Indian Organic Market Development Project(IOMDP)
Organic agriculture in India: In India, organic production has considerably grown in the last two years. Indian government agencies and numerous NGOs are promoting organic agriculture as a way out of the difficult economic situation Indian farmers are facing due to degradation of natural resources, increasing production costs and the liberalisation of food markets. Following this trend, some ten thousands farmers have already converted to organic agriculture; and many more are ready to do so.
In 2000, the Indian Government started promoting organic agriculture on various levels. Under the National Programme for Organic Production (NPOP) standards, accreditation criteria and a national organic logo have been launched, and the Planning Commission has identified organic agriculture as a major thrust area for the current Five-year-plan. The government is now preparing a policy to support the development of OA.
Market potential for Indian organic products: In recent years, the market for organic products has grown at very high rates (up to 30% a year) in Western Europe, USA, and in Japan. With regards to the higher shares of organic products in those markets, smaller growth rates are expected in coming years. According to estimates of BIO SUISSE, MIGROS and Coop, the Swiss organic market is expected to grow by approx. 10 % in 2004. Traders and retailers are also expected to increase their range of exotic organic products. With the present small share of such products in their range, over-proportional growth rates are expected in this field (especially in France, Italy, Germany, the Northern European Countries and Japan; less in Switzerland, where consumers have a certain preference for local products).
For Indian producers there is an interesting potential on the international market, mainly in tea, tropical fruits and juices, spices and nuts, and rice (e.g. basmati), pulses and cotton.
A high potential for Indian farmers and food-processors exists on the domestic market, too. In the Indian culture, there is a traditionally high consciousness about “pure food” and thus contamination in food products. After the numerous food scandals in recent times, the interest for organic products is growing fast among the Indian middle class consumers (which make up for around 10 % of the population). Recent market research came to the conclusion that 5 % among the middle class are potential buyers of organic products, which means an estimated market of 5 million consumers. Several enterprises have already entered into the domestic organic market, or are planning to do so in the near future (e.g. distribution networks like Safal Mother Dairy, one of the largest traders in fruits and vegetables, or the supermarket chains Metro and FAB India). Therefore, it is expected that a considerable amount of private investment will be mobilized for the development of this market segment.
SECO’s initiative in organic agriculture in India: Seco started its involvement in Organic Agriculture in India in 2001 by supporting the set-up of the Indian certification agency INDOCERT based in Kerala. By now, INDOCERT has become a well-established certification agency whose number of clients (farmers, corporate NGO’s, food processors and traders) is rapidly increasing. INDOCERT is expected to get the international accreditation before the end of the year (before schedule). The project is so successful that there are now plans to open a branch office in North India, without any additional financial support by seco.
However, the approval of agricultural inputs such as organic fertilizers, plant protection means and feed items is not yet solved in a satisfying way. Recently, many industries started to offer organic inputs, what has led to confusion in the market. Also the different certifiers in India do not yet have a system for mutual recognition of approved inputs. This shortcoming is also proposed to be solved in the framework of this project.
Considering the large number of farmers being certified organic or certified organic in conversion, it can be said that certification is no longer the bottleneck of the organic system in India, what is – under other – the merit of the INDOCERT-project. Today market access (domestic and international) is the main concern. The question is whether the certified producers will find their buyers and whether they will be able to meet the quality requirements of the export and domestic market. We came to the conclusion that further support is needed to improve the performance of the organic production/market chain (farm inputs, production, processing, trade) is needed to allow farmers to take maximum benefit of the established certification system.