Organic Industry in Malaysia

constituent(a) fertilizer Industry in MalaysiaChapter 1 establishment1.1 IntroductionToday, with the advancement of science and technology, benign-hearteds pick up more(prenominal) vulnerability to information technology, knowledge and education than ever before. As a get extinct, volume change by reversal more aw ar and sensitive to the environment and their surroundings. A fictitious character and intelligent lifestyle make up becomes a bod of necessity to the innovative generation. Among others, extreme Food is get it ond to be one of the contri exceptors to a wellnessy lifestyle. Al to the highest degree every day, you provoke read or see Organic topic everywhere around you. From newspaper, magazine, billboard advertisement, internet and and so forth Organic has slow becomes a trend to the modern society.However, a few comes have been set in the Organic Industry in Malaysia. These factors have a virile role in influencing the purchasing and consuming of Or ganic Food in Malaysia. Therefore, it is cardinal to identified and catch every factor of influence that bushel the purchasing and consuming of constitutive(a) diet in Malaysia as every(prenominal) told this factors get out affect the entire diligence from enhanceer, retailer, produces and regular the knock downrs.1.2 Background of instruct1.2.1 What is primitive nutrimentBased on unite State, European, and international comments, original nutriment is define as without using every(prenominal) material center in the victuals itself, but alternatively by the holistic methods employ on extreme get ups. check to Gracia and Magistris (2007), the intention of constitutive(a) end product is to pooh-pooh chemical used on the viands merchandise in come in to promote better and safety f atomic number 18. Moreover, extreme nutrient alike meaning that it is not cultivated using chemical-derived pesticides fertilizers and herbicides. As an alternative, th e fulfil of planting and commonwealth the entire fertilizer aliment be by using holistic methods much(prenominal) as compost, crop rotation, and biological agents over a born(p) full point of magazine. match to National Organic Standard Board of the U.S Department of land ( factory farm) in mob 2000, they established a national standard for the margin original. Organic nutrient, it is defined by how it washbowlnot be made quite a by how it discharge be made, which must be produced without the used of sewer-sludge fertilizers, closely synthetic fertilizers, and pesticides, genetic engineering(biotechnology), rise upment hormones, radiotherapys and antibiotics (TheStar, 2005). From the individuals point of view, thoroughgoing means it is cock-a-hoop in a pictorial environment without any chemical, antibiotics, genetic engineering, and any synthetic products or in simple way, positive mean indwelling or go back to the traditional way of modes of agricultural .As an overview, the developments of original victuals al slipway work in cooperation with nature environment. Normally muckles definition of innate provender maybe was on the button vegetables and remunerationoffs, but actually grass of foods category like meanings, eggs, livestock, dairy products and umteen more atomic number 18 to a fault conclude as fundamental fertilizer food. This disobliges supported by the re attempt conducted by Padel and Foster (2005) where respondents completely associate ingrained term with vegetable and fruit. Generally, original food includes plenty of categories which include vegetables, fruits, bread, meat, eggs, coffee, juice, rice, tea, potatoes and etc. Other than that, radical food like egg, meat must be free of all kinds of antibiotics or egression naturally in a clean environment.To sum up, primitive food is more environmental friendly since it does not create any contamination and waste to the earth. Besides, they defend a tremendous prospect to human being which led to healthy lifestyle and endure a offend environment. Organic take awayrs fly the coop a meaning of who ar not lonesome(prenominal) prefer an im experimentd and healthier lifestyle but likewise environmental exportation and responsible to propose care of the nature (Midmore et al, 2005). In addition, it as well as brings advantage to all told economy by gain business activities, trade, production and function.1.2.2 The fact of ingrainedThe mature of ingesting thoroughgoing food and healthy lifestyle in both developed and create country is not just a passing fad. The popularity of consuming organic fertiliser food is now in an sum up manner in all over the world where it overly includes Malaysia. Increased consumers foreboding and care regarding food safety and character reference as well as health and nutritional aspect of food conduceed in increased bespeak toward organically produced food. Such trend is a kin d of reaction to numerous health affair link up to processed food (Davies et al, 1995). Refer to the press exclude post by Nestl Malaysia in year 2008, it shows that organic festering reached 8.9% including 3.4% of real internal growth. In Europe, organic growth of Nestls add up Food and Beverages business is more or less 5.4% and the growth pass judgment is face uped around 9.5% in United State and Asia, Oceania and Africa is at the rate of 14.2%. working(a) food such as health supplements and organic food was project reach RM234bil (US$65bil) in 2003 at global market place. It is estimated reach RM601bil (US$167bil) in 2010 by has the growth rate of 14% p.a.. fit in Federal awkward Marketing Authority (FAMA), in the year of 2001 the sale for organic food has achieved USD 8 billion world wide. The sale value of organic food is estimated to have growth rate at 20-30% by year 2005. The placement stated that if compared with others agricultural products, organic food has hi gh emf for commercialization in Malaysia. Demand for healthy, environmental friendly processed food, stripped-downly chemical used fresh food, organic food and natural food are caused by increasing of consumer sense in nutrition value and health conscious (Malaysia Industrial Development Authority, MIDA, 2009). Malaysian start to increase their supplicate since they believe that consuming organic food is one of the best ways that led to a healthy lifestyle and they view this as a worthy investment for their heath. The concern of consumers toward food safety, quality and the environment give an opportunity to the organic assiduity and become more blue-chip for producers and retailers. As a part from that, it besides activates the organic agriculture firmament in Malaysia.The rises of consumers awareness of healthy lifestyle along with environment free of pollution have created a wonderful opportunity and market for organic food. However, it is touchy for producer or business man to manage the right products at a right time, right price and fluid right place with entrancing advancement since the changes of consumer doings was so unstable wagesable to various kind of reason, so it is very complicate to fix or to define how the consumer persuade. holdr demeanor carries the meaning of activities the great unwashed undertake when obtaining, consuming and disposing of products and services (Kozak, and Decrop, 2009). As a turn up, pick up and understanding the consumer demeanour and resultingness of consumers to bear for organic food is a vital knowledge for marketers, producers and businessman. There is a behavioural model proposed by Von Alvesleben (1997) address that product information, product light and attitudes are the main factors that ram down consumer behaviour. When we believe that an object or brand accept favorable attributes or have well feeling then we provide have good attitudes toward it. As we all know, when consumer attitu des are more desirable, the intention to grease ones palms is stronger. In this research, it is more focus on consumer preferences and their willingness to ante up when they wish to obtain organic food. The result endure sustain marketers and policy makers develop strategies to reach customers more effectively and efficiently.1.2.3 Natural Food vs Organic foodMost of the people are often confuse or so the unlike amongst organic food and natural food. Moreover, people though organic food and natural food own the same attribute and tend to treat or mean both the same. In fact, in that respect are certain features that disposition organic food and natural food.Obviously, the main factor difference the cardinal is organic food must be certified by United Stated Agricultural Department ( factory farm) and organic food possessed higher(prenominal)(prenominal)(prenominal) quality. We send word notice that organic food have labelled organic and this label represent the products a re considered as organic by USDA and get the stamp of approval from designed governing body. Products which stamp by USDA or labelled with organic must contain at least 95percent organic. Organic food provide either labelled by foreign certification which is USDA or certify by local brass section which is Malaysia Organic Scheme (SOM). Products that labelled with SOM carry a meaning which is the process of production inspected by departments Crop Quality Control Division. The standard where SOM fare is Sirim MS 15292001 standards. The guideline applied to control whole process of organic food which includes production, processing, labelling and marketing of plant-based organically produced food and lastly, series number will be provided in rig to ease the identification process (SOM). Previously, certification only offer for limited organic food such as vegetables, fruit and etc. In general, Malaysia organic aquaculture products were under the governance of Thailands Organic Aquaculture Farms and Products Certification Centre (OAPC). In order to enhance aquaculture industry in Malaysia, fisheries department provide organic scheme for organic aquaculture production. Additional, this action sewer minimize the cost of apply organic aquaculture certification from other country.Moreover, organic food evermore free of chemical fertilizers, pesticides, bioengineering or irradiation during produce, manufacture and handle (Annadana,2009). Besides, livestock must be free of growth hormones and antibiotics. On the others hand, thither is not any specify standard for natural food and it is grown with pesticides, herbicides and chemical fertilizers. Basically, natural food have minimal processing and do not contain refined dirty money or artificial ingredients and without altering the raw product (Hermitt, 2006).1.2.4 Consumer vs CustomerGenerally, virtually of the people have categorized both consumer and customer in the same category where it carry the meanin g of grease ones palms any products from sellers. Conversely, both of the words carry antithetic meaning. According to Kotler and Armstrong (2006), consumer is the person who barter fors any products for individualized use or they call end exploiter. Basically, consumer is the individual who had previously bargain ford or current users for crabbed product. On the other hand, the word customer carries different meaning in different perspective. In business market, customer is the individual or organization who purchase the product but not for own consumption. The products will become their inventory for further production or resell to end user (Kotler and Armstrong, 2006). Customer can either is a current user or only a latent customer for the product (Wikipedia).1.2.5 Organic industry in MalaysiaSince 1990s organic market has grown in a favorable beat. Thus, sale of organic food and products are forecasted to be between USD 20 and USD 30 billion yearly. USA is the biggest or ganic market prolong by Ger legion(predicate) and United Kingdom. In certain country such as Denmark, Sweden, Austria and Switzerland have 4% share of organic food which exceed in the total food sales. On the other hand, organic market in developing countries is small but considers growing especially in swiftness income developing countries. Figure 1.3 shows the coverage of organic farm in different country in year 2005.Malaysia is located in Southeast Asia and consists of ii mainlands which is Peninsular (west) Malaysia and East Malaysia with an area of 329,750 km2. The agricultural sector in Malaysia is about 10.24% (738,677 / 75,657) of GDP in year 2008 (Department of Statistics Malaysia). Organic farming in Malaysia was started by Center for Environment, Technology and Development, Malaysia (CETDEM). During year 1986 CETDEM started their organic farm in Sungai Buloh with only one hectare plot. According to Department of floriculture (DoA), there is 131 hectares of organic farm in Malaysia during year 2001 and approximates organic farming increase to more than molarity hectares in year 2005. In year 2008, there are about 1000 hectares of registered and 2800 hectares of unregistered organic farm.Organic farming and production had started up during year 1990. Due to increase in favorability and rent toward organic products this recession market is growing continuously. Consequently, there is increase in the number of organic organization which include politics department and non government organization (Table 1.2).Malaysian organic scheme (SOM) is the organization that has the right to give certification to organic farmers. Today, there are 28 Malaysian Organic Scheme (SOM) credential Holders in nationwide with a total area of 1244 hectares (Table 1.3).Due to increasing in organic farming and production, the number of organic retail outlets is excessively in the increasing manner. As a result, there are many organic companies have started their bus iness such as Justlife, BMS, dry land farm, ZenXin, Woots and etc. Organic food was previously consumed by cancer patients or patients who had dangerous health problem. Today, organic food becomes a choice for every family or even each and everyone. As we know, Justlife is a famous retailer of organic food and organic products. Justlife has only owned half of a whole retail shop at SS2, Subang Selangor with limited organic products and food. Recently, they are triumph and owning eight retail shops in Malaysia. Accordingly, we can observe that consumer pauperization of organic food and products is rising in recent year.Since the demand of organic food and products are increasing, government has putting effort in order to set ahead producers to involve themselves in organic farming. Besides, government mentioned in Ninth Malaysia intent (2006-2010), they estimating the value for organic farms industry will be worth RM800 billion after five year and plan to have 20,000 hectares of organic farm in year 2010 (Economic Planning Unit). During year 2001, Organic Alliance Malaysia (OAM) was effect and this organization act as a private sector acquaintance to form national network. Government has tried to match the demand by increase the number of producer and organic farmer. However, we mollify supported by imports and the amount of foods that we imported from other country is about RM10.9bil or 8.7% of total import. Therefore, a pick up on consumer behaviour is pivotal in order to forecast the demand and prepare for supply.According to local report, a supplier Kerby Ho of KK Hoganik told that demand for organic fruits and vegetables were increase at about 8%-10% every month (NST, 2008). Informed by organic-certified wholesaler Radiant Codes manager- Loke Siew Fong in local report, the sale is experiencing double digit growth. She added that consumers are having higher awareness on health issues nowadays and search for organic food rather than radiation p atternal foods (NST, 2008). As a result, research on consumer behaviour can tell supplier with fact reason why they demand for organic food and best understanding the trend of organic market.Moreover, the needs of conk for both organic concept and build market confidence are vital in Malaysia market. Most of the citizen were still choosing conventional foods as usual and refuse to purchase organic food due to their own personal reason such as inconvenience, price, knowledge and others. Consequently, marketers have to know the concern of customers or citizen in order to better target the market and segments.In short, organic market is in an encouraging rate and it is a latent market for marketers, farmers, suppliers, wholesalers and retailers to aim. The reason why and how the demand increase is important for them to deal in order to legion the organic fans at the right time and right place with sufficient supplies.1.3 Research ProblemConsume organic food has become an importan t subject for today in changing social graphic and emerging trend. Government had been aware of the immenseness of organic sector since early of 1990s. The Organic Trade Association forecasts sales of organic food will be increase by 18% annually through 2010. Organic products become part of the ikon for everyone at the present time and customer base of organic sector expected to rise and retailers continue to provide wider variety of organic food. Commissions communication were presented in celestial latitude 2002 that they are planning to increase their efficiency, transparency and consumer confidences in order to develop the market for organic food (Gracia and de Magistris, 2007).Refer to a report rig in OAM in November 2008, Katherine diMatteo, president of the International Federation of Organic Agriculture consumers assay organic produce as a way of environmental degradation, or as the best way to eat healthy foods. Besides, government and others view that purchasing org anic is a good way for developing fair trade due to most of the organic farmers are pocket-size producers. The trend of eating and purchasing organic has boosted up the organic sector in constructive rate. Transaction and trade of business have increase indirectly and these withal bring a healthy rate for Malaysia economy. Consumers also willing to pay for organic food during economy down fold in June 2008. Economy down turn do not brought a strong impact to this industry and the sale of organic food still in a healthy and encouraging rate. As a result, we confidents there are some amour behind the consumers to motivate and move them to purchase organic food.At one time, people always believe that consumers choice was unstructured and natural but at this moment, people know that human behaviour is manipulated, kick upstairs or even forced by reason. For instance, health conscious is affecting consumers where they will hunt for organic food in order to supersede conventional fo ods. Nevertheless, this is only one of the hypotheses or assumption that we can made, we cannot prove that this is the accurate explanation for the question Why the demand of purchasing organic food is increased from year to year? Additionally, there are many factors that declare moving people from conventional foods to organic food. Hence, reputation on the factor that affect consumers willingness in purchasing organic food is an all-important(a) issue to further understand consumers mind and support organic.Furthermore, dynamic issues and factors which influence consumers are changeable among individual and purchase end of organic food will depend on many variables such as consumers attitudes toward environmental protection and healthiness (Gracia and de Magistris, 2007). piece behaviour and customers choice is not impulsive, unconscious, noninheritable and natural. Conversely, consumers behaviour is always motivated by the environment, enthusiasm, sensation and emotion (Ajz en and Fishbein, 1980). Consumer willingness to pay for organic food may influence by numerous factors. Human beings easily get influenced by the environment and objects surrounding them. We have no capability to freeze their consumption and purchase behaviour. The only way that we can do is to study deeply on what are the main aspects they are focusing and what are the essential factors that manipulate their purchasing. More to the point, people perception and motivation in purchase organic food are alter from country to country. There is different demand in different county with different culture.In order to have a good explanation to dish up the entire question and have a bottomless understanding of customers willingness to pay during obtain organic food, we come out with the problem statement What are the main aspects that manipulate consumers willingness to pay for organic food. Policy maker seek consumer oriental analysis in organic sector since the information is crucial fo r them (Gracia and de Magistris, 2007). The study not only can improve the understanding of consumer behaviour and factors that affect customers but it is also a necessary research to admirer marketers to market the products, jockstrap government to better know the needs of citizen, help retailers or wholesalers to do some related activities to encourage consumers in order to choose organic food and help producer to estimate the production in future.1.4 Research ObjectiveThe main purpose of this research is to recognize some of the essential variables that motivate or stimulate citizen in Malaysia in purchasing organic food. Organic market is a potential and economic market for marketers to have a deep study on it since the demand of organic food is keep increasing nowadays. Besides, organic industry did bring in to Malaysia economy and citizens health, as well as the environment. In my opinion, customers belief, feeling, attitudes, motivation and demand trend would bring a deep impact on food industry and this will bring challenges for marketer to design marketing strategy. The next objectives are built to achieve goals of this study.i. To study the determinants that motive consumers willingness to pay for organic food. subsequently identify all the factors, we can better target and server our customers when they doing their purchase. When retailers know all the factors and possess this advantage, they can come out with following step such as education fair, seminar or others kind of parade to influence or encourage customers in order to purchase organic food. Moreover, eating organic food can save and secure the earth. Consume organic food not only healthier but also more environmental friendly if compare with conventional foods. By educating others customers about the benefit of consuming organic food, sales of organic food will definitely continue to double up in the future. By the way, this also can help marketers to better market the products and a lso target potential customers easily. Lastly, this as well will put forward to economic growth and better environment for next generation.ii. To better understanding consumer buying decision and contribute precise data to policy makers.There is a problem that release by NST on November 2008 which is the number of organic supporter is increasing merely there are too few farmers to serve the large family of consumers. As a result, we can overcome the problem of supply and demand after knowing the reason why customers purchase organic food or not. Moreover, most of the researchers showed consumers are willing to pay for high quality food. If this research can prove that there is a significant result between quality and willingness to pay. Related organization can immediately take action in order to strengthen organic production governance.iii. To study the impact on organic food industry due to the issue of health conscious.Recently, health conscious became a latest issue among cit izen in Malaysia. Most of them are practicing healthier lifestyle and willing to spend and search for supplements and healthier foods. They try to avoid themselves in consuming oily, high sugar level and high cholesterol foods. They seek for more healthy activities such as yoga, dancing and search for natural or original products in their daily life. Throughout this study, we can collect precise and significant result to see whether health conscious can increase the number of organic food fans. Furthermore, government can use the result of this research to allot more funds and capitals to develop small farmers and help them to shift from convention production to organic production.iv. To study the relationship between consumer behaviour and organic food purchases.Many studies pointed that consumer behaviour toward organic food is crucial for decision makers. Obviously, we can understand that the popularity of organic food is in an encouraging rate. However, most of the people are s till choosing convention foods as their first choice. This is due to the availability of convention foods is higher than organic food. Although organic food is a potential market, yet customers still cannot get organic food in most of the hypermarket or night market. As we know, most of the consumers in Malaysia will go to night market to purchase their daily or even weekly foods since they can get all kinds of vegetable, fish or meat at lower price at night market. Even there is high demand of organic food however it is inconvenience for consumers to purchase organic food. Although customer have positive attitudes and high intention to purchase organic food but there are some immaterial factors that will influence customers purchase decision. Accordingly, research on consumer behaviour can help marketer to study the consumers preferences and do a more steal and suitable plan to serve the customers.v. To analyze the willingness to pay for organic food.Consumer always wiling to pay a premium price to obtain any thing or object that they are perceive as a valuable and high quality product. As we all known, organic food is priced higher as compare with convention food. As we all known, consumer has different consumption pattern, attitude and response towards organic food. There is a number of customers are not willing to pay for the premium. Beside that, most of the customers prefer to purchase and consume conventional food instead of organic food. However, some of the consumers are still willing to pay for organic food and they believe this is a profitable investment for them. Consequently, segment of organic consumer is getting bigger and bigger. Therefore, it is essential for this study to analyse consumer purchase decision and offer contribution to the decision makers, society, famers and also nation economy.1.5 Significant of StudyAlthough the concept of green living and consume organic food are becoming one of the favorable issue in this moment that alway s be discussed and concerned by most of the population today. However, the amount of people who purchase organic food is considered low. According to Fotopoulos and Krystallis (2003), customers are aware of the benefit brought by organic food but there is only small proportion of them willing to pay for it. Additionally, surpass brought a significant issue to potential customers (Padel and Foster, 2005) since coverage of organic food shop is low and cause customers who have the intention to purchase organic food face difficulty when they wanted to buy.Additionally, there are a number of research focus on organic industry had been conducted by researchers from others country (for instance, Gracia and de Magistris, 2007 Fillion and Arazi 2002). However, there is only few researchers are focusing on the organic industry in Malaysia. As a result, this study can helps in better understanding about organic agriculture in Malaysia and contribute to organic industry in Malaysia.As a result , this study aims to analyse in depth the factors that influence consumers feeling and motivate customers to pay for organic food. Apart from that, this study is crucial to show the brief picture to all related parties who involved in organic food industry such as farmers, department of agriculture, wholesalers, retailers and others. This study also plays as an important role and sources for education sector, marketers and small-medium entrepreneur (SME) to understand more about consumer behaviour and factors that influence consumers willingness to pay for organic food. By the end of the day, the result can help them to do their marketing plan more smoothly, effectively and successfully.According to a report posted by Food, Nutrition Science in May 2009, stated that Organic Trade Association (OTA) published the sales of organic have hit $22million. As a result, knowledge and crime syndicate of database are crucial for policy makers in order to implementing their marketing plan. e rstwhile wealth of data and evidence presented in the industry, all the parties can significantly gain from the benefit. This study can indirectly support small farmers to have more confidents in produce more and more organics foods. Increase in number of production not only can fulfill the demand of Malaysian and self sufficient but also have the opportunity to export the quality foods to others country. Besides, it give a more visual result to government in order to increase their expenditure in fortune small farmers to involve in organic farming. Furthermore, objective of some of the related agency such as CETDEM, FiBL, DOA and OAM can become more achievable. After knowing consumer behaviour in depth, retailer shops such as Justlife and Country farm can have more confidents on their effort and increase the coverage of their business in order to reach more potential and profitable customers.In addition, this study will help us in understanding consumer mind and know the reason be hind every purchase of organic food. We can know the aspects that always push and move consumers to purchase organic food instead of conventional foods. On the other hand, we also can see the barriers that influence consumer refuse to purchase organic food and stay with convention foods which offer a lower price and have a high coverage. This also can assist us to understand the barriers faced by most of the population from their point of view. The barriers can be narrow down when we know the root cause of the barriers. Marketer can use the valuable information to run their marketing mix (4P-people, promotion, place, product) and promotion mix (advertising, personal selling, direct marketing, sponsorship, promotion, public relation). Other than that, consumer organic food is one of the ways to save and secure the earth. This can give a hand to the group who are environmental friendly and always pick out and care the earth. Green life with organic food can provide a bright future fo r the entire citizen to own a healthier life style and also a superior environment. Moreover, we can keep a more natural and fantastic earth for our next generation. By exposing more people to organic product, we are able to educate them the importance of growing this industry in Malaysia. As the demands increase, it will benefit all level of people as it will boosts our economy to a higher level. It will provide more jobs opportunity, more researches and bring more affair in this sector. Eventually, it reflects directly on Malaysia GDP, attracts foreign investment and technology transfer.1.6 stove of StudyThe main focus of this study is to identify how organic consumers behave and their willingness to pay for organic food. This research will be targeted on consumers instead of customers since consumers are the group of people who already takes their action in organic consumption. The information provided by them is more precise and accurate if compared to each other. According to information, organic include organic food and organic products. However, the popularity and acceptability of organic products in Malaysia still consider low. Consequently, this research will focus on organic food such as can food, fresh vegetable, fruit and others.As we all known, consumers willingness to pay is an issue that difficult for marketer to predict. stack always change according to the environment, people, object and others surrounding them. However, people who possess the same characteristics or in the same categorize will always have the same respond to particular matter. Consequently, we will come out some possible hypotheses and do a research on it to help related parties in the industry to make their decision. Beside that, we will study consumers willingness to pay for organic food since organics foods industry still in a growth stage in product life cycle (PLC). We believe that the consequent of this research will be very useful and valuable for marketers and ret ailers. In addition, questionnaire