The last couple of years have seen a massive growth of demand in the organic food industry, especially in the urban and fast-growing markets of India. The organic food industry in India which is currently in its initial stages of evolution is growing at a rapid rate of 25% – 30% Y-o-Y. High disposable income and increased health awareness are the key factors which have resulted in this augmented demand.
With this scenario the domestic organic food market is projected to touch $1.36 billion mark by 2020.
How different is organic farming from regular farming?
The differences between organic farming methods and conventional farming are the methods used during food production. Organic farming works towards increasing sustainability and biodiversity and needs good soil and air quality. This must then be maintained by using natural growing practices, avoiding harmful chemicals and continued practice of crop rotation along with other natural farming methods.
Organic agriculture is typically more profitable – upto 35% more than conventional farming. It also provides more rural employment opportunities because organic management is more labour intensive than conventional practices. For workers, though, the biggest advantage is that organic decreases their exposure to toxic agrochemicals.
The demand vs supply analysis of organic food brands in India
The organic food market in India is still at a nascent stage wherein we are noticing an increasing demand from end buyers but due to limited availability the supply remains slow. The major problem faced currently is that organic products are priced at a high rate which makes market penetration challenging. The limited availability of organic foods coupled with the fact that majority of sales is concentrated in larger cities shows that supply chains of organic food from farms to domestic consumers are not very well established. There is a lack of knowledge about organic products leading to a low penetration amongst potential customers.
Role of accelerator programs like Agri-Udaan
Agri-Udaan is a brilliant initiative by the Government of India to attract youth from rural India and train them so that they can add value to farmers produce. This indirectly brings more land under organic cultivation. With the Indian Government committed to the goal of doubling farmers income by 2022 several Indian agri-tech start-ups and ecosystem enablers have come forward to help India regain its status of being the “Golden Bird” using technologies such as AI, BIG Data, ML and more.
Upcoming trends which make organic farming a viable business model
There are of technologies being developed like refrigeration system powered by farm waste, AI Based deep tech solution for crop inspection and agricultural products grading, supply chain optimisation platforms, tech platform for rural entrepreneurs for demand led agriculture, a wearable plant phenomics device for pre-detection of pests diseases and deficiencies prior to any physical damage to plant. With such innovations organic farmers can merge nature and human creation to improve efficiency and protect produce.
The trend of organic and healthy eating is catching up again where an increasing number of Indian citizens have chosen a complete chemical free lifestyle and have turned towards eating natural and organic. We are seeing newer organic brands coming up which have traditional processing techniques, and all this is made possible due to the awareness spread by a lot of change makers, NGOs and organic food marketing companies.
As per industry reports, India organic food market, which currently sized at 6000 crores is anticipated to grow at a CAGR of over 25% during 2016-2021. Rising popularity and awareness within the younger generation and millennials is the reason behind the growth. In a country having 1.25 billion citizens, there is immense scope and opportunity for new brands to enter and work mutually for the growth of the industry, thus making it a rewarding opportunity for the investors to enter this space.