Despite the promising performance in terms of exports, the local consumption of organic produce is still at a nascent stage, with a market share of less than one per cent. This was stated in a joint report by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) and EY, which was titled The Indian Organic Market: A new paradigm in agriculture.
It added that the agricultural policy of India had gradually shifted from espousing a production-centric approach to a more holistic approach, in addition to focusing on increased productivity, factors in climatic considerations, nutritional concerns, environmental impact and standard of living of the stakeholders.
Notwithstanding the enabling environment created by a culmination of the aforementioned factors, there exist several challenges for all the stakeholders involved at every stage of the value chain.
The producers of organic products are continually struggling to optimise the scale of their operations while maintaining profitability. This is primarily because of the gaps in the regulatory framework for organic products in India. The processors of organic food products face significant resistance in the form of a lack of adequate post-harvest facilities for organic products.
Several measures need to be taken in order to avoid contamination and cross-contamination of the produce and the infrastructural capabilities of the country often prove to be inadequate.
The marketing of organic produce comes with its own set of challenges related to global competitiveness and differences in global and national quality standards.
Although there has been a marked improvement in the level of awareness regarding organic products, many consumers are unaware of its benefits, thereby providing no incentives for increased supply and resulting in organic products being priced higher than their conventional variants.
A greater emphasis should be placed on the capacity building of stakeholders, easing access to finance, monitoring and evaluation (M&E) of all assets and processes as well as research and development (R&D) to help keep abreast with global progress in the sector.
Additionally, there has emerged an urgent need for infrastructural development and business climate reforms, reinvention of branding and marketing strategies and entrepreneurship development.
Organic farming is practiced with varying levels of success in 178 countries. However, the North American and European Union (EU) regions (as single markets) generate the bulk of the global sales. The global sales increased to $89.7 billion in 2016 from $7.9 billion in 2000. Country-wise, the top consumers of organic products are the United States ($43.1 billion), followed by Germany ($10.5 billion) and France ($7.5 billion).
The increase in demand has led to a considerable increase in the area subject to organic management techniques globally, surging from 11 million hectare (ha) in 1999 to 57.8 million hectare in 2016.
The wild harvest and other non-agriculture organic collection area also increased to 39.9 million ha in 2016 from 4.1 million ha in 1999.
The three countries with the largest area under organic cultivation are Australia (27.1 million ha), followed by Argentina (three million ha) and China (2.3 million ha). “The three countries with the largest wild harvest area for organic products are Finland (11.6 million ha), followed by Zambia (6.7 million ha) and India (4.2 million ha),” the paper highlighted.
The rapid growth of the organic market can be attributed to various factors are increasing emphasis on good health, proliferation of consumption-related ailments, an increased awareness regarding the health benefits of organic products among consumers, enhanced income levels and standard of living, together with government initiatives aimed at promoting organic products are key drivers of this exponential market expansion,” it added.
In addition to ranking third in wild harvest area, India also houses the highest number of organic producers globally with 835,000 organic farmers. It also ranks ninth in terms of area under organic cultivation with 1.49 million ha.
Therefore, it occupied a robust position in producing organic products, having already exported 1.35 million metric tonne (MT) of certified organic food products worth Rs 1,937 crore in 2015-16. The exports are largely concentrated around the US, Europe, Canada, Japan and the West Asian markets.
India is the largest exporter of organic cotton worldwide. In the food market segment, oilseeds comprised half of India’s overall organic food export, followed by processed food products at 25 per cent. The current Indian organic market is estimated at Rs 40,000 million and is likely to increase to Rs 1,00,000–1,20,000 million by 2020 with a similar incremental trend in exports. It has been progressing steadily with a compound annual growth rate (CAGR) of 25 per cent as compared to the global growth rate of 16 per cent.