Industry Challenges

As the industry continues to grow, it faces unique challenges:

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01

Cost

Due to relatively small volumes, the costs of organic food products are relatively high. The cost of cultivation increases as it takes more time and energy to produce than its chemical-intensive counterpart.

02

Awareness

There is low awareness at the producer level on the difference between conventional farming and organic farming. Even if they are aware, many farmers are apprehensive about adopting organic farming due to the high production cost and the low yield.

03

Demand and Supply

High demand and low supply has further created an inflationary pressure on organic food products. This supply-demand mismatch can be eased fundamentally by making organic production mainstream with location-specific hybrid production strategies.

04

Certification

The three-year transition period when farmers have to wait before getting their farms certified is another problem. This issue was addressed in the US by food manufacturers offering financial incentives to offset the waiting period. Ardent Mills pays farmers more remuneration for crops grown on land undergoing transition and helps them choose rotational crops they can sell to supplement their income. Kashi has created a logo, “Certified Transitional”, to label products made from farms that are undergoing the process of transition.

05

Farmers

Specialized farmer training costs, higher processing and inventory holding costs, and increased packaging, logistics and distribution costs add to the price of end products. Nevertheless, investments in achieving operations excellence by companies will facilitate lowering the cost of organic food products.

06

Consumer's Knowledge

At the consumer level there is confusion between natural and organic products and limited understanding of the health benefits of organic food products. In addition, consumers are faced with a plethora of decisions around brands — imported or domestic, product quality, authenticity of claims and certifications.

07

Market

The absence of organic food products across all segments in the market is a concern. Consumers find little value buying limited organic products at a premium when rest of the foodstuff they consume is non-organic.

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