Rich tastes: Why only the wealthy can afford India's high-priced organics
That’s according to a study by apex industry body, Assocham, which has linked the high cost of organic food production to a market that is limited largely to an affluent class of consumers.
Switching to organic food would likely cost a family a premium of Rs1,200-1,500 (US$17.60-22.00) per month, Assocham revealed in a recent study it authored with management consultant EY.
Production scale should not be a problem, however. India is home to the highest number of organic producers globally with 835,000 farmers. It also ranks ninth in terms of area under organic cultivation with 1.49m ha.
“Therefore, it occupies a robust position in producing organic products, having already exported 1.35m tonnes of certified organic food products worth Rs1,937 crore [US$275m] in 2015-16,” the report stated.
The domestic organic market is estimated at Rs40,000m and is likely to increase to Rs100,000m–120,000m by 2020, with a similar incremental trend in exports — though this is based on a very low uptake.
Despite the promising performance of exports, local organic consumption of organic produce is still at a nascent stage, with a market share of less than 1% and per capita consumption equivalent to only US$0.12.
Market challenges
The industry has to bear costs for specialised farmer training, as well as dedicated processing, packaging and storage for products without chemical additives. Moreover, high certification costs, together with expensive organic manures and inflationary pressure created by high demand and low supply, are among numerous reasons why organic prices are so high, the study explained.
In terms of the market, poor awareness levels among consumers of the health benefits of organic foods, especially in non-metro cities, together with their limited availability “are posing a grave challenge to the growth of the Indian organic food industry,” it said.
To offset these issues, Assocham has called for the development of a central public-private partnership model that will help the organic sector in reaching its full potential.
“A greater emphasis should be placed on the capacity-building of stakeholders, easing access to finance, monitoring and evaluation of all assets and processes, as well as research and development to help keep abreast with global progress in the sector,” said Assocham secretary general, DS Rawat.
Role of government bodies
While the government has sanctioned several schemes to incentivise organic farming, with a number of state governments even creating individual policies to promote these, there still exist challenges for all stakeholders involved in the value chain.
For example, state-level policies are needed to monitor organic production to coincide with policies that promote cultivation.
At the same time, the government needs to step up its efforts to provide incentives for bio-fertilisers and pesticides, and promote their use to decrease the cost of cultivation.
“The increasing costs of inputs and the elongated conversion period from conventional to organic farming are a few of the key challenges faced by the producers, most of whom are small or marginal farmers,” the report said.
