From April to May of 2009, the consumption of artificially ripened mangoes led to several cases of allergic reaction in Tamil Nadu. The cause was known to be artificial ripening, which was resorted to for a boost in sales. While this may have been an extreme reaction to an extreme situation, the use of chemical fertilizers and pesticides has adversely affected the nutritional value of food, more than ever before. The government and other players have woken up to the situation and begun promoting organic food in the last few years. The response this initiative has generated has been more than encouraging. “The market potential is huge as more and more people are realising the benefits of organic food and wanting it, but do not know where to get it. There are no official figures on the size of the domestic organic food market but we reckon it could be around Rs. 40 crore this year and growing at about 25 to 30 per cent every year,” says Sanjeev K Azad, director, Conscious Food, a manufacturer of organic foods.
So, how then does one define organic food? The Agricultural and Processed Food Products Export Development Authority, a body established under the Ministry of Commerce and Industry, Government of India, describes organic products as those that are grown under a system of agriculture without the use of chemical fertilizers and pesticides with an environmentally and socially responsible approach. This is a method of farming that works at grass root level, preserving the reproductive and regenerative capacity of the soil, good plant nutrition and sound soil management, while not compromising on the nutritive value of food.
Producing opportunities
A major portion of the organic food produced in India is exported. In the recent times, the Government of India has implemented the National Programme for Organic Production (NPOP) for the accreditation for certification bodies, establishing norms for organic production, promotion of organic farming amongst other responsibilities. This has been recognised by the European Commission, U.S. Department of Agriculture and Switzerland as being equivalent to their country standards, which has only increased exports from the organic foods market.
Companies such as Conscious Food are cashing in on the export opportunity. The company was started in 1990 as a proprietary operation and formed into a company in 2001. Based out of Mumbai, they have presence in Goa, Delhi and Kolkatta. “Our snacks are exported to the U.K., where they are marketed by Conscious Food Ltd., a company incorporated in the U.K. Our partnerships with FabIndia and Godrej Nature’s Basket are helping us expand awareness and reach within newer markets across India. The typical buyer is urban and affluent, aware of the benefits of organic food and the tourists or expatriates visiting India,” says Azad.
Another player, Lucknow based Organic India is into organically made wellness products. “Our journey began in 1995 when some people from the U.S. and Israel came to India looking for organic foods and met Dr. Narendra Singh (current director of research and product development at Organic India), whose formulations worked well because they were made from organically grown herbs,” says managing director and global chief-executive, Krishan Guptaa. But, as constant supply of raw materials became important, Organic India started working with farmers, growing from one farmer to thousands today.
Currently, they also have organic ghee for which they ensure that the cow is tension free and that the calf has its share of its mother’s milk. Last year, they set up a dehydration plant in Chittoor, Andhra Pradesh, for drying mangoes. This is in collaboration with the U.S. based company Fine Dried Food Intl. Soon, other foods will be included in the product range.
Playing the waiting game
“One has to be ready to wait to see returns on investments,” points out Guptaa. Today, they are present in the U.S., India – through A-class supermarkets – Israel, where they have a retail chain and Canada too. Because they deal primarily in wellness products, their representatives also educate doctors on these products. The Internet and mobile platform constitute the other two ways through which one can order Organic India products. “We are growing at 60-70 per cent year-on-year and touched $15 million in 2009-2010.” But to achieve this, Organic India had to perfect its supply chain and it took them nearly ten years to get there.
Azad is in agreement, “Passion for the cause and very strong belief that the organic way of life is a much better life, free of early disease and overall ill health – these are the prerequisites for a start-up to enter this business.” He identifies costs and the lack of awareness amongst consumers as the two main challenges for the industry. “Some of the reasons why organic food is expensive – initially the yields are lower, there are no government subsidies, the cost of certification is high, there is a mismatch between supply and demand and a bulk of the organic foods produced is exported. People who understand the long term health benefits of organic food and realise that as an expense it does not add much to their monthly kitchen bill are unaffected by the current high prices. However, in the long run, with increasing demand and a resultant increase in supply, the prices should stabilise, though it will always be dearer than conventional food,” says Azad.
Navdanya, is a seed saving, organic farming movement, which has trained more than five lakh farmers over the past two decades, focuses on household and local food security and fair trade. It has members across the country with fair trade outlets in Delhi and Mumbai. Dr. Vandana Shiva, who spearheads the movement, says, that the rise in food prices and the stepchild treatment the government gives to organic foods in comparison to chemical farming is the reason for the price differential. She adds, “Toxic food is cheap not because it is cheap to produce, but, because it is heavily subsidised. Because of subsidies to chemically contaminated food, organic appears expensive. This market distortion does affect the spread of organic foods.”
Spreading the word
To overcome this, spreading awareness about the benefits of organic food and thereby pushing up the demand for organic food will help. “Further, we need channels that are aware of the organic cause to invest in the future of these truly beneficial products,” stresses Azad. Manoj Menon, executive director, ICCOA believes that for organics business to succeed, retailing skills are essential too.
Organisations like ICCOA and Navdanya organise events to promote organic foods. ICCOA acts as a via media between the retailer and the farmer and is also implementing its own projects with individual state governments that will act as models for replication. “ICCOA was established as a center for excellence, as a knowledge bank for organic food. Till 2004-2005, exports were the main focus for organic food producers. Since ICCOA was started in 2004, the focus has been on the Indian market development as well,” says Menon.
In 2003, organic food exports were at Rs. 30 crore, going up to Rs. 550 crore in 2009-2010. In comparison, there was not much of a domestic market back then, whereas it is now estimated at Rs. 150 crore. According to a survey conducted by ICCOA, across eight major cities in India, there is market potential to touch Rs. 1,450 crore in this fiscal year. An all-India estimate is even better at Rs. 2,300 crore.
Pacing forward
As Azad points out, India has historically been growing and eating organic food. “Even today, about 50 to 60 per cent of the farms do farming without the use of chemical fertilizers and pesticides. People are now beginning to become more aware of the need for organic food and its contribution in improving the quality of the soil and its connection with the more apparent issues of global warming and ground water contamination.” He adds, “Urban India though is more impacted from chemically infused foods that are harmful.”
As more and more organisations come forth, as there is greater awareness and as the market develops further, this is a field that is poised to grow at a steady pace.
