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Challenges Of Organic Food Market In India

Organic should be given the status of an industry and specific policies shall be adopted

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The world is taking up a healthier turn for good as people seem to accept the inclusion of organic food as a part of their daily life. And why not, one should always consume the safest produce. Yet, the rate of adoption has been slow in the Indian market. Indian population which represents almost 20% of the world’s population consumes less than 1% of world’s total organic produce, despite having the largest organic farmland. Its growth has been sluggish, with people holding preconceived notions about the segment. Here are a few hindrances that this segment is facing:

Lack of awareness about organic products: The organic food industry is a fledgeling industry where its consumers mostly belong to the “fad diet” category, with a great lacking in awareness. Working on a word by mouth principle, core awareness for the category is negligible, with many people opting for these options as they seem fancy. This deficiency in knowledge creates consumers that glamorize the organic consumption, creating temporary demand. This, in turn, affects the sustainable growth of the whole industry. The concern for safe food is still far away.

Consumer preference for low price product: India is a price sensitive nation, with great disparity in the earning power. Organic food, due to various factors is steeper on price. Unaware consumers are wary of spending that much on Organic food. Huge difference between the pricing of Organic and the conventional product price has created disfavour towards Organic food.

Convince the farmer: Farmers have got so used to the chemical fertilisers and pesticides etc that they hold a deeply entrenched fear in converting to organic. The fear is for the loss of the crop, which might set back the whole years earning. A great deal of sensitization and education is needed to address the fear. Yet, their fear holds much ground and hence proper mechanisms to compensate for the loss of the yield (which may be only initially) should be introduced.

Pay extra percentage to the retailer:  Retailers prefer conventional over the organic for the quick movement from the shelf and hence for bringing in a greater margin per sq. inch of the shelf space., because organic material replenishment cycle is much more as compared to the conventional product. Retailers demand a good premium in order to create a shelf space to showcase the organic product. There is a push from the manufacturer and the brand than the pull from the market because the whole of the industry is new, adding a scope for the retailer to further assume an upper-hand. So the brands have to give a lot more percentage to the retailer than the conventional brand to get the shelf space. That makes the whole organic thing more expensive than it should be.

Expensive storage method: Apart from pricing, a hike of expenses is noted in terms of storage and preservation.  Very expensive storage method is being used as chemical input is not utilized to store these products for long-term. Conventional farmers enlist the use of chemicals to reduce their loss of crops, while organic farmers have to remain restricted to limited natural methods. Without the perquisite chemical preservatives added to conventional foods, organic foods face a shorter storage time and shelf life and hence require a greater level of maintenance.

Supply-demand disparity: The basket of the organic production is not balanced. What is in more demand is lacking in supply e.g. fresh fruits and vegetables while the supply of some of the grains outgrows the demand Hence there is the disparity in terms of what is needed by the consumers versus what is provided by the producers. This gap needs to be filled by local production in clusters.

Need for the Government support: Government is the most crucial stakeholder. There are certain aspects that can only be taken care of by the government. Like provision of organic inputs, those are far more costly than the subsidised chemicals provided by the government bodies. The education of the farmer and compensation initially for the loss of the crop are other important aspects where the government can support.

Industry Status
Organic should be given the status of an industry and specific policies shall be adopted. For example exemption from GST will help in reducing the cost. These moves will definitely motivate more players to enter the organic sector.

Despite these trying situations, the organic industry is achieving greater grounds as it sets itself up to win and provides its bounty to the world.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Tags assigned to this article:
organic food Organic Food Production

Pankaj Agarwal

The author is Co-founder & MD, Just Organik

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