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Organic foods costly in India, hence restricted to affluent, says study
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Thursday, 05 July, 2018, 08 : 00 AM [IST]
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Our Bureau, New Delhi
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The high cost of organic food products in India is the key reason behind its purchase being restricted to the affluent class of consumers, as the switch to organic food is likely to cost a family an additional Rs 1,200–1,500 per month.
This was the finding of a recent joint study, which was titled The Indian Organic Market: A new paradigm in agriculture and conducted by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) and global consultancy firm EY.
“Specialised farmer training costs, processing and inventory holding costs (without chemical additives), and increased packaging, logistics and distribution costs (due to low volumes), contribute to the high price of organic food products,” it added.
“High certification costs together with high cost of organic manure, and inflationary pressure created by high demand and low supply are key reasons for organic products to have higher price mark-ups than conventional products,” the study said.
The report added that poor awareness levels amid consumers about the health benefits of organic food products, especially in the non-metro cities, together with their limited availability in the market, were posing grave challenges to the growth of the Indian organic food industry.
The lack of standardised organic agriculture inputs and subsidy on organic inputs, supply chain issues, global competitiveness, absence of proper branding and packaging are the other challenges being faced by organic sector in the country.
The study also highlighted that while the Centre has sanctioned several schemes to incentivise organic farming with many state governments, even creating individual policies to promote the same, and the private sector has also expressed interest by increasing investments, there exist several challenges for all stakeholders involved at every stage of the value chain.
For instance, owing to gaps in the regulatory framework for organic products in India, producers of organic products are continually struggling to optimise the scale of their operations while maintaining profitability.
The ASSOCHAM-EY report also stated that although the government has been encouraging organic cultivation through various policies, there is a need to have state-level policies and cells to monitor organic production.
At the same time, it needs to step up its efforts to discourage use of fertilisers and pesticide by incentivising and promoting use of bio-fertilisers and bio-pesticides to decrease the cost of cultivation.
In addition to the procedural challenges pertaining to certification and quality assurance, 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 processors of organic food products face significant resistance in the form of lack of adequate post-harvest facilities for organic products. Thus several measures need to be taken in order to avoid contamination and cross-contamination of produce as infrastructural capabilities of the country often prove to be inadequate.
The ASSOCHAM-EY study also called for developing a public-private partnership model that aids 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 (M&E) of all assets and processes, as well as research and development (R&D) to help keep abreast of the global progress in the sector,” it added,
Additionally, the study noted that there was an urgent need for infrastructural development and business climate reforms, reinvention of branding and marketing strategies and entrepreneurship development.
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