Advertisement

BW Businessworld

Organic Foods: The New Revolution

Farmers favour it, the government favours it and so do young entrepreneurs. Organic food is the way forward

Photo Credit : Ritesh Sharma, Location Courtesy: Beejom Farm, Ritesh Sharma,

The choice of going organic with your menu is getting easier and easier. In a way, the trend is somewhat ironic in a country like India, which had been growing a lot of its food organically, just a few decades ago. In the last decade, the organic food sector has seen immense growth, with a small part of it turning more organised. The government too has begun taking interest in growing organic food as well as the rest of agriculture as the issue of food security looms large.

The official view
A report by the union ministry of agriculture (Eleventh Sitting of the Committee of Estimates 2014-15) starts off by stating that according to the National Programme for Organic Production, under ministry of commerce, organic agriculture is defined as “a system of farm design and management to create an ecosystem, which can achieve sustainable productivity without the use of artificial external inputs such as chemicals, fertilisers and pesticides.”

The committee noted that the global trade was currently $60 billion (Rs 3,60,000 crore) and may touch $100 billion (Rs 6,00,000 crore). Trade in India may (eventually) reach Rs 5,000 crore to Rs 6,000 crore, which is about one per cent of the global trade.

The committee noted that since 1970, the area under cultivation in the country has remained almost constant in the range of 140-142 million hectares out of the total area of 328 million hectares, whereas the population has almost tripled during the period. India has approximately 17 per cent of the world population, but only 2.3 per cent of the total global land area.

According to the ministry of agriculture, the area under organic cultivation increased hugely in 2013-14 compared to 2012-13 in states such as Andhra Pradesh (108 per cent), Chattisgarh (117 per cent), Jharkhand (200 per cent) and Orissa (173 per cent). While the area under organic cultivation declined significantly in Delhi (99 per cent), Bihar (98 per cent), Meghalaya (80 per cent), Arunachal Pradesh (65 per cent) and Haryana (50 per cent) in 2013-14 vis-a-vis the area under organic cultivation in 2012-13.

A joint secretary in the union ministry of agriculture, elaborating on the challenges that cropped up when the government began a three-year pilot project in organic farming involving 5,00,000 acres across India, especially in the hills, rain-fed areas and some regions with tribal populations, says, “There are questions that need to be looked at, like whether organic and hybrid farming can be done side by side? Whether organic farming will affect India’s food security? What will the farmer achieve if he switched over to organic farming, since there are no separate mandis (markets) to sell his produce? The issue of regulations and the misuse of organic label on non-organic produce also need to be discussed.”

The government has 18 research centres working on organic farming for the past 12 years. The research shows that farmers need as long as five years to switch to organic farming from conventional farming in a controlled environment. The process may take even longer for an ordinary farmer, says the official.

A farmer keen to switch to organic farming has to register with the Participatory Guarantee Scheme (PGS) portal. He can then get a residual certificate (that there are no pesticides or artificial fertilisers) for the harvest from the government.

According to the official, the budget for promoting organic farming in just the seven northeastern states, is Rs 400 crore, apart from another Rs 300 crore annually, available from the Paramparagat Krishi Vikas Yojana (PKVY) scheme.

What Farmers Have To Say
The organic food sector involves a lot of parties including the government, the non-government organisations (NGO), fast moving consumer goods (FMCG) companies and sellers, but the farmer takes up the important position in the whole system. What’s even more important than the farmer, is what he produces and how he produces. The location and variety of the produce are key elements in organic classification. Most farmers want to sell their produce directly to consumers, so that synergies are formed and profits and benefits are maximised.

Talking about the impact of organic farming on farmers, Bharat Bhushan Tyagi, who has been growing organic food for the last 25 years in his village in Uttar Pradesh, says , “We grow everything from grains to vegetables. With multi-layer production, our yields go up. Our income doubles, even triples eventually.”

The input cost for organic farming is minimum, and with farmers growing crops suited to their land, yields increase drastically and production costs shrink by as much as 60 per cent. “We get higher incomes, the environment is safe and the food we grow is free of pesticides and artificial additives. In the coming times, when organic farming spreads across the country, the cost of such farming will drop compared to chemically enhanced farming,” says Tyagi.

Tyagi’s son Deepak, who is focussed on the commercial side of things, says, “We look at market rates as well as the minimum support price. We give organic farmers a royalty amount of around 20 per cent to 25 of the market base rate. That way, with lower input costs, the production is steady and the market payment is more than normal,” explaining his business model.

The Tyagis have fixed a monthly schedule to supply their produce directly to a thousand families. “It is all about person to person interaction, not something one can get online,” says Deepak Tyagi.

The organic food market in India is divided into two. One is the ‘organised’ sector, where you have an industrial set up that is backed by data. The other is the much larger unorganised sector, made up of largely small operations that aren’t as well documented, explains Ashish Gupta, founder of Jaivik Haat, an organic food shop in Delhi.

Gupta is a computer professional, who quit his corporate job to work with farmers in the organic sector. Referring to the organised sector of the market, he says, “Everybody (as in the big FMCGs) is looking at this space right now. Those who haven’t really gotten involved as yet, are waiting for people like us to set the ground-work for them.”

“In terms of total hectares in organic farming, India is in the top five in the world,” states Gupta. He says the agricultural land for organic farming is approximately 0.4 per cent to 0.5 per cent of all agricultural land in India (which stands at around 200 million hectares).

Gupta is associated with the Organic Farming Association of India, where he has been on the board for many years, as well as the PGS Organic Council that provides low-cost, high-impact certification to small and marginal farmers. He is also associated with the International Organisation of Agricultural Movements (IFOAM) and the PGS International Committee Board.

Explaining the Participatory Guarantee System, Gupta says, “the NGOs and the Food and Agriculture Organisation of the UN began the system to address the unorganised sector and now, the government too is speaking about the same thing.”

Certification from PGS — wherein a group certifies that its members are growing food organically, thereby establishing a system of peer certification — is free. A process based certification ensures that the farmer doesn’t have to bear any cost, or only a nominal cost as set by the farmer community. The development of PGS in India began in 2006. It was a successful experiment that the government officially established in 2011. The principle idea behind it is trust. “In the last decade, we found that this process was acceptable to consumers as well,” says Gupta, adding that it is for the first time in the history of organic farming in India that the government is involved in a serious way.

What Sellers Have To Say

N. Balasubramanian, CEO of 24 Mantra Organic, sells all things organic.

“The biggest challenge of being in the organic food industry as an organised sector player is finding the right people to do back breaking work and not at a fancy salary,” he says. “We are going to the farmer, enrolling him into organic farming and sustaining him for three to four years without a premium. We go with our ability to convince the farmer that organic is better for him and for the soil,” he adds.

The company is very strict about one thing. “We want farmers to follow all protocols and required norms to stay 100 per cent organic,” he says.

The next challenge is the supply chain. The food industry in India works in a base-cost manner. Being organic certified, 24 Mantra Organic cannot follow that model. But many sellers mix produce from different geographical regions to arrive at a competitive price, thus compromising the geographical origin norm, he explains.

“We have to follow very different paths even for basic foods like atta (flour), rice and daal (pulses). Also, getting consumers to switch to organic is a task,” he says.

“We have 160 people who manage 32,000 farmers from across 16 states in India who work with us, cultivating 1,70,000 acres of land. Each manages around 1,000 acres,” he says.

The organic food market is worth around Rs 1,000 crore in India. Around 22 brands make up the organised sector, which is approximately a Rs 300 crore-market. 24 Mantra Organic is the largest player in this market.

“Globally, the organic food segment is worth $80 billion. Very soon, it will be as large as the colas and chocolate sectors,” says Gupta of Jaivik Haat. “Twenty years from now, if we reach even seven per cent, we can have a $10 billion industry in India,” he adds.

For Ashmeet Kapoor, founder and CEO of online vegetable and fruit store I Say Organic, organic was always the way to go. Kapoor was bit by the sustainability bug while he was working in the US after completing his entrepreneurship course. “I decided to farm on my own, on a piece of land in eastern UP,” he says. Though he soon realised that the areas where farmers faced the most difficulties are marketing and selling their produce at the correct price. And that’s where the idea for I Say Organic came from. The company was formed in 2012.

“We started partnering with farmer groups involved in organic farming. Now we have 14 groups from across the country. For our requirements, we source from around a hundred farmers. Through these networks, we have access to 15,000 acres of land,” he says.

Currently, the web-based organic food marketplace sells five tonnes of vegetables and fruits a week, doubling sale year on year. It has a customer base of around 10,000 households in the National Capital Region (NCR), of which around a thousand households are regulars. The average spend per transaction on the web-based marketplace ranges from Rs 900 to Rs 950. I Say Organic gets 700 orders a week on average, with potatoes, onions and tomatoes leading the sales numbers. The only limitation of the business seems to be that with perishables, which is the biggest area of focus.

So, what makes his business different from the others? “What we felt is that a lot of sellers have strong opinions and dismiss obvious market needs. The thinking about the customer was lacking,” he says, adding that most sellers want customers to adopt the same principles as them. “Our service is geared towards convenience. We deliver seven days a week, we have a vast variety of products, including vegetables and fruits. For an aware consumer, that is the most important category to eat organic,” he says.

In the end, it always boils down to keeping the customer happy. In the organic world too, that means both ends of the supply chain — the farmer as well as the consumer.

îbikramjit@businessworld.in; @bikramjitray




sentifi.com

Top themes and market attention on:


Advertisement