Untapped Potential

Lack of lagislation and certification undermines the potential of organic farming in India

Last Updated: Sunday 07 June 2015 | 21:11:47 PM

Untapped Potential

Shoor Vir Singh: grows sugarca Global agribusiness
Organic products are beginning to make a dent in world food market

Organic farming is the 'in-thing' in the developed world today. Promoted by environment and health conscious people, a vast market is opening up for organic food and products.

Concerned at the chemicals they ingest along with their food and the adverse impact industrial farming has on the environment, sales and area under organic agriculture across Europe, the US, Japan and China are increasing.

Global agribusiness

Shoor Vir Singh: grows sugarca World trade in organic products for 2000 were estimated at US $17.5 billion (see table: Growing organically). Trends indicate that the organic food market would grow substantially in most of the European countries, the US and Japan. Currently, the demand outpaces supply. In the uk, demand for organic food increased by 55 per cent in 2000. Imports continue to grow and represent up to 75 per cent of organic sales.

One of the main reasons behind the increase in organic food consumption is the food scare triggered by bovine encephalopathy (BSE) in cattle, dioxin in animal feed and genetically modified products. As cheese replaced sliced sausages, German producers reported a 16 per cent increase in cheese demand in January 2001 as compared to January 2000. The cheese industry called this the 'BSE effect.'

The BSE bogey continues to haunt the entire Europe with Austria and Italy reporting their first BSE cases in January 2001, taking the total count of BSE-affected countries to twelve. Only Greece, Sweden and Finland remain untouched by the bse disease. Public opinion blamed large-scale industrial farming methods and the feeding of mammalian meat and bone meal as one of the reasons for the spread of mad cow disease and related Creutzfeldt-Jacob disease, which has caused 80 human deaths in the UK since the mid 1990s. As a result, the Europeans are ready to pay a premium price for organic products. Even though the market share of these products is small, analysts predict it will expand considerably in the years to come.

Growing organically
In 2000, the organic food market grew but is still only a fraction of the trade

Markets Retail sales
(in billion US $)
Total food sales
(in per cent)
Expected growth
(in per cent)
Germany 2.2-2.4 1.25-1.5 10-15
United Kingdom 1.0-1.05 1.0 25-30
Italy 1.0-1.05 1.0 15-20
France 0.75-0.80 1.0 15-20
Switzerland 0.42-0.45 2.0-2.5 15-20
Denmark 0.35-0.37 2.5-3.0 10-15
Austria 0.25-0.30 2.0 10-15
Netherlands 0.22-0.27 0.75-0.10 10-20
Sweden 0.12-0.15 1.0 20-25
Other Europe* 0.30-0.40 N.A N.A
Sub-total (Europe) 7.0 _ _
United States 8.0 1.5 15-20
Japan 2.50 N.A N.A
Total 17.50    
* Belgium, Finland, Greece, Ireland, Portugal, Spain, Norway

Note: Of
ficial trade statistics are not available. Compilations are based on rough estimates. The figure for Japan is particularly uncertain. (This figure also include non-certified products, e.g. "Green Products".
Compiled by ITC, May 2001,based on trade estimates
In January 2001, German chancellor Gerhard Schroder appointed Renate Kunast from the Green Party as the new minister of agriculture. Schroder has adopted the strategy to move German agriculture away from 'factory farms' and 'back to nature farms.' This move is being termed as a possible turning point for farming practices in Europe. Hans Johnson, chairperson of Swedish Farmer's Association says, "This is the first time that politicians are giving signals other than just the need to produce as cheaply as possible."

The first ever global agricultural audit done by the Washington-based International Food Policy Research Institute and World Resources Institute showed that farming methods worldwide have degraded soils, parched aquifers, polluted waters, caused biodiversity loss and even created food insecurity. Some 20 per cent of world's forest have been converted to agriculture consuming 70 per cent of fresh water annually.

In the US, the US Department of Agriculture (USDA) has been promoting organic agriculture for several years. National organic standards in the US were released in 2000. A pilot programme offering organic crop insurance is in the pipeline. Besides, a new programme paying farmers up to $50,000 a year for practicing conservation is being promoted. The programme could cost more than US $4 billion annually. In addition, several US states have started subsidising conversion to organic farming systems. In Minnesota, in 1999, organic farmers were reimbursed up to two-thirds of the cost of organic inspection and certification.

However, the situation in India is dismal. The Indian government gives no support to the producers who grow crops organically. Worse, there is neither any legislation recognising organic farming nor accredited certification agencies. "For India to take advantage of the growing interest in organic produce in the north is a steeplechase," according to Veena Jha, project coordinator, United Nations Conference on Trade and Development, New Delhi. "Gaining access to the markets will mean overcoming the hurdles which include certifying the farm, meeting standards of the importing buyers and following the knotty import procedures," she says.

Exporters learning ground
A wide variety of organic products from organic chickens to organic coffee are being sold worldwide. Organic farming is economically viable once the 'real' cost of industrialised agriculture is computed (see box: Counting costs).

In China, organic food production is growing. Sales of organic foods by the country's 800 government certified producers reached US $4 billion in 2000, of which about $140 million were exported. "Recent health scares in China over poisoned food generated an interest in domestic consumers. Specialised supermarkets in big cities now stock everything from organic soyasauce and lychees to delicacies such as organic pig face," informs Shi Songakai of the semi-official China Organic Foods Research Centre.

Though in 1997, organic coffee accounted for only between one and two per cent of the US $5 billion worldwide market for speciality coffee, the market is growing.

Grown on approximately 150,000 ha worldwide, Mexico and Peru together account for about 60 per cent of the total area under organic coffee cultivation. Certified organic coffee is usually produced by small growers and is supplied by cooperatives of these small growers and communities from remote areas which deal directly with the importers. The Indigenas de la Sierra Madre (ISMAM) made up of 1,200 small scale coffee growers in Chaipas, Mexico is an example. Cultivation is in accordance with rules set up by the International Federation of Organic Agriculture Movements (IFOAM).

Bottennecks and hassles confront the Indian organic producers
Going organic is an uphill task in India (see box: All pain, little gain). The domestic market is weak as the Indian consumer is unconvinced about the benefits of organic produce. On the other hand, making inroads into importing countries is hard.

In the domestic market, lack of standards and mandatory certification makes it easy for spurious producers to cash in on the 'organic fad.' Absence of any proper mechanism to certify the organic products gives rise to a lurking doubt in the consumer's mind over the authenticity of the product beings old as organic. Though Indian standards for organic foods were introduced in March 2000, these are not mandatory: inspection and certification for the farm is necessary only for export. And while Mukesh Verma, a Mumbai-based advisor of organic farming, may claim that "people in UK just see the weevil hole in wheat and get an assurance that it is organic", for India the hole may occur due to bad storage practices. The pertinent question then is that why would the cost-sensitive Indian consumer pay more for a product of doubtful credentials?

Not a cakewalk

Organic by choice To put it in a nutshell, the factors that have contributed to the lack of development of organic market in India include low awareness about the perils of chemically farmed products, high prices of organic produce, lack of consumer confidence in organic food standards and their erratic supply.

Smritee Singh, nutrition manager of The Nature Store, an exclusive shop of organic products in Bangalore, says, "The lack of awareness among people is the main hurdle in selling organic products. Only the elite and foreigners ask for organic foods. There is also a great problem of sourcing. When an article about health issue and organic food appears, the next day we receive inquiries. But given the short memory of the people, business levels soon fall back to baseline levels." Points out Singh, "Only 25 per cent of the visitors make purchases, but they too leave complaining about higher prices."

Market surveys about the willingness of people to invest in organic produce can also be misleading as Yardi and Soree India (P) Limited, New Delhi, an organisation involved in marketing of organic produce found. Says Prabha Mahale, director of the organisation, "We did market research of three affluent colonies of Delhi and found that 30 per cent people were willing to buy organic produce. However, when we actually started selling, not even three per cent showed an alacrity to buy."

The government has taken no concrete step to encourage organic agriculture. There are neither subsidies for organic cultivators nor any incentives to practice organic cultivation. As yet, India has no legislation nor any mechanism to certify the products as organic. It was only recently that the Agricultural and Processed Export Development Authority (APEDA) prepared and released national standards for the organic produce. And though India announced the National Programme for Organic Production (NPOP) in March 2000 to promote organic agriculture export, progress on it would put even a snail to shame.

In June 2001, the Director General of Foreign Trade issued a notification declaring that export of an agricultural product as organic would be permitted only if it was produced, processed and packed under a valid organic certificate issued by a certifying agency duly accredited by either APEDA, coffee board, spices board or tea board. The notification expected to be operational from July 1, 2001 has been deferred till October 1, 2001 for reasons best known.

Like other government programmes, the NPOP has got bogged down in committees. T A Viswanathan organic agriculture consultant for APEDA informs, "A national level steering committee has been formed with representatives of ministries of agriculture, food processing, forests and environment, science and technology, rural development and commerce trade and exports for the development of the organic production. The steering committee has constituted a technical committee for preparation of accreditation policy and guideline for farm practices of different crops. As of now, all these details are ready for approval by the screening committee and implementation of the notification will start soon."

But Hay Soree, managing director, Yardi and Soree India (P) Limited has little expectation from the programme. "The idea has been mooted by the commerce ministry with an eye on exports only, not for promoting organic farming nor for the Indian people," says Soree.

The standards stand-off
To export organic products, the farmers need expensive and complicated certification done on their farms. Worse, the rules as to what constitutes organic are still being framed. The specific rules for organic agriculture are called standards which determine the production process within the ecological and social environment. The farms have to be certified by a recognised certifying agency, according to the standards.

The IFOAM, an umbrella organisation for promoting the movement worldwide, has provided basic standards on the basis of which a country can develop its own standards. The IFOAM tries to harmonise certification programmes through an accreditation system. IFOAM body International Organic Accreditation Service (IOAS) certifies farms.

Though the underlying concepts are the same, standards adopted by countries differ and should ideally be producer-based rather than buyer-based, as these currently are. Umesh Chandrashekhar, who heads the Institute of Marketecology (IMO) Control-India, Bangalore involved in organic certification says, "Certification, which verifies whether the practices are in accordance with the standards, must be based on the country which is producing organic products and not the country which is buying them, as is currently the case."

Alexender Daniel, director Indian Institute of Rural Development, Aurangabad, Maharashtra and general secretary IFOAM, Asia agrees. He says,"India has developed standards, but due to absence of any notification, this amounts to nothing. Indian farmers interested in exporting their produce have to run from pillar to post to get their farms certified from the international certifiers on standards based on the requirements of the buyer, not the producer. This goes against the basic principles of organic farming which are location-specific." Warns D N Reddy, director of Centre for Resource Education, Hyderabad, "International standards do not benefit our producers. We have to wake up if we want to safeguard the interests of our farmers."

Marketing muddles
Marketing is the main problem for organic produce. As a result almost every developing country has certified export surplus. "There is a mismatch between buyers and sellers," says Jha. The Codex Alimentarius standards guidelines state that organic food import requirements should be based on principles of transparency and equivalency. Although a regulation was issued to this effect in the EU in 1992, the reality is very different. According to the regulation, the EU should open the organic food market to products from third (non-EU) countries.This list is short and sweet: it includes Argentina, Australia, Israel, the Czech Republic, Hungary and Switzerland. In 1992, the EU Council Regulations introduced a case-by-case import permit procedure as an alternate way of gaining access to the EU market. Set up as a provisional measure to apply to every consignment imported from a non-listed third country, these countries find the procedure cumbersome.

"Apart from the procedural complexities, organic products from developing countries may also be subject to tariff and non-tariff obstacles," informs Jha. The solution lies in India getting itself included in the General System of Preference category to avail of the concessions provided by developed countries to developing countries for exporting their products and to seek a tariff quota system for organic produce, which means getting included in the third list of non-EU exporting countries.

India Organics Inc

Mehtre showing his organic man (Credit: R V Singh / CSE)The government's interventions have focused on promoting certified organic production, missing out the challenge of using the organic route to reward traditional, marginal farmers. This misplaced priority seems to be changing. A master plan for the production of organic coffee is almost ready. Formulated by the coffee board, the plan focuses on belts where tribals and small growers cultivate the commodity without recourse to chemical pesticides and fertilisers. The blueprint identifies areas for production potential and draw up packages of practices.

Organic tea production is also gaining momentum. A company in southern India -- the Singampatti Group of Estates of the Bombay Burma Trading Corporation -- practices organic cultivation of tea on 312 ha and produces 9,000 tonnes of fully certified organic tea annually. The corporation is the largest single producer of certified organic tea in the world. The certification is carried out by IMO.

The Darjeeling tea gardens have also turned organic after some consignments of Darjeeling tea were rejected by Germany in 1993 because of high pesticide content. There are now 11 tea gardens which grow organic Darjeeling tea, and account for 10 per cent of total Darjeeling tea cultivation. Goodricke for example, annually produces 2,500 tonnes of organic tea from its six estates in Darjeeling.

Though the operational costs for organic tea is five times that of conventional farming, the price it commands is 80 per cent higher than conventional tea. According to Atul Kaushik, former deputy secretary at the ministry of commerce, organic tea is only one per cent of the total tea market. "To increase the market, these products should be promoted in speciality tea shop," he suggests.

India's organic trade in spices is fast picking up, courtesy the Spices Board India which is promoting organic cultivation of spices. It encourages growers to regard each farming unit as a self-sustainable eco-system and use organic inputs rather than the chemical fertilisers. Vermiculture, intercropping and cultivation of legumes are promoted in this package.

According to the Board, India exported 20 million tonnes of organic black pepper in 1999-2000 to Germany valued at Rs 56 lakh. In 1999-2000, 23.90 million tonnes of organic white pepper was exported to Germany. Some 9.10 million tonnes of organic sliced ginger worth Rs 9.30 lakh was exported to the US in 2000-01. India is also exporting organic turmeric powder to Denmark.

There are a number of private Indian organic exporters of spices also. Peermade Development Society, Peermade is one such exporter. The Society exported 30.27 million tonnes of organic black pepper in 1998-99 to the US and Germany. The Netherlands also bought 12 million tonnes of organic white pepper from the society in 2000-01. There are small Indian, exporters of cardamom like the Kerala Cardamom Processing and Marketing Company Limited, Mas Enterprises Limited, Vandanmettu Exporters of Cardamom, Gandhi Sons, Mumbai and so on.

The Indian Organic Food, a New Delhi-based company, has ventured into organic commodities like basmati and other varieties of rice, tea, lentils, grains and sugarcane. Products are internationally certified and are being imported to countries all over the world. The company is a member of IFOAM Asia. Indian Organic Food has developed Anupaan, a vitaliser which ensures healthy growth of plants and crops. Totally organic in nature, the vitaliser is being tested in Germany, Portugal and New Mexico.

Contrary to popular belief, Indian farmers are realising that organic farming can increase yields. Bhanu Shinde, a farmer from Lohgaon village in Paithan Taluk of Aurangabad says, "I have used organic farming since the last four years for my vegetables, sugarcane and wheat. My wheat production increased from 500 kg per ha during conventional farming to 700 kg per ha in organic cultivation. The yield of brinjal has doubled with the use of organic inputs." G Mehtre of Tasgaon, Maharashtra, has been growing 115 varieties of mango organically for the last 10-15 years.

Dinkar Punjaram, a farmer from Aurangpur village in Aurangabad district of Maharashtra, grows bajra (millet), chilli, chana , papaya, wheat and sugarcane organically. He says, " We use compost and make Amrit sanjivani as a nutrient for the plants. To make 250 grams of sanjivani, we mix 25 litres of cow urine, 25 kg cowdung and jaggery. We also use another preparation for plant protection using garlic, chilli, hing (asafoetida) and tobacco leaves." He adds, "We earn about Rs one lakh in a year through our 2.4 ha farm."

Narayan Reddy has a 3.6 ha farm located at Soranhunise near Varathu village in Karnataka. Since 1975, Reddy has been organically growing a wide variety of crops like soyabean, brinjal, tomato, potato, gram and cardamom. The Institute of Social and Economic Change, Bangalore has verified that Reddy nets between Rs 70,000-80,000 per year.

For exporters of organic products, success comes slowly but steadily. Harpal Singh Grewal, director of a New Delhi-based organic produce export company Indian Organic Food, explains the formula of his success, "Firstly you must raise awareness about the need to consume organic foods. This will be a period of loss. Then, enter the market with a professional mindset. Finally make your foods a fashion. Though during the professional period some profits are achievable, sustainability will come only when the fashion period starts." For sustainability, quality is key. "Once your quality has been established there is no stopping you. Your products will sell like pancakes and command the price they deserve," he adds. The company, running a 2,000 ha organic farm professionally in Sirsa, Haryana, exports organic sugarcane products, peas and basmati rice and some cereals.

M G Sathyanarayana, the founder of Magosan Exports, a company launched in 1993 in Karnataka, has translated organic farming into a profitable venture for farmers with the Netherlands-based certification body, SKAL. The company trades in organic black pepper, cardamom, cinamom, cloves, coffee, nutmeg, honey, ginger, basmati rice and white pepper.

While farmers associated with big exporters do not have to worry about the sale of their products and their certification, small marginal farmers are a harrowed lot. One such farmer from Ettumannor of Kottayam district in Kerala, Raju Joseph, says, "I cultivate coconut, coffee, rubber, black pepper, nutmeg, banana, jack fruit, tea, turmeric, cashew and vanilla in my farms with SKAL certification. I paid Rs 20,000 last for certification. But now with low exports, I cannot afford the certification cost."

Few groups which are trying to bridge the gap between the consumer and the producer within the country are gripped in trouble. ECONET, a network of consumers and producers or organic products in Bangalore, is finding that it cannot bear the high handling costs. "If we can get bulk orders, this brings down the costs and improves our profit margins," says Vasu, programme officer, ECONET. He reveals, "We started the ECONET network in 1993 with 104 members but now we are left with only 17. Distances are long and the price is often only 5-10 per cent more than conventional produce. Storage is a big problem and many farmers go back to conventional farming."

One approach to deal with these problems as organic farmer Ram Babu Shinde from Aurangabad suggests is, "to organise a market in nearby towns where producers and consumers can meet and purchase products." The general secretary of IFOAM Asia, Daniel informs, "We promote production of organic products in 45 villages. We hire a place in Aurangabad city every 15 days where we provide information to the interested consumers. We inform the consumer as well as sell our produce simultaneously. This strategy is now yielding results."

The way ahead
Given that more than 60 per cent of India's arable land is under traditional agriculture, there is an urgent need to ensure high premium for the produce grown in these regions. "Unfortunately, these farmers are so involved in their struggle for survival that they have no time to figure out what is organic and what is not. The organic produce at present is sold to the arahatiya or middleman and he will not go out of his way to help the farmers," says Kaushik. "However there are examples where non-governmental organisations have found traditional farmers where no chemical products have been used. These NGOs have helped the farmers to sell their produce as organic," he informs.

There are many farmers in India who use crop residues, manures, legumes and neem to grow their crops. They rely on crop rotation and interplanting, leaving the ants, earthworms, frogs and other animals to do their job. These farmers practice farming through organic inputs. And it is high time that attempts are made to classify these practices accordingly.

If this is done, the poor farmers will get a premium price for their low yield. This will also go a long way in alleviating poverty and raising the living standards of the poor villagers. "I do not see any problem in transforming our traditional farms into organic. Most of the agriculture in backward and tribal areas could be classified as organic. Almost all the northeast agriculture is also organic. We must take advantage of this opportunity by arranging a market for their products," feels M C Diwakar, joint director, Plant Protection, Quarantine and Storage, Ministry of Agriculture, Government of India, Faridabad, Haryana.

For exports, an aggressive strategy demanding free access needs to be adopted. Argentina has shown the way. The farmers and government joined hands in the early 1990s and established certifying bodies on their own. They also established the state-of-the-art principles for organic farming which was recognised by the EU. Argentina does not require the services of EU certifying organisations. They do it on their own.

India should take a lesson or two from this. Our policy makers must remember that globalisation may be about free market access but markets do not fall into laps like Newton's apple. They require sustained efforts and proactive strategies.

According to Grewal, "You have to develop a passion for your organic products." The question is: is the government capable of passion?

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