Organic Food Business
Organic food products are growing in the Indian food industry. In the next three years, the Indian organic food market is predicted to rise by more than 25%. In addition, organic farming has become more popular in India. People are becoming more aware of the advantages and disadvantages of using organic products. Such trends continue to reveal a significant increase in opportunities for the organic food business.
Businesses that want to start an organic food business, whether it’s manufacturing, processing, distributing, or selling, will face number of problems that plague the sector and organic food business conditions.
Here is a list of a few challenges that one must keep in mind:
- Market opportunity: Before starting any firm, it’s always a good idea to look into the company’s and industry’s history. As a result, there is an increasing number of cases of organic food adulteration on the organic food market. Which has been seen several times around the world. The goal of Food safety Legislation is to raise safety standards. Simultaneously, customers are becoming more willing to pay a higher price for safe and high-quality organic products.
- Understanding the target audience: This new generation is educated and intelligent. Eating healthy food is becoming more popular. Rather than paying medical fees, youth choose to spend their money on healthy eating. As a result, they are willing to adopt new and improved Food Business items. Priority has been given to health above cost. Organic products have found a home in shopping baskets thanks to increased spending power, increased awareness, and increased demand. As a result, it appears that the organic food business is expanding rapidly. However, finding a possible buyer is a challenge.
- Growth opportunity: In terms of opportunity, organic food items rank high. However, organic food consumption accounts for only 0.1% of India’s total annual food consumption of $300 billion. Overall, India accounts for less than 0.2% of the worldwide organic food industry. Despite this, the number of opportunities has increased as a result of the increasing e-commerce sector for product sales. An organic food supply chain is more valuable than a conventional agribusiness supply chain. Because there are fewer mediators, product traceability is improved. As a result, organic products from North East India, such as pineapples, have grown in demand and reached a wider audience.
- Challenges due to policy changes: There are different perspectives to this:
- Small and medium-sized farmers are typically found in hilly and tribal areas, resulting in a weak supply network. It is quite difficult for them to gain direct access to the market. Furthermore, to avoid cross-contamination, organic items must be stored separately from conventional items. Products spoil due to a lack of packaging rooms and refrigerated vans.
- The government, on the other hand, is assisting farmers through the Participatory Guarantee System (PGS). The Pradhan Mantri Kaushal Vikas Yojana (PKVY) scheme initiative supports this certification process. These farmers, however, are not entitled to export. Third-party certification is required for exports by the Agricultural and Processed Food Products Export Development Authority (APEDA). It’s crucial because farmers in India won’t be capable of earning a higher price until they’re allowed to export under PGS.
- If a farmer decides to go from traditional chemical-based farming to organic farming, he or she runs the risk of losing yield. This requires the government providing subsidies to pay for the initial yield loss. Currently, the Indian government does not provide such a subsidy. In addition, following the green revolution, a large portion of the budget is devoted to chemical-based inputs and high-yielding seed varieties. Organic farming receives less than 2% of states budgets.
- Converting one or a few areas of land to organic farming may not be enough to achieve the goal. This is due to the possibility of contamination of the crop from air and water sources. Some states, such as Sikkim, have been designated as organic because they generate entirely organic products. Farmers are encouraged to embrace organic farming practices as a result of such government programs.
- A severe shortage of high-quality organic inputs also increases the risk of crop losses. The quantity of organic fertilizers available is limited. Furthermore, few serious competitors in the market supply organic inputs. A policy on input standardization is required. Different crops grown in different regions confront different problems. These are crop- and region-specific problems. To improve their yields, more research and development is required.
- Farmers have suffered significant losses due to a lack of essential equipment. For Example, fruit flies In Sikkim lead to the damage of orange yields in 2015. To protect crops from insects, basic equipment includes netting and poly-houses.
- Labelling: It has been made compulsory to label organic products as per The Food Safety and Standards Authority of India (FSSAI). It has issued regulations requiring food enterprises selling organic product to follow certain guidelines. It is necessary to obtain certification from one of the following organizations: The National Program for Organic Production (NPOP) or the Participatory Guarantee System for India (PGS-India). Companies that deal in organic produce can obtain a voluntary logo from the FSSAI that identifies the product as organic.
- Third-party Certification: It is also possible to obtain certification in green expertise on a national and worldwide level. An eco-label is a mark of approval that also assists in the promotion of ecologically friendly goods and services. This is necessary for marketing purposes as well as to build trust in the minds of customers. The Ministry of Commerce has allowed nearly 24 agencies to certify general exports.
The idea of one nation, one law has been maintained thanks to the unified regulation on organic foods. The Jaivik Bharat logo and the Indian Organic Integrity Database Portal were both launched in 2017. Several state governments have also established certification bodies and taken steps to promote and improve organic farming, as well as the production, processing, distribution, and sale of organic goods.
Do you have the confidence and motivation to start a food business in India?
MeraLegal will assist you in obtaining all appropriate food licenses and registrations to begin your business; please click on the following link to contact one of our consultants.