Analysis of the Organic Food Industry in Malaysia

psychoanalysis of the ingrained solid f atomic number 18 Industry in MalaysiaChapter 1Introduction1.1 IntroductionToday, with the advancement of science and technology, gentlemans gentlemans pick up more than delineation to information technology, experience and education than ever before. As a root, plurality become more aw ar and sensitive to the environment and their surroundings. A select and thinking(a) lifestyle necessitate becomes a kind of necessity to the current generation. Among others, radical Food is recognized to be one of the contri saveors to a wellnessy lifestyle. Almost any day, you can put down or see radical topic e precisewhere around you. From newspaper, magazine, billboard advertisement, internet and and so on innate fertiliser has slowly becomes a trend to the modern society.However, a some issues perplex been identified in the Organic Industry in Malaysia. These factors have a safe role in influencing the purchasing and down of Orga nic Food in Malaysia. in that respectfore, it is important to identified and understand every factor of regularise that concern the purchasing and con subject mattering of original nutrient in Malaysia as only this factors turn in affect the entire industry from farmer, retailer, produces and even the consumers.1.2 Background of Study1.2.1 What is entire pabulumBased on United State, European, and foreign definitions, original aliment is define as with verboten using any material substance in the solid solid regimen itself, but instead by the holistic methods employ on complete farms. According to Gracia and Magistris (2007), the intention of thorough output signal is to eliminate chemic used on the regimen production in cab atomic number 18t to countenance healthier and sentry duty viands. Moreover, total nourishment to a fault means that it is non cultivated using chemical-derived pesticides fertilizers and herbicides. As an alternative, the process of planting and do important the total diet are by using holistic methods such as compost, crop rotation, and biological agents over a inborn period of time. According to National Organic Standard carte du jour of the U.S subdivision of Agriculture (USDA) in course of instruction 2000, they established a national standard for the term total. Organic food, it is defined by how it can non be made earlier by how it can be made, which must be produced without the used of sewer-sludge fertilizers, most synthetic fertilizers, and pesticides, genetic engineering(biotechnology), ingathering hormones, irradiations and antibiotics (TheStar, 2005). From the several(prenominal)s point of becharm, constituent(a) means it is grown in a in liquidateed environment without any chemical, antibiotics, genetic engineering, and any synthetic products or in simple way, thoroughgoing mean inseparable or go back to the traditional way of modes of hoidenish.As an overview, the developments o f thoroughgoing food always work in cooperation with nature environment. Normally piles definition of fundamental food perhaps was just vegetables and fruits, but actually plenty of foods menage like meats, eggs, livestock, dairy products and many more are likewise conclude as primitive fertilizer food. This issues clog uped by the research conducted by Padel and Foster (2005) where respondents only associate radical term with vegetable and fruit. Generally, radical food allows plenty of categories which include vegetables, fruits, bread, meat, eggs, coffee, juice, rice, tea, potatoes and etc. separate than that, innate food like egg, meat must be free of all kinds of antibiotics or harvest-home naturally in a clean environment.To sum up, total food is more environmental informal since it does not create any defilement and waste to the earth. Besides, they give a direful opportunity to human being which led to sound lifestyle and provide a cleanse environment. Org anic consumers carry a nitty-gritty of who are not only elect an improved and healthier lifestyle but also environmental exportation and responsible to take care of the nature (Midmore et al, 2005). In addition, it also brings advantage to social unit economy by accession business activities, trade, production and use of goods and services.1.2.2 The fact of innateThe get up of contracting essential food and healthy lifestyle in both real and developing clownish is not just a passing fad. The popularity of consuming innate food is now in an increasing elan in all over the conception where it also includes Malaysia. Increased consumers concern and care regarding food safety and quality as well as health and nutritional scene of food firmnessed in appendd demand toward organi discovery produced food. Such trend is a kind of reaction to numerous health purpose related to processed food (Davies et al, 1995). Refer to the press release post by Nestl Malaysia in yr 2008 , it shows that organic growth reached 8.9% including 3.4% of real internal growth. In Europe, organic growth of Nestls total Food and Beverages business is close to 5.4% and the growth browse is presented around 9.5% in United State and Asia, Oceania and Africa is at the rate of 14.2%. Functional food such as health supplements and organic food was projected reach RM234bil (US$65bil) in 2003 at global foodstuff place. It is estimated reach RM601bil (US$167bil) in 2010 by has the growth rate of 14% annually.According Federal Agricultural 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 judicature stated that if compared with others agricultural products, organic food has high potential for commercialization in Malaysia. Demand for healthy, environmental friendly processed food, minimally chemical used fresh food, organic food and natural food are caused by increasing of consumer awake(predicate)ness in nutrition value and health conscious (Malaysia Industrial Development Authority, MIDA, 2009). Malayan start to amplify their demand 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 industry and become more semiprecious for producers and retailers. As a part from that, it also activates the organic agriculture sector in Malaysia.The rises of consumers consciousness of healthy lifestyle along with environment free of pollution have created a wonderful opportunity and food market for organic food. However, it is hard for producer or businessman to manage the chastise products at a right time, right wrong and still right place with attractive promotion since the changes of consumer d emeanor was so unstable due to various kind of reason, so it is very complicate to fix or to define how the consumer behave. tirer doings carries the meaning of activities people undertake when bumping, consuming and disposing of products and services (Kozak, and Decrop, 2009). As a result, debate and in showect the consumer behaviour and go forthingness of consumers to generate 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 knowledge and attitudes are the chief(prenominal) factors that drive consumer behaviour. When we believe that an object or brand possess favorable attributes or have pricy feeling then we will have proper attitudes toward it. As we all know, when consumer attitudes are more desirable, the intention to purchase is stronger. In this research, it is more focus on consumer preferences and their willingness to pay when t hey wish to obtain organic food. The result can benefactor marketers and policy makers develop strategies to reach clients more effectively and efficiently.1.2.3 Natural Food vs Organic foodMost of the people are a great deal confuse about the several(predicate) amidst organic food and natural food. Moreover, people though organic food and natural food own the aforementioned(prenominal) attribute and tend to treat or mean both the same. In fact, in that location are certain features that distinguish organic food and natural food.Obviously, the main factor difference the two is organic food must be certified by United Stated Agricultural incision (USDA) and organic food possessed higher quality. We can notice that organic food have labelled organic and this label represent the products are considered as organic by USDA and get the stamp of approval from designed organisation. Products which stamp by USDA or labelled with organic must concord at least(prenominal) 95percent organic. Organic food can either labelled by foreign certification which is USDA or certify by local organization 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 live is Sirim MS 15292001 standards. The signpost applied to control whole process of organic food which includes production, processing, labelling and marketing of plant-based organically produced food and lastly, series physique will be provided in cabaret 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 system of rules for organic a quaculture production. Additional, this action can minimize the cost of apply organic aquaculture certification from other country.Moreover, organic food always 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, in that location is not any situate 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 edulcorate or arranged ingredients and without altering the raw product (Hermitt, 2006).1.2.4 Consumer vs CustomerGenerally, most of the people have categorized both consumer and customer in the same category where it carry the meaning of purchase any products from sellers. Conversely, both of the words carry different meaning. According to Kotler and Armstrong (2006), consumer is the person who purchases any products for personal use or they call end user. Basically, consumer is the individual who had previously purchased or current users for particular 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 sell to end user (Kotler and Armstrong, 2006). Customer can either is a current user or only a potential 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 organic market follow by Germany 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 wasted but considers growing especially in upper 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 two 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 soil 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 Agriculture (DoA), there is 131 hectares of organic farm in Malaysia during year 2001 and approximates organic farming increase to more than 1000 hectares in year 2005. In year 2008, there are about 1000 hectares of registered and 2800 hectares of unregistered organic farm.Table 1 .1 Organic production areaSource Organic Alliance Malaysia, 2007Organic farming and production had started up during year 1990. Due to increase in favorability and demand toward organic products this niche market is growing continuously. Consequently, there is increase in the bet of organic organization which include government department and non government organization (Table 1.2).Table 1.2 Organic organization in MalaysiaSource Better Diet Islam, 2009Malaysian organic scheme (SOM) is the organization that has the right to give certification to organic farmers. Today, there are 28 Malaysian Organic Scheme (SOM) Certificate Holders in nationwide with a total area of 1244 hectares (Table 1.3).Table 1.3 Malaysian Organic Scheme (SOM) Certificate HoldersSource Department of Agriculture Malaysia, 2009Due to increasing in organic farming and production, the number of organic retail outlets is also in the increasing manner. As a result, there are many organic companies have started their business such as Justlife, BMS, Country farm, ZenXin, Woots and etc. Organic food was previously consumed by cancer patients or patients who had serious health puzzle. Today, organic food becomes a alternative 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 have half of a whole retail shop at SS2, Subang Selangor with limited organic products and food. Recently, they are success and owning eight retail shops in Malaysia. Accordingly, we can happen that consumer demand 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 encourage producers to make themselves in organic farming. Besides, government mentioned in Ninth Malaysia Plan (2006-2010), they estimating the value for organic farms industry will be worth RM800 gazillion after 5 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 found and this organization act as a private sector association to form national network. Government has tried to match the demand by increase the number of producer and organic farmer. However, we still back up 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 study on consumer behaviour is decisive 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 formulaic foods (NST, 2008). As a result, research on consumer behaviour can tell supplier with fact reason wherefore they demand for organic food and better grounds the trend of organic market.Moreover, the needs of advance 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 turn down 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 potential market for marketers, farmers, suppliers, wholesalers and retailers to aim. The reason why and how the demand increase is important for them to study in order to farer the organic fans at the right time and right place with sufficient supplies.1.3 research ProblemConsume organic food has become an important subject for today in changing social graphic and emerging trend. Government had been aware of the importance of organic sector since early of 1990s. The Organic Trade Association forecasts sales of organic food will be increase by 18% annually with 2010. Organic products become part of the picture for everyone at the present time and customer base of organic sector expected to rise and retailers inhabit to provide wider variety of organic food. Commissions communication were presented in December 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 found in OAM in November 2008, Katherine diMatteo, president of the International Federation of Organic Agriculture consumers essay organic produce as a way of environmental degradation, or as the best way to eat healthy foods. Besides, government and others view that purchasing organic is a good way for developin g fair trade due to most of the organic farmers are small-scale 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 also bring a healthy rate for Malaysia economy. Consumers also willing to pay for organic food during economy down turn in June 2008. Economy down turn do not brought a strong preserve to this industry and the sale of organic food still in a healthy and encouraging rate. As a result, we confidents there are something screw 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 rigd, push or even forced by reason. For instance, health conscious is affecting consumers where they will endure for organic food in order to replace conventional foods. 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 nous Why the demand of purchasing organic food is increased from year to year? Additionally, there are many factors that slip by moving people from conventional foods to organic food. Hence, study on the factor that affect consumers willingness in purchasing organic food is an essential issue to further understand consumers mind and support organic.Furthermore, dynamic issues and factors which influence consumers are changeable among individual and purchase decision of organic food will depend on many variables such as consumers attitudes toward environmental security measure and healthiness (Gracia and de Magistris, 2007). Human behaviour and customers choice is not impulsive, unconscious, inborn and natural. Conversely, consumers behaviour is always motivated by the environment, enthusiasm, sensation and emotion (Ajzen 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 skill to freeze their consumption and purchase behaviour. The only way that we can do is to study complexly 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 vary from country to country. There is different demand in different county with different culture.In order to have a good explanation to answer 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. polity maker seek consumer oriental analysis in organic sector since the information is crucial for them (Gracia and de Magistris, 2007). The study not only can improve t he understanding of consumer behaviour and factors that affect customers but it is also a necessary research to help marketers to market the products, help 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 nonsubjectiveThe 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 profitable market for marketers to have a deep study on it since the demand of organic food is keep increasing nowadays. Besides, organic industry did contribute 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 des ign marketing strategy. The following objectives are built to achieve goals of this study.i. To study the determinants that origin consumers willingness to pay for organic food.After 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 measuring such as education fair, seminar or others kind of exhibition 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 also target potential customers easily. Lastly, this as well will cont ribute to economical 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 however 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 becaAnalysis of the Organic Food Industry in MalaysiaAnalysis of the Organic Food Industry in Malay siaChapter 1Introduction1.1 IntroductionToday, with the advancement of science and technology, humans have more exposure to information technology, knowledge and education than ever before. As a result, people become more aware and sensitive to the environment and their surroundings. A quality and healthy lifestyle have becomes a kind of necessity to the modern generation. Among others, Organic Food is recognized to be one of the contributors to a healthy lifestyle. Almost every day, you can read or see Organic topic everywhere around you. From newspaper, magazine, billboard advertisement, internet and etc, Organic has slowly becomes a trend to the modern society.However, a few issues have been identified in the Organic Industry in Malaysia. These factors have a strong role in influencing the purchasing and consuming of Organic Food in Malaysia. Therefore, it is important to identified and understand every factor of influence that affect the purchasing and consuming of organic food in Malaysia as all this factors will affect the entire industry from farmer, retailer, produces and even the consumers.1.2 Background of Study1.2.1 What is organic foodBased on United State, European, and international definitions, organic food is define as without using any material substance in the food itself, but instead by the holistic methods used on organic farms. According to Gracia and Magistris (2007), the intention of organic production is to eliminate chemical used on the food production in order to promote healthier and safety food. Moreover, organic food also means that it is not cultivated using chemical-derived pesticides fertilizers and herbicides. As an alternative, the process of planting and farming the organic food are by using holistic methods such as compost, crop rotation, and biological agents over a natural period of time. According to National Organic Standard Board of the U.S Department of Agriculture (USDA) in year 2000, they established a national stand ard for the term organic. Organic food, it is defined by how it cannot be made rather by how it can be made, which must be produced without the used of sewer-sludge fertilizers, most synthetic fertilizers, and pesticides, genetic engineering(biotechnology), growth hormones, irradiations and antibiotics (TheStar, 2005). From the individuals point of view, organic means it is grown in a natural environment without any chemical, antibiotics, genetic engineering, and any synthetic products or in simple way, organic mean natural or go back to the traditional way of modes of agricultural.As an overview, the developments of organic food always work in cooperation with nature environment. Normally peoples definition of organic food maybe was just vegetables and fruits, but actually plenty of foods category like meats, eggs, livestock, dairy products and many more are also conclude as organic food. This issues supported by the research conducted by Padel and Foster (2005) where respondents o nly associate organic term with vegetable and fruit. Generally, organic food includes plenty of categories which include vegetables, fruits, bread, meat, eggs, coffee, juice, rice, tea, potatoes and etc. Other than that, organic food like egg, meat must be free of all kinds of antibiotics or growth naturally in a clean environment.To sum up, organic food is more environmental friendly since it does not create any pollution and waste to the earth. Besides, they give a tremendous opportunity to human being which led to healthy lifestyle and provide a better environment. Organic consumers carry a meaning of who are not only prefer an improved and healthier lifestyle but also environmental exportation and responsible to take care of the nature (Midmore et al, 2005). In addition, it also brings advantage to whole economy by increase business activities, trade, production and consumption.1.2.2 The fact of organicThe rise of demanding organic food and healthy lifestyle in both developed an d developing country is not just a passing fad. The popularity of consuming organic food is now in an increasing manner in all over the world where it also includes Malaysia. Increased consumers concern and care regarding food safety and quality as well as health and nutritional aspect of food resulted in increased demand toward organically produced food. Such trend is a kind of reaction to numerous health affair related to processed food (Davies et al, 1995). Refer to the press release post by Nestl Malaysia in year 2008, it shows that organic growth reached 8.9% including 3.4% of real internal growth. In Europe, organic growth of Nestls total Food and Beverages business is about 5.4% and the growth rate is presented around 9.5% in United State and Asia, Oceania and Africa is at the rate of 14.2%. Functional food such as health supplements and organic food was projected reach RM234bil (US$65bil) in 2003 at global market place. It is estimated reach RM601bil (US$167bil) in 2010 by h as the growth rate of 14% annually.According Federal Agricultural 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 organization stated that if compared with others agricultural products, organic food has high potential for commercialization in Malaysia. Demand for healthy, environmental friendly processed food, minimally chemical used fresh food, organic food and natural food are caused by increasing of consumer awareness in nutrition value and health conscious (Malaysia Industrial Development Authority, MIDA, 2009). Malaysian start to increase their demand 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 industr y and become more valuable for producers and retailers. As a part from that, it also activates the organic agriculture sector 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 hard for producer or businessman to manage the right products at a right time, right price and still right place with attractive promotion since the changes of consumer behaviour was so unstable due to various kind of reason, so it is very complicate to fix or to define how the consumer behave. Consumer behaviour carries the meaning of activities people undertake when obtaining, consuming and disposing of products and services (Kozak, and Decrop, 2009). As a result, study and understanding the consumer behaviour and willingness of consumers to pay for organic food is a vital knowledge for marketers, producers and businessman. There is a behavioural model proposed by Von Alve sleben (1997) address that product information, product perception and attitudes are the main factors that drive consumer behaviour. When we believe that an object or brand possess favorable attributes or have good feeling then we will have good attitudes toward it. As we all know, when consumer attitudes are more desirable, the intention to purchase is stronger. In this research, it is more focus on consumer preferences and their willingness to pay when they wish to obtain organic food. The result can help 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 about the different between 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, there are certain features that distinguish organic food and natural food.Obviously, the main factor difference the two is organ ic food must be certified by United Stated Agricultural Department (USDA) and organic food possessed higher quality. We can notice that organic food have labelled organic and this label represent the products are considered as organic by USDA and get the stamp of approval from designed organization. Products which stamp by USDA or labelled with organic must contain at least 95percent organic. Organic food can either labelled by foreign certification which is USDA or certify by local organization 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 follow 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 order 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 can minimize the cost of apply organic aquaculture certification from other country.Moreover, organic food always 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, there 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 sugar or artificial ingredients and without altering the raw product (Hermitt, 2006).1.2.4 Consumer vs CustomerGenerally, most of the people have categorized both consumer and customer in the same category where it carry the meaning of purchase any products from sellers. Conversely, both of the words carry different meaning. According to Kotler and Armstrong (2006), consumer is the person who purchases any products for personal use or they call end user. Basically, consumer is the individual who had previously purchased or current users for particular 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 potential customer for the product (Wikipedia).1.2.5 Organic industry in MalaysiaSince 1990s organic market has g rown 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 organic market follow by Germany 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 upper 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 two 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 far m in Sungai Buloh with only one hectare plot. According to Department of Agriculture (DoA), there is 131 hectares of organic farm in Malaysia during year 2001 and approximates organic farming increase to more than 1000 hectares in year 2005. In year 2008, there are about 1000 hectares of registered and 2800 hectares of unregistered organic farm.Table 1.1 Organic production areaSource Organic Alliance Malaysia, 2007Organic farming and production had started up during year 1990. Due to increase in favorability and demand toward organic products this niche market is growing continuously. Consequently, there is increase in the number of organic organization which include government department and non government organization (Table 1.2).Table 1.2 Organic organization in MalaysiaSource Better Diet Islam, 2009Malaysian organic scheme (SOM) is the organization that has the right to give certification to organic farmers. Today, there are 28 Malaysian Organic Scheme (SOM) Certificate Holders in nationwide with a total area of 1244 hectares (Table 1.3).Table 1.3 Malaysian Organic Scheme (SOM) Certificate HoldersSource Department of Agriculture Malaysia, 2009Due to increasing in organic farming and production, the number of organic retail outlets is also in the increasing manner. As a result, there are many organic companies have started their business such as Justlife, BMS, Country farm, ZenXin, Woots and etc. Organic food was previously consumed by cancer patients or patients who had serious 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 success and owning eight retail shops in Malaysia. Accordingly, we can observe that consumer demand of organic food and products is rising in recent year.Since the demand of o rganic food and products are increasing, government has putting effort in order to encourage producers to involve themselves in organic farming. Besides, government mentioned in Ninth Malaysia Plan (2006-2010), they estimating the value for organic farms industry will be worth RM800 million 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 found and this organization act as a private sector association to form national network. Government has tried to match the demand by increase the number of producer and organic farmer. However, we still 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 study on consumer behaviour is crucial 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 conventional foods (NST, 2008). As a result, research on consumer behaviour can tell supplier with fact reason why they demand for organic food and better understanding the trend of organic market.Moreover, the needs of communicate 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 an d it is a potential market for marketers, farmers, suppliers, wholesalers and retailers to aim. The reason why and how the demand increase is important for them to study in order to server the organic fans at the right time and right place with sufficient supplies.1.3 Research ProblemConsume organic food has become an important subject for today in changing social graphic and emerging trend. Government had been aware of the importance 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 picture 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 December 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 M agistris, 2007).Refer to a report found in OAM in November 2008, Katherine diMatteo, president of the International Federation of Organic Agriculture consumers seek organic produce as a way of environmental degradation, or as the best way to eat healthy foods. Besides, government and others view that purchasing organic is a good way for developing fair trade due to most of the organic farmers are small-scale 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 also bring a healthy rate for Malaysia economy. Consumers also willing to pay for organic food during economy down turn 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 something behind the consumers to motivate and move them to purchase organic food.At one time, peop le always believe that consumers choice was unstructured and natural but at this moment, people know that human behaviour is manipulated, push or even forced by reason. For instance, health conscious is affecting consumers where they will hunt for organic food in order to replace conventional foods. 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 keep moving people from conventional foods to organic food. Hence, study on the factor that affect consumers willingness in purchasing organic food is an essential issue to further understand consumers mind and support organic.Furthermore, dynamic issues and factors which influence consumers are changeable among individual and purchase decision of organic food will depend on many variables such as consumers attitudes toward environmental protection and healthiness (Gracia and de Magistris, 2007). Human behaviour and customers choice is not impulsive, unconscious, inborn and natural. Conversely, consumers behaviour is always motivated by the environment, enthusiasm, sensation and emotion (Ajzen 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 vary from country to country. There is different demand in different county with different culture.In order to have a good explanation to answer the entire question and have a bottomless understanding of customers willi ngness 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 for 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 help marketers to market the products, help 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 profitable market for marketers to have a deep study on it since the d emand of organic food is keep increasing nowadays. Besides, organic industry did contribute 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 following objectives are built to achieve goals of this study.i. To study the determinants that motive consumers willingness to pay for organic food.After 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 exhibition 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 also target potential customers easily. Lastly, this as well will contribute 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 however there are too few farmers to serve the large pool 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 t o 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 beca