Food Certification Market: Are Companies Shying Away from Getting Certified?

With concerns surrounding the authenticity, quality, and safety of food products skyrocketing amid the rising number of food scandals across the globe, the food certification sector is becoming an important stakeholder of the food and beverages industry. The food industry is highly vulnerable to negligent practices in any stage of food chain, right from farming practices to processing and consumption.

Consumers are becoming increasingly aware about food safety, thanks to the rising number of high profile food recalls and frequent media coverage of major food scandals. Thus food products that adhere to national and international safety standards are witnessing more demand across the globe. Subsequently, food safety certifications are becoming a common requirement for operating in the food and beverages industry. Businesses that become certified to reliable food safety schemes are gaining competitive advantage in the marketplace and the ones failing to do so are losing massively on overall gains – in terms of revenues as well as negative publicity.

The global market for food certification was valued at more than US$11 bn in 2014 and is projected to exhibit a healthy 5.3% CAGR through 2015-2021, according to a recent market research report published by Transparency Market Research.

In this blog post, Transparency Market Research analysts uncover some of the core facts and trending aspects of the global market for food certification,

How certifications add value to a brand’s image?

Food certifications convey to consumers and other key stakeholders the fact that a food business meets the set of standards recognized as best practices nationally or internationally. A certification also signifies corporate responsibility and good governance and is invaluable to any business operating in the food and beverages industry.

A food certification is essentially a third-party confirmation that food products, systems, and the processes involved in the overall food supply chain have adhered to consistent policies. In most countries, the government plays a central role in recommending food standards, conducting regular inspections, and ensuring that standards are met.

Every certification imply different aspects of food safety and food quality. Some ensure that the products are safe for consumption, some analyze the qualitative aspect of the product, while others may ascertain that practices in the food chain addressed a set of environmental, social and economic sustainability policies.

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If food certifications are so integral to maintaining a food brand’s public image, why don’t all food producers get certified?

Certifications do not come cheap. Companies who wish their products to have a certification logo such as Halal or Organic, for instance, need to shell out substantial funds for inspections and on the official process to getting certified, which is why many companies may shy away from getting certified.

Consider the case of getting certified as ‘organic’ in the U.S. The U.S. Department of Agriculture (USDA) estimates that the U.S. market for organic foods has a valuation of nearly US$40 bn. Even as organic foods cost more than conventional foods, they are witnessing increased demand as they are not made from genetically modified seeds or are grown devoid the use of pesticides. There are nearly 2 million farms in the country, out of which only about 14,000-15,000 are certified organic. Despite being exhibiting high growth potential market, not all farms in the country opt for the organic certification.

The reluctance of farms is mainly because the process of acquiring organic certification involves a lot of hassle, not to mention lower returns as compared to the funds invested, at least for some time. For granting a farm the organic certificate, the USDA requires that the farm spend three years in transition. During the transition period, the farm has to adhere strictly to organic practices but cannot send the produces under the title of ‘organic’ before the period of probation is over. As conventional food sells for less as compared to organic food, it is obvious that the farmer is spending a lot more to grow that will be sold for less.