Strategies for the development of organic food

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PART 1: THE BACKGROUND

1.1. International Comparisons: 1968-1998

1.1.1. A study of organic food in America particularly in the late 1960's and 1970's. Does the American experience have implications for Britain ?

1.1.2. A study of organic food in Austria between 1988-98. What reasons are there for the divergence between Britain and Austria ?

1.1.3. A discussion of organic food in Britain. The emphasis will be on the late 1980's and early 1990's; with a discussion of the conditions which prevented the development of organics. This would help evaluate the current and future importance of pesticide free food in Britain.

1.2. The current market for organic food in Britain: 1995-1998

1.2.1. To consider the present strategies which operate in the supermarket industry. The limitations faced by independent grocers and street markets may also be considered.

1.2.2. An analysis of the specialist organic supermarkets. What impact are specialist stores having on the market for organic food ?

1.2.3. A summary of the policies of the existing supermarkets and new entrants may help explain how the market will develop.

PART 2: IS THE MARKET FOR ORGANIC FOOD LIKELY TO CHANGE

2.1. An examination of the changing market for organic food

2.1.1. Is 1997 (see Mintel), an important stage for the development of pesticide free produce. The aim is to consider whether the market is close to a threshold where environmental factors and organic food gain greater importance. This could be useful as a guide for decision-making for policymakers. The adoption-diffusion model could be used here.

2.2. Economic and Environmental Factors affecting organic food

2.2.1. A forecast for the market for organic food based on the relationship between personal disposable income, price and environmental factors (Mintel 1/91). An attempt could be made to weight the three variables individually.

2.2.2.  A forecast based on how consumers perceptions may change over time.

PART 3: STRATEGIES FOR THE DEVELOPMENT OF ORGANIC FOOD

3.1. An assessment of the strategies being pursued by supermarkets and The Soil Association. For example, the debate over the price of organic food could be examined.

3.2. The Delphi Method could be used to examine experts opinions on what policies would be most appropriate for the development of organic food. Also, The Delphi Method could be compared with the economic model outlined earlier (2.2.1.) to see where the outcomes of it coincide and where they do not.

PART 4: WIDER IMPLICATIONS.

4.1. Does the development of organic food offer a solution to some of the problems in farming. Would organics help farmers to obtain a higher price for their produce?

4.2. What reasons can be offered for consumers buying organic. Is personal health or broader environmental concern the main reason for buying pesticide free produce.

5. Strategies by consulting organisations such as The Soil Association

Should the Soil Association develop organics through local food links schemes e.g. box schemes or growers markets only? Alternatively, should they focus their attention mainly on large supermarkets? The answer to this may depend on the predicted size of the organic market; the greater the predicted growth the more the second option becomes relevant. A forecast on the sales of organic food will depend upon the relationship between (1) the level of personal disposable income, (2) the price of organic food and (3) the importance of environmental issues (Adapted from Mintel 1/91).

6.  Focus on particular products

The aim is to focus on fresh fruit and vegetables. This is because the market for organic meat and dairy products appears to be smaller and so more difficult to assess. Although, factors such as BSE need to be considered because they may have implications for sales of fruit and vegetables. More emphasis could be placed on produce such as lettuce which may be more affected by pesticides.

7.  Marketing or Policy strategies; Tools for analysis

The Innovation/Adoption Model, used in marketing, could be used to assess whether the market for organics is likely to remain largely unchanged or to increase. The effectiveness of a food voucher, making organic food affordable, as a policy tool.

Consumer strategies for the development of organic food


1.            Policies for the well-being of consumers or the public

The aim of the study is to examine whether the development of organic food is an appropriate objective. Are policies now needed to provide organic food more widely to consumers ?

2.     Agricultural policies: for the advancement of farming interests

Do organics represent a "new deal" for farmers. Would organics help resolve the apparent false dichotomy between farming interests and consumer concerns. The dichotomy is that consumers demand for cheap food may hinder farmers' incomes. Jeff Rooker has stated that "consumers want cheap food - but they want safe food above all else". If farmers could capitalise on this demand for "safe food" through organics then they may be able to earn higher prices for themselves and satisfy consumer concerns simultaneously.

3a     Generic strategies by supermarkets

The research could assess whether supermarkets could improve their generic policies. Grocers have been successful at pursuing mid-market strategies (Cronshaw et. al. 1990). The question now is whether these strategies are still viable or whether consumers are becoming more quality conscious and less price sensitive in which case policies may need to change in favour of organics.

3b     What strategy elements (tactics) could the major grocers adopt to develop organic food.

What can supermarkets do to encourage farmers to grow more organics e.g. to give incentives to growers?

What can supermarkets do to promote organics to support the demand for pesticide-free produce e.g. to encourage consumers to ignore blemishes?

What is the appropriate pricing policy for organic food? One that prices organics equivalently to conventional produce e.g. Tesco. Alternatively, one that charges more for organics than for conventional produce e.g. Sainsbury's.

Should grocers encourage manufacturers to develop processed organic food ?

A deeper analysis using economic models could be used to assess:

The relationship between supermarkets incentives and the increase in supply of organic food. Also the effect of grants on conversion rates towards organics.

The link between promotional campaigns and sales of organic food.

The effect of different pricing policies on sales.

The demand for organic convenience food.

4.  Policies for the representatives of Local Authorities who administer street markets so that they can better meet the needs of their communities


Should Local Authorities encourage their street markets to provide organic food? Alternatively, is the demand for organics likely to remain largely unchanged with box schemes remaining the significant method of distribution? Consequently, limiting the need for alternative outlets such as street markets.


5.   Strategies by consulting organisations such as The Soil Association

Should the Soil Association develop organics through local food links schemes e.g. box schemes or growers markets only? Alternatively, should they focus their attention mainly on large supermarkets? The answer to this may depend on the predicted size of the organic market; the greater the predicted growth the more the second option becomes relevant. A forecast on the sales of organic food will depend upon the relationship between (1) the level of personal disposable income, (2) the price of organic food and (3) the importance of environmental issues (Adapted from Mintel 1/91).

6.    Focus on particular products

The aim is to focus on fresh fruit and vegetables. This is because the market for organic meat and dairy products appears to be smaller and so more difficult to assess. Although, factors such as BSE need to be considered because they may have implications for sales of fruit and vegetables. More emphasis could be placed on produce such as lettuce which may be more affected by pesticides.

7. Marketing or Policy strategies; Tools for analysis

The Innovation/Adoption Model, used in marketing, could be used to assess whether the market for organics is likely to remain largely unchanged or to increase. The effectiveness of a food voucher, making organic food affordable, as a policy tool.

Summary: The academic aims of the research

An aim of the research would be to contribute to the existing literature on The Green Consumer; but with reference to organic food only. The purpose would be to examine consumer motives for purchasing organic food e.g. personal health or environmental concern.

References

Cronshaw, M, Davis E, Kay J, (1990) On being stuck in the middle or Good Food Costs Less at Sainsbury's" - working paper, Centre for Business Strategy, London Business School.

Mintel, Report on Organic Foods, January 1991.

Mintel, Organic and Ethical Foods, November 1997.

Jeff Rooker Independent 16/8/97

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