As the world evolves from organic foods to ‘SOLE’ ( Sus-tainable, Organic, Local and Ethical) eating, India is only beginning to catch up by starting to go and grow organic. However, does a low-volume category as organic food make business sense in an environment that is already trying for modern food retail? Is t h e dream too fanci-ful?
The benefits of consuming organic fruits and vegetables and other food products has been a topic of debate for quite some time. A debate which usually results in scientists, farmacists, and activists convincing consumers of the long term health, physical, and even scientific benefits of growing and going organic. However, is India as a country and Indians as individuals ready to go the organic route? In some aspects the fruits and vegetables we eat are more ‘organic’ or natural than what one may find in a supermarket/ grocery store half way across the world. Although those items may seem to be a lot cleaner and last a lot longer, yet those items would also be bigger in size and lack in natural organic taste due to the hormones and pesticides they were pumped With.
More and more civilised countries have begun to go the ‘organic’ route, by promoting farmers to utilise their land in organic farming as a form of agriculture that relieson crop rotation, green manure, compost, biological pest control, organically approved pesticide application and mechanical cultivation to maintain soil productivity. The current inorganic route includes utilisation of fertilisers and harmful pesticides to boost output of products, which may be cheaper for both the farmer and consumer, yet have harmful side effects for the Consumers.
“Organic foods are not massproduced and traditional organic farming often produces lower yields than modern intensive farming methods. That is why organic food is generally more expensive than non-organic. Soil fertility is restored through organic farming, which in the long term is self-sustaining and scientifically proven to improve yields,” explains Aruna Rangachar Pohl of Pristine Organics Pvt Ltd, a leading organic food company based in Bangalore.
Although India may be considered an economic superpower by many, the power it lacks the most is to feed its people. According to the United Nations World Food Program, nearly 50 percent of the world’s hungry live in India, and around 35 percent of India’s population – 350 million – are considered food-insecure, consuming less than 80 percent of minimum energy requirements. Nearly nine out of 10 pregnant women aged between 15 and 49 years suffer from malnutrition and anaemia. India has the second highest rate of child undernourishment in the world. Yet trampling over these malnourished are also the over nourished, who are indulging on the not-soorganic food at the corner ‘halwai’. So where do the health conscious come in?
The Organic Role
As stated by most pro-organic supporters, the benefits of growing and consuming organic foods far outweigh the increase in costs. However, can the average Indian consumer afford organic food products, let alone non-organic products? Some may argue that organic non-food products are a good way to recycle and utilise things that would otherwise end up in landfills as trash. However, once again, the question of price and organic certification comes up. Mukesh Gupta, executive director of Morarka Organics, which operates the Down To Earth organic food retail chain, explains the procedures of organic Certification.
“It is the technology for production, information for record keeping so that certification can be done and linkage to the buyer in a manner that is beneficial for both the buyer and seller. Yes, to do so is also cost intensive – about Rs 3,500 per acre per year. At some places, the Government is providing this support, but not enough as yet.”
“Though many of our consumers are already aware of the perceived benefits of organic foods, we have also been at the forefront promoting these products specifically. We have done several workshops with specific reference to organic foods at our stores. These workshops aim at teaching the uninitiated about organic foods and their benefits and also give consumers a chance to sharpen their culinary skills via innovative and interesting organic food recipes,” explains Mohit Khattar, MD, Godrej Nature’s Basket.
As with any and every other lifestyle changing factor, knowledge is power. Although for some consumers of organic foods, it may be a ‘trendy’ lifestyle choice, for most others it is a conscious choice of paying a higher price to purchase organic foods. Whether it be to help the environment, aid local farmers, or even sustain farmland for future growth, truly ‘organic’ people have their own reasons for going the organic route.
“Organic farming has already been increasingly adopted by a large number of farmers in India in the last five years. In most cases, the primary driver is not just the higher price for organic produce, it is primarily to re-store the soil balance and water levels in the farm by using organic manure and other organic farm inputs,” shares Vishal Jalan, CEO, Aricha Trading Company.
“I have personally visited farmers who were earlier growing chemically farmed produce for commercial sale, but at the same time devoting a small section of the farmland to organically cultivated produce for their own family consumption! Now such farmers and others have completely washed their hands off chemical inputs, in order to protect their family’s health and their farm’s health,” he adds.
About 75 percent of the world’s poor people live in rural areas and depend on agriculture for their livelihood. The case in point is even more prominent in India. However, with urbanisation growing at a rapid pace, conserving farmland and farmers has to become a priority for this country. With more than half of its population being vegetarian, India needs its fruits, vegetables, and grains more than it needs it share of meat. And with an ever increasing population, the requirement for such foods will soon surpass local farmers’ ability to supply. So how do organic foods play a role in this?
“Factory farming and the green revolution’s encouragement of use of off-farm chemical inputs to improve yields has, over the years, caused mass destruction of soil wealth – only one inch of the top four inches of soil on which humanity exists is available for future sustenance,” Pohl points out. Organic farming isn’t a new concept to India’s farmers, as most are still practicing organic methods, passed down for generations. Organic fertilisers and natural pest controls are the only tools available to most of these farmers, who have always lacked the financial resources to explore chemical solutions.
But here’s the bind: these farmers, whose produce is as organic as they come, cannot afford to pay the fees required to gain official certification to market their products as ‘organic’ and make a handsome profit. Infrastructural support provided to farmers is the key to nourish and grow the current organic market in India. As the key to many other complexities, knowledge in growing organic is also an important factor for Indian farmers toaccess markets and consumers. “We do have massive support infrastructure being provided to farmers. Beginning with many inputs being critical to the adoption of organic cultivation, today we can say that the only critical difference is ‘Knowledge’,” shares Gupta. “Small organic farmers are not certified organic due to the expenses and documentation involved in certification. However, there are several NGOs who help groups of farmers get certified to improve their ability to market their produce,” Pohl adds.
In response to the USD 26 billion global market for organic foods, the Indian Central Government set up a National Institute of Organic Farming in October 2003 in Ghaziabad, Madhya Pradesh. The purpose of this institute is to formulate rules, regulations and certification of organic farm products in conformity with international standards. The major organic products sold in the global markets include dried fruits and nuts, cocoa, spices, herbs, oil crops, and derived products. “Planet sustainability is a concern impacting mainstream consciousness.
The opportunity now is to specialise in a category. Organic food is normally priced 20-30 percent higher than conventional food. This premium is very important for a small farmer whose income is just sufficient to feed his/her family with one meal. Over 70 percent of the Indian farmers are defacto organic since they are mostly marginal farmers with small holdings, not able to afford off-farm chemical inputs,” Pohl notes.
Supply vs Demand
Although the current demand of organic foods is lower than what manufacturers of organic foods can supply, upon observation of the current trend in organic retailing it seems that the supply and demand gap will soon be closed. Indian companies have been exporting organic foods increasingly over the past five years to European and American markets, as the conscious consumer demands for organic products came from abroad.
“The more developed nations in Europe and the U.S. have shown a distinct preference for organic produce primarily due to their enhanced consciousness on healthy eating and healthy lifestyles. Another driving force is the increased awareness on environment and ecological balance,” shares Sidhartha Lohia, director, Apurva Organics Ltd., which has a range of organic teas that are primarily exported. However, awareness at home is also rising as more consumers take the organic route and take the initiative to become healthy. “The supply has been more oriented towards fresh produce and staples. Value- added organic foods are scant. Increased supply of organic foods will fuel demand and also reduce prices – given a choice. India has more than its fair share of ‘green shoppers’,” Pohl Says.
From leading rice manufacturers to niche gourmet stores, organic foods are now available in almost every category and at most grocery stores and supermarkets. However, the variety of organic products grocery stores and supermarkets carry vary according to location and hence, demand.
“In India, if sufficient stocks are made available in as many outlets as possible, with as many products as demanded and reasonably priced, say at about 10-15 percentpremium, there is a huge opportunity. My impression is that we do not even produce one percent of the material that can be sold in the Indian market,” Gupta contends. “It requires a lot of effort to educate the customer about the benefits of the organic products that we offer and we have to prepare them to pay more for these products,” shares Sunil Kapoor, general manager, marketing of KRBL Ltd., manufacturer of India Gate basmati Rice.
Although retailers and manufacturers may have different feedback on the level of demand for organic foods, they all do agree on its escalating popularity. “We launched our organic products two years ago. At the initial stage the market was average, but now the demand is growing because we have launched innovative items and knowledge of organic products is also now greater,” says a spokesperson of MPS Group.
“Kohinoor’s Organic Basmati Rice was launched four to five years ago and has been gaining in popularity ever since,” shares GurnamArora, joint managing director, Kohinoor Foods. “We position the organic range as natural basmati rice as it’s procured by our contract farmers as part of the company’s ‘Organic Basmati Program’ in collaboration with the Uttarakhand government.”
An initiative that began more than two years ago as a small inhouse pilot project of the Gomukh Trust, which works on issues of sustainable agricultural development for marginal farmers, has now grown to a network of 50 committed families of consumers and 25 farmers as suppliers. Located near Pune, this programme is aimed at providing organic vegetables and 100 percent organic products such as rice, pickles, and paneer, to consumers at their doorsteps. A venture of the Gomukh Centre for Rural Sustainability, known also as GORUS, this is just another “innovative idea that marries convenience for consumers, assured market for farmers and a quest for sustainable farming.”
“The organic foods segment is still very niche and small, but is a market that is definitely drawing a lot of interest. Since Godrej Nature’s Basket is known to be a destination for niche food products, the demand for organic products is reasonably significant at our stores. In fact, organic grocery now accounts for a substantial share of our overall grocery sales,” Khattar informs. Organic It Is!
With initiatives such as GORUS becoming more ubiquitous, organic farming is gaining in importance throughout the country, though at varying paces across different regions. With south India leading the way in speciality organic retailing, north India too is catching up, though with the health conscious in this part of the country approaching the development more as a ‘trend’ rather than an essentially sustainable, healthier way to live.
Although India is and will be going through its own stages of exposure to all varieties of international cuisine and the trend of fast food restaurants is not set to decline anytime in the near future, the quintessential Indian household meal will still consist of lentils and vegetables, both of which can be grown organically.
“In terms of scope in India, organic can definitely solve many problems being faced by Indian Agriculture:
a) The small farmers can get better prices;
b) In the high-input agriculture situations, the cost of inputs can be reduced;
c) In many arid areas, the productivity can be increased,” Gupta notes. Marketers and retailers are already betting on this segment locally to become a part of the Indian shopping culture in the near future as health will always be on one’s Mind.
“With demand on the uptick, and an increase in the curiosity levels of new customers, expansion in the organic foods segment looks imminent. We have specific plans in place with regards to expanding our organic food portfolio,” Khattar Discloses.
“Future opportunity and challenge for the small farmer is to meet higher demand as organic foods cross the plank from niche to mainstream,” adds Pohl.