Organic Food

This source is a secondary source because it is the evaluation consumer’s attitudes towards organic foods and their consumption. Some issues that are discussed in this article are as follows… Factors impacting consumer attitudes toward organic foods, consumer willingness to pay more for organic foods, and barriers for organic purchase. The quality of the source seems to be legit because of the different view points that it has from different consumers of organic foods. These types of view points would be good for my claim because of the different types of evidence that could be used for the different points of views.

This source (video) is a primary source. It evaluates the inspection of organic dairy, meats and processed foods. The source touches up on how organic food is grown and produced. Some big key points of this source are also agriculture and how it affects organic foods, and genetically modified foods. Once again the quality of the source is high because there are different views on organic foods and none of the contributors seem biased in this video. The claim essay can use research from this video because it is showing people and interviewing people who grow, buy, and consume organic foods.

The source is secondary because it is based off of a reporters reports and isn’t coming from a main source. Some key issues that are discussed in this article are organic food identity problems in china. This source would be good to research for the claim essay because it is often that we think something is organic on the shelves of a super market when in all reality it might not be.

Includes bibliographical references and index. This book is a compilation of different facts about deciphering organic foods. It has no opinions on another source and doesn’t present any ideas based off of someone else’s works. Some key issues that are stated in this source are organics, environment, sustainability, health, organic retail. These are all things that have to do with organic foods in health, business, and environmental situations. The author’s position on organic foods is that there are many things that draw us to buying organic foods. The source does use different types of evidences such as many facts that support many of their guidelines to organic foods.

This document is an information report providing a micro and macro environmental analysis of the organic industry. It gives specific attention to the European and German market and to the retail industry in particular. A brief introduction, also focusing on the reasons and criteria for the selection of such sector, will be followed by an assessment of the aspects at the micro and macro level that affect the players operating in it. To facilitate the analysis I will pretend that the writer of the following report is a manager operating in the broader food industry.

Since we operate in the food retail industry, both nationally (Germany) and on the European level, I suggest, as sales director of this company, to consider entering the organic branch, since it has been growing steadily in the last 2 decades. Organic farming can be regarded as method of production that gives particular attention to environmental protection and animal welfare, thus avoiding the adoption of synthetic chemical means and the production of genetically modified organisms. The industry is highly regulated, requiring producers to acquire special certification to sell goods as organic within given borders.

The market has been growing steadily, as suggested above, and is still doing so despite the economic and financial crisis; it grew globally by more than 25 per cent since the start of the global crisis between 2008 and 2011. According to the latest data (Fill and ‘FOAM, 2013), 37. Million hectares of agricultural land are nowadays organic (they were 11 million only in 1999) and 1. 8 million producers world-wide are reported (from 252 thousand in 2000). The global sales have also seen a dramatic increase, climbing by almost 200% in the last 10 years.

Although this industry accounts only for 1-2% of the total food production globally, almost 10% of the total food sales share is covered by it. Fig 1 . Organic agricultural land by region, 1999-2010 Despite the number of producers and retailers, as I will elucidate later in this report, has been increasing year after year in order to cover the high demand for this kind of rodents (mostly driven by concerns about private health on one hand and the global environment on the other), I believe there are still good opportunities for ambitious firms to enter – at any point of the supply chain – this relatively new and steadily expanding market. . Macro environmental analysis The environment where firms operate includes several forces that affect their activity, from the acquisition of resources, through the process of transformation of such input, and finally to the creation of an output. The more external forces (general or contextual, such as political, cultural, social and legal) are the ones influencing the rim in a more general way, as opposed to the operational ones, which affect the business on a daily basis (Ian and Christ, 2006).

In this part I will refer to the external range of influences and observe how these can have an impact on the organic industry. As said, the focus will be on the European market and on Germany, which represents the biggest player in the E area and the second largest globally. Selection of factors To carry out this task I have asked my team of analysts to perform a Pestle analysis, which takes into account political, economic, socio-cultural, technological, legal and environmental aspects.

It is usually performed by almost every major and minor organization in order to get an overview of the whole scenario of a particular industry or branches of it. Of course the elements considered vary in importance based on the industry and the goods involved. In the organic sector’s case, the socio-cultural, political and legal aspects are particularly crucial and the report will give a particular attention to these; in addition, other factors not (directly) included in Pestle but that it is important to mention when analyzing this particular industry, are the demographic and regulatory ones.

Environmental issues also represent a major concern. 2. 1 Specific macro-factor analysis 2. 1. 1 Political factors These basically represent to what extent the government (local, national or supra- national) intervenes in a particular industry. Demand for bio products and the growing popularity of organic farming within Europe has fostered the development and implementation – through the European Commission, The EX. Council and the EX. Parliament – of official rules, programmed and plans.

This level of action is closely related to the regulatory one, which will be more thoroughly addressed in the section following this one. The most relevant document to mention in this part is the “European action plan for organic food and farming”, which comprises 21 initiatives in order to develop the market and get better standards by increasing transparency, reliability, efficacy and consumers’ trust. Also at the national level many governments have been providing their plans and policies in order to support the growth and efficiency of the organic industry.

In Germany, for instance, the range of governmental assistance in the last decade has increased significantly both through the Federal Government and the Leander; the measures are directed both to organic agriculture and to the whole supply chain (Nibbler and Kenneth, 2007). Environmental objectives, as well as the opportunity for rural development, are the main goals of the government’s financial, legal and regulatory support for operators dealing in this industry. 2. 1. 2 Legal and regulatory factors The political intervention in the industry is, as discussed, very present and fundamental for its growth.

Although it might benefit the overall sector, the high level of laws and regulations represent nonetheless a potential barrier for new entrants. In 2009 the EX. introduced new regulations regarding the production, control and babbling of organic goods. These put an ever bigger attention to environmental, animal and consumer protection and health. For instance, food can be sold as organic only if 95% of its ingredients derive from organic agriculture and processing. Closed cycles (using internal resources) are favored to open cycles; external resources should be limited to natural or naturally obtained materials.

Only in exceptional cases, thoroughly evaluated by the European Commission, chemical synthetic resources may be allowed if other suitable alternatives are not available. 2. 1. 3 Economic factors Europe has, according to the Research Institute of Organic Agriculture, 25% of the world’s organic farmland, but it represents almost half of the global revenue within organic industry (the American market is still the world’s largest). Sales of organic products were approximately 21. 5 billion Euros in 2011 (Fill, 2013).

The largest market for organic products is Germany, with almost 7 billion Euros (Nielsen and Braun, 2013), followed by the I-J (3 billion Euros), France and Italy (both 2 billion Euros). Fig 2. Sales growth of German market in 2012 The German market grew by 6% in 2012 up to 7. 04 billion Euros, showing a stable Roth and representing 3. 9% of the entire food market; the increase in the previous year had been even higher (9%), influenced by several food scandals that drove more and more consumers from conventional food to bio products.

Fig 3. Sales growth from 2000 to 2012 Fig 4. Organic food sales in Germany (2012) 2. 1. 4 Socio-cultural factors (and demographic ones) A growing number of people are nowadays more informed, health- and environment- conscious than ever; they are thus willing to spend more on healthy natural foods, since there is widespread public belief that organic food is much safer, more atrocious, and environmental friendlier than conventional food.

In any case it is important to note that “regardless of whether any measurable health benefits exist from consumption of organic produce, the public perception of health gains associated with organic produce is undoubtedly influenced by statements that are not (yet) able to be supported by scientific evidence. ” (Givens, 2008).

Demography also plays a very important role in an increasingly aging Europe; in Germany (one of the countries with the lowest birth rate), the typical heavy consumer of this kind of rodents is in his mid ass (thus belonging to the generation of the forerunners of the ecological movement in this country) and with a good income level. Young consumers, such as students and entry level workers, tend to opt for more affordable options. The market is slowly opening to 30+ customers, mostly young professionals fond of a healthy and dynamic life-style. . Micro environmental analysis This section of the report will mainly focus on Porter’s “5 forces analysis”, concentrating the analysis on those factors that can more directly influence the daily activities of a firm operating in the organic industry, affecting its ability to satisfy its customers and make a profit. As the producers’ scenario is particularly fragmented, the study will give particular attention to the German retail industry and often assume the perspective of the five largest specialist retail chains operating in it.

Three forces relate to ‘horizontal’ competition, such as the threat of substitute products or services, the threat of established rivals, and the threat of new entrants; the two remaining forces represent ‘vertical’ competition: the bargaining power of suppliers and the one of customers. . 1 Threat of established rivals (intensity of competitive rivalry) In Germany organic products are sold as follows: 35% in traditional supermarkets (around 40. 00 shops) 23% in specialist shops (around 2000 shops; there are 17 organic supermarket chains, the 5 biggest are Lunar, Vital, Den’s Bio, Basic and Redford). 19% in discounts supermarkets (more than 10. 000 shops) Fig 5. Number of specialized organic outlets in Germany (2008) It is therefore clear that, despite being this sector quite young, the number of actors operating in it is very high; this great level of rivalry determines a high threat to profits.

It is furthermore important to note that these operators vary consistently in cost structures and have different levels of exit barriers; bigger, traditional retailers/ wholesalers (such as Metro, Rowe and Deeds) have an advantage in terms of economies of scale, although they will have to face stronger exit barriers, considering the amount of their investments. According to recent research (Bifocal, 2010), the further development of the specialized organic market sector will see a decrease in terms of market share in favor of traditional supermarkets; nevertheless, the overall turnover will increase.

This is mainly due to the fact that specialized retailers can provide a wider range of products, a more regular supply, competent staff and the availability of non-foods items as well. 3. 2 Threat of new entrants The highest threat is represented by traditional supermarkets with re-branding strategies towards the organic sector, since completely new entrants would face and be discouraged by very strong entry barriers in terms of capital requirements, economies of scale, amount of regulations, experience curve and access to key inputs. The resulting threat to profits can therefore be regarded as medium. 3.

Threat of substitute products There are not many direct substitutes for organic food and as long as a large portion of the public will be convinced that it is safer, healthier, more nutritious and even tastier than conventional one, its higher prices will be Justified and the branch will maintain if not increase the market share. Nonetheless, local farmers’ markets provide a good alternative for individuals fond of food with no pesticides and with a low environmental impact; even so, their prices are not rarely higher than the ones offered in supermarkets (even if specialized) and their presence on the territory is ere scarce.

There are some products and services that could be listed as indirect substitutes, since they also help satisfy the desire of a healthier and CEO-friendly life- style. Fitness centers, wellness programs and sustainable tourism are Just some of these. Despite this, it is important to stress the fact that nutrition is usually regarded as the most crucial factor when it comes to choices taken by consumers in order to improve their personal health and reduce the negative effects on the environment.

The resulting level of threat to profits from substitute products can again be regarded as medium. 3. Bargaining power of buyers Consumers’ power in this industry is mostly influenced by the following factors: Price sensitivity Buyers are ready to spend more than on conventional food provided that this is justified by higher levels of quality, freshness, taste and the certainty (provided by certificates and labels) that the production and packaging of goods respect specific standards and norms.

Despite this general observation, discount supermarkets have been lately offering similar products to the one displayed in specialized chains for sensibly lower prices, alerting customers that a similar quality can be obtained also or half of the usual price. Price sensitivity is therefore increasing. Information availability This kind of consumer is usually extremely educated and informed and consequently expects a high level of transparency, as well as being well aware of the different alternatives available in order to satisfy his demand.

Degree of dependency upon existing channels of distribution Buyers have been increasingly attracted by the offers displayed in the Internet through more or less specialized organic e-shops. This could represent a potential threat (as well as an opportunity for further investment), although most consumers till rely on traditional channels, offering, among other services, the availability of competent and specialized staff.

Availability of substitute products See above The resulting level of threat from this force can be regarded as medium to high. 3. 5 Bargaining power of suppliers Contrarily to the US market, where suppliers are extremely concentrated (with local farmers often signing contracts with big corporations) and represent the real dominant power in the organic industry, in Europe they are still very fragmented.

They do not represent a big threat for the retail industry. It is furthermore not likely for suppliers to tend towards forward vertical integration. The resulting level of threat from this force can be regarded as low to medium The above mentioned observations can be summarized in the following table, which underlines the micro environmental factors within the organic (retail) industry and their level of threat. Fig 6. Porter’s five forces summary 4.

Further relevant specific market issues: recent developments in the target market Researchers Budded and Ham (2011) observe that the traditional parameters necessary to define the usual buyer of organic products (e. . Level of income and education, age, as indicated above), have almost completely lost their previous importance in the last few years; the authors have thus come to the conclusion that marketing campaigns should concentrate on health-orientated specific needs, underlining the naturalness of goods and their lacking of chemically produced ingredients.

Under the criterions that adopted by the U.S. Agriculture Department ( USDA ) , organic nutrients bring the significance that nutrients raised without chemicals and processed without additives. Man-made fertilisers, pesticides and antibiotics may non be used in raising organic nutrients. Besides that, usage of irradiation, biotechnology, and sewer-sludge fertiliser is besides banned. Farming patterns used before the 1900 ‘s are classed as organic. It was merely after this that added chemicals such as urea and DDT were brought into agriculture.

By and large, organic nutrients included organic veggies, fruits, dairy merchandises, meat, and olive oil. Animals can be classs as organic if they are feed with organic nutrients like organic maizes and organic harvests. Based on the information of All for Natural Health, familial alteration is non allowed throughout the whole elevation procedure. Furthermore, additives and seasoning are forbiding to be added into meats. Because of these patterns, organic nutrients bring more nutrition and healthier if comparison with conventional nutrients. Some consumers believe that organic nutrients are tasty due to the agriculture and raising patterns.

From a research conducted by Organic Monitor towards organic planetary market, single-digit market growing was observed for the first clip in 2009 because of the economic lag cut downing industry investing and consumer disbursement power. Organic nutrients and imbibe gross revenues expanded by approximately five per centum to 54.9 billion US dollarsA in 2009. Global grosss have increased observed each twelvemonth, except in 2009. Based on the information that collected by Willer and Kilcher ( 2009 ) , more than 140 states are now bring forthing certified organic nutrients with 32.2 million hectares of agricultural land being managed organically globally by more than 1.2 million manufacturers. The states with the largest markets are the US, Germany, and France ; the highest per capita ingestion is Denmark, Switzerland, and Austria which shown in the tabular array below:

Table 1.1: The states with the highest per capita ingestion of Organic nutrients 2009

Organic Foods Market in Malaysia

It is undeniable that the demand for organic nutrients is on the lifting tendency in Malaysia. This lifting tendency fundamentally caused by the alterations of consumer life style as they are more concern about nutrients safety. Harmonizing to IFOAM & A ; FiBL ( 2003 ) , there are 600 hectares of land under organic direction ; with a portion of entire agricultural land of 0.01. Domestic production is mostly limited to veggies and fruit with perchance one organic domestic fowl operator in East Malaysia. Whilst turning, entire estimated norm is still statistically undistinguished ( UNEP/UNCTAD, 2006 ) . Most organic production is sold domestically with some being exported to Singapore. So far, thereA isA no dependable market statistics available. Some supermarkets such as Jusco, Carrefour, set up an organic corner to advance organic merchandises. Based on the information provided by Department of Agriculture Malaysia, Malaysia Organic Scheme ( SOM ) is a enfranchisement programme to recognize the husbandman who operates his farm in conformity with the standard conditions set by the national organic criterion, MS 1529:2001. An inspector from SOM will be send to transport out for farm review and the determination to attest whether a farm is organic or non is made by a enfranchisement commission consisting of members from assorted authorities sections. Once the application is successful, a logo of Organic Malaysia will be labeled on the merchandises. A merchandise with this organic logo fundamentally is more expensive comparison to others. In wide, SOM brings benefit to whole society because environmental pollution is minimized and consumers are assured that the merchandises they purchase are genuinely organic.

Research Background

It is a fact that the demand for organic nutrients are lifting dramatically in these few old ages. Foods safety and wellness consciousness are turning quickly in late old ages. Therefore, some consumers tend to buy organic merchandises which are healthier and higher quality. Under the 9th Malaysia Plan ( 2006-2010 ) that unveiled by the 5th Prime Minister of Malaysia, A Datuk Seri Abdullah Ahmad Badawi, the authorities is aiming the organic agriculture industry to be deserving RM800 million in 5 old ages ‘ clip. The Ministry of Agriculture plans to hold 20,000 hectares under organic farming methods by twelvemonth 2010, increasing local production by 4,000 hectares per twelvemonth. Organic ingestion is expected to turn by 20 % per annum ( DoA ) . Besides this, authorities encourages little scale manufacturer endeavor into organic agriculture. Compare to conventional nutrients, organic nutrients bring a batch of advantages and organic agriculture patterns may minimise environmental pollution. Organic farming method creates organic veggies and fruit contains more 50 % vitamin, nutrition and mineral than farmed nutrients. With a chemical free agriculture method, organic nutrients may cut down nutrient toxic condition and forestall some diseases. Pesticides and antifungals are spray on veggies and fruits straight on commercial agriculture method and excessively much ingestion of these chemicals in long term can do malignant neoplastic disease because of it can non be to the full digest by our organic structure system. Therefore, organic nutrients are better pick to cut down the opportunity to develop malignant neoplastic disease. From environment facet, organic agriculture method takes good attention of dirt and land because it encourages the recycling of foods back into the dirt so it can really make better long term sustainability for our land resources.

Problem Statement

In facts, there are many research workers making research on the facet of organic nutrients but there are non much research sing Malaysia organic nutrients market. This has triggered the involvement and avidity to analyze more about this subject. Despite authorities has mark to increase organic farming industry, but there are still some consumers do non aware about the particular properties of organic nutrients compare to conventional nutrients. Furthermore, organic market in Malaysia can be considered as little comparison to other western state such as United State and Australia. Besides than these, factors and motivations that influence families to alter their purchase attitudes from conventional nutrients to organic nutrients is besides one of the factors that triggered the involvement to analyze more about this subject.

Research Aims

This research paper is conducted for the intent of:

To place is at that place any relationship between 3 factors ( economic, psychological science, direction ) and purchase determination of organic nutrients among Malaysia families.

To find what is the chief factor to act upon Malaysia families on buying organic nutrients.

To research the relationship between demographic background ( age, instruction degree, gender and faith ) and purchase determination for organic nutrients.

Research Questions

Based on the research aim that stated in 1.4, this research will set up several inquiries:

What are the relationship between 3 factors ( economic, psychological science, direction ) and purchase determination of organic nutrients among Malaysia families?

What is the chief factor to act upon Malaysia families on buying organic nutrients?

What is the relationship between demographic background and purchase determination for organic nutrients?

Definitions of Key Footings

Table below is the list of cardinal footings with accounts of definitions that the writer will concentrate on in this survey.

Table 1.2 Definitions of Key Footings

Cardinal Term

Definition

Beginnings

1

Organic Foods

Foods produced without utilizing most conventional pesticides ; fertilisers made with man-made ingredients or sewerage sludge ; biotechnology ; or ionising radiation.

U.S. Department of Agriculture ( USDA )

2

Economic

A scientific discipline which surveies human behavior as a relationship between terminals and scarce agencies which have alternate utilizations.

Lionel Robbins ( 1932 )

3

Psychology

A scientific survey of human behaviour and mental procedures

Feldman, ( 1990 )

4

Management

5

Demographic

A characteristic used to depict some facet of a population and that can be measured for that population, such as growing rate, age scope, income degree, and instruction background

Laura Klappenbach, n.d

Scope of Study

In order to increase readers ‘ involvement, this research paper is titled as multidimensional selling positions of organic nutrients. In a simpler word, this research paper is conducted to look into what are the chief factors to act upon consumer from Johor Bahru and Malacca to buy organic nutrients. Therefore, the lone dependant variable is organic nutrients purchase determination. Four independent variables had been established to mensurate this relationship. The four independent variables that have been employed in this research are economic, psychological science, direction and demographic. Survey signifier will be established and administer to aim respondents, family from Johor Bahru and Malacca province who age from 20-65 old ages old. 200 sets of questionnaires will be every bit distributed to aim respondents based on demographic background which is gender. In other words, 100 sets questionnaire will be distributed to male while the remainder will reply by female.

Significance of the Study

First, this research paper can be use as a mention to consumers particularly families who are sing to buy organic merchandise, this research might assist them through giving a clearer image about some elements and advantages of organic nutrients. Furthermore, this will take more pupils to take organic nutrients.

Second, this survey of organic nutrients shall besides alarm organic husbandmans on some betterment needed. Through this paper, organic husbandmans will understand more about consumers ‘ consideration before they purchase. Some installations can be added to increase the production of organic nutrients. In add-on, organic husbandmans will be provided a clearer image about Malaysia organic nutrients market and organic label.

Third, this paper shall give information to those organic nutrients retail merchants. Through understanding consumers ‘ outlook towards organic nutrients, organic nutrients retail merchants can pull off their merchandise from the facet of pricing, wrapping and labeling to excite gross revenues volume. In add-on, this may make more occupation chances and assist to foster better Malaysia ‘s economic system.

Last, this paper can be contributed as a mention to future research worker who intends to carry on research in related field. This paper can be a guideline to assist researcher hold a clearer image and smoothen their research advancement.

Organization of the Research

Introduction about organic nutrients and overall of this research are discuss in chapter 1. Organic nutrients market in Malaysia is defined here and follows up with research background that focuses on some information about organic nutrients. Research aims and inquiries are established in chapter 1 that discuss about aims to be step in this research.

Chapter 2 is concentrate on the past literature reappraisal that are related to organic nutrients, which has been published by a big figure of research worker. The chief independent variables will be explained in this portion which consists of economic system, psychological science, direction, and demographic. A really specific account of each variable will be provided in this portion.

Chapter 3 will calculate out the research methodological analysis that will be used in this research paper in order to happen out the relationship of independent variables towards purchase determination of organic nutrients. In add-on, hypothesis and theoretical model will be besides shown in this chapter. Apart from these, informations analysis method and trying design will be explained in item.

Chapter 4 will continue with the analysis of the information that have been collected by utilizing Statistical Process for Social Science ( SPSS ) Version 18. Analysis of demographic background of the respondents is provided in this chapter.

Chapter 5 illustrates the treatment of the hypothesis. Each of the hypotheses that established in chapter 4 will be farther explain in this chapter and follow by deductions. Furthermore, restriction of the survey and some recommendations for this research paper will be provided in this portion. Last, a simple decision will be usage to stop the full research.

Chapter Summary

In overall, chapter 1 has explained the definition and organic nutrients market. In this portion, the research worker has besides set up the research aim for this survey. In add-on, the definition of dependant variable and each independent variable has been explained in a table signifier. Last, range of survey and important of the survey besides has been explained in inside informations in this chapter.

Why spend more money on organic food? Why are GMO products lasting longer? These are commonly asked questions which will be explained. By the definition of GMO products, they encompass alimentary products grown from seeds that have been genetically altered. Organic products are those that are grown under the traditional way, without any intervention of Bio-engineering, and also without the usage of chemicals, known as pesticides.

The Author, Michael Pollan in both, “Omnivore’s Dilemma” and “In Defense of Food” makes an extensive and detailed analyzation of the production of food now days. The big corporations (farms) are now known as manufacturing factories; where practically all the elements of their production process are strictly controlled. This highly technological system reduces the nutritional value of their products and in many cases their flavor as well, but it guarantees high volumes and longer shelf life of the products.

An example of a food that would be known as a GMO would be tomatoes, which would be less healthy and again it wouldn’t taste the same as an organic one. Organic products are grown by small farmers according to old farming techniques. These products do not need the addition of micronutrients like GMOs; they maintain all the nutritional values and the original taste. Unfortunately, small farmers can not satisfy the demand that the market needs, let alone, the prices are higher. For example, if you were to sell organic tomatoes, you would have to need to sell them locally.

If a company such as organic valley were to be ship organic products from California to New York, with them having shorter expiration date, they would end up going bad. It would be hard for everyone to have the budget to buy and eat organic food; even expensive restaurants don’t use organic food. So, what is better? Feeding a large growing population with GMO products; or to go back to square one, and run the risk of not having enough supply and have the prices skyrocket. At the end of the day, people will eat more GMO food for not everyone has money to buy organic food.