DATED: 30th August 2012 To Conference Secretary PESIT International Conference, Bengaluru Subject: SUBMISSION OF Full Length paper

DEAR SIR/MADAM Please find my submission of paper titled ORGANIC FOOD AND PRODUCTS EMERGING OPPORTUNITIES AND CHALLENGES IN GLOBAL TRADE for upcoming International Conference. I hereby affirm that the contents of this paper are original. Furthermore it has neither been published anywhere in any language fully or partly, nor is it under review for publication anywhere. I affirm that all author(s) have seen and agreed to the submitted version of the paper and their inclusion of name (s) as co-author (s). NAME OF AUTHORS: Qualification:
Designation:

Dr. P RAMANAGOWDA MSc, PhD

Emeritus Professor of Agronomy, GKVK

NAME OF AUTHORS: Qualification:

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CMA N RAVEENDRANTH KAUSHIK MA, MPhil, MBA, PG Tax Law, ACMA

Economic Analysis & Research Scholar

NAME OF AUTHORS: Qualification:

Designation:

ASHA L MSc. Sr. Research Fellow, Department of Soil, UAS, Bengaluru

1508, 4TH D Main, WCR 2 Stage, Mahalakshmipuram, Bengaluru 560086 Karnataka 09845010834 080 23490101 rk.rkaushik@gmail.com

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ORGANIC FOOD AND PRODUCTS EMERGING OPPORTUNITIES AND CHALLENGES IN GLOBAL TRADE
Abstract Food production in India has increased from 50 million metric tons in 1950 to 240 million metric tons during 2012. The major contributors for such increase are due to improved irrigation, use of agro chemicals and several other improved methods of cultivation. On account of this India was able to achieve Green Revolution during 70s. Off late, the use of agro chemicals and its residue in the food products has become a major concern. Today, all over the world there is much demand for organic food due to importance of health consciousness and balanced diet. Indian Agriculture before 60s was totally organic and hence, Organic Farming is not new to Indian farmers. About 75% of the total Agriculture in India is rain fed where the use of agro chemicals like fetilisers, pesticides etc are very rarely used. There are several food crops (cereals, pulses and oil seed), fruits and vegetables, fiber, fuel, flower, medicinal plants, honey, plantation crops (coffee, tea pepper, etc), dyes, spices (chilies etc) and many more minor forest fruits readily available for exports. The scenario indicates that there is great potential for organic food and products from this sector of rain fed farming. The recent statistics (by APEDA) shows that only around 5.5% of global requirement of Organic food and products are met and this shows there is a very big opportunity and also challenges to export to countries such as Europe, America and other Western countries. The major challenges in export opportunities are fragmented holdings, availability of scientific inputs, awareness about backward and forward market linkages, certification process, supportive government policies etc. Above said challenges are important and it requires good Management practices and polices and approaches to overcome these challenges and create a better environment to capitalize the opportunities. This opportunity which is gifted to country like India, if

taken in right decision will help in earning not only huge revenue but also will diversify Indian business across the world.

Introduction Business at global level started after GATT (WTO) at Uruguay Round in 1994 with involvement of 155 countries as of now. Earlier to this business was restricted to domestic markets. Consequent to these the meaning of export has also changed wherein movement of commodities between two villages is also viewed as exports. Under these circumstances India has a deciding role in terms of producing, providing quality Organic food produce and products to Europe and Western countries. India, an agrarian country which has still 70% of population rely on agriculture have the knowledge of traditional, time tested Organic methods of cultivation. The crop diversity in cereals, oilseeds, pulses, fruits, vegetables, dairy, poultry, piggery and fish etc are the available avenues for exports. Besides, several forest produce and products, plantation crops, spices etc are all available for export under Organics. Recent government policies also favours the Organic farming by way of declaring certain states as Organic states and promoting individual and group producer associations through subsidies and supports.

Status of Organic Products

Before 1960, the entire agriculture both under rain fed and irrigated conditions were entirely organic utilizing several traditional practices such as use of compost, insito green manuring, green leaf manuring, tank silt recycling, sheep penning, sudu mannu etc for maintaining soil fertility. While the crop protection also managed by adopting crop rotation, use of cakes and oil and trap plants and several other indigenous technical know-how.

Organic farming is gaining momentum all over the world as it offers a means to address food self reliance rural development and nature conservation. One of the surveys conducted by FiBL and IFOAM indicates that 8 out of 10 households (around 83%) brought Organic products in 2011. Considering this global scenario India also revived the age old practices of producing food crops under natural and traditional wisdom in producing quality organic produce. Scope of Organic Farming India

Table 1 Area under Organic Certification (in Hectares)

The above table clearly indicates that the area under Organic Farming is increasing drastically and in period of 6 years from 2003-04 to 2009-10 there is 100 times increase in area under Organic farming and there is a further scope to bring some more areas under Organic both under rain fed and irrigated.

Table 2 Indian Organic Farming Components 2008-09

Components Number of Exporters Total Production (Metric Tons) Total Quantity Exported (Metric Tons) Value of Exports in US $ Value of Exports Rs.

Major Organic Exports

Quantum 299 18,11,111 53,918 118.99 million 571.12 Crores cereals,pulses,honey,tea,spices,oil seeds,fruits,vegetables,cotton fibres,cosmetics and body care products

Table 2 above shows that India during 2008-09 produced 18.11 lakes tons of Certified Organic Products, of these 54,000 tons food items worth Rs 591 crores were exported. India exported around 135 organic products and average growth rate in Organic Market is around 50%.

Table 3 Indian Organic Products Exports, Region wise - 2009 Percent of Total Exports 70% 20% 5% 3-5%

Region Europe United States South East Asia Japan

Table 3 shows region wise exports, 70 per cent of the countrys organic products were exported to the European Union, 20 per cent to the US, 5 per cent to Japan and the rest to Canada, Australia and East Asian countries.

Table 4 Global Demand for Organic Foods - 2010

Japan Canada Country United Kingdom Germany United States of America 0

1000 1904 2000 6020 20155

5000

10000

15000

20000

25000

Million Euros

Source FiBL, 2010 Table 4 above shows largest domestic markets in some of the countries of the world. This indicates that there is large scope for export of Organic products in the global scenario as majority of the countries have demand exceeding supply.
Table 5 Growth of Organic Foods - Global Market (Billion US $)

Source FiBL, 2010

Table 6

Source FiBL Table 6 above shows demand for organic products in some of the major countries, it clearly shows that most of the products given in the table are grown in abundant in India and there is potential for India to meet the global demand. Support Policies Organic Farming is not new to Indian farmers, before 60s the entire agriculture production was fully Organic as there was no use of inorganic fertilizers, plant protection chemicals etc. This is one of the major strength for investors in Organic Farming in India. Most of the states framed the policies on Organic Farming in order to promote and develop Organic farming eg. Karnataka State Policy on Organic Farming 2004. 4 major states in India have also declared to go 100% organic in near future. To address the issue of small and fragmented holdings, Governments have also come up with new policy under Contract Farming to consolidated fragmented holdings.

In realizing the global business of Agriculture and Horticulture produce, National Dairy Development Boards (NDDB) has established world class facility infrastructure for storing, sorting, grading and marketing agriculture produce.

At the National level a separate government package named Rastriya Krishi Vikas Yojana (RKVY) in support of sustaining stable agriculture production is formed. Government also established agencies like APADA, KAPAC etc for promoting agriculture produce exports in global scenario. To ensure quality of Organic products for exports and imports, Government has acclaimed certification process for Organic production and process. National Bank for Agriculture and Rural Development (NABARD) has come out with initiatives like building capacity of Bankers, NGOs, farmers through effective training programs and organizing exposure visits. It has also come out with financial schemes to promote Organic farming.

Challenges in Organic Farming Though the country is having arid, semi arid, humid, temperate and costal agri-climatic condition with diversified crops and cropping system unfortunately there is lack of consolidated, coordinated and controlled system of production with respect to quality and distribution. Lack of availability of Organic certified inputs in promoting Organic production is a major constraint. Organic certification of process and produce are not set up at Production level. Lack of awareness and training facilities among stakeholders on Organic farming and produce. Lack of global exposures to producers. Lack of logistic, financial and technical support at production level. Lack of backward and forward linkage of agriculture produce.

Opportunity for Global Investor India has emerged as one of the promising and potential country in the world due to its multiple advantages such as low level of soil pollutions, farmers are experienced in growing organic due to traditional practices, recent government policies are pro organic and adjustable climatic conditions suitable for growing varieties of crops. Keeping these points in view the quality of produce and products is superior compared to other organic producing countries. Organic production in India favours investors in terms of giving them high returns on the investment and less pay back period due to positive factors like well developed supply chain system, communication networks (roads, sea ports, railways etc). There is a need for Global Investors to invest in areas of cold storage units, processing plants, certification, market linkages etc in order to produce on time and meet the growing demands.

Conclusion It is right time for Global Investors to invest in producing Organic Food as it assures investors with fair returns, low risk and quick pay back without any hurdles. There are many natural Organic food products readily available like honey, minor forest fruits, spices and medicinal plants which doesnt require any investment to produce and which can be readily marketed. The pro government support towards Organic Production through various policies needs to be capitalized to meet the growing Organic food demand. All the state Agriculture Universities, National Research Organization and NGOs are involved with the farming community in educating and creating awareness about Organic Farming. It is important that challenges such as onsite cost effective certification, providing technological support, financial support, buy back system (support price) are to be strengthened and streamlined for meeting the targets.