With the dawn of information age and the new
millennium, mankind stands at the threshold of another major
breakthrough which is not only expected to reshape the fields of
agriculture and business but also influence our personal health,
nutrition and lifestyles. Organic farming and organic products are now
almost a familiar phenomenon in the developed world. Organic food is
getting increasingly popular, as its production and consumption levels
keep growing steadily. The consumers increasingly prefer healthful
foods and this has opened new vistas for the vibrant agro-based
economies like Pakistan, to penetrate and enhance their share in the
world organic market.
It is hard to find someone opposed to good food.
"You are what you eat" may be one of the oldest cliches, but
holds good even today. "Live your life in your prime" is the
new buzz slogan. According to a research study conducted by the Tufts
University, the United States uses a pyramid to show how a healthful
diet should be constructed, Canada reflects its ideal diet in a
rainbow. Israel uses a chalice, the Philippines uses a star, and Japan
arranges foods in the number 6 to represent six food categories.
Germany, Norway, and the United Kingdom put their food guides in the
shape of a plate.
The National Organic Standards Board of the United
States defines organic agriculture as, "an ecological production
management system that promotes and enhances biodiversity, biological
cycles and soil biological activity". We notice that the focus is
on the ecologically compatible production systems and not on the final
product itself. In common parlance organic farming denotes pesticide
free agriculture (i.e.) growing fruits and vegetables or rearing
livestock without the use of artificial fertilizers, synthetic
herbicides/pesticides, genetically modified organisms (GMOs), growth
regulators, antibiotics or hormone stimulants, etc. However, in
essence it goes beyond that. It is a complete farm management system
and incorporates appropriate land management practices, crop cycle,
use of renewable resources and conservation of soil, energy and water.
It is pertinent here to indicate the difference
between "natural" and "organic" food. As mentioned
above the organic foods are grown without pesticides, preservatives,
additives, colours, refined sugars and genetic engineering. To receive
organic certification they must also meet rigid pre- and post-harvest
growing and manufacturing standards. Such standards are less stringent
for "natural foods" which are generally made without
additives or preservatives, but may be grown using standard farming
methods. So it can safely be inferred that all organic foods are
natural, but not all natural foods are organic.
The introduction of organic food has diversified
the consumers' food plate and offered them more and better choices.
During the last decade there has been an increasing trend in the
overall health consciousness of the people and a growing expansion of
the world organic market. But is organic food nutritious? Why do
people prefer to buy it? How are the organic products influencing the
local and international food market? This article aims to address such
questions besides identifying the potential and prospects for
Pakistani agriculture to venture into this product market.
ORGANIC VS CONVENTIONAL PRODUCE:
There is no doubt that organic farming is much better
for the environment than the conventional farming. Conventional farming
by its abundant use of pesticides, herbicides and chemical fertilizers
causes widespread environmental damage. It has already led to soil
erosion, salinity, land degradation, declining soil fertility, and
disturbed our ecosystem. By contrast organic and bio-dynamic agriculture
is focussed on protection and preservation of our ecosystem and strives
at striking a balance between land, crops and animals including the
natural soil microbial flora. It largely saves the land from erosion or
degradations, increases its fertility by use of organic manure and a
judicious crop cycle, and promotes the overall crop growth.
The question whether the organic products are more
nutritious is still unanswered fully. The scientific evidence so far is
inconclusive but supports the organics. A review of the research done
over the past 50 years, published in the late 1990s, reveals a trend
that indicates organically grown crops to be slightly higher in some
nutrients. For instance, some studies found a higher Vitamin C content
in the organically grown produce, and lower level of nitrates. Nitrates
can transform in the body into highly toxic nitrites or nitrosamines,
which have been linked to cancer.
Agriculture is the largest sector in the Pakistan
economy. About 27 percent of Pakistan's total land area is considered
arable. Four crops dominate agricultural production namely wheat,
cotton, sugar cane and rice, and account for around 39% of total
agricultural output and nearly 10% of GDP. Approximately 70% of
country's foreign exchange earnings come from the sale of agricultural
products such as cotton, rice, fruits and vegetables etc. and agro-based
industries, mainly the cotton textile industry which is the largest
industrial sub-sector in the country. So Pakistan's economy remains by
far a single-crop economy, based purely on cotton.
Although Pakistan enjoys a strong agriculture, it
faces major difficulties with crop yields and over use of pesticides
when compared to other agricultural centres in the region. For example,
wheat yields are only 75% of international standards, while rice yields
are approximately 66%. Outdated infrastructure and farming techniques
that have not changed for decades, and inadequate irrigation and cold
storage facilities compound this problem.
The world organic market is growing steadily and is
expected to have a market value of $100 billion by year 2006. However,
the organic agriculture is still in its infancy in Pakistan. Current
products include organic rice, organic sesame seed, organic wheat,
organic Kinno fruit and juice concentrate, and organic mango fruit and
pulp. Tremendous opportunities exist in a wide range of organic foods
including fruits and vegetables, cereals and grain, beef, poultry and
eggs, honey and several other processed products. This implies that with
proper guidance, support and strategies, the Pakistani farmers should be
capable to cater for the domestic demand and penetrate the foreign
organic food markets as well.
According to Stiftung Oekologie und Landbau
(Germany), organic farming is practiced in approximately 100 countries
of the world and the area under organic management is growing. Almost 23
million hectares are managed organically world-wide. Table 1 shows the
state of organic farming worldwide and includes both fully converted
land as well as "in-conversion" land area. Currently, the
major part of this area is located in Australia (10.5 million hectares),
Argentina (3.2 million hectares) and Italy (more than 1.2 million
hectares). The percentages, however, are highest in Europe. The world's
largest certified organic property (994,000 ha) is located in Australia.
By contrast, the area under organic management is still very low in most
Asian countries, but organic agriculture is in progress as the area
"in-conversion" is increasing. For many Asian countries no
precise figures are available, but it is assumed that no country has
reached one percent yet. The total organic area in Asia is now almost
0.6 million hectares.
1: State of Organic Agriculture World-wide
Area under Organic Management
% of agriculture land
Stiftung Oekologie und Landbau-Survey, February 2003
Currently the major organic export markets include
Japan, the Netherlands, Norway, Switzerland, New Zealand, Singapore,
Germany, the United Kingdom and the United States. At present Japan is
the biggest market for organic products in the world with an annual
sales value of around $3 billion. The United Kingdom with annual sales
value of $2.5 billion and Germany with a market worth of $2 billion
follow the Japanese.
Demand for organic food in the European Union has
increased greatly during the last decade because of food safety issues
like Mad-Cow's Disease, Dioxin levels, Chernobyl disaster, GMOs,
enhanced information dissemination and increased health awareness
amongst the public, and environmental and animal rights issues.
CONSUMER MARKET SEGMENTATION:
The American consulting firm Healthfocus Inc.
conducted a market study based on mail surveys of 1100 pre-screened
health-conscious Americans to discover their food habits, shopping
attitudes, company and brand perceptions. It was found that the
Americans have five major reasons for buying "healthful
food" namely, for preventive reasons, for medical reasons, to
promote daily stamina, to lose weight, or for spiritual reasons.
Similarly, in other developed countries greater awareness in the
public about food safety, convenience, concerns about environment and
GMOs has made organic food a suitable "substitute food"
addressing their concerns. Drawing inferences from various global
studies, the consumer market is differentiated into five segments:
Investors or long-term health-conscious people (45%). They are likely
to be college educated men who work longer or extra hours and eat well
to ensure future good health.
Managers or short-term health-conscious people (36%). They are likely
to be college educated managers or administrators who choose healthy
foods to gain an edge in their short-term performances.
Healers (9%), mostly elderly low-income women, are the late
discoverers of healthy eating and prefer this for medical reasons.
Strugglers (7%), mostly low-income parents, are the junk food lovers.
Disciples (3%) are likely to be animal-rights activists, Buddhists,
and Seventh-day Adventists following a dietary regimen for
CONSUMER BEHAVIOUR — ATTITUDES AND PREFERENCES:
Consumer surveys indicate that consumers prefer
organically grown food not merely because of taste, appearance, or
personal health reasons but also because they prefer food without
pesticide residues. Some consumers might also be concerned about general
health and environmental issues, such as farm worker safety, soil and
water quality, and wildlife habitat. With the expansion in organic
markets during the last decade, it has been found that many consumers
perceive that they are receiving these attributes and the desired value
for their money.
The Australian Consumers' Association conducted taste
tests in June 2000, to find out the taste differences between
organically grown and conventionally grown produce and noted a definite
difference of taste between the two.
However, organic food is generally more expensive
than conventionally grown produce as it is more labour and
capital-intensive to produce, requires specialised knowledge and skills
to grow, and may at times be of lower yield as well. The price of
organic food invariably includes these and similar hidden costs, which
in fact match the real product value. The Australian Consumers'
Association conducted a market survey in May 2000 to check the prices of
organic food in different parts of Australia. It was found that organic
fruits & vegetables on average cost 70% more than their conventional
The organic food is generally sold at major
supermarkets, some regular fruit and vegetable shops, health food shops,
certified organic retailers and over the Internet as well. It is
generally advisable not to pay premium prices for products labelled
"naturally grown", "chemical free" or just
"organic" without any certification details, rather look for
the certifier's logo or name on the produce or its packaging. The
Pakistani farmers, therefore, would have to develop a standardization
and certification process to establish trust and confidence of the
buyers in their products.
At present there are no uniform requirements for the
labelling of organic products, and standards vary from country to
country. However, broadly speaking it is usually mandatory for the
export products to be labelled "organic",
"biodynamic" or "biological". The certified organic
or bio-dynamic products are usually labelled either as
"organic" or "in-conversion to organic". Products
labelled organic are grown on land that has been managed using practices
appropriate to organic farming for at least three years, whereas the
products labelled "in-conversion to organic" indicate that the
farm has been operating on organic principles for at least one but less
than three years.
The Pakistani agriculture is likely to encounter
problems with quality assurance, certification, labelling, packaging,
trademarks, uncertainties about production, supply and price, and would
need to address these issues. Impediments to market access and
information to enhance the organic market's outreach would require to be
The emerging market opportunities offer a potential
challenge for the businesses and seek a swift facilitative response from
the government in the areas of legislation, fiscal support and
standardization. Today our agriculture needs to respond to this new
opportunity by putting its investment in increasing the number and size
of organic farms, promoting agribusiness and making food-marketing
investments in the substitute products. New food retail houses should be
fostered while the traditional ones must expand their natural and
organic food product lines.
In the developed world, many mega mergers and buyouts
have already taken place in the natural and organic foods industries,
including Whole Foods merging with Fresh Fields ($135m), H. J. Heinz Co.
first buying out Earth's Best and later acquiring a 20% stake in leading
natural and organic food company Hain Food Group, Kellogg Co. acquiring
Worthington Foods, and Trefoil Partners II getting a controlling stake
in Cascadian Farms (Murphy). We must ponder if the Pakistani agriculture
could venture into corporate farming and attract big food houses to the
At the same time we can not be oblivious of other
emerging opportunities such as the farmers' markets, Internet sales, and
public-private partnerships to develop individually or cooperatively
owned wholesale markets. So there is every likelihood of small-scale
farmers getting into competition with large-scale growers and producers
through either direct sales/marketing or indirectly through the
cooperatives or the local chain-store outlets.
Several demand and supply-side forces shall be
critical in determining the future growth of organic market. Sustained
increase in demand for organic food is directly linked to continued
consumer preference for and growing understanding about such food.
Individual income, price and health/quality standards shall be the key
factors in determining the consumer responsiveness whereas lower
production and farm costs, enhanced research, improved sanitary and
phytosanitary conditions may shape the production side of the future
It is essential that our agriculture diverts
resources to dedicated organic farmland to increase its proportion in
the total Pakistani agricultural land. Meanwhile, the industry needs to
evolve a strategy to boost its share in the world markets. Broadly
speaking, this should focus on in the order of priority — improved
industry co-ordination and development, market development, including
market research and marketing systems, setting up of a regulatory
framework for quality assurance, an integrated, farm-based research,
development and extension, strengthened communication and information
services, enhanced education and skills, and improved processing of
In a nutshell, we may conclude that the growing
organic markets abroad provide an ideal opportunity for the Pakistani
farmers to compete and establish their niche in the overall world
market. Considering the growing size of the world organic market and the
strengths of the Pakistani agriculture, we can safely infer that there
exists a strong market potential for Pakistani organic produce to
penetrate, expand and consolidate its share in the markets abroad.