Market Restraints
A market restraint is a factor that has a negative effect on the market, either in terms of preventing sales or consumption of organic foods to rise. Figure 3 lists the factors that are restraining growth in the Asian organic food industry. The restraints are listed in order of importance and the impact is given over the forecast period.
The market for organic foods in Asia is very small considering over haft the global population resides in the continent, There are three main factors responsible for the undeveloped state of the industry:
●Many Asian countries have large sections of the population below the poverty line, and these consumers struggle to afford the basic necessities; Organic foods are seen as luxury items in many Asian countries because of the high price premiums
●Low consumer interest and / or awareness of organic foods. This is either because Asian consumers do not know what organic foods are or because they are not interested to buy organic foods
●Low production levels of organic foods in the continent, which impacts availability and consumer awareness
These are the reasons why demand for organic foods is limited to the most affluent countries like Japan, Hong Kong and Singapore where consumers are more informed of food issues and they have the purchasing power to buy organic foods. Apart from Japan, organic foods are imported into all these countries because or no domestic production.
In countries where there is growing consumer interest in organic foods, sales are restricted by lack of industry regulations. There are no regulations for the marketing of organic foods in any Asian country aside from Japan. There is no differentiation between organic and non-organic foods in the marketplace and food can be grown according to conventional farming and be marketed as organic to consumers. In countries like South Korea and China there is little differentiation between organic and green foods and sales of organic foods suffer because they are usually priced higher due to the higher standards of production.
Another factor restraining market growth in most Asian countries is poor availability of organic foods. It is rare to find retailers that offer organic foods and this is because of very low production of certified organic foods in these countries and because of low consumer interest. In countries where there is consumer demand, organic foods are only found in specialist retailers like health food shops. Apart from Japan, no mainstream retailers offer organic foods. Countries like Singapore only have 3-4 retailers in the whole country that market a wide range of organic foods.
Although interest in organic farming is rising, very few Asian farmers are converting to organic agriculture. In some countries, organic agriculture is seen to be backward and not part of the modernization of the agricultural sector. Many Asian farmers want to emulate western farming practices in which high levels of agricultural inputs arc used to maximise yields. Organic agriculture does not fit into their idea or western farming practices. Countries like China and India are also looking at expanding the production of Genetically Modified Organisms (GMOs), which attracts more farmers than organic farming. Low farmer interest in organic farming translates into low production levels and this impacts availability and consumer demand.
