Demand
for organic food products has grown at rates as high as 20% since the 1990s.
Organic grains compose 11% of total organic food demand, and are used in
livestock production which represents 43% of organic food demand. Though the demand
for organic grains is arguably increasing, domestic production of organic
grains is lagging. Producers in the U.S. are hesitant to transition to
certified organic grain production for a number of reasons. However, a lack of
information pertaining to the organic grains market is one of the most
prominent barriers to entry. One method that may provide insight into marketing
opportunities available to organic grain producers is to create classifications
of organic grain buyers. These classifications may allow for the comparison of
business demographics, perceptions of the organic grain market, relationship
formation and maintenance factors, and characteristics of purchasing agreements
across buyer classifications. These comparisons would allow producers to
identify potential marketing opportunities by providing insight regarding types
of assistance offered by buyers, how to form a relationship with buyers, types
of purchasing agreements used, and purchasing agreement characteristics and
requirements. Producers would then be able to identify appropriate buyers for
their respective situations based on times contracts are signed, payment
timing, storage and transportation requirements, and the amount of organic
practice documentation buyers require. Similar classifications have been
proposed for organic producers, but, to date, no such classification exists for
organic buyers. This work proposes two classifications of organic buyers.
First, a classification of committed organic buyers versus pragmatic
organic/pragmatic conventional buyers is motivated by similar classifications
of organic producers found in previous works. Secondly, this work also
introduces a classification of buyers that are sellers versus end-users of
organic grains. Literature has suggested that the type of organic grain buyer
(seller or end-user) gives rise to differences in functionality regarding
interacting with producers and purchasing agreement characteristics. A sample
of 45 organic grain buyers in the Midwest was utilized to characterize business
demographics, perceptions of the organic grain market, relationship factors,
and purchasing agreement characteristics on the two aforementioned
categorization of organic grain buyers. A mixed methodology approach was
utilized involving data collection via phone interviews and an online
questionnaire. Initial data analysis suggests that data from the two data
collection methods statistically differed in some measures of business
demographics, perceptions of the organic grains market, and types of assistance
offered to producers. This suggests that buyers responding to a phone interview
may be more willing to assist producers and have more positive perceptions of
the organic market. Thus, each analysis separates phone interview and online questionnaire
responses. Due to a small sample size, means comparisons were utilized for the
proposed categorizations of buyers. Data were found to not adhere to the
normality assumption, requiring the use of nonparametric methods. A Chi-square test
was conducted for binary variables, while a Wilcoxon-Mann-Whitney test was
utilized for continuous and categorical variables. Results suggest that
committed organic grain buyers are smaller in terms of gross sales than
pragmatic organic/conventional buyers. Fewer committed organic grain buyers
require the grain supplier to pay for grain delivery when compared to pragmatic
buyers. Both the comparison of committed organic versus pragmatic buyers and
the comparison of sellers versus end-users suggest that there is a bifurcation
in organic grain buyers, indicating potential conventionalization within the
organic grain industry. Additionally, both categorizations also indicate the
buyers anticipate future supply and demand to both increase, but do not expect
future price to increase. Thus, it can be concluded that buyers believe future
supply will increase at a greater rate than demand, decreasing price. Alternatively,
buyers may expect future supply and demand to grow proportionally, keeping
price constant. Though the sample is representative of the population of buyers
present, the small sample size suggests results of this work should be
interpreted with caution.
| Identifer | oai:union.ndltd.org:purdue.edu/oai:figshare.com:article/9108350 |
| Date | 14 August 2019 |
| Creators | Nicholas A Lancaster (7042940) |
| Source Sets | Purdue University |
| Detected Language | English |
| Type | Text, Thesis |
| Rights | CC BY 4.0 |
| Relation | https://figshare.com/articles/INVESTIGATING_THE_BUSINESS_CHARACTERISTICS_PURCHASING_AGREEMENTS_AND_PERCEPTIONS_OF_ORGANIC_GRAIN_BUYERS_IN_THE_MIDWEST/9108350 |
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