Household income as a factor forming potential demand on the market of organic products

Annotation

Purpose. The purpose of the article is to analyze the situation of households in terms of income, expenditure, food quality, consumption of individual products and to assess the potential development opportunities for organic products market.

Methodology / approach. The dialectical method of cognition, the systematic approach to the study of economic phenomena and processes, the monographic method (the analysis of scientific achievements of domestic and foreign scientists on the assessment of income, cost structure, quality of life) were used in the research. The abstract-logical method (for theoretical generalizations and formulation of conclusions), the economic-statistical method (when assessing the reliability of differences between groups of households), the graphic method (when constructing graphical images), correlation analysis (to make a correlation between the level of consumption of meat and meat products based on the amount of income in the households) were used among the special methods of research. To assess the actual state of affairs, the authors used data from the statistical observation regarding the level of income and expenditures of the population of Ukraine according to 2018, which was called “Anonymous microdata on the main indicators of income, expenditures and living conditions of households ”. The total number of households that responded to questions about their income level was 7698from 8051, or 95.6 %. household income product market

Results. The article emphasizes that one of the important criteria for social protection is the quality of food supply in accordance with scientific norms and established standards. The income level and food consumption by households were compared. It was noted that in general the distribution of respondents in cash income levels was not considered to be normal. A clear correlation was established between the level of household income and the level of food consumption in both monetary and physical units. These differences were tested using the statistical method of t-test for comparing averages, which provided evidence of the difference between groups of households.

Originality / scientific novelty. For the first time, the level of discrepancies in income and food consumption between households was assessed using the t-test method of comparison of averages, which allowed establishing statistically a significant difference between groups in these indicators. The assessment of the impact of household income on the level of expenditures and consumption of certain types offood products has been further developed with the identification of promising focus groups for consumers of organic products.

Practical value / implications. The practical value of the results is that the identification of patterns allows to predict further trends in the level of consumption of certain types of food, particularly organic.

Key words: quality and standard of living, organic farming, organic products, product quality, national health, basket of goods.

Introduction and review of literature

In any country, high quality and living standards of the population should be a strategic goal of the economic policy of the responsible government. In this case, it is possible to talk about ensuring social protection. One of the important criteria of this protection is to provide the population with food in accordance with scientific norms and established standards. The last one has a particular importance nowadays. The use of various chemical additives and substances, both directly in the production of products in agriculture and in the food industry, creates additional risks for the population. It is compliance with the appropriate standards that can provide consumers with the assurance that products are safe for their health. Organic products in this case provide the greatest guarantee of safety for the total absence of chemicals in the production process. Organic farming has significant benefits for human health. Firstly, it reduces the risk of health loss for agricultural workers, because they are the most vulnerable to the effects of pesticides and other chemicals that are used by conventional production. Secondly, organic products are healthier for consumers by minimizing the impact on health of toxic and persistent chemicals [1].

The fact is that organic products are much more expensive for products grown by conventional methods, the main consumers of organic products are wealthy segments of the population. The average price of organic products is 2-2.5 times higher than conventional food products. To remedy the situation, developed countries subsidize producers of organic food, makes it possible to meet the quality healthy food society [2]. It is already 10 % of the world's population consumes organic products today, and in Ukraine such a population is about 1 -2 % according to various sources [3]. In countries where is used the organic farming, the price of finished products is 40-50 % higher than that grown in the traditional way (using pesticides, chemicals, growth promoters, fertilizers and other means of intensifying production), and individual products, depending on market conditions can exceed 100 % [4].

The term “quality” itself is Latin for “guamtec”, which means property or quality. O. Osadchuk believes that product quality is the conformity and perfection degree of the product characteristics and properties with respect to the requirements and needs of consumers [5]. It is the clear observance of quality requirements that can guarantee the conformity of products to established standards. O. Varchenko et al. notes that the basic provisions of the EU White Paper on food safety became an important basis for the development of a number of regulatory documents by the higher governing bodies of the Community in the first half of the 2000s, later called the main EU legislation, which are still in force today [6]. There is a clear tendency to the expansion of the market of quality food products in the world today. According to G. Simakhina and N. Naumenko, the annual range expansion of traditional food products is at a level of 2-3 %, and health foods - 40-50 % [7]. This is especially relevant in Ukraine, where the state of population health is unsatisfactory. In recent years, the state of population health of Ukraine has deteriorated so much that the problem has grown to become a threat to national security.

One of the ways to improve the nutrition quality of the population is the transition to the consumption of organic products. It should be noted that the problem of organic market development under different aspects are studied in the works of S. Padel, C. Foster [8], A. Tarkiainen, S. Sundqvist [9], M. Bahorka [10], G. Stanhill [11], D. Connor [12], M. Yazdanpanah et al. [13], O. Bazaluk et al. [14], D. Fedchyshyn [15], A. Kucher et al. [16; 17], R. Ostapenko et al. [18], G. Pruntseva et al. [19]. Researchers note that although organic products have advantages over conventional products in terms of food safety most of the population, even in the developed world is very conservative about changing their priorities in this segment. Even when the price difference between organic and conventional products is minimal, the vast majority of consumers know the preference for conventional products. A change in priorities in this case is possible only if the population reassesses its attitude to lifestyle in terms of the quality of nutrition.

In developing countries, there has also been considerable attention paid to nutritional quality. The group of researchers from Thailand led by M. A. Kelly investigated the impact of the spread of population consumption of “problem foods”, namely deep-fried foods, soft drinks, snacks, convenience foods, processed meats, and Western-style baked goods (cakes, pies, sweets) [20]. The survey involved 87134 students. The authors concluded that supermarkets are becoming widespread and targeted in the middle and lower income sectors of society. This study provides evidence that the modernization of food retailing systems can play an important role in the transition to lower-quality diets. In contrast to many developed countries, Thailand retains a strong and resilient traditional sector dominated by fresh food markets. Currently, these markets remain widespread and provide an affordable source of health promotion.

It is noted that extremely poor families may spend two-thirds or more of their income on food, but even this spending provides them with insufficient calories. At the individual level, extreme poverty leads to malnutrition, underdevelopment and stunting [21]. It should be noted that very often it is the close relationship between a population's nutritional status and average growth that researchers draw attention to [22]. The most well-known situation in the world is when the population of South Korea significantly exceeds the average height of the population of North Korea. The main reason for this is well known: the chronic malnutrition and even the starvation among North Korea population.

The purpose of the article

The purpose of the article is to analyze the situation of households in terms of income, expenditure, food quality, consumption of individual products and to assess the potential development opportunities for organic products market.

Results and discussions

In order to evaluate the actual situation in relation to the impact of household income on the level of food consumption, the results of statistical research were used, which was carried out by the State Statistics Service of Ukraine [23]. The results of this research included 8051 households. The respondents evaluated the following data: incomes and resources, some socio-demographic characteristics, expenditures, food consumption by households. In this case, it is especially interesting to compare the level of income and food consumption by households. Respondents were asked to self-assess their level of income over the past year and to assign themselves to one of four groups.

The results of statistically processing on the Ukraine population questionnaire are shown in Table 1.

Table 1

Impact of the cash income level of households on the consumption of certain

Fig. 2 The household distribution histogram by level of cash income according to the results of the survey in 2018 (number of respondents is 8051)

Source: own calculations

As for the level of household income, there is a clear dependence between the status of the corresponding group and the average level of the household cash income. In the group with the level of income assessment “The income level was enough and there were savings” their average value is equal to 135210 UAH, in the group “The income level was enough and there were not savings ” - 105258 UAH, in the group “The most basic necessities were constantly denied, except food” - 65744 UAH, in the group “It was not even possible to provide sufficient nutrition” - 51895 UAH. The differences in the level of income between the first and second groups are statistically significant, as evidenced by the results of the t-test for the comparison of averages (Fig. 3). Levene's test gives a value of p = 0.0000, which is less than the standard value of 0.05. This is evidence of the fact that differences in the averages between these populations are not random. The situation is similar for the reliability of differences between the other groups.

Source: own calculations

It was decided to estimate potential consumers from the total number of households at certain proportions of organic products consumption. Table 3 shows the obtained results.

Table 3

The number and share of households of potential consumers of organic meat
products with different values of the share in the consumption structure in Ukraine in 2018