ANALYSIS OF ORGANIC FOOD
REGULATION AND ITS IMPACT ON
ORGANIC SUPPLY CHAIN IN
INDONESIA Ahmad Sulaeman, PhDDepartment of Community Nutrition – Faculty of Human Ecology, Bogor
Agricultural University (IPB) Indonesia and Researcher at the Center for
1
Agricultural University (IPB) Indonesia and Researcher at the Center for
Tropical Horticultural Study/Center for Tropical Fruit Study IPB
Presented at The International Symposium on Marketing and Finance of the Organic Suplly Chain, 23-26 September, 2012 Seoul, Korea
OutlineOutline� INTRODUCTION
� ORGANIC FOOD MARKETING AND CONSUMER
PERCEPTION ON ORGANIC FOODPERCEPTION ON ORGANIC FOOD
� REGULATION RELATED TO ORGANIC FOOD
AND ITS IMPACT ON ORGANIC SUPPLY CHAIN
� CONCLUSION
IntroductionIntroduction
� Indonesia “Go Organic 2010
� significant achievements ;
� increased consumer awareness, interest ,
and demand on organic foodand demand on organic food
� the number of organic producer and
trader ���� the width area of organic
� the number of government budget for
organic agriculture development
Introduction Introduction ....,,,,,,continued....,,,,,,continued
� A lot of food products with organic
claim are available in the market.
� From both locally grown and imported
� Miss perception of consumer on
organic foodorganic food
� To protect both organic consumers
and producers government drafting
and formulated policies and regulation
Width Area for Organic Width Area for Organic Agriculture in IndonesiaAgriculture in Indonesia
Type of organic agriculture area Width (Ha)
Certified Area 90 135.30Certified Area 90 135.30
On going certification process area 3.80
Area with PAMOR certification 5.89
Area without certification 134 917.66
TOTAL 225 062.65
Source: IOA (2011)
ORGANIC FOOD MARKETING AND ORGANIC FOOD MARKETING AND CONSUMER PERCEPTION ON ORGANIC FOODCONSUMER PERCEPTION ON ORGANIC FOOD
� Various marketing strategies:
(a) direct selling, door to door,
(b) through government institutions and
campuses, campuses,
(c) through religious organization
(church),
(d) through niche organic stores, and
(e) through modern market.
Different ways to convince consumersDifferent ways to convince consumers
(a) certifying the product through third party
certification and put logo “ORGANIC INDONESIA
on its label”,
(b) certifying through participatory guarantee system
eg. PAMOR Certification
testing the product and put pesticide free claim on (c) testing the product and put pesticide free claim on
the label and
(d) self claim on its organic status without any proof
but rely on consumer trust
Consumer perceptionConsumer perception
� Poor understanding on organic food:
� 80% perceived as food that is free of pesticide,
preservative, and chemical.
� Only8 .2 % perceived as food that is natural, free
preservatives, free chemical fertilizer, free pesticide,
free antibiotics, no additives, no GMO, safe, and free antibiotics, no additives, no GMO, safe, and
naturally grown and environmentallly oriented (Gantina
and Sulaeman 2006)
� This fact is then well used by the producers and
traders to sell their products with high price
without any gurantee of its organic status except
free pesticide label only or self claimed organic.
Consumer knowledge on organic foodConsumer knowledge on organic food
80
90
10092.9
0
10
20
30
40
50
60
70
Kurang (<60) Baik (>80)
5.9
1.2
Perc
en
t
Level of knowledge
Source: Gantina and Sulaeman (2006)
Consumer Reasons for Buying Organic Food Consumer Reasons for Buying Organic Food
60
70
80
90
87.1
Perc
en
t
0
10
20
30
40
50
60
2.4 2.4
7.1
1.2
Perc
en
t
For healthy To conserve environment
Attractive appearance and packaging Just wanto to try
Other reason
Source: Gantina and Sulaeman (2006)
Benefits Consumer looking for from Benefits Consumer looking for from consuming organic foodconsuming organic food
60
80
74.1
0
20
40 18.8
4.7 2.4
Perc
ent
Fulfill family nutrition need To maintain healthCuring disease/diet Other
Source: Gantina and Sulaeman (2006)
REGULATION RELATED TO ORGANIC FOOD REGULATION RELATED TO ORGANIC FOOD AND ITS IMPACT ON ORGANIC SUPPLY CHAINAND ITS IMPACT ON ORGANIC SUPPLY CHAIN
� Food law No 7/1996
� Consumer Protection Law No 8/1999
� Government Regulation No 24/2008
regarding Food Safety, Quality and Nutritionregarding Food Safety, Quality and Nutrition
� Goverment Regulation No 69/1999 regarding
Food advertisement and labeling
REGULATION RELATED TO ...........REGULATION RELATED TO ...........continuedcontinued
� Indonesian National Standard (SNI) on Organic Food
System (SNI No 6729/2010)
� NADFC Regulation HK.00.06.52.0100 year 2008
concerning Control for Processed Organic Food
� NADFC Regulation No HK.00/05.1.2569 year 2004
concerning Criteria and Management of Food Product concerning Criteria and Management of Food Product
Assessment
� MoA Regulation No 27/2009, then canged into No
88/2011 regarding Food Safety Control for exporting and
importing plant fresh produce
� MoA Regulation (draft) on Requirements and Procedure
for the Implementation of Organic Agricultural System
Indonesian Organic LogoIndonesian Organic Logo
1. The growth of organic ceritification body 1. The growth of organic ceritification body
No Name of Institution Location
1 Biocert Bogor – West Java
Impact of RegulationsImpact of Regulations
Accredited Organic Ceritification Insitution in Accredited Organic Ceritification Insitution in IndonesiaIndonesia
1 Biocert Bogor – West Java
2 INOFICE Bogor – Wet Java
3 Mutu Agung Lestari Depok – Wet Java
4 Sucofindo Jakarta
5 PT Persada Jogyakarta
6 LeSos Seloliman – East Java
7 LSO West Sumatera Padang – West Sumatera
Organic Agriculture Producer in Indonesia in 2011Organic Agriculture Producer in Indonesia in 2011
22. The number of certified organic producer increases . The number of certified organic producer increases
Source : IOA (2011)
The comparison of width area for The comparison of width area for organic agriculture 2011organic agriculture 2011
Source : IOA (2011)
Impact of Regulations...Impact of Regulations...continuedcontinued
3. The availability of organic certified product in 3. The availability of organic certified product in Indonesian market with the label of ORGANIC Indonesian market with the label of ORGANIC INDONESIA INDONESIA �������� increased the consumer trustincreased the consumer trust
ChallengesChallenges� Most of organic producers are small farmers or
household scale industries���� not afford for
organic certification
� Very limited number of local produced organic food will
be available in the market ���� affect supply chain ����
chance for imported productchance for imported product
� Many organic items produced by smale scale
farmers/industries can not be sold as organic in spite of
having fulfilled the Indonesian Organic Standard ���� will
rely on loyal customer trust eventhough without legal
organic label
� There will be many foods claimed as organic with
fake organic certificates
SolutionsSolutions� Need government hand and financial agencies to
help certification
� Need more government budget to pay the third party
certification
� Adopt other scheme of certification?
� Internal Control System� Internal Control System
� Participatory Guarantee System
� Second party certification by govenrment
� Public campaign about the importance of
certification for both consumer and the
business
CONCLUSIONCONCLUSION� Business in organic food has been growing fast in
Indonesia and there is a trend that organic has become a
life style.
� To protect organic consumer as well as to provide
protection and to develop organic farming, government
has established several regulation which will affect the has established several regulation which will affect the
organic food supply chain.
� To anticipate unexpected impact of those regulations on
organic supply chain, government and organic food
business player should take actions which may benefit
for both consumer and the business itself.
KAMSA HAMNIDA – THANK YOU
Further information:
Prof . Ir. Ahmad Sulaeman, M.S., Ph.D.
Dept Community Nutrition – Faculty of
Human Ecology Institut Pertanian
Bogor, Kampus IPB Darmaga BOGOR
16680 telp. 02518621258/8629227,Fax
0251-8622276/8629227, HP
087874444468
email: