Agriculture Reference
In-Depth Information
organic products. This was supported by the observations at the outlets where many
retailers explicitly indicated the organic products of domestic origin. The interviewed
retailers also stated that they are interested in meeting consumers' demands for domestic
organic products but are hampered by inadequate supply, both regarding the quantities and
the range. Also low level of business professionalism for many producers was mentioned, in
particular inappropriate preparation of the products, lack of reliability, absence of
producers' organisations and sometimes also unrealistic price expectations. When the issue
of low presence of domestic organic food in retail supply channel was presented to the
organic farmers, they saw the main obstacles in their insufficient production capacity which
is related mostly to the small farm size. Certainly, an important disincentive is also lower
profitability of channelling the products through the intermediaries. Many farmers stated
that direct selling is by far the most preferable marketing channel for organic food. The
research has also identified several new forms of organic food sales within its duration
(2008-2010), such as box schemes in both forms as direct and indirect sales. Furthermore, a
institutions similar to Community Supported Agriculture was established. There has been
also a significant increase of the number of registered enterprises involved in the trade of
organic food products and also new local organic farmers' markets emerged. It can be
assumed that the new selling channels and forms of direct sales is a response of innovative
and proactive farmers to the consumers' demand. Contemporary food consumers require
innovative selling methods with upgraded service. The farmers that are able to adequately
answer to these needs will acquire premium market positions and sustainable
competitiveness. For example in the case of box schemes, the farmer obliges himself to
supply consumers with products in the agreed amount and frequency, while the consumers
subscribe for the whole season and usually pay an agreed average yearly fee. The benefit is
on both sides. The consumers have an assurance regarding the production methods and
they normally pay less for the same amount of produce which is fresh and locally produced.
The farmer, on the other side reduces risk of insufficient demand, but more importantly the
actual marketing activity is minimised and the farmer can focus primarily on production.
2.3 Organic food price premiums
Organic food production is determined with lower yields when compared to conventional
farming and therefore the price differential is an important purchasing barrier for majority
of consumers. On the other side the price premium affects the organic farmers' profitability
and therefore business attractiveness. There is only limited information available on prices
for organic products in the EU (European Commission, 2005). However, as a general rule,
organic products receive a higher price than conventional products, but prices diverge
depending on the market and on the product.
The research on organic sector in Slovenia (Slabe et al., 2010) includes also a rather detailed
analysis of price premiums for organic food products at the retail level in major marketing
channels. The price scan was performed in two periods (June and October 2009) in order to
reflect the difference of the season. In total 65 products pairs of organic and conventional
categories were included and prices were scanned in four outlet types (farmers' market,
specialised shops, conventional retailers, discount retailers). In total almost thousand entries
were obtained through the price scan. The price premiums for organic products were
calculated with the reference to the conventional counterpart. The organic price premiums
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