Agriculture Reference
In-Depth Information
4
The Organic Food Market:
Opportunities and Challenges
Leila Hamzaoui-Essoussi and Mehdi Zahaf
Telfer School of Management, University of Ottawa
Canada
1. Introduction
Nowadays, most environmental challenges that humanity is facing relate to unsustainable
consumption patterns and lifestyles. Sustainability is seen in this context as a consumption
pattern that meets the needs of present generations without compromising the needs of
future generations (Bruntland, 1987). This is also related to basic needs such as food. The
present food chain is mainly based on food scarcity, GMOs, use of pesticides and antibiotics,
and industrialization of the agricultural system. Growing consumer demand for organic
food (OF) is based on most of these facts (Davies et al., 1995; Chryssohoidis and Krystallis,
2005). Organic production combines best environmental practices, preservation of natural
resources, animal welfare standards while ensuring no use of genetic engineering,
pesticides, additives, or fertilizers; each stage of the organic food production being
controlled and certified. On the other hand, there are some unique challenges to the cost and
logistics of moving locally or regionally produced organic foods to the market. Of particular
interest is the concept of food mileage
1
and the situation of small and medium size farms. At
this time production of such farms is rather limited amounting to a few hundred tons. Such
a volume will be of little interest to mainstream grocery chains. Moreover, consumers seem
to be ambivalent about channels of distribution. Trust/mistrust emerge as an important
factor in deciding not only where to buy OF products but even whether to buy OF products
or not. Therefore, food mileage, price, and the certification process could contribute
significantly to OF consumers' consumption decisions of OF products. Finally, the challenge
that the organic food sector is currently facing is a gap in the knowledge that spans between
the marketing system in place, the value chain, and the value delivery network in the
organic food system.
This chapter introduces the current literature and current market realities of the OF industry
and presents a supply-demand model. This model integrates both demand and supply side
key factors and is built to answer the questions of what, how, where and why consumers
buy organic. The authors also attempt to show how the combination of (1) behavioral factors
such as knowledge and trust orientations, (2) lifestyle factors such as principle oriented
standard of living and sustainability, and (3) local food/food mileage factors such as
1
The distance food travels from the production site to the final consumer. The more food miles that
attach to a given food, the less sustainable and the less environmentally desirable that food is.
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