Organic Products Essay Example

Organic Products Essay Example Organic Products Essay Organic Products Essay Definition of Ecopreneurship The term â€Å"ecopreneur† is derived from two terms which are â€Å"entrepreneur† and â€Å"ecology. An entrepreneur is a person who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods and who accepts the risks associated with them. (Schaper, Michael. 2002) He can be anyone who identifies an opportunity in a market and has a belief that it would succeed in the economy and on that belief he starts exploiting the opportunity. They may create a new organization or may be a part of an existing organization where they revitalize the organization in response to their perceived opportunity. Generally, the word entrepreneur is used to denote a person who starts a new business but with time and more understanding of the subject, the revised definition of an   entrepreneur also includes â€Å"intrapreneurs†, that is an entrepreneur operating within a corporate environment. Entrepreneurs are the strategic factors in economic development and the central factors in the trade cycle as they are the driving force of an economy. Ecology or environmental biology is the branch of biology which takes into consideration the examination of living organisms in the natural environment. It includes the study of individuals, populations, communities, and ecosystems. (Goliath. 2002). The ecology has reached enormous importance in the last years because of man’s interest in the environment in which he lives and to find ways to protect the environment in order to make it sustainable. The word ecopreneur is a portmanteau of â€Å"ecological† and â€Å"entrepreneur. An ecopreneur is an individual who is focused on ecologically-friendly issues and causes, attempting to do business in a way which benefits the environment. He may not be a person or entity only involved in products like solar powered cells, water conservation system or compostable packaging. In fact, an ecopreneur is anyone who ranks environment more than or equally to profits as his most effective criteria as a business owner (reuters, 2007) . While many entrepreneurs may be motivated, at least in part, to the mantra of â€Å"greed is great† on their journey to becoming a millionaire, growing numbers of ecopreneurs are adopting a different course, focusing on solving the problems facing society through the businesses they create, greening their bottom line. Many are redefining their wealth, as we have, not by the size of their bank account or square footage of their home. Wealth is defined by life’s tangibles: health, wellness, meaningful work, vibrant community life and family. †(John Ivanko. . The main aim of an ecopreneur is to build a firm which is more sustainable and environmentally friendly. Sustainability development is a pattern of resource use such that it not only meets present human needs, but also preserves the environment so that the resource can also be utilized by the future generations. Sustainable business, or green business, is enterprise that has no negative impact on the global or local environment, community, society, or economy- a business that strives to meet the triple bottom line (people, planet and profit). Often, sustainable businesses have progressive environmental and human rights policies. In general, business is described as green if it matches the following four criteria: * It incorporates principles of sustainability into each of its business decisions. * It supplies environmentally friendly products or services that replace demand for nongreen products and/or services. * It is greener than traditional competition. * It has made an enduring commitment to environmental principles in its business operations. Who is an Ecopreneur An entrepreneur whose business efforts are not only driven by profit, but also by a concern for the environment†. (Schuyler. 1998). The terms such as â€Å"Sustainopreneur†, â€Å"environmental Entrepreneur† and â€Å"eco capitalist† are synonymous with ecopreneur. The characteristics of ecopreneur are: * They all undertake business ventures which involves a measure of risk * They must identify a feasible business opportunity * Th eir activities must have a positive impact on the environment. * The degree of intentionality separates ecopreneur from accidental entrepreneurs. Principles of ecopreneurship There are some basic principles and measurements that can help guide the practice of ecopreneur and provide some basic standards of principle to this emerging group. 1. Energy and Resource Use Efficiency and Maximization: â€Å"In nature, one-way linear flows do not long survive. Nor, by extension, can they long survive in the human economy that is a part of the earths ecosystem. The challenge is to redesign the materials economy so that it is compatible with the ecosystem†. (Lester Brown. Earth Policy Institute). By minimizing waste production and maximizing reuse of waste streams, sustainable business can potentially significantly increase profits. 2. Ecosystem Services: Services related to protection of ecosystem and natural resources and preventing environmental degradation can be an inspiration for a green business idea for ecopreneurs. 3. Natural step principles: Ecopreneurs can see potential risks, such as extinction of substances extracted from the Earth’s crust or overharvesting etc, as opportunities for success through green business. 4. Eco- efficiency and eco-effectiveness: Ecopreneurs should find methods of decreasing waste while increasing productivity such that the waste of the production process and the product itself can be the raw materials of a new product of service. Drivers and Challenges The driving forces behind ecopreneurship are as follows: 1. Global population growth: Ecopreneurs realize that as the resources and land area is limited, so it is their responsibility to ensure that there are enough resources not only to fulfill the needs of the current population which is growing continuously, but also for the future generations. Hence they should find ways to conserve energy, materials, and resources by developing new technologies or finding ways to control birth rate and finding ways to meet the food and shelter demand for the growing population in order to make sustainability possible. 2. Increasing life expectancy: Ecopreneurs value life, not only their own and of family members, but of the whole humanity. They want everyone to live a longer and healthier life, that is why they develop products and ways to increase life expectancy such as healthier food, purified water etc. . Climate change: Climate shapes the way we live on this planet and the way we live, work and play is advertently changing the climate. The pollutants released in the air due to use of fossil fuels is adversely affecting the climate. In order to sustain the climate, ecopreneurs are involved in finding alternate ways to produce energy such as using wind, water and solar energy. 4. Resource scarcity: The diminishing natural resources are a great issue as we will be left with no natural resources if we do not sustain them. In order to sustain them, ecopreneurs constantly look for alternatives by recycling them or using a cheaper, abundantly available resource if possible. 5. Lack of equity in the world: The people of the world are living in a continuum, with one end which has all the facilities of the world including the best quality food, water and home, while on the other end are people who do not even have the basic necessities of life. Ecopreneurs want to make sure that every living being on the world is treated equally so that no one is deprived of anything. That is why they are active members of movements such as WTO and also find ways to produce goods and services affordable by everyone. They are also involved in philanthropic acts such as giving charity donations to help the deprived people of the society (Environlution, 2010). Organic Food as Eco Friendly Product Organic foods are foods that are produced using methods that do not involve modern synthetic inputs such as synthetic pesticides and chemical fertilizers, do not contain genetically modified organisms, and are not processed using irradiation, industrial solvents, or chemical food additives. For the vast majority of human history, agriculture can be described as organic; only during the 20th century was a large supply of new synthetic chemicals introduced to the food supply. The organic farming movement arose in the 1940s in response to the industrialization of agriculture known as the Green Revolution. Organic food production is a heavily regulated industry, distinct from private gardening. Currently, the European Union, the United States, Canada, Japan and many other countries require producers to obtain special certification in order to market food as organic within their borders. ORGANIC VERSUS CONVENTIONALLY- PRODUCED FOOD Although the attributes associated with organic foods may be difficult to identify by visual inspection alone, most consumers purchase organic products because of a perception that these products have unique (and in some cases superior) attributes compared to conventionally grown alternatives (Vindigni et. al, 2002). On the other hand, a major rea son why some consumers do not purchase organic foods is linked to a perception that such foods are not better than their conventionally produced alternatives (Jolly et al. 1989). There is, thus, a continuing debate about whether organically produced products are superior to and/or different from conventionally produced alternatives and, if so, in terms of what characteristics. * CONSUMER AWARENESS AND KNOWLEDGE ABOUT ORGANIC FOOD The environmental ethic that gained worldwide prominence with Earth Day 1990 placed emphasis on individual responsibility (for personal health) and social action (on environmental quality and animal welfare) (MacEachern 1990; Jolly, 1991). Personal responsibilities include making informed consumer choices. This, in turn, requires consumer knowledge and awareness about competing products. Knowledge and awareness have other direct and indirect effects on attitudes toward consumer products, and the willingness to pay a price premium. Because organic products are credence goods, consumers (unlike producers who are aware that their products are organic) may not know whether a product is produced using organic or conventional methods, not even after repeated purchase and consumption, unless they are told so (Giannakas, 2002). Thus, awareness and knowledge about organically produced foods are critical in the consumer purchase decisions. If an individual cannot clearly differentiate between two alternative products, a price premium on the organic product can confuse and/or affect the individual’s purchasing decision, in favor of the cheaper product. Most studies on consumer knowledge about organic products reflect a conceptual belief that is true and justified. Consequently, studies typically use measurement methods that essentially rely on correctness to answers on survey questionnaire (Hunt, 2003). Correct (or incorrect) responses imply that the respondent has knowledge (or does not have knowledge) about organic foods and products. Hunt (2003) has noted some limitations associated with such a narrow definition of consumer knowledge, and proposed a wider definition and measurement that captures other important, but often neglected, dimensions of knowledge. Studies that investigated the level of consumer awareness and knowledge about organic foods include Jolly et al. (1989), Ekelund (1990), Akgungor et al. 1997), Hutchins and Greenhalgh (1997), Wang et al. (1997), Compagnoni et al. (2000), Environics (2001), Oystein et al. (2001), Kenano? lu and Karahan (2002), Cunningham (2002), Demeritt (2002), Hill and Lynchehaun (2002). A critical review of these studies suggests that, overall, there is some consumer awareness about organic foods around the world. This awareness is high especially in Western Europe, where the organic market is relatively well developed, compared to other reg ions of the world. Consumer awareness of organic products in North America compares reasonably well with that of Western Europe. Although there is general consumer awareness around the world, the literature also suggests that consumers have inconsistent interpretations about what is ‘organic’. For example, in a survey of consumers in three California counties, Jolly et al. (1989) found that respondents associated organic produce with no pesticides, no artificial fertilizer, no growth regulators, and residue-free products. Similarly, survey respondents in the UK perceived ‘organic farming’ to imply absence of chemicals, ‘absence of growth hormones’, and ‘not intensively grown’ or ‘products grown naturally’ (Hutchins and Greenhalgh, 1997). In a more recent study for the UK, respondents described organically produced food as one that is more natural and healthy, compared to conventional food (Hill and Lynchehaun, 2002). Furthermore, there was no difference in the UK consumers’ understanding of â€Å"organic† among organic and non-organic food buyers. In other words, both buyers of organic and non-organic products felt that organic alternatives have no pesticides and/or use no chemical fertilizers, and are natural and healthy. In contrast, Jolly (1991) reported a substantial difference in how US buyers and non-buyers rated organic product quality, compared to conventionally grown products. Consumer knowledge and awareness will continue to be important in the organic food market in two respects. First, there is still a segment of the potential market that is not yet informed about organic foods. For example, in a US study which reported that knowledge and awareness was considered the number one reason why consumers do not buy organic food, 59% respondents indicated that they never considered organic products because they did not know about them (Demeritt, 2002). A second dimension to the knowledge and awareness puzzle is the possibility that those who do not consider organic products may have a general knowledge about them, but do not have enough detailed information to clearly differentiate the unique attributes of organic from conventionally grown alternatives. In summary, knowledge and awareness about organic products can affect attitudes and perceptions about the product and, ultimately, buying decisions. If the skepticism about organic products stemming, in part, from reported cases of mislabeling and fraud are assuaged, perceptions about the appeal and inherent characteristics of organic may translate into actual demand. * CONSUMER ATTITUDES AND PERCEPTIONS Consumers actions regarding organic food stem from attitudes that in turn, are linked to a complex set of ideas, motivations and experiences. Beliefs and perceptions are highly subjective notions (Fishbein and Ajzein, 1975), because they reflect opinions about the objective state of the world. Although in reality such perceptions may or may not be true, the individual who holds the perception thinks that it is true. Given Lancasters (1966) notion that consumers demand bundles of product characteristics, perceptions about particular (desirable) characteristics of organic food can influence a buyers choice. Studies on consumer perceptions about organic versus conventionally produced food therefore attempt to determine what consumers think is true. By comparison, consumer attitudes are likes and dislikes. That is, the positive and negative orientations toward organic or conventionally grown food. Weistberg et al. (1996) argued that consumer preference for a particular product is based on attitudes toward available alternatives. Thus if consumers are asked to indicate their preferences regarding organically versus conventionally produced food, such respondents typically compare their attitudes toward the methods of purchasing the goods, and/or the product characteristics under consideration, before stating their preferences. Although particular attitudes are often assumed to lead to specific behaviors, the food and nutrition science and social-psychological literature provide limited evidence to support the assumption (Goldman and Clancy, 1991; Sims, 1980). Overall, the scholarly literature suggests that various consumer attitudes work in contrasting ways- for and against purchasing organic products. Several consumer studies have been undertaken in North America and Europe to assess consumer perceptions about organic foods (e. g. Hay, 1989; Ott, 1990; Huang et al, 1990, Huang et al, 1993; Misra et al, 1991; Jolly et al, 1989; Jolly, 1991; Goldman and Clancy, 1991; Ekelund, 1990; Baker and Crosbie, 1993; Swanson and Lewis, 1993; Groff et al, 1993; Sylvander, 1993; Buzby and Kees, 1994; Byrne et al, 1994; Fricke and von Alvensleben, 1997; Hack, 1997; Hutchins and Greenlagh, 1997; The Packer, 1998; Thompson and Kidwell, 1998; Oystein et al, 2001, O’Donovan and McCarthy, 2002; Jolly, 2001; The Packer, 2001; Demeritt, 2002; Wolf, 2002; Cunningham, 2002). The key findings from selected studies on consumers’ attitudes and preferences about organic foods are summarized in Table 4. Most of these studies concluded that consumers purchase organic foods because of a perception that such products are safer, healthier, and more environmental friendly than conventionally produced alternatives. Some studies reported health and food safety as the number one quality attribute considered by organic product buyers. Concern for the environment was less important compared to food safety and health concerns, suggesting that such consumers might rank private or personal benefits higher than the social benefits of organic agriculture. * CONSUMER PREFERENCES FOR ORGANIC FOOD Consumer preference for organic food is based on a general perception that organic products have more desirable characteristics than conventionally grown alternatives. Apart from health, food safety and environmental considerations, several other product characteristics such as nutritive value, taste, freshness, appearance, color and other sensory characteristics influence consumer preferences (Bourn and Prescott, 2002). Studies that investigated the effect of organic quality attributes and other characteristics on consumer preferences include Jolly et al. , 1989; Hay, 1989; Ekelund, 1990; Jolly, 1991; Jolly and Norris, 1991; Sylvander, 1993; Buzby and Skees, 1994; Huang, 1996; Kyriakopoulos et al. 1997; Schifferstein and Oude-Ophuis, 1998; Akgungor et al. , 1997; Mahesh et al. , 1997; Land, 1998; Torjusen et al. , 1999; The Packer, 2001; Meatnews, 2001; Loureiro et al. , 2001; Aguirre, 2001; Demeritt, 2002; Wolf, 2002; and Cunningham, 2002. These studies differ in several respects, making comparisons across studies difficult. For example, there is inconsistency in defining the concept of quality. Thus, while some studies examined quality in terms of both sensory and nutritive characteristics, others differentiate sensory characteristics from nutritive attributes. Thus, different studies may have conveyed different notions of quality to the various survey respondents. In general, the empirical evidence supports the hypothesis that product quality characteristics affect consumers’ preferences for organic food; with the most important including nutritional value, economic value, freshness, flavor or taste, ripeness, and general appearance (especially of fruits and vegetables). Wolf (2002), for example, reported that respondents in California rated fresh-tasting and fresh-looking grapes as the most desirable attribute. Other North American surveys that ranked taste as the most important quality characteristic influencing consumer demand include The Packer (2002), Cunningham (2002), and Demerit (2002). The Packer (2002) reported that 87% of US respondents identified taste as the primary factor considered in the purchase of fresh produce. Cunningham (2002) also reported that 93% of Canadian respondents prefer food products with good taste. In contrast, studies for other parts of the world (e. g. , Jolly et al. , 1989; Buzby and Skees, 1994; Torjusen et al. 1999) reported that consumers ranked nutritional value and freshness higher than taste and other related quality characteristics. While most studies reviewed for North America tended to suggest that consumers rank taste and related sensory characteristics as more important than food safety and environmental concerns, studies in the other regions (such as the EU) tended to place health and food safety, and environmental concerns at the top of the pr eference ranking (see, for example, Sylvander, 1993; Shifferstein and Oude Ophuis, 1997; Akgungor et al. 1997; Aguirre, 2001; Sandalidou et al. , 2002). What seems clear, and consistent across studies, is that consumers in all regions tend to prefer locally grown organic produce, compared to shipments from other places. In addition, organic product purchase decisions tend to be influenced more by product quality and other inherent characteristics, than by price premium. On the other hand, several studies (e. g. , Sylverstone, 1993; Buzby and Skees, 1994; Davies et al. , 1995; Roddy et al. , 1996; Latacz-Lohman and Foster, 1997, Worner and Meier-Ploeger, 1999; Oystein et al. 2001; Demeritt, 2002; O’Donovan and McCarthy, 2002) reported that price premium, lack of knowledge and product availability were the major reasons preventing non-buyers from purchasing organic food. Demeritt (2002), for example, reported that the most important reason why US consumers did not purchase orga nic food was lack of knowledge or awareness. About 59% of those who did not purchase organic products indicated they never really considered organic, while 39% indicated that price was the main inhibiting factor. Another 16% reported they did not purchase organic foods because of limited availability. Davies et al. (1995) and O’Donovan and McCarthy (2002) also reported product availability and price as key inhibitors to consumers’ demand for organic foods in Ireland. According to Davis (1995), two-thirds of non-buyers of organic food in Ireland reported they would buy organic if it was easily available. By comparison, O’Donovan and McCarthy (2002) reported that among Irish respondents who did not purchase organic food, 43% indicated it was too expensive, 28% cited lack of availability, while 29% were just not interested. Challenges in Organic Food Industry Successful transition from niche to mainstream status The major challenge the organic food industry faces is the successful transition from niche to mainstream status. Although organic foods are becoming more visible in European food retailers, they have yet to acquire broad appeal with consumers. Organic foods are not considered to have mainstream status since a small amount of consumers account for the majority of purchases in most countries. For instance, consumer research shows that 61% of organic foods in the UK are purchased by 7% of consumers. In Denmark, 1% of consumers account for 80% of purchases. Although many consumers are now buying organic foods in European countries, a small consumer base is responsible for the bulk of purchases. This is responsible for slowing growth rates in countries like Denmark and the UK. Organic foods need to have broader consumer appeal if they are to take mainstream status in the food industry and the major challenge faced by many organic food companies is how to expand the loyal consumer base. Prevention of fraudulent business practices A number of cases have been reported in the last couple of years of non-organic food being labelled and sold as organic food. For instance, in May 2001 it was discovered that 20,000 tonnes of non-organic grain was imported and sold as organic grain to unsuspecting British organic farmers and producers. This is a major threat to the industry for consumers purchase organic foods because of the belief that it has been grown according to organic farming principles. The continuation of these fraudulent cases risks undermining consumer confidence in organic foods. Consumer demand for organic foods, especially imported products, could collapse if this type of fraud continues. Continuing political support required for industry development. There is growing pressure to reform the European Common Agricultural Policy (CAP) and changes are likely in the short term. There is a need for political representation of organic farming. Organic farming needs to be promoted at the ministerial level as a sustainable form of agriculture. The question is: who will take the lead with political change happening on a regular basis due to the growing trend of coalition governments? Protection of price premium Organic foods, because of their nature of production, have a price premium over conventional foods. This can range from 15% for organic milk to over 100% for some organic exotic fruit and specialty cheeses. There is growing pressure for organic food growers and producers to reduce production costs. This pressure comes from retailers, which attempt to narrow the price premium as low as possible in order to encourage consumer demand. The major barrier to product adoption in many countries consumers is the high price. The concern is that this pressure could translate into a compromise in organic standards and the method of production. For instance, organic farmers can be tempted to produce to the lowest standards of organic production in order to cut costs. This is likely to erode consumer confidence and promote divisions in the organic food industry on the lines of organic standards. Recommendations for organic food industry * Food safety, hygienic regulations and consumer protection Politicians and decision makers should promote the idea of mature and responsible producers and consumers with regard to food safety. Controls and liability for food safety should not be burdened only on the shoulders of governments and authorities. Citizens will relieve authorities by accepting responsibility too. The duty of governments and authorities will only be to function as controllers of private control services. Producers, processors, traders and consumers should hold regular meetings on round tables and develop mutual confidence with the aim to accept together responsibility for food safety. Fair prices (no dumping prices) for high quality and healthy food are an important precondition to guarantee food safety. The practiced biodynamic farm model to produce a high percentage of the animal feedstuff directly on the farm and use mainly the own fertilizer is a very suitable one to ensure food safety. * Food quality Creation of consciousness that food quality means more than producing hygienic sound nutrition. Food quality must not be reduced only to chemical detectable contents. Conventional food quality analyses should be supplemented by other analytical methods that can detect vital force in foodstuffs. The production of superior food quality( that fulfils all quality aspects) should be promoted. Education in organic farming Promoting education of children in schools about organic food and agriculture. Establishing and funding of vocational education programs especially for organic Farming. Funding of practical studies and training in organic farming organizations. 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