GROWTH OF ORGANIC FOOD INDUSTRY IN INDIA

Abstract

The organic food industry in India is in the early stages of growth. Higher
disposable income and greater health awareness have resulted in an increased
domestic demand for organic food. There is huge premium in selling organic
products, not only to export markets but also to affluent, health conscious domestic
consumers. India is endowed with an abundance of labour and has diverse agroclimatic
region that is well suited to year round agriculture. It still has strong
traditional agricultural practices. Can India make use of this comparative advantage
to introduce sustainable agriculture practices and at the same time improve
incomes of small and marginal farmers?On the supply side, small and marginal
farmers realize that there is an opportunity to get higher net incomes even if yields
are low in organic agriculture. This is because the price of pesticides and chemicals
has increased significantly over the last few decades resulting in a significant
increase in the cost of production. Organic farming cost could be 50% to 60% less
when compared to inorganic farming practices.In addition to domestic demand
side, globalized markets provide significant opportunities for Indian agriculture to
capture a larger share of the global demand for organic food. This paper analyzes
the growth of the organic food industry in relation to domestic and export demand.
We also look at the supply side to determine if organic farming and sustainable
agricultural practices could help improve farmers’ income. Finally, this paper
analyses existing policy framework towards organic agriculture and how small and
marginal farmers could possibly benefit in this niche market.