The Organic Food Market: Opportunities and Challenges

Abstract

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 mileage1 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