GROWTH OF ORGANIC FOOD INDUSTRY IN INDIA

Abstract

The organic food industry in India is in the early stages of growth. Higherdisposable income and greater health awareness have resulted in an increaseddomestic demand for organic food. There is huge premium in selling organicproducts, not only to export markets but also to affluent, health conscious domesticconsumers. India is endowed with an abundance of labour and has diverse agroclimaticregion that is well suited to year round agriculture. It still has strongtraditional agricultural practices. Can India make use of this comparative advantageto introduce sustainable agriculture practices and at the same time improveincomes of small and marginal farmers?On the supply side, small and marginalfarmers realize that there is an opportunity to get higher net incomes even if yieldsare low in organic agriculture. This is because the price of pesticides and chemicalshas increased significantly over the last few decades resulting in a significantincrease in the cost of production. Organic farming cost could be 50% to 60% lesswhen compared to inorganic farming practices.In addition to domestic demandside, globalized markets provide significant opportunities for Indian agriculture tocapture a larger share of the global demand for organic food. This paper analyzesthe 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 sustainableagricultural practices could help improve farmers’ income. Finally, this paperanalyses existing policy framework towards organic agriculture and how small andmarginal farmers could possibly benefit in this niche market.