Consumer/Household Economics, Demand and Price Analysis,

Chang, Hui-Shung (Christie)

Zepeda, Lydia

English

Research Papers in Economics

  223
Demand for Organic Food in Australia: Results from a Focus- 
Group Study
Hui-Shung Chang and Lydia Zepeda
Australia has the world’s largest organic food pro-
duction area (mostly pasture and range), although 
the Australian organic industry is rather small in 
terms of the number of organic farmers and the 
volume of outputs compared to conventional pro-
duction. The number of certiﬁ  ed organic farmers 
nationally in 2003 was estimated to be between 
2,000 and 2,200, composing about one percent of 
the total number of farmers and 1.6 percent of total 
agricultural land in Australia. The retail value of 
organic food production was estimated at AU$250 
million in 2003, with farm-gate value at around 
AU$90 million and exports at around AU$40 mil-
lion. The current share of organic sales in total food 
sales is about 1 percent. The growth rate in or  ganic 
production was forecast to continue at 10–30% 
per year, depending on the categories. The bulk 
of organic food (about 80 percent) is sold through 
specialty shops and supermarkets. There are also a 
number of farmers’ markets, home deliveries, box 
schemes, and Community Supported Agriculture 
(CSA) projects operating around the country. There 
is evidence that both supermarket sales and farm-
ers’ markets are experiencing growth in Australia, 
similar to the developments in the United States and 
other parts of the world. 
Organic agriculture was first defined in the 
Australian National Standard for Organic and 
Biodynamic Produce in 1992, and certiﬁ  cation 
is administered by the Australian Quarantine 
and Inspection Service under the auspices of the 
Organic and Biodynamic Program. It is based 
on a third-party inspection/certification model 
whereby production, processing, and labeling of 
organic produce are overseen by AQIS-accredited 
certifying organizations. There are two levels of 
certiﬁ  cation: in-conversion and certiﬁ  ed organic. 
“Certiﬁ  ed in-conversion” means that the produce 
has been produced in compliance with the organic 
standard for at least one year after being admitted 
to the certiﬁ  cation program. Produce can become 
“certiﬁ  ed organic” if all requirements are met for 
at least three years. The aim of organic certiﬁ  ca-
tion is to help consumers distinguish organically 
produced products from conventionally produced 
products with speciﬁ  c labels, thereby protecting 
consumers against fraudulent and unsubstantiated 
product claims. 
Although the Australian Organic Standard is 
well-recognized in the key international organic 
markets, domestically there is consumer confusion 
about product recognition and organic certiﬁ  cation 
and concerns about product misrepresentation.
To understand future demand for organic 
products and consumer attitudes towards and 
knowledge about these issues, a focus-group study 
was conducted in Armidale, NSW. Armidale was 
chosen in part because we were interested in as-
sessing the op  portunity for the development of an 
organic sector in rural Australia. Rural demand is 
of particular interest because of limited availability 
of organic foods in the rural areas. There were 36 
participants in four different groups, with seven to 
ten participants in each group. Five ques  tions were 
asked, including the most important characteristics 
of food, the meanings of “organic,” the meanings 
of “organic certiﬁ  cation,” motivations for buying 
organic food, and justiﬁ  cation for price premiums 
for organic food. 
We found that:
• Sensory appeal is the overriding factor in food 
choice; 
• There are different levels of awareness and 
understanding of “organic” and “organic 
certiﬁ  cation” among participants;
• The availability of organic food in rural Aus-
tralia is a limiting factor in demand;
Hui-Shung Chang is a senior lecturer in the School of 
Economics, University of New England. Armidale, Australia. 
Lydia Zepeda is a professor in the Department of Consumer 
Science, University of Wisconsin-Madison.
  The extended version of this paper is to be published in 
Renewable Agriculture and Food Systems: Chang, H-S. and 
L. Zepeda. In press. “Consumer Perceptions and Demand 
for Organic Food in Australia: Focus Group Discussions.” 
(www.cabipublishing.org/rafs). Renewable Agriculture and 
Food Systems. DOI: 10.1079/RAF2004103.224   
• Concerns over dietary and health restrictions 
motivate many organic food buyers;
• Concerns about the level or concentration 
of chemicals, the environment, animal wel-
fare, and taste are motivations behind the 
consumption of organic foods by organic 
consumers and potential motivators for non-
organic consumers;
• Both organic and non-organic consumers 
believe the price premium for organic food 
is generally justiﬁ  ed because of higher pro-
duction costs, but the differential does restrict 
purchasing behavior; and
• Organic food consumers are more knowledge-
able about organic foods and more tolerant of 
higher prices and inaccessibility.
These results conﬁ  rm that consumers are in 
general concerned about the use of chemicals, the 
treatment of farm animals, and the environmental 
impact of food production. In addition, they sug-
gest that increasing consumer awareness of organic 
farming and certiﬁ  cation as well as the availability 
of organic foods may be the most effective ways of 
moving organic foods into mainstream.

Demand for Organic Food in Australia: Results from a Focus-Group Study

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