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ORGANIC PRODUCTS MARKET OPPORTUNITIES



Marketing is an important management tool on which the success of any business lies. Although, the primary aim of any agribusiness is to maximize profit, hence, there is need for agropreneurs to shift their focus from ‘producing for the market’ to ‘producing what the customers want’. Many agribusiness owners have gone bankrupt because they failed to prioritize the need of the consumers. In order to successfully benefit from the opportunities of the market, it is necessary to understand the market (local, domestic or export) and prepare well for it. For organic products, marketing is especially important as the higher value and  sometimes  price  of  organic  products  often  needs  to  be  explained  accordingly to customers. Marketing ensures that these values are well communicated, whether face-to-face or through promotion material, in order to boost demand and develop new markets.
Demand for organic products is growing in nearly all countries of the world due to growing awareness and improved availability for organic products. Consumers are increasingly buying organic for the following reasons:
·         They want to buy guaranteed food which is produced without pesticides;
·         They care for food that promotes sustainable agricultural production practices and especially biodiversity (e.g. promoting rare plant and animal species, diversity of plants and animals);
·         They care about the well-being of animals;
·         They want food whose origin they know and how its production benefits producers and the environment;
·         They prefer products that contribute to the mitigation or the effects of climate change.
Consumers are willing to pay a better price for better quality. This is only one of many benefits organic farming offers to agropreneurs from developing countries, through export of organic products to premium markets in developed countries. Demand for organic products is growing since more than twenty years and offers a huge income potential for producers, processors and trading companies all over the world. Certified organic products provide access to attractive local and international markets, where higher prices and incomes are possible. As a consequence, organic products from Africa are currently exported to many countries, especially in Europe, and are being successfully exhibited in international trade fairs. Organic  markets  have  developed  fast  in  the  past  decades,  especially  in  richer countries. The reasons for this growth include:
Increased consumer demand  for  healthy  and  sustainably  produced  food, which  triggered  important  investments  from  the  side  of  retailers  to  boost the awareness for these products, and Enhanced public support for the organic sector, aiming to set in place a regulatory framework that benefits  both  farmers  and  consumers  and  involving subsidies and control mechanisms to ensure consumer protection.
The support for organic agriculture is particularly high in Europe and North America where consumers are well informed about organic agriculture and the benefits of organic products.  Therefore, North America, the European Union, Switzerland and Japan are the largest markets for organic products; their respective regulations play an important role not only in these countries themselves but also in the exporting countries. By far the largest organic market is the United States, followed by the European countries of Germany and France. Even though these countries are important organic producers themselves, there are major opportunities for exporting countries – particularly for crops that cannot be grown in the countries as well as off-season products.
The fast growing world market for organic produce offers increasing trade opportunities for African entrepreneurs. In fact, the majority of certified organic produce from Africa is destined for export markets, with the large majority being exported to the European Union, which is Africa’s largest market for agricultural produce. For instance, the total value for the export of organic produce from Uganda has been estimated at 37 million US dollars in 2009. In most cases, due to the dominance of small-holders in Africa, the typical supply chain is made up of a private  enterprise  organizing  many  small-holders  as  out-growers  to  secure  the sufficient quantities for export, or farmers are working together on one project supplying and packaging for exporting trading companies.
In Tanzania, for example, the total value for the nine most exported organic product categories was estimated at almost 10 million Euros in 2009. The exports are mostly destined for the European Union and the USA. In terms of tons, heavier nut products like cocoa, cashews and coffee are on the top. In economic terms, cocoa,  cashews,  vanilla  and  tea  are  the  most  important  export  products.  They represent 55 percent of the total organic export value. The driving factor for the organic export business lies in the growing interest of  big  retailers  and  processing  companies  to  broaden  the  portfolio  of  organic products. Consumers should not only be able to buy fresh organic products, but also different types of convenience food, ranging from frozen organic pizza to ready-to-eat breakfast cereal mixes. Since the fast growth of such processed food implies the purchase of a broad range of organic ingredients, countries have started to specialize on specific ingredients including: medicinal herbs and spices, dried fruits and mushrooms, flavours and sweeteners.
Although the African market for organic products is still small, domestic organic markets are growing in Africa.  Local  organic  markets  are  usually  located  near capital  cities  and  major  towns.  The majority of the consumers that know and care for organic are foreigners and upper-middle class citizens with values similar to European organic consumers. The products marketed include organic fresh fruit and vegetables, dairy products, meat, wine, herbs and personal care products.  In  Tunisia  and  in  Egypt,  specialized  shops  and  a  number  of  supermarket chains (Metro and Carrefour) have organic sections. Similarly, organic shops in South Africa, Kenya and Uganda and Ghana are also picking up organic products and, therefore, playing a growing role in the domestic organic market. In Zambia, organic farmers sell their produce in local farmers’ markets or to urban supermarkets. There is no doubt that, with increasing awareness, the potential of local or domestic African markets for organic products will increase. However, few African countries have articulated a concrete promotion strategy for domestic markets. The driving factor   in the domestic market for organic products relate to the fast expansion of big retail chains. Targeting upper class consumers in urban areas –including foreigners and well-educated national citizens – they increasingly try to respond to consumers’ interest for best quality, including organic. As competition among different retail chains is increasing, specific retailers are more willing to get involved in the promotion of organic as part of their strategy to attract consumers and generate a favourable image compared to their main competitors. Since freshness is one major quality factor for consumers, especially for fresh vegetables and fruit, street markets may also become important promoters of organic food—especially if well-located, near upper-class consumers and are well-managed and ensure quality through hygiene and trustworthy sellers.
In Uganda, organic products for the domestic market are sold via a number of outlets including supermarkets, restaurants, international schools and open markets. There is a big range of organic products supplied by small-scale farmers and processors on the domestic market. These include coffee, bee products, fresh fruits and vegetables and dried fruits. Over the years, the demand for organic products has been growing steadily.  For some products such as organic dried fruits, the demand by far exceeds supply. Products like organic Arabica coffee are increasingly being consumed in restaurants and coffee shops. Through a basket delivery scheme of one of the organic outlets (NOGAMU shop), fresh fruits and vegetables and other organic products (e.g. sesame, spices, teas, fruit concentrates) are supplied on an order basis to customers. Customers  place  their orders  by  telephone  or  email  and  baskets  are  prepared  and  delivered  to  their doorsteps.

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