Consumer Behaviour towards Organic Food Products: A Study in Meghalaya By Suchitra Mohanty 1, Subhasis Mandal 2 and Kazi M.B. Rahim 3 1 Faculty Research, Amity Research Center, Kolkata e mail: Suchitramohanty2007@gmail.com 2 Senior Scientist, Agriculture Economics, CSSRI, RRS, Canning Town 743 329, West Bengal 3 Professor, Department of Agriculture Economics and Statistics, Pallisikshya Bhawan, Viswa Bharati, West Bengal 1
Consumer Behaviour towards Organic Food Products: A Study in Meghalaya ABSTRACT Increasing demand for organic food and rising health consciousness among the people in the present scenario led the researcher to study about the behavior of consumer towards the organic products, its pricing, awareness of consumers towards organic products etc in a more intensive way. Meghalaya, one of the potential states for organic products, majority of the farms of the state cultivate the traditional way without or minimum use of fertilizers and plant protection chemicals. Some of the major food crops produced organically in Meghalaya and having good market demand are ginger, orange, pineapple, cashew nut. Consumers are also preferred to purchase many organic food products product, particularly in big cities. But due to improper market linkage, lack of awareness of the people about organic produce, no product differentiations between organic and inorganic products etc resulted into price advantage (premium price) to the organic foods produced in the state. The present paper analyses the consumer behavior towards organic products including willingness to pay for the product, preference for various product such as fruits, vegetables, cereals etc to understand the perception of the consumers towards organic products in a better way. INTRODUCTION Demand for organic food products and awareness level on organic foods is increasing rapidly around the developed world. Consumers in developed countries and also in few developing countries have become more health conscious and they have started spending on greener, healthy and natural foodstuffs (Kumar and Jain, 2003). However, the market development in the Asian countries is in a nascent stage. Scanty information is available for Indian organic food market and 2
the consumer behaviour towards these products. Mostly the organic foods in our country are produced targeting the export demand in the markets of developed world. Along with the increase in production, marketing of the organic products, awareness level of the consumer ultimately influences the price premium for the organic produce. Study on the behaviour of the consumers towards the organic product is one of the important aspects for analysing the future demand of the organic agriculture. From the marketing perspective, it is important to understand human conception of consumer decision-making regarding organically produced food and how the consumption can be promoted (Ankomah & Yiridoe, 2006). Beside this, awareness and knowledge level of consumers about organically produced foods are also crucial. The present study was based on the primary data collected from Meghalaya (one of the seven states of North East India) which is said to be, by and large, organic by default or the farmers of this region are de facto organic producers. The Government of India task force on organic farming and several other reviewers also have identified rainfed areas and regions in north east as more suitable for organic farming in view of the low input use (GOI, 2001; Dwivedi, 2005; Ramesh et. al., 2005). The study was carried out with the following objectives in Meghalaya: i. To find out the consumer s awareness about the Organic Product ii. To analyse the willingness of the consumer s to buy various Organic Products iii. To understand the willingness of the consumers to pay price premium for Organic Foods. METHODOLOGY For present study, survey was conducted at different cities like Shillong, Guwahati, Kolkata and Delhi to understand the awareness level of the people for the organic product. These markets were chosen for the survey purposively, because previous studies has indicated that the product flow to these markets from Meghalaya existed and also the organic product from Meghalaya is having a link in these market channel for these places (Tripathi et. al., 2008). Total 250 consumers were interviewed for this survey and the selections of consumers were made purposively those who purchased produce from such outlets where organic as well as inorganic products were both available. Because, it was difficult to find out the consumers of organic food products as the availability of such products was very negligible. The total respondents were categorized under four income group (>5 lakh, 4-5 lakh, 2-4 lakh and <2 lakh). Maximum 3
respondents were under the lowest income group i.e. <2 lakh (36 percent), followed by 2-4 lakh (32 percent), 4 to 5 lakh (20 percent) and more than 5 lakh (12 percent). (Table 1) It was expected that the level of income would factor the consumer demand and awareness level on organic foods. The hypothesis to be tested was that the demand for organic food products would be skewed to higher income group because of their higher awareness level and quality consciousness. Thus the analysis of consumer behaviour was made by classifying the consumers in various income levels. Table 1: Profile of the consumers of the respondents Name of the City Income group >5 lakh 4-5 lakh 2-4 lakh <2 lakh Total Shillong 4 15 15 20 54 Guwahati 5 10 15 25 55 Kolkata 15 10 25 25 75 Delhi 6 15 25 20 66 All 30 50 80 90 (12) (20) (32) (36) 250 (100) RESULTS AND DISCUSSIONS a. Consumers awareness level about the organic product The income groups of the sampled consumers were consisting of income of below Rs 2 lakh (60 percent of consumer), income group of Rs 2-4 lakh (21 percent), Rs 4-5 lakh (14 per cent) and income over Rs 5 lakh (12 percent) (Table 2). Among the respondents only 21 percent had heard about the organic product, while rest (79 percent) didn t hear about organic products (Table 3). Out of this 21 percent only 17 percent respondents were under the income group less than Rs 2 lakh, 24 percent from the income group of Rs 2-4 lakh, 32 percent from the income group of Rs 4-5 lakh and 33 percent from the income group having income of Rs > 5 lakh. Consumers revealed that colleagues, literature and mass media were the major source by which they came to know about the organic products. Among those who had heard about organic products, a very around 6 percent of consumers were made aware through colleagues, 4 percent each through literature and mass media. This indicated that the information flow from colleagues played a role in creating awareness about organic product. 4
Table 2: Income-wise distribution of the consumers Srl No Income group % of Consumer a <2 lakh 60 (150) b 2-4 lakh 21 (53) c 4-5 lakh 14 (35) d >5 lakh 5 (12) Note: In parenthesis total number of the consumers Looking into the individual income group, results revealed that maximum 23 percent of the respondents sourced knowledge about the organic food by the help of the colleague under the higher income group (Rs >5 lakh) and 16 percent from literature under the same income group. Seven percent consumer was aware of organic foods from mass media under the income group between Rs 4 to 5 lakh. This indicated that the consumers of higher income group were more aware of regarding the organic food products than the consumers of below income groups. The level of understanding about the organic foods was judged qualitatively based on the reply of a set of questions asked to individual consumers. The questions were like what one understands about the organic foods, whether one checks for organic label or not while purchasing the organic food products etc. Based on the reply the level of understanding were categorised as poor, good and excellent. The level of understanding about the organic foods was poor among the 68 percent of the respondent, average among 24 percent of the respondent, good among 6 percent of the respondent and excellent among 3 percent of the overall respondents considered under the survey. Table 3: Awareness level of the consumers about organic food Particulars % of respondents across the income group <2 Lakh 2-4 Lakh 4-5 Lakh >5 Lakh Overall 1. Whether heard about organic food a. Percent of respondents 17 24 33 32 21 2. Sources of knowledge about organic food a. Colleagues 4 6 12 23 6 b. Literature 1 4 10 16 4 5
c. Mass media 3 5 7 6 4 3. Level of understanding about the organic food a. Poor 76 59 52 55 68 b. Average 18 31 34 35 24 c. Good 4 7 10 6 6 d. Excellent 2 3 4 4 3 4. Purchasing behavior of consumer for organic food a. Purchase of uncertified organic food I. At least once 4 12 16 208 II. Sometime 6 8 10 137 III. Very often Nil Nil Nil Nil b. Purchase of certified organic food I. At least once Nil 3 7 82 II. Sometime Nil 3 5 82 III. Very often Nil Nil Nil Nil Purchasing behaviour of consumers for organic produce is an indication for the likely demand of the organic product. Only 8 percent of the overall respondent purchased un-certified organic food only once and only 7 percent of the respondent purchased un-certified organic food sometimes. This showed the lack of purchasing behavoiur of the consumer and also the consumer was observed to be inconsistent in their purchasing behavior. The reasons are mainly due to nonavailability of complete range of organic food products, high prices and also lack of confidence on the products whether these were really produced organically or not. Whereas, 2 percent of the respondents purchased certified organic produce at least once and also percentage of respondents (2 percent) reported to purchase the same sometimes. None of the respondents was purchasing the organic produce very often. b. Willingness to buy various Organic Products by the Respondents Out of the 21 percent of the respondents who were aware about the organic product among the various income groups revealed that they were willing to buy organic products and the majority wanted to purchase organic fruits, followed by vegetables, others and cereals (Table 4). 6
Others includes spices, condiments, tea and pulses were the items considered under the others category in this study. In case of the low income group (Rs < 2 lakh), Fruits was the most preferred (77 percent) organic food product, followed by vegetables (65 percent) and others (12 percent) among the respondents. Cereal was least preferred organic product among the respondents under this income group. Similarly, under the income group between 2-4 lakh, 68 percent of the respondents preferred to purchase fruits as an organic product followed by vegetables (74 percent), others (22 percent) and cereals only 4 percent. The response of the consumer of the next income group (4 to 5 lakh) was almost same. Nearly 85 percent of the respondents under this income category liked to purchase fruits as an organic food items, followed by vegetables (79 percent), others (30 percent) and cereal (7 percent). The higher income group i.e. more than 5 lakh also preferred fruits as the most preferred organic item (88 percent) followed by vegetables (75 percent), others (34 percent) and cereals (12 percent). Thus the above results clearly indicated that fruits were the most preferred organic item in the respondents organic purchasing commodities in all the income groups, followed by vegetables and other commodities, whereas cereals was the less preferred commodity. The consumers of lower income strata perceived shifting to organic cereals as expensive because cereals required in a larger quantity as compared to other commodities. The preferences for cereals were increased with the increase in the income of the respondents. Table 4: Willingness of the consumers to purchase various organic foods (%) Name of the Commodities Income group < 2 Lakh 2-4 Lakh 4-5 Lakh > 5 Lakh a. Cereals Nil 4 7 12 b. Fruits 77 68 85 88 c. Vegetables 65 74 79 75 d. Others 12 22 30 34 Note: Others includes spices, condiments, tea and pulses 7
Wilingness of the consumers to purchase various organic food 100 90 80 70 Percentage 60 50 40 a. Cereals b. Fruits c. Vegetables d. Others 30 20 10 0 < 2 Lakh 2-4 Lakh 4-5 Lakh > 5 Lakh Income group Fig 1: Willingness of the consumers to purchase various organic foods c. Willingness to Pay Price Premium for Organic Foods Price premium of the organic products depends on factors like income pattern, types of commodities, distribution channels, and current market conditions tec. Consumers were asked about the maximum extent of rice premium they are willing to pay for the organic food products across the consumers under various income groups. Previous studies indicated that the price premiums obtained vary among various income groups (<10% to >30%), for different organic products (spices, vegetables, fruits, cereals etc). However, the average price premium ranges between 30 to 50 percent (trader level) across countries for different organic products (Garibay and Katke, 2003). Most of the consumers (78 percent) under the income group of Rs < 2 lakh expressed their willingness to pay a maximum of 10 percent of premium price for organic food products (Table 5.34). Around 20 percent of the consumer in the same income group were willing to pay a premium of 11-20 percent over the conventional produce and no one was willing pay a 8
premium beyond this extent (>20 percent). Similarly, under the income group of Rs 2-4 lakh around 51 percent of the consumers were willing to pay a maximum of 10 percent price premium and 45 percent of the consumers were willing to pay a premium of in between 11-20 percent and almost 2 percent of the consumer expressed their willingness to pay a premium of 21-30 percent. Under the income group of Rs 4-5 lakh, more than half of the consumer (52 percent) were willing to pay a maximum price premium in between 11-20 percent, around 45 percent expressed their willingness to pay a price premium of < 10 percent, 6 percent of the consumer were willing to pay extra price in between 21-30 percent and 2 percent of the consumer expressed their willingness to pay the premium price even more than 30 percent. Under the income group >Rs 5 lakh 58 percent of the consumer were willing to pay a price premium of 11-20 percent and 51 percent of the consumer were willing to pay extra up to 10 percent, 10 percent of the consumer were willing to pay a premium of 21-30 percent and 3 percent of the consumer were willing to pay even >30 percent of the price premium. As the income was higher the willingness to pay higher premium was also increasing. However, most of the consumer was willing to pay a price premium up in between 11-20 percent. But this premium price was not accepted by the consumer for all kinds of commodities. Consumers expressed their willingness to pay higher price premium for fruits and other commodities, which are consumed directly and lesser price premium for other commodities such as pulses and cereals. Table 5: Extent of price premium consumers willing to pay for organic food (%) Extent of price Various Income group premium <2 lakh 2-4 lakh 4-5 lakh >5 lakh a. <10% 78 51 45 51 b. 11 to 20% 20 45 52 58 c. 21 to 30% nil 2 6 10 d. >30% nil Nil 2 3 9
Extent of price premium consumers willing to pay for organic food (%) 90 80 70 Extent of price premium 60 50 40 30 a. <10% b. 11 to 20% c. 21 to 30% d. >30% 20 10 0 <2 lakh 2-4 lakh 4-5 lakh >5 lakh Various Income group Fig 2. Extent of price premium consumers willing to pay for purchase of organic food Conclusions In this present era, organic farming movement across the World is gaining popularity since years. The majority of India s farms in northeast region in general and Meghalaya in particular are organic by default. The traditional method of cultivation which the farmers of the region practice, is a centuries old practice and organic by default. Pineapple (because of its good flavour and less fiber contain), Cashew (highly nutritious and tasty), Turmeric (high cucurmin content and widely preferred worldwide because of its strong pungent smell), Ginger (less fiber and delicious flavour) and Orange (juicy and sweet) were some of the products of Meghalaya preferred by the consumers as organic. The results clearly indicated that fruits are the most preferred organic item preferred by the respondents among the organic purchasing commodities in all the income groups, followed by vegetables and other commodities, whereas cereals was the least preferred commodity. The preferences for cereals are increased with the increase in the income of the respondents. Price premium of the organic products were depending on factors like income pattern, types of commodities, distribution channels, and current market conditions etc. But this premium price was not accepted by the consumers for all kinds of commodities. Consumers expressed their willingness to pay higher price premium for fruits and other commodities, which are consumed directly and lesser price premium for other commodities such as pulses and cereals. 10
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