Agriculture Reference
In-Depth Information
Common lore tells us that organic market growth has been rooted in an unlikely mix of
fear and fashion. Many consumers, it is believed, have been attracted to organics by their dread
of the imperceptible threats of industrial food production. The 'mad cow' crisis and other food
scares have so tested consumer confidence in conventional food systems, and the institutions
that regulate them, that assurances regarding the safety of genetically modified organisms,
food irradiation and agricultural chemicals have fallen on deaf ears. Others, purportedly, have
been attracted by the positioning of organics as a premium quality niche product. Substan-
tially higher retail prices for organic foods have promoted a perception that they are consumed
primarily by those wealthy enough to pay virtually any price to purchase what they believe to
be tasty, safe or nutritious foods. There is certainly a grain of truth in these beliefs. However,
research does show organic consumption to be somewhat more complicated.
In this chapter we examine the organic marketplace in terms of the changing dynamics of
supply and demand; what is known about those who consume organic foods; what strategies
have been set in place to recruit more people as organic food consumers; and constraints and
opportunities for further expansion of the market for organic foods. In doing so, we will
address, at least in part, one of the principal concerns that has arisen within the organic sector
as a consequence of its growth; that is, the concern that expansion has come at the cost of the
core values and practices on which organic agriculture was founded (see
Chapters
9,
14
and
Special
topic
3
).
The demand for organic foods
There is a widespread perception that rapid growth in the organic market since the mid-1990s
has been based more on an escalation of consumer demand than on an expansion of supply
(Lyons 2001). This 'demand-pull' perspective on market growth is lent credence by the claims
of several distributors, processors and retailers that they have experienced considerable diffi-
culty sourcing enough certified produce to satisfy buyers, leading some to sponsor the conver-
sion of conventional farmers to organic production (Lyons 2001, Halpin and Parkinson 2004).
Yet, as we have seen, there already are signs that recent rates of market expansion are slowing.
The question is, at what point do we consider the market for organic produce to have 'matured';
that is, to have reached an equilibrium of sorts between supply and demand that is likely to
remain relatively steady for the short to medium term? Or, to put it more bluntly, how big will
the organic market get?
Demand, however, is a difficult concept to quantify. There are few people who, when asked,
will state categorically that they would not purchase organic foods under any circumstances.
Surveys suggest that were organic foods to be made as widely available as conventional foods,
almost all Western consumers would buy them at least some of the time (Lockie
et
al
. 2002).
And the lower any retail price premium is over outwardly similar conventional foods, not sur-
prisingly, the more people express an interest in purchasing organic produce (Lockie and
Donaghy 2004). The level of demand, therefore, for organic foods derives not only from the
values, beliefs and socioeconomic status of food consumers, but on the relationship between
these attributes and supply side issues such as quality, distribution and retail pricing. Levels of
demand, even within markets that appeared to have reached maturity, may shift very rapidly
in response to major changes in supply. Given these factors, demand is examined in this
section, from the perspective of existing supply side dynamics, retail price premiums and con-
sumers' stated willingness to pay for certified organic foods.
Generating an accurate picture of the international organic sector accurately is hampered
by limited data availability and uniformity. Nevertheless, the most recent International Feder-
ation of Organic Agriculture Movements report suggests that of the US$23 billion global retail
