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 1% and per capita consumption at only EUR0, said the ASSOCHAM-EY joint report.
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. Producers of organic products are continually struggling to optimize 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 on the other hand, face significant resistance in the form of lack of adequate postharvest 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 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.
In addition to ranking third in wild harvest area, India also houses the highest number of organic producers globally with 8,35,000 organic farmers. It also ranks ninth in terms of area under organic cultivation with 1.49 million ha. Therefore, it occupies a robust position in producing organic products, having already exported 1.35 million MT of certified organic food products worth INR 1,937 crore in 2015-16.
The exports are largely concentrated around the US, Europe (EU), 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%.
The current Indian organic market is estimated at INR 40,000 million and is likely to increase to INR 100,000–120,000 million by 2020 with a similar incremental trend in exports. Indian organic market has been progressing steadily with CAGR of 25% as compared to 16% global growth rates.