This is a common practice among farmers. They often grow their own Food, be it grains or vegetables, in a separate plot and apply little or no chemical fertilizers and zero pesticides. The reason? Most consider what they sell in the markets as harmful for health, laced with chemical residues.

But most consumers, except a minority, seem blissfully unaware of what goes into their food. Cauliflowers dunked in chemicals to make them sparkling white; bottle gourds pumped with growth hormones to make them grow bigger; heavy sprays of pesticides on okra and brinjal, which are cooked unpeeled. Off-season vegetables often have a higher chemical load, farmers say. They use more pesticide to protect off-season vegetables: because those sell at a premium and growing costs are higher.

Consumer preference for cheaper food is one reason why the market for Organic, that is food grown without chemical fertilizers and pesticides, is miniscule in India, food companies complain. How small is it? Less than ₹4,000 crore in a year, including non-certified produce.

As per data from the Agricultural and Processed Food Products Export Development Authority (APEDA), till March this year, 5.4 million hectares—or just about 3.5% of total cultivated land of 154 million hectares—is registered under the National Programme for Organic Production (NPOP), a body that provides certification standards for organic production.

Interestingly, India had the highest number of farmers practising organic farming (1.4 million) in the world, while Australia had the largest area under organic agriculture (36 million hectares), according to the World of Organic Agriculture report 2021.

In 2022-23, Indian farmers produced 2.9 million tonnes of certified organic produce which includes foodgrains, oilseeds, perishables, cotton and tea. India exported ₹5,525 crore worth of organic produce in 2022-23, significantly higher than the estimated domestic sales. Organic produce, unlike in India, is a huge trend in developed markets—according to the Organic Agriculture report cited earlier, global organic food and beverages sales was estimated at €106 billion in 2019, with the US, Germany and France accounting for over 60% of the market.

24 Mantra Organic, the largest organic food brand in India, clocked a turnover of ₹330 crore in 2022-23. Exports accounted for 45% of its revenue. In comparison, the annual turnover of Nalli Sarees, a premium garment retailer, was over ₹500 crores in the year ending March 2022. Even a boutique ice cream brand like Naturals sells more (over ₹200 crore in a year) than what the largest organic food brand could sell within India.

Mint spoke to several companies to understand what is holding back the market for organic food. When consumers can afford to spend on premium cars, shoes or garments, why not spend on food grown without chemical fertilizers?

Here’s why in a nutshell: due to steeper prices, the market is limited to an elite set of consumers. Higher prices are driven by retail outlets demanding ‘crazy’ margins, and costs incurred towards certification. Repeated price fluctuations push farmers to drop out frequently: when vegetable prices fall sharply, there is little incentive for them to continue with organic methods. Which means erratic supply for sellers and frequent stock-outs, especially for fruits and vegetables.

Limited scale of production leads to higher certification, processing and marketing costs, leading to higher retail prices. This, in turn, discourages consumers. When consumers turn their back, the farmer loses interest. The cycle plays in a loop.

In addition, the lip service accorded to natural farming by governments, both at the state and central levels, is not matched by financial support. In 2022-23, subsidies on chemical fertilizers were at a staggering ₹2.25 trillion. The federal budget for the National Mission on Natural Farming? Less than ₹500 crore.

Consumer awareness continues to be poor. There is a sense of mistrust if organic food is really what it is sold as. So, consumers often pick up the cheapest staple on offer because there is hardly any data on the quality and safety aspects of conventional (non-organic) food. The last large-scale survey by the agriculture ministry, on pesticide residues in food, was conducted more than five years back. The results were kosher. Just 2.2% of the samples were found to exceed prescribed pesticide residue limits. But farmers seem to know better. Which is why some of them separately grow the food they eat and the food they sell.

“When India embarked on the green revolution in the mid-1960s, it created a support system to help farmers transition into a new technology. That support is missing for farmers who want to shift to organic. We need to provide farmers marketing support and a robust government extension system—agronomists and field staff—who can teach farmers how to prepare various organic and bio inputs and how to control pests and weeds,” said Vineet Kumar, programme manager, sustainable food systems at the Centre for Science and Environment, New Delhi, a research and advocacy organization.

Price buildup

On a bright September morning, Pappu Patidar, a 32-year-old farmer from Mandsaur district of Madhya Pradesh, was busy tending to his field. Hired workers harvested ripe soybeans while Patidar plucked out weeds by hand from a small plot of groundnut.

It took Patidar nine years to move all his 15 acres into certified organic farming. “In the first few years, the yields dropped but then recovered gradually,” he said. Earlier this year, Patidar sold organic wheat to 24 Mantra for ₹2,800 per quintal, at a 20% premium compared to market price of conventionally grown wheat. His costs of certification were borne by 24 Mantra. Agronomists and field staff from the company taught Patidar how to prepare bio-pesticides and organic manure from cow dung.

“My biggest savings are on chemical pesticides—about ₹40,000 every year. The crops are healthy because they are grown on healthy soils,” Patidar said. The field staff from the company claimed that the package of practices adopted by the farmer has boosted soil organic carbon content, a critical indicator of soil health.

24 Mantra, which now works with 35,000 farmers in 16 states, began its journey in 2005. Its revenue nearly doubled, from ₹169 crore in 2017-18 to ₹330 crore in 2022-23.

According to Rajasekhar Reddy Seelam, founder and managing director of 24 Mantra, consumers are taking to organic food, but at a slow pace. “Awareness and trust are important factors. Yet, over the last five years, we estimate that the number of families who have experimented or are regularly purchasing organic items have increased from 1 million to over 4 million,” Seelam said.

“For us, high retail margins are a big hurdle. That money could be better spent on consumer awareness,” Seelam added. For instance, most retail stores ask for a 25-30% margin for stocking organic brands. They consider organic staples to be a premium product which will sit on the shelves for longer. Smaller brands that have less bargaining power compete among each other and end up offering a high margin to retailers. This drives up consumer prices. For instance, the retail margin on a packet of conventional rice is usually less than 10% but exceeds 30% for organic variants.

“We had started our journey with the premise that everything we sell on our platform should be organic one day,” said Seshu Kumar Tirumala, national head of buying and merchandise at BigBasket, a popular online grocery store. Over the past five years, the share of organic staples, which include non-perishables like grains, pulses and oils, has increased from 5% to 14% of overall sales, he added.

But of the 18,000 tonnes of fresh fruits and vegetables sold monthly on the platform, less than 8% are from a category the company describes as ‘organically grown’. Products sold here are grown organically but are not certified.

BigBasket has created this unique category to deal with erratic supplies. Vegetables have a short crop cycle and are grown on smaller plots of land. Planting decisions often change in response to market demand. Incurring certification costs is an impediment. So, BigBasket instead ensures that the produce is grown without chemical inputs in the season it is procured. To be ‘certified organic’, no chemical inputs can be used in a plot of land for at least three years.

“We are being transparent with the consumer here. Our agronomists work closely with farmers to monitor their practices. But at a policy level, we need to figure out how certification can be simplified for this category,” Tirumala said. For staples, this isn’t a challenge. On its platform, 85% of the organic staples are sold under a private label, BB Organic.

On consumer demand, Tirumala said that customers are not willing to pay beyond a certain point for organic food. A price premium of over 20-25% is the maximum consumers are comfortable paying to switch to organic. “We are mindful of this premium while putting a price tag. Right now, we are not chasing profits but genuinely want to promote this category,” Tirumala added.

Pesticide-free

While BigBasket created the ‘organically grown’ category to deal with erratic supplies of fresh produce, some are experimenting with other methods. In Andhra Pradesh, a large community managed natural farming project has created a safe food movement with participation of six million farmers. Safe Harvest, which sold ‘pesticide-free’ produce worth ₹50 crore in 2022-23, now works with 18,000 farmers spread across 11 states.

Small farmers who cultivate low fertility soils find it very difficult to switch to organic, said Rangu Rao, CEO of Safe Harvest. “So, instead of organic, we are helping farmers move towards rational use of fertilizers and teaching them how to stay off chemical pesticides which are more harmful,” Rao said.

Rao added that organic certification is both expensive and complex for farmers to adopt. Currently, India follows two distinct systems: NPOP certification for exports and domestic sales where the produce is certified by third-parties, and participatory guarantee system (PGS) where farmer groups certify each other. PGS certification, which is less stringent and cheaper, is only meant for the domestic market.

“For the domestic market, PGS certification is a better option. The certification costs are low (between ₹400 and ₹700 per hectare compared to ₹2,000 under NPOP for a group of farmers) but the standards are similar compared to NPOP,” said G.V. Ramanjaneyulu, executive director at the Centre for Sustainable Agriculture (CSA), Hyderabad.

CSA, a research organization, works with farmer groups in Telangana and Andhra Pradesh and has so far certified about 100,000 hectares under the PGS system. It has created a state-level federation of farmer groups which sells its produce under the Sahaja Aharam brand.

“Our key objective is to increase the farmer’s share in what the consumer pays for organic food. While conventional farmers receive about ₹25,000 per hectare in fertilizer and other subsidies, there is no such support for organic growers,” Ramanjaneyulu added.

The challenges notwithstanding, the organic market has seen the entry of large companies like ITC Ltd which launched its Aashirvaad Organic range of wheat flour and pulses in 2020.

“The organic segment is a small share of our food business but we see a sizeable opportunity in future,” said Anuj Rustagi, chief operating officer, staples, at ITC. “The focus is on building trust. The organic products we sell are traceable. We are also working with retailers to drive growth in the segment,” Rustagi added.

The trust factor is critical, not just for domestic consumers but also for the export market. An audit of NPOP organic certification standards by the European Union, carried out in November 2022, found “many weaknesses in the supervision and implementation of the controls at various levels…which significantly reduces the guarantees that the exported consignments are indeed organic.”

Till the time regulatory agencies fix these loopholes, consumers will face a dilemma. Should they pay a significant premium for food that may or may not be organic? Or continue to buy conventionally grown produce hoping their bodies will be able to weather the chemical residues?

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Updated: 17 Oct 2023, 10:28 PM IST