendly. Quite a few respondents also mentioned that organic foods are not genetically modified. A small number of respondents also said that organic foods use nothing artificial like colours and flavours. Few defined it as healthy food. A small amount of respondents have also mentioned that organic food do not use artificial additives, antibiotics, artificial growth enhancement and growth hormones. One respondent also stated that organic foods trait is that it is misshapen and that is how it should be. She believes that organic food which is grown naturally without the use of chemicals and sprays and pesticides, the output is natural which is not in the exact shape as its other same produce. In contrast, the produces of conventional food have nearly exact shape. The terms like ‘all natural’ and ‘free range’ have also been used by few respondents to define organic food. This proves that confusion still confusion exists with the term ‘organic’ which is argued by different researchers as discussed by Hughner (2007). The term ‘home grown’ is also used to define organic food. This was not clear as to what the respondents exactly meant by home grown to define organic food. The term that organic is for the care for animal was not selected by any respondent. iii) Difference between organic and conventional food: In the questionnaire the eight question was formed to find out what the consumers believed was the major difference in the production of organic food as compared to that of conventional food. This question was asked so as to know what knowledge respondents have about the production of organic food. How it is different from the production of conventional food? Table 7: Major difference in production between Organic Food and Conventional Food Difference Without use of chemicals Quality Better taste
respondents 86 49.71% 15 8.67% 9 5.20%
Not processed Expensive Healthier No use growth hormones Grown naturally Environment Friendly Massive quantity of conventional food
15 4 10 9 19 5 1
8.67% 2.31% 5.78% 5.20% 10.98% 2.89% 0.58%
Most of the respondents believe that the major difference in the production of organic food as compared to conventional food is that the organic foods are produced/grown without the use of chemical, pesticides and fertilizers. It is naturally grown without the artifical chemical intervention. They are grown without pesticides and chemical preservatives. Processing of the food is not done and are non manufactured. Natural ingredients are used. And is certified as being produced in soil with no chemicals. In contrast, convnetional food, they believe are grown using chemicals, fertilizers and pesticides. The produce have a uniform shape. Sprays and chemicals are used while growing, to produce more yeild to meet demand, example strawberries in winter. Conventional foods are produced speedily and in massive quantities. Their main objective is to see how many can be sold from the crop once grown. Respondents also stated that quality is also another factor that differentiates organic food from conventional food. Organic food gives importance to quality, whereas, conventional food focuses on quantity. Few have also mentioned that organic food has better taste than conventinal food because there is no use of chemicals and other artificial ingredients in organic food. The ground on which organic foods are grown are not fertilized by chemicals which gives less toxins for the body to metabolize. Quality of nutrients are present. No chemicals are used and therefore, the growth process is longer. Since organic foods are grown natually, there is purity in the food. Price is the major difference for only a few respondents. Organic food is more expensive as compared to conventional food. They quoted that the cost factor is more in organic food whereas, conventional foods are cheaper.
Quite a few of the respondents feel that the major difference is that organic food is healthier than conventional food. Few mentioned that it takes care of the soil and animals are fed with no growth hormones. Most of them belive that it affects the directly. It makes a positive difference in the environment. They have stated that organic food is environment friendly. The production process makes a difference in the environment. Finally, welfare of the food and the planet is taken care of. Only some of the respondents felt that there is no much difference in the production of organic food and conventional food. This can be explained as the those respondents lack knowledge about the production processes of organic food and conventional food. iv) Fastest growing sector: The question asked was ‘Do you know that organic food is one of the fastest growing sectors in food industry?’ following were the results regarding this question. Figure 9: Fastest growing food sector
F a s t e st g ro w i n g fo o d se c t o r N o , 2 2 .7 0 % Y e s, 7 6 .8 8 %
Y es No
Figure 9 above, depicts that 76.88% of the respondents know that the organic sector is one of the fastest growing sectors in the food industry. This can be understood as the respondents are updated about the organic food industry. 76.88% of the sample population is interested in knowing where the organic food industry is moving towards. This can also be infered as they have interest because they being reading and hearing through various means of advertisments, journals, articles etc about the benefits of organic food. One third of the sample population is unaware of the growth of the organic food industry.This is not a small ratio.
Advantges: To know the consumers’ perception towards the advantages of the organic food, as mentioned above question no. 11 and 12 were formed and were measured on the basis of the Likert scale to know the respondents’ agreement and disagreement. For the analysis part, the responses were given numbers from 5 to 1. 5 being strongly agree and 1 meaning strongly disagree. 3 was scaled as ‘don’t know’ which means neither agree nor disagree. Hence, if the mean score is less than 2.5 then the respondents are assumed to disagree. If the mean score is between 2.5 and 3.5 then it is neither agree nor disagree that mean its don’t know. And if it is above 3.5 then the respondents are assumed to agree. By the use of statistical tools following mean scores were found.
Table 8: Means score of the statements regarding advantages of organic food Consumers responses towards the advantages of organic food Organic food is Healthier than normal conventional food Organic food is Safer Organic food Tastes Better Organic food helps Animal Welfare Organic food has Positive Impact on Environment Statement 1: Organic food is Healthier than normal conventional food. For this statement mean the score of the respondents’ is 4.13 which depicts that respondents on an average agree that organic food is healthier than conventional food. The mean score is above 4.00 because most of the respondents did agree with this statement. Total 143 respondents did agree with the statement that organic food is healthier than conventional food. There were only 30 respondents who neither agreed nor disagreed with the statement. This may be because of the lack of research and poor studies on the healthiness factor between conventional and organic food. Statement 2: Organic food is Safer than conventional food. Mean Score 4.08 2.16 0.37 0.17 4.12
The mean score for this statement is 2.16. This is infered as respondents agree as well as repondents don’t know much about the safe factor in organic food against conventional food. 73 respondents agreed with this statement. Whereas, 86 either disagreed,10 strongly disagreed and 4 respondents neither agreed nor disagreed. This tells us that respondents are not sure if organic foods are safer than conventional food. For this again no proper reliable results can be the reason that respondents are not sure about the safe factor of organic foods. Statement 3: Organic food has a Better Taste than conventional food. The mean score of 0.37 shows that respondents agree with this statement. Respondents do nit feel that organic food tastes better than conventional food. Most of the respondent suprisingly believe organic food lacks taste and is just a healthier option. But there were 107 respondents who did not feel much of difference between both type of food which is 3.09 and hence the score is 3.09 just above don’t know. They believe that the taste of the food depends largely upon the cooking abilities of the person on not on the way it is grown. Also, in due to the use of artificial flavours in conventional food, it becomes difficult to judge which tastes better. Statement 4: Organic food Helps Animal Welfare. The mean score for this statement is just 0.17 which implies that respondents agree with this statement. Out of total 173 only 6 respondents agreed with this statement. Only one repondent disagreed and 166 were of nil opinion. Respondents do not agree that organic food helps animals. Most of respondent are not aware that organic does not feed the animals growth hormones and other artificial growth medicines unlike conventional food. They corelate organic to only plants/farming products and not to animal Statement 5: Organic foods have a Positive Impact on Environment. A large no. of repondent believe that organic food has a postive impact on the environment a Since 143 respondent agreed to this the mean score of 4.13 which shows the respondents’ concern towards the environment factor. Respondents greatly believe that organic foods have a positive impact on the environment. Only 18 respondents are neutral with this statement and 12 respondents agreed. None disagree to this statement. The reason behind this strong agreement from the respondents could be because there is no use chemicals
respondents believe that it does not pollute soil, air and water, which helps in keeping environment chemical free. In Addition: Respondents were also asked if they thought eating organic is a lifestyle choice. The figure 8 below, shows that 135 respondents that means 78.03% of the sample population agreed with the statement that eating organic food is a lifestyle choice Only 38% of the respondents do not feel that eating organic food is a lifestyle choice. Figure 10: Eating Organic food is a lifestly choice
Eating Organic is a Lifestyle Choice
Eating Organic is a Lifestyle Choice
This can be due to the reason that organic foods are costly and are considered as premim product. They are premiumly priced which makes organic foods affordable only to high earners as compared to conventional food which is affordable by everyone. Paying more for the same kind of food (as compared to the price). People think it is a matter of lifestyle. Hence, respondents feel that eating organic is a lifestyle choice. 4.3.2 Reasons that are raising the Demand for Organic Foods: To asnwer the second objective of the research, question no.13 and 14 was asked. This question asked the respondents if they bought organic food and how frequently did they buy organic food. Question no.14 in particular finds out why consumers buy organic food. What is their main reason to buy organic food? i)Frequency of buying Organic Food:
As found in the above analysis of the knowledge regarding organic food, people are aware of organic foods and have mentioned what organic food is and what are is characteristics and advantages. In this section, apart from knowing about organic food, it will become clear as to how many of the respondents actually buy organic foods. Figure 9 gives the results. Figure 11: Frequency of buying Organic Food
Frequency Of Buying Organic Food
Always Frequently Rarely Never 0.00%
4.05% 38.73% 53.76% 3.47% 20.00% 40.00% 60.00%
Frequency Of Buying Organic Food
The above figure 11 depicts that there are not more frequent buyers of organic food. Only 67 respondents which comprise of 38.73% of the total sample, frequently purchase organic foods. The number of respondents who rarely buy organic foods is 93, which is also high and compromises of 53.76%. Only 4% of the respondents always buy organic foods apart from being acquainted with organic food. 3.47% of the sample population i.e. 7 respondents never buy organic food. ii) Response to the reasons for their purchase: To know the response to different reasons for purchase of organic food question nos.14 to 17 were formed. As mentioned earlier, for these question also, the Likert scale was used and for analysis they were numbered from 5 to 1. It may also be noted that out of 173 respondents, 7 respondents had marked the coloumn ‘do not purchase’. Therefore, the mean score is derived from the remaining 166 respondents. The following table gives the mean score for the responses of the respondents.
Table 9: Mean score for the statements regarding the reasons of purchase Consumers responses towards reasons for their purchase of Mean Score organic food Because it is Healthy It Tastes Better Positive impact on Environment Helps Animal Welfare Statement 1: I Purchase Organic food because it is Healthy. This statement has a mean score of 3.93 which is the highest amongst all the other reasons. It states that respondents agree that they purchase organic food for health concerns. It states that majority of the respondents purchase organic food because it is healthy. Agreeness for this statement is high because respondents know that organic foods do not use chemicals and pesticides which affects their health. And when it comes to paying more for organic, then the consumers give health higher priority and purchase organic foods. Statement 2: I Purchase Organic food because it Tastes Better. The mean score for this statement is 0.34. This shows that respondents do not agree that they purchase organic food because of the taste factor. This reason is very low as considering the health factor. Only 12 respondents agree with this statement and remaining respondents out of which is 154 respondents disagree to this statement. This gives an insight to marketer that organic food will not be purchase on for taste but only for a social cause. Statement 3: I Purchase Organic food because of Positive Impact on Environment. The mean score of 3.52 for this statement depicts that respondents agree with this statement. They purchase organic food because it has a positive impact on the environment. Respondents are aware about the environment conditions and are also aware that organic
3. 93 0.34 3.69 0.024
food has a good impact on the environment as it does not use chemicals which pollute air, soil and water which ultimately benefits human health. Statement 4: I Purchase Organic food because it Helps Animal Welfare. Having a mean score of 0.024 suggests that respondents agree as well as do not agree that they demand organic food because it helps animal welfare. Only 1 respondents agree that they purchase organic food because of animal welfare. Thus, above are the reasons because of which consumers demand organic food. All the reasons form factors for demand for organic food. It is healthy, have positive impact on environment. All these factors lead to the purchase of organic food. But good taste and helps animal welfare are not the factors that can lead to the purchase of organic. iii) Main Reason for Demand for Organic Food: To know the consumers’ main reason for demanding organic food, question no.14 was structured. Respondents were suppose to give their main motive for purchasing organic food. By cross tabulation of question no.13 and question no.14 we get a clearer picture of the main motive corresponding to frequency of buying. Following table gives information regarding the main motive of organic purchase. Table 10: Cross tabulation of Frequency of Buying and Main motive for Demand Main motive Health Taste Environ ment Animal welfare Do not purchase
Frequency Of buying Never Rarely Frequently Always 90 52 6 8 4 1 82 30 3 1 7 -
The above table explains that amongst frequent buyers demand is equal for health and safety reasons i.e. 52 respondent each of frequent buyers. Whereas, from the respondents who buy organic food rarely 90 respondent demand organic food for health and safety reasons. This depicts that the main motive for the respondents to buy organic food is the health factor with a total of 148 respondents in favour of this factor. These findings relate by the study organic market report by Siddarth Jain and Deepti Behl (2007) which states that consumers main motive to buy organic food is health factor and food safety. From the frequent buyers only 3 buyer demands organic food due to the environment factor whereas, from the respondents who rarely purchase organic foods, 2 respondents demand organic food because of environment reason. This makes the environment the second factor after health and food safety, with 116 respondents in favour of it. These factors are followed by other factors such as animal welfare 1 respondent. None of the respondent buy it for taste. From the above findings, the second research objective is also completed. It shows that the prime reason for demand for organic food is health and safety followed by the other reasons which are environment and animal welfare. Additional Findings: iv) Cross Tabulation Between Gender and Buying Behaviour: From this analysis which gender opts more for organic food will be understood. Table 11: Cross tabulation between Gender and Buying Behaviour Frequency Of buying Gender Male Female 4 2 66 13 38 43 2 5 Never Rarely Frequently Always
The above table 8 represents that a even if there is larger number of males in the sample population, females are more frequent buyers of organic food. In the ‘frequently’ coloumn it is clear that male respondents are 38 and female respondents are 43 which describes that females frequently buy organic food. The ‘rarely’ coloumn is dominated by males which contains 66 males as compared to 13 females. It is understood that males rarely
buy organic food whereas females buy frequently. In the always coloumn also female respondent more compared to male. This gives an insight that females have more motive to buy organic food as they have strong concern towards health, environment and animal welfare. It is also seen that the most frequent female buyer are also concerned about their family and childer health v) Cross Tabulation between Income and Buying Behaviour: This is analysed so as to find out which income groups buy organic food. Table 12: Cross tabulation of Household Income and Buying Behaviour Frequency Of buying Household Income Rs5000 – Rs10000 Rs10,001 – Rs20,000 Rs20,001 – Rs50,000 Over Rs50,001 1 2 2 0 14 32 16 31 13 15 20 22 0 2 2 3 Never Rarely Frequently Always
Table 12 portrays that higher household income respondents opt for organic food. It is seen that respondents with an income of over Rs 50,000 frequently buy organic food. 22 respondents whose income is over Rs 50,000 frequently purchase organic food. As the income goes lower the inclination towards buying organic fades. There are 13 respondents in the income group of Rs5,000 – RS10,000 , 15 respondents in RS10,001 - RS20,000 and 20 respondent from Rs20001 to Rs 50000 . This can be explained as organic foods are highly priced, they are not affordable by everyone. Hence, high income earners tend to purchase organic food frequently. The table also shows that in the income group of under RS 10,000 the respondents never always purchase organic food. This explains that buying organic food purely depends upon the income group. But if the consumer has proper knowledge about organic food and its benefits then the consumer cannot resist from purchasing organic food. There exists a market potential in this group. vi) To find out if having children under 15 years of age make a difference in purchasing organic food: Recently people have started buying organic food because they care about their children. Specially if they have children under the age of 15 years. They want them to eat healthy. Having no chemicals in the food attracts parents having small children towards orgnaic food.
It eliminates the problems children face by eating conventional food as children in a youn age have a fragile health and get affected easily. Table 13: Cross Tabulation between Children and Buying Behaviour Children Children under 15 years Frequency Of buying Never Rarely Frequently Always 0% 12% 88% 0% 10.5% 60% 22.5% 7% Children Above 15 years
The table shows that respondents having children under the age of 15 years opt for organic food either frequently or rarely. 88% of the respondents who have children under 15 age buy organic food frequently. And only 12% buy rarely. This signifies that parents having children under 15 years of age have a positive attitude towards organic and also act in a positive manner by purchasing organic food. In contrast to this, having children above 15 years of age is more often associated with rarely buying organic food. As seen in the table, 60% of the respondents who have children above 15 rarely buy organic food. 10.5% never buy organic and only 22.5% buy frequently. Thus parents having children under the age of 15 years are the major purchasers of organic food.
From the above findings it is clear that most of the respondents are aware of organic food. It potrays that the term ‘organic’ is known by almost all the respoondents. They do have a good knowledge of organic food and its basic chracteristics. Also most of the respondents most are not aware of the practices of organic farming such as chemical free farming etc. This can be said by observing from table 4 as it is seen that they have mentioned major differences in production methods of conventional and organic foods as no use of chemicals, but growth hormones, additives, not processed etc are not been mentioned as a part of organic production Also the respondents are ignorant about organic production which is done by soil rotation, encouraging biological cycle, feeding through manures, achieving balance between animal life, natural environment and food crops etc.
Findings of this research agree rearch by Siddarth Jain and Deepti Behl(2007) that the main reason for purchasing of organic food is due to health and food safety factor. Impact on enviornment and animal welfare are the secondary concerns. Advantages about organic foods are known but when it comes to purchasing, not many people buy organic. This is majorly because of the price factor. As seen in the table 9, high income earners are the ones who frequently opt for organic food. Also being a parent of a child under the age of 15 years makes them concerned and inclines them towards purchasing organic food
CHAPTER V CONCLUSIONS AND RECOMMENDATION
In the previous chapter, the data collected was analyzed. With regard to analysis of the data, this chapter will discuss the main findings and how this research has contributed to the study. According to the findings, recommendations are made regarding educating more about organic and on which strategies manager’s could focus. Limitations of the studies are discussed followed by the scope for further research, which can eliminate the current limitations. And finally, concluding comments end the study.
5.2 MAIN FINDINGS OF THE STUDY:
As discussed organic food market studies conducted by Siddarth Jain and Deepti Behl (2007) which primarily define the market available for organic food for Indian farmers as export. In contrast to it there also exist a growing demand for organic food in India. The major question was the awareness of organic food in India and the reasons by which the demand can be increased In order to find answers to the above questions, this research was conducted. The research was carried out with the help of a self-administered questionnaire survey and following were the results. In this research as we analyze, it was found that 63.58% of the respondents were males and 36.42% were females. It tells us that data is not dominated by one gender. Despite males being a little more in number, it was found that females are the most frequent buyers of organic food. This stated that women are the major purchasers of organic food. This is because they are more conscious about their health and what they eat. Children are also one
of the reasons because of whom they opt for organic food. They are also more concerned about animal welfare and environment as compared to men. The research had varied respondents, which were aged above 18 years to 55 years of age. The age group of 31-40 had maximum respondents. Major respondents were graduate, which depicts that sample population was well educated and they had knowledge about organic food and its characteristics. Most of the respondents were salaried persons, handful of them were businessmen and almost equal amount were housewives. However, the household earnings of most of the respondents was over Rs 50,000. This shows the buying capacity of the respondents. As seen in the previous chapter, there are more frequent buyers. This is because the household income is high which makes the respondents capable of buying organic food. The first objective of this research was to find out the knowledge of the consumers regarding organic foods. From the data collected and analyzed it is clear that all the respondents are aware about organic food. They are familiar to the word ‘organic’. They understand organic food as chemical free. Majority of the respondents have defined organic food as chemical, pesticide and fertilizer free. This research’s findings and Hughner (2007), who shared views of different researchers, show similar results. Many understand organic food as chemical free. As mentioned by Wong (2004), people identify organic food as food gone through certification requirements and that is grown from ‘cleansed’ farmland or soil. This research also found that some respondents have mentioned that organic food is recognized by the symbol of the certifying body. In India , the APEDA’s symbol is an assurance that the food labelled as organic and having the symbol is 100% organic. Also, some respondents have defined organic food as food produced without the use of chemicals in the soil. This means that the foods are produced from the lands that do not use chemicals in the soil; foods grown from ‘cleansed’ farmland. Respondents have also mentioned organic food as naturally grown, use of natural fertilizers and environment friendly. They are aware that organic food has a positive impact on the environment; it does not pollute the environment, as it does not use chemicals and other fossil fuels. They also believe that organic food is not genetically modified. Few said that organic food does not use artificial flavours and colours. People need to be also made aware of other benefit likes animals are not fed with additives, antibiotics, growth enhancement and hormones. Thus animals are taken care so as to minimize the usage of
chemical treatments. A good differentiation that about organic foods is misshapen and that is how they should be. Whereas, in conventional food, because of the use of chemicals and other treatments, it is made sure that the shape of the produces are similar and in proper shape. As argued by different researchers, there still exists confusion regarding the word ‘organic’ because of the positively associated terms like cage-free and all natural, is also proved as right in this research as well. Few people have identified defined organic as ‘free range’ and ‘all natural’. As explained by Anstine (2007), “organic food is all natural but not all natural food is necessarily organic”. This is because organic food requirements are more stringent than the requirements for all natural foods. All natural food, for example yogurt only cannot contain synthesized ingredients. Hence, as reported by Hughner (2007) (in his research about organic food in UK ) confusion still exists amongst consumers regarding the term ‘organic’. When asked about the difference between the production of organic and conventional food, respondents found major difference to be no use of chemicals on the food while growing as well in the soil. Natural ingredients are used while growing organic food. One of the responded also mentioned quality and better taste as a difference. They also believe that quality of the nutrients is more as compared to conventional food. Price as stated is also a major factor that differentiates organic and conventional. This is exactly as defined by APEDA about organic farming, “as a production system that is designed to produce optimum quantities of food of high nutritional quality by using management practices which aim to avoid the use of agro-chemical inputs and which minimise damage to the environment and wildlife.” Conventional foods, on the contrary, they say uses chemicals, has uniform shape, produces in massive quantity, quality is ignored so as to produce more and meet demands but are less costly. Davies et al. (1995); Harper and Makatouni (2002); Hill and Lynchehaun (2002) as citied in Hughner (2007) research have rightly said that most are unaware of the organic farming practices. Respondents have mentioned what organic food does not do. However, they have not mentioned what organic food does. They have not mentioned anything about factors relating to organic food such as crop rotation, use of animal and plant manures, encouraging biological cycles etc. However, as per the definition ( Organic Farming in India:by Dr Gursharan Singh Kainth ) of the organic food and farming, people are aware and have a good knowledge on the whole what organic food is.
Regarding the advantages of organic foods, respondents have highly agreed with environment and animal welfare factor. They strongly believe that organic food enhances environment and takes care of animals. Respondents do believe that organic food is healthy, safer and tastes better. However, lack of proper research in India has led them into uncertainty even though organic farming is an age old tradition in India. In addition to this, because of the premium price of organic food, people think that eating organic is a lifestyle matter. By looking at the buying frequency of the respondents of organic food, it is clear that India’s consumers are ready to become the highest spenders on organic food as suggested by a report (ORG-MARG Survey, 2002). This can be said because people frequently buy organic food. Their prime motive to buy organic food is due to health and food safety reasons. (ORGMARG Survey, 2002) also said that Indian consumer’s main motive to buy organic is health and safety, then comes other factors like environment and social factors. Some people also buy organic food out of curiosity as also mentioned by Chakrabarti and Baisya (2007). Few buy it because it poses as a status symbol. In additional findings, the researcher found that high household income leads to frequent purchasing of organic foods. As the income drops down, the frequency of purchasing organic foods also reduces. Income and buying behaviour of organic foods are positively related. To the researcher’s surprise, it is also important to note that some respondent whose income is under Rs. 10,000 always purchases organic food special the female respondent. This informs us that to some extent income does not matter if you have proper knowledge and information about the advantages of organic. In such a situation, nothing can restrain you from purchasing organic food. It was also found that people who have children less than 15 years of age tend to purchase more and wider rage of organic food than the people who do not have children under the age of 15 years. These findings relate with the (ORG-MARG Survey, 2002) reports. This explains that parents do not compromise with the health of their children.
5.3 CONTRIBUTION OF THE STUDY:
The study of this dissertation is on Consumers’ perception towards organic food. It aims at understanding the knowledge of consumers regarding organic food and what according to them are its advantages. And also for what reason do they demand organic food. There has not been much of a research on the consumer’s knowledge towards organic food. This area is not much explored. Some researchers have presented data that is mentioned in the literature review regarding consumer’s thinking but a detailed study on this topic has not been performed as is done in this dissertation. On reasons for increase in demand for organic food, many studies have been done. However, these studies have been performed in the US, Germany and few other countries. Very limited study has been done in India. This research will contribute in both areas of Indian market. This research explains what consumers perceive about organic foods. This will help in understanding the knowledge of Indian consumer regarding organic food and will add to the literature already written. Work on reasons for demand of organic food is also done. This helps in comprehending for what reasons the consumer is demanding organic food. What is leading him to buy organic food? This study can be compared with the previous researches to understand if the preferences have changed or what is causing the demand for organic foods during the study period. This research also notes the role played by income and children under the age of 15 years on purchasing of organic foods.
From the research findings, review of the questionnaire and analysis, the researcher recommends the following: – This research can be studied by the Government so as to know consumers’ perception. As discussed in previous chapter as well as in this chapter, consumers are not fully aware of the exact meaning of organic. Government can take necessary steps to educate consumers. Government is promoting, organic farming, organic food and wants consumers the buy more of organic food by having organic trade fairs. Organic Food Fair 2007 by ICCOA in New Delhi for the same. Hence, in reference to this study, government can study what consumers know and act upon what further
information should be provided to the consumers about organic food so that they are convinced to switch over from conventional to organic buying. – People should be made more aware regarding organic food and its farming procedures and practices. Because having proper information and knowledge about organic food will change people’s perception and will influence them to purchase organic food. – Organic food companies should give more information about organic food and its contents and nutritional value on the packing. This will make people aware about organic food, which, in turn, will increase the demand. – Managers of the organic food companies should start targeting parents, especially mothers who have children under the age of 15 years, as they are the major purchasers of organic food. – – – Managers can also target rich income segment, as prices of organic foods are high and generally the higher income group will opt for organic food with some exceptions. Effects of organic food on health, safety factor, effects on environment and animals should be informed to consumers which will help them to choose organic food. While advertising organic foods, parents having children under the age of 15 years can be targeted. Also the health and safety issues, environmental friendly and animals taken care of can be showed.
5.5 LIMITATIONS OF THE STUDY:
The study to investigate consumers’ perception towards organic food, in spite of best efforts put, had its own limitations. The first limitation of this research is that it could cover only Pune city of the India, which cannot be considered as a representative of the whole of the India as a country. The survey had taken place in only certain areas of Pune city and respondents participated were only 173, which again is a small sample size and the area from where data was collected was also limited. The research aimed to target majority of the respondents who were easily accessible through convenience sampling, which could have led to biased results. Instead, a better designed, probability based sampling approach could have been used to ensure that each person had a chance of being selected. Time and budget constraints for the present research led to the use of selfadministered questionnaires that could ask only limited questions and was only a multiple
choice question. This was done due to time constrains. This could not enlighten more on the other reasons for increase in demand for organic food apart from the reasons mentioned in the questionnaire. Different methods could have given different results. Again, due to time constraint, only few statistical tools were used for the analysis and interpretation of the data. If time was not an issue, use of other statistical tools could have been made, to get more proper results co-relating questions with each other.
5.6 OPPORTUNITIES FOR FURTHER STUDIES:
This research is limited to the study of knowledge of people who are above 18 years of age. There can be research undertaken for the study of adolescent’s knowledge and attitude towards organic food. This will give more contribution to study and help the government and organic food companies to take necessary actions regarding educating the young generation. The study is also limited to the reasons for increase in demand for organic foods, which were pre-designed by the researcher. A detailed study could be conducted by using qualitative methods for exploring different reasons because of which the consumers demand organic food. As stated above, if the researcher had no constraint regarding time and budget, study by considering different cities of India and increasing the sample size would give a more realistic picture.
It can be understood from this research that consumers are well aware about organic foods. They have a good length of knowledge regarding organic food and have a positive attitude towards it. Health and food safety are the main reasons that the consumers demand
for organic produces, which are then followed by better taste, environment factor and animal welfare. Women are the major purchasers of organic foods. It is also seen that household having children under the age of 15 years are important purchasers of organic food as they are concerned about their children’s health. People earning a high income opt for organic food. In contrast, it is also seen that if proper knowledge is conveyed, despite small earnings, people cannot restrict themselves from buying organic products.
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