A conceptual Study on marketing practices, issues, challenges and future prospectus of organic products.

A CONCEPTUAL STUDY ON MARKETING PRACTICES, ISSUES, CHALLENGES

AND FUTURE PROSPECTS OF ORGANIC PRODUCTS
UMA .K
Assistant Professor, DOS in Commerce,
Pooja Bhagavat Memorial Mahajana Education Centre, Mysuru.
Dr. Rechanna
Associate professor & Research Guide, DOS in commerce,
J.S.S Women’s College, Mysuru.
ABSTRACT:

Organic farming production and trade has emerged as an important sector in India as
in other parts of the developing world, and is seen as an important strategy of facilitating
sustainable development. The fast growth in the production of organic products is creating
new and more complex challenges for marketing. The study focuses on understanding of
existing marketing practices and issues of organic products will help the stake holders,
authorities, researchers and producers to identify the uncertainties and take necessary
solutions to the problem correctly. It provides awareness about the current situations and
future of the organic product industry. In this paper, mainly prominence has been made of
concept, need and importance of organic marketing. It explores the main issues in adoption of
organic marketing practices. And the current Scenario of Indian market and explores the
challenges have with organic marketing. The study highlights the marketing trends for
organic food products and shows the areas where more attention is needed and which
problems are to be further studied, resolved and improvised.

KEYWORDS: Organic product, organic farming and marketing practices, sustainable

development, Issues, challenge’s, future prospects of organic market.

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INTRODUCTION:
In today's commercial business world ecological and societal issues plays a
predominant role in marketing. Organic production and trade has been developed as an
essential sector in India and other parts of the developed and developing countries. It is
observed as a vital strategy for facilitating sustainable development. This paper discusses
about the marketing practices, importance, problems, and challenges of organic products.
Here we deliberate about the marketing of organic food products, organic food are also called
as green foods. For boosting organic agriculture and marketing of organic products is an
important motivating force. After almost a century of development organic agriculture is now
being involved by the mainstream and shows great potential commercially, socially and
environmentally throughout the world, when customers are asked why they purchase organic
products the three most commonly mentioned reasons are environment, health, and quality..
Environmental concerns focus on minimizing the negative impact that some
production and processing methods have on the natural environment. Health issues revolve
around reducing customers’ exposure to, and consumption of, artificial chemicals. Finally, a
product of a higher quality may, for example, be an apple that is fresher, sweeter, and
generally tastier. Consumers seem to be unsure about channels of distribution. Trust/mistrust
emerges as an important factor in deciding not only where to buy green food products but
even whether to buy green food products or not. Therefore, food traveling distance, price, and
the certification process could contribute significantly to green food consumers’ consumption
decisions of organic products. Finally, the challenge that the organic food sector is currently
facing is a gap in the knowledge that extents between the marketing system in place, the
value chain, and the value delivery network in the organic food system.

LITERATURE REVIEW:
David Pearson Joanna Henryks (2008): studied on the title Marketing Organic Products:
Exploring some of the Pervasive Issues, This article explores the issues that encompass the
national, organizational, and individual differences within the global organic industry. These
are discussed using the marketing mix framework of product, price, promotion, and place of
distribution. It concludes that the most important attributes of organic products are health,
quality, and environment.
Philip Kotler (2011) conducted a conceptual study on “Reinventing Marketing to Manage
the Environmental Imperative “, this article highlights marketers in the past have based their
strategies on the assumption of the growing recognition of finite resources and high
environmental costs, marketers need to reexamine their theory and practices. They need to
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revise their policies on product development, pricing, distribution, and branding. The recent
financial failure has added another layer of concern as consumers adjust their lifestyles to a
lower level of income and spending. Companies must balance more carefully their growth
goals with the need to pursue sustainability.
J.J. Makadia and K.S. Patel (2014): conducted study on “Prospects, status and marketing of
organic products in India-A Review”, The paper aims to contribute to the safety and quality
of foods, long term sustainability of the system and accumulating evidences of being equally
productive, the organic farming has emerged as an alternative system of farming which not
only address the quality and sustainability concerns, but also ensures a debt free, profitable
livelihood option.
Leila Hamzaoui-Essoussi and Mehdi Zahaf (2012). performed research on “The Organic
Food Market: Opportunities and Challenges”, with an intention to discover the organic,
consumers’ interest in organic food has exhibited continued growth for the past two decades,
and it attracted entrepreneurs and corporations seeing a big potential for this industry, and it
led to the creation of standards and regulations to guide the organic food industry. It shows
the increasing number of organic consumers and the organic retailing still leads to an
importance imbalance between supply and demand, high operating cost and poor supply
reliability.

OBJECTIVES OF THE STUDY:

1. To know the Evaluation and concept of organic marketing.
2. To identify the importance and need of organic marketing.
3. To study the Issues, challenges and prospects of organic marketing.

1. EVOLUTION AND CONCEPT OF ORGANIC MARKETING:

Traditional agriculture in India dates back to the Stone Age of 7,500-6,500 BC. The
farmers of ancient India are known to have evolved nature friendly farming systems and
practices such as mixed farming, mixed cropping and crop rotation. The first “scientific”
approach to organic farming can be quoted back to the Vedas of the “Later Vedic Period”,
1,000 BC to 600 BC (Randhawa 1986 and Pereira 1993). The essence is to live in partnership
with, rather than exploit, nature. The “Vrkshayurveda” (Science of plants), the “Krshisastra”
(Science of agriculture) and the “Mrgayurveda” (Animal Science) are the main works,
(Mahale and Sorée 1999). Here agriculture was not developed just as a production system,
but as a culture. Great attention was paid to agricultural technologies and agronomic practices
and sophistication was achieved through genetic diversity, crop rotation and mixed cropping

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systems. Animal husbandry was an integral part of the farming practice. The study says
before 1960, in India only traditional agriculture was followed without intervention of
synthetic and chemical fertilizers and pesticides. There was threatening to food security to
fulfill the hunger of the population and frequent climatic irregularities during late 1960s. The
Government of India had entered into the path of so called green Revolution. There was
increase in production and productivity at that time and our country was able to satisfy partly
the food security. After three or four decades, production and productivity reduced drastically
with abnormal input costs and the farming sector turned to be unfavorable occupation to all
concerned. Soil degradation, high pest-disease-weed infestation, more water consumption and
non-judicious use of inputs, unfavorable price and with several natural and manmade issues,
the farming turned to be unworthy for farmers. Under these circumstances, there was a need
to search the potential of organic farming in our country as the practice was emerging in
several countries all over the world for the last two decades. India also started its journey
towards organic farming to meet domestic and export need of organic produce during end of
last century

In 1983, the first training centre in organic agriculture was set up in Pondicherry
under a project called Agriculture, Man and Ecology (AME), implemented by Educational
Training Consultants, Leusden, the Netherlands and financed by the Government of the
Netherlands. In October 1984, the association for the propagation of local genetic resources
organized the first conference on organic farming in Wardha. In 1992, the Rajasthan College
of agriculture organized a national seminar on natural farming. in the same year. The first
known study on ecological agriculture in South India was published. Since then, numerous
farmers turned organic and important networks, such as ARISE (Agricultural Renewal in
India for a Sustainable Environment), were established. In 1993, a directory of individuals
and organizations involved in sustainable agriculture in India, called Green Farming was
produced in 1994; a register of 365 Indian organizations was published.

The 9th five year plan had stressed the promotion of organic produce in plantation
crops, spices and condiments with the use of organic and bio inputs for protection of
environment and promotion of sustainable agriculture (GOI 2001).Even 10th five year plan
highlights promotion and encouragement to organic farming with the use of organic waste,
Integrated Pest Management (IPM) and Integrated Nutrient Management (INM) (GOI, 2003).

Defining organic farming: The National Organic Standards Board of the U.S. defines
organic farming as an ecological production management system that promotes and enhances
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bio-diversity, biological cycles and soil biological activity. The focus is on ecologically
compatible production systems and processes, not on the product itself or specific inputs
(GOI, 2001). A general definition of organic farming is that organic production systems are
those farming practices that do without the application of artificial fertilizers and chemicals
and have a high degree of environmental sustainability. Similarly, organic agriculture is
defined by the National Organic Standards Board in the United States as “an ecological
production management system that promotes and enhances biodiversity, biological cycles
and soil biological activity. It is based on minimum use of off-farm inputs and on
management practices that restore, maintain, and ecological harmony” (USDA 2003).
Concept of organic farming: Organic farming produces foods using techniques that
preserve the environment and give up from the usage of artificial materials, such as
insecticides and antibiotics. Organic agriculturalists and food processors follow a defined set
of standards to produce organic foodstuffs and fibers. These organic standards cover the
product from farmhouse to table, inclusive of soil and water quality, pest control, livestock
practices as well as guidelines for utilizing food additives and technologies, such as
purification. Basic Standards for Organic Production and Processing (IBS) sets the standards
for organic agriculture, production and processing based on four main principles; Principle of
Health, Principle of Ecology, Principle of Fairness, and Principle of Care.
The most simple expression of organic farming is "No chemical pesticides + No
chemical fertilizers + Certification = Premium Price". Examples have shown that well-
managed organic farming systems can deliver reasonably high yields without depleting
natural resources.
Organic farming sustainability: Nowadays, most environmental challenges that humanity is
facing relate to unsustainable consumption patterns and lifestyles. Sustainability is seen in
this perspective as a consumption pattern that meets the needs of present generations without
compromising the needs of future generations (Bruntland, 1987). Sustainable agriculture also
means using locally available renewable resources and appropriate and affordable
technologies, and minimizing the use of external and purchased inputs. Obviously, organic
agriculture fits in well with these descriptions of sustainable agriculture.
Organic food consumers: They are the one of the stake holders who interested in using the
organic food products, because they are conscious about their family member’s health?
Organic product stakeholders: The organic products farmers, corporate sectors, processing
industries Scientists, Researchers, , certification bodies, laboratories and state policymakers
consumers, Government, and Middlemen’s in the supply chain are stakeholders’ of organic

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Industry. They are very much sensible about the health of the people, protection of
environment and economic sustainability in future.
Organic farming and marketing practices: The growth of organic agriculture in India has
three dimensions and is being adopted by farmers for different reasons. First category of
organic farmers are those which are situated in no-input or low-input use zones, for them
organic is a way of life and they are doing it as a tradition. Second category of farmers are
those which have recently adopted the organic in the wake of ill effects of conventional
agriculture, may be in the form of reduced soil fertility, food toxicity or increasing cost and
diminishing returns. The third category comprised of farmers and enterprises which have
systematically adopted the commercial organic agriculture to capture emerging market
opportunities and premium prices. While majority of farmers in first category are traditional
(or by default) organic they are not certified, second category farmers comprised of both
certified and un-certified but majority of third category farmers are certified. These are the
third category commercial farmers which are attracting most attention. The entire data
available on organic agriculture today, relates to these commercial organic farmers.
Organic marketing is quite different from that of regular marketing. Organic markets
are still a niche segment in which specific buyers are targeted. Careful selection and
development of target markets, distribution channels, certification, awareness creation etc.,
are important in the case of organic Marketing. Such marketing requires different skills than
regular marketing and may call for additional costs in the initial stages. Through the
implementation of appropriate marketing strategies producers and companies can organize
organic production and influence consumers' purchasing behavior.
Third Party Certification (TPC): The most widely used model is Third Party Certification
carried out by an independent body. This type of certification is often a precondition for
gaining access to larger markets for organic products. Labeling agricultural products as
"organic" requires inspection and certification from an accredited certification body (CB).
Certification needs to be renewed on an annual basis and needs to also cover all processing
and trading steps involved up to the sale of the product.
Smallholder Group Certification based on Internal Control System (ICS) a special type
of third party certification version adapted to the local conditions of developing countries is
the Smallholder Group Certification. Here several small scale farmers with similar farming
practices who market collectively can be certified together, with internal "inspectors"
inspecting every farm, and an accredited certification body auditing the group's Internal
Control System.

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Participatory Guarantee System (PGS): are locally focused quality assurance systems.
They certify producers based on active participation of stakeholders and are built on a
foundation of trust, social networks and knowledge exchange. There is need to establish
incentives/penalties system for better/poor quality of organic produce meant for, export in
particular, and domestic market in general.
Integrated pest Management (IPM): IPM is based on taking preventive measures,
monitoring the crop, assessing the pest damage, and choosing appropriate actions. Many
different tactics are used in IPM, including cultural practices, biological control agents,
chemical pesticides, pest-resistant varieties, and physical barriers.
Integrated Nutrient Management (INM): It refers to maintenance of soil fertility and of
plant nutrient supply at an optimum level for sustaining the desired productivity through
optimization of the benefits from all possible sources of organic, inorganic and biological
components in an integrated manner.
Community-supported agriculture” (CSA):It is promoted originally by the Soil
Association, Basically, CSA is a partnership between consumers and local producers,
whereby consumers become members or shareholders of a CSA and provide funds to the
farmers at the beginning of the growing season. In return, the members receive boxes of
produce throughout the harvest. The aim of CSAs is to “link the local food chain, support
local farm communities, improve communication, and return the human face to food.

2. TO IDENTIFY THE IMPORTANCE AND NEED OF ORGANIC MARKETING.

Globally, there is growing awareness of the adverse impact of chemical inputs on the
soil, environment and human health. This has prompted both developed and developing
countries to shift towards organic farming and organic food products. In India, traditional
methods of farming were by default ‘organic’, with hardly any use of chemical inputs.
However, concerns about ensuring food security for a large population led to the Green
Revolution in the 1960s, which resulted in an increase in the use of chemical inputs to
improve crop yields, leading to the same deleterious effects on soil and consumer health that
developed countries had already experienced. Consequently, there has been rise in demand
for organic food products both in developed countries as well as within India, resulting in a
premium on the prices for these products. This has encouraged organic food exports from
India. Given the growing demand for organic food products both domestically and globally,
and the need to protect soil and consumer health, the Indian government has taken various
measures to support the growth of organic farming and organic exports.

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A country like India can enjoy a number of benefits from the adoption of organic
production. Economic and social benefits like generation of rural employment, increased
earning capacity of household, poverty alleviation, social uplifting, ensuring the health of
young generations, women empowerment, sustainable development, prevention of disasters
caused by the pesticides, improving the environmental conditions, conservation of the natural
resources, improved soil fertility, prevention of soil erosion, preservation of natural and agro-
biodiversity are the major benefits. The threat posed by the conventional food products to the
human health and the damage done to the ecology are being viewed seriously. Efforts are
made to produce healthy foods and the demand for them is increasing.

3. TO STUDY THE ISSUES, CHALLENGES AND OPPORTUNITIES OF ORGANIC

MARKETING.
3.1 The companies, farmers, certification bodies, laboratories and state policymakers
identified some common issues, which include:
1. High cost of organic food: In developing countries, uncertified organic food is generally
cheaper to produce and sold at the same price as conventional food. In some cases, the price
difference is the result of the specific willingness of consumers to pay higher prices and does
not reflect a higher cost of production.
2. Costly and complex organic certification process: The Cost, quality of certification,
lengthy procedures, ability of services, international validity and complicate in nature are
constraints faced by the farmers. So while pursuing export-friendly strategies, the authorities
must think of innovative ways to ease the certification process. Making universally
recognized accreditation simpler and cheaper for small organic farmers to acquire is the first
step to increasing their formal participation in the sector.
3. Lack of infrastructure facilities and certification bodies: Marketing and the distribution
chain for organic products are relatively inefficient and costs are higher because of the
relatively small volume.
4. Only export regulated organic market: In India the regulation was implemented through
National Project on Organic Production (NPOP). So far regulation in India was limited to
only export organic products but not in domestic market.
5. Low awareness about organic inputs: The NPOF, sufficient provision has been made to
train farmers for organic production and internal control and to develop both model organic
farms and a nationwide network of organic service providers (to provide guidance, establish
farmers' groups and arrange organic inputs). There is also a need for establishment of organic
input channels for better marketing and timely availability.
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6. Most of the fields are contiguous and problem of contamination: Sometimes, the
application of pesticides or herbicides will also contaminate the adjoining farmer plot because
of wind. These types of problems can only be solved by group adoption of organic
technology. The group adoption will also help the farmers in better management of outbreak
of new pests and diseases in that area.
7. Introduction of GM crops: Genetic engineering is creating new forms of pollution
identified as genetic pollution. The transgenic organisms are modified organisms with a
foreign gene which behave differently in the ecosystem. Transgenic organisms also carry
risks because exotic genes are also introduced through the use of viruses and plasmids as
vectors, which themselves can create ecological risks.
8. Lack of established markets: The low level of consumer awareness and knowledge of
organic products and the need for consumer education and promotion; the truth of organic
product claims and labeling; the multiplicity of certification logos and marks; the lack of
domestic organic standards; discontinuity of supply; high price premiums; lack of
coordination of demand and supply; and lack of processing and value-adding activities.
9. Low level of Production: small production base and resultant inconsistent supply; lack of
integrated farm-based research, development and extension; low level of conversion to
organic production; sourcing of inputs; weed control.
10. Lack of Industry support: fragmentation of the industry and lack of coordination; lack
of unity, trust and cooperation among industry participants; lack of government support;
public relations and recognition within mainstream agriculture.
11. Lack of a proper organic supply chain, leading to product contamination and spoilage.
The lack of a proper organic supply chain is felt more acutely in hilly, tribal and remote
places that have a high potential for organic farming, but have difficult terrain or
underdeveloped infrastructure.
12. Consumer confusion. The way that organic farming is defined and certified has been a
source of confusion for consumers. Certification and labelling of organic products are
supposed to help consumer confidence. However, the use of terms like organic, biological,
biodynamic and ecological to refer to organically produced products by different certifying
organizations using different logos does little to simplify the choice process for the consumer.
What is the real difference in layman’s term?
13. Lack of Government support. While European and United States governments have
provided subsidies and other technical and regulatory assistance to organic farmers,
government support in India has been limited to facilitating organic production and trade with

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the development of national organic standards and providing matching funds for research and
development. Although adoption of organic production in Europe has been encouraged by
government subsidies, it is unlikely to happen here in India.
14. Labelling of organic products. Many industry analysts believe that credible certification
and consistent labelling of organic products is the key to consumer confidence and demand
growth and a unified national approach to organic product labelling is a necessary step
towards avoiding consumer confusion and building consumer confidence. However, after
years of discussion and lobbying, labelling of organic products remains one of the key issues
facing the industry.

3.2 Organic Marketing- Challenges Although a large number of firms are practicing
organic marketing, it is not an easy job as there are a number of problems which need to be
addressed while implementing Organic marketing. The major challenges which Organic
marketing have to be faced are:
1. New Concept-Indian literate and urban consumer is getting more aware about the merits
of organic products. But it is still a new concept for the masses. The consumer needs to be
educated and made aware of the environmental threats. The new organic movements need to
reach the masses and that will take a lot of time and effort.
2. Cost Factor- Organic marketing involves marketing of organic products/services, organic
technology, organic power/energy for which a lot of money has to be spent on R & D
programmes for their development and subsequent promotional programs which ultimately
may lead to increased costs.
3. Convincing customers-The customers may not believe in the firm‘s strategy of organic
marketing, the firm therefore should ensure that they undertake all possible measures to
convince the customer about their organic product, the best possible option is by
implementing Eco-labeling schemes. Sometimes the customers may also not be willing to
pay the extra price for the products.
4. Sustainability- Initially the profits are very low since renewable and recyclable products
and organic technologies are more expensive. Organic marketing will be successful only in
long run. Hence the business needs to plan for long term rather than short term strategy and
prepare for the same, at the same time it should avoid falling into lure of unethical practices
to make profits in short term.
5. Non Cooperation- The firms practicing Organic marketing have to strive hard in
convincing the stakeholders and many a times it may fail to convince them about the long
term benefits of organic marketing as compared to short term expenses.
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6. Avoiding Organic Myopia- Organic marketing must satisfy two objectives: improved
environmental quality and customer satisfaction. Misjudging either or overemphasizing the
former at the expense of the latter can be termed organic marketing myopia.
3.3 Future Opportunities of organic market
1. Big and growing market potential: Organic food products are slowly but steadily finding
their way in the average Indian household. As an upcoming segment in retail, it is indicative
of the rising health consciousness among the Indian consumers.
2. Growing purchasing power of consumers: This high purchasing power will boost the
domestic retail markets including organic foods. Growing health awareness coupled with
increasing per capita incomes enhances the affordability towards organic food.
3. 70% of GCA is under rain fed agriculture: It is estimated that up to 30% of the rain fed
farmers in many remote areas of the country do not use chemical fertilizers and pesticides.
Thus, many resource poor farmers are practicing organic farming by default. While rain fed
regions undoubtedly offer good scope for organic production.
4. Growing health awareness: The organic food revolution in the country, which is
currently at a nascent stage. Although health is the key reason for growing demand, the rising
health-consciousness will certainly trigger demand in the near future.
5. Reduce heavy subsidies on food and fertilizers: It not only saves our economy but also
provides safety and sustainability to our soils and environment. Government should develop a
strategic plan for the phased conservation of conventional/modern system to organic
agriculture. An investment of the same amount for encouraging the organic inputs use and on
organic agricultural research will propel our agricultural exports/ export earnings.
6. Control the nitrate leaching and CO2 emissions: Organically managed soils can convert
carbon from a greenhouse gas into a food-producing asset. Soils that are rich in carbon
conserve water and support healthier plants that are more resistant to drought stress, pests and
diseases. The study conducted by Lasalle and Hepperly (2008) on organic systems have
shown an increase of almost 30 percent in-soil carbon over 27 years.
7. Earn high export earnings: The most important export goods include organic cotton,
currently accounting for a 25 %-share of sales, followed by tea (20 %), dry fruits (18 %),
basmati rice (13 %) and honey (10 %).

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CONCLUSION:
India is one of the agricultural based nations with more than two third of the
population is directly or indirectly involved in agricultural sector. Organic agriculture is a
production system based on an agro-ecosystem management approach that utilizes both
traditional and scientific knowledge. It offers developing countries a wide range of economic,
environmental, social and cultural benefits. Organic agriculture also brings valuable
contributions to society outside the market place, irrespective of whether the products are
marketed as organic or not. The demand for organic products worldwide was estimated to
grow at a rate of around 10-20 per cent per annum in the next few years, which has attracted
entrepreneurs and corporations seeing a big potential for this industry. This led to the creation
of standards and regulations to guide the organic food industry. But with the increasing
awareness about the safety and quality of foods, long term sustainability of the system and
collecting evidences of being equally productive, the organic farming has appeared as an
substitute system of farming which not only express the quality and sustainability concerns,
but also guarantees a debt free, moneymaking livelihood opportunity.
In addition, the government should revise curricula in agricultural universities to
include organic farming practices, provide training to upgrade the skills of field officers
supervising organic farming and farmers, and improve farmers’ market linkages by
supporting investment in the organic supply chain and marketing. The survey participants
strongly believe that subsidies should be targeted and need-based. They should be carefully
designed to target small and mid-sized farmers and help link them to the global value chain.
An environmental committed organization may not only produce goods that have reduced
their harmful impact on the environment, they may also be able to pressure their suppliers to
behave in a more environmentally responsible fashion. Final consumers and industrial buyers
also have the ability to pressure organizations to integrate the environment into their
corporate culture and thus ensure all organizations minimize the detrimental environmental
impact of their activities.

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David Pearson Joanna Henryks (2008): Marketing Organic Products: Exploring Some of the
Pervasive Issues, Journal of Food Products Marketing, Vol. 14(4)
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Food and Agriculture Organization of the United Nations (FAO), 2001. FAOSTAT: FAO
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