THE INDIAN ORGANIC FOOD MARKET
Contents Organic- Organic
Concep Con ceptt Statem Statement ent
Global- Organic Organic GlobalIndia India-
Farmi Farming ng & Food Food
Organic Organic Farming Farming & Food Food
SWOT SWOT
- Organ Organic ic Sec Secto torr
Roadmap
Definition of “Organic” An
Organic label indicates to the consumer that a product was produced using certain production methods. In other words, Organic is a process claim rather her than a produ oduct claim. The
International Federation of Organic Agriculture Movements (IFOAM), a non-governmental organization, internationally networking and promoting Organic agriculture, has established guidelines that have been widely adopted for Organic production and an d proc process essin ing. g. Code dex x Co
Commit Comm itte teee on Food Food Labe Labeli ling ng ha hass deba debate ted d "Dra "Drafft Guid Guidel eliines nes for the Production, Processing, Labeling and Marketing of Organically Produced Foods“ for adoption of a single definition for Organic agriculture by the Codex Alimentarius Commission at its meet eeting in June, 1999.
Acc Accord ordin ing g to the prop propos osed ed Co Code dex x defi efini niti tion on,
"Organ ganic agricul icultture is a holisti isticc productio ion n management system which promotes and enhances agro-ecosystem health, including biodiversity, biological cycles, and soil biological activity. It emphasizes the use of management practices in preference to the use of off-farm inputs, taking into account that regional conditions require locally adapted systems. This is accomplished by using, where possible, agronomic, biological, and mechanical methods, as opposed to using synthetic materials, to fulf ulfil illl any specific fun functio ion n within the system. m.""
Organic Agriculture
Organ ganic agri griculture ure syst systeems and products are are not al alw ways certified and are referred to as “Non-certified Organic agriculture or products".
Certified Organic products are generally more expensive than thei heir conventiona nall counterp erparts for a numb numbeer of rea reason sons :
Production cost for Organic food is typically higher because of great eater labour inpu nputs per uni nitt of output.
Post-harvest handling of relatively small quantities of Organic food results in higher costs because of the mandatory segregation of Orga Organi nicc an and d conv conven enti tion onal al prod produc uce. e.
Marketing and Distribution chain for Organic products is relatively inefficient and costs are higher because of relatively small small volu volumes mes..
Global Glo bal Org Organi anicc Agri Agri Lan Land d
37 million hectares of agricultural land is organic (including conversion areas).
160 countr countries ies 1.8 mil milli lion on produ producer cerss 1.8
Distribution of organic agricultural land by region (2010)
Source: Source: SOEL, FiBL FiBL - 2010
About 1/3rd of the organic agricultural land (12.5 million ha) is in transition/ developing markets and emerging markets.
Source: Source: SOEL, IFOAMIFOAM- 2010
Developmen Develo pmentt of Organic Organic Land- Trend– Trend–10 10 Years Years
The countries with the highest number of producers are India ( 3 4 0 ,0 0 0 producers), Uganda (180 (180,0 ,000 00)) an and d Mexi Mexico co (130 (130,0 ,000 00). ). More More than one third of Organic producers are in Africa. On a global level, the Organic agricultural land area increased in all regions, in total by almost 3 million hectares, or 9%, comp compar ared ed to 20 2007 07..
About one-third of the world’s orga organi nical cally ly ma mana nage ged d agri agricu cult ltur ural al land is located in the Oceania regi region on.. Lati Latin n Amer Americ icaa an and d Euro Europe pe also account for a considerably large proportion of the world’s tota to tall orga organi nicc land land..
Continent-wise Distribution: Organic Land
Organi Org anicc Food – Glo Global bal Scena Scenario rio Global Organic Food Market 2010
: 59.1 billion US dollars 2009 : 54.1 billion US dollars 1999 : 15.2 billion US dollars
Major Markets : 26 BN US$ U.S.A Japan : 3 BN US$ Europe : 12 BN US$ : 10 BN US $ Others Annual Growth : 20 -30% Market Share : 1% of Total Total Food Sales
Organic Cluster Organic Clusters/Ret s/Retailers ailers - Globa Globall & Organic Brands
Whole Food Markets Organic Clusters, Rhone Alps “Produce of Heaven”, Tasmania Walmart Asda Costco Pronatura Kroger Safeway Wild Oats “O”- organic organicss
Organic Farming / Food-Investments Globally S.No
Name of Nam of Or Organ aniic Fo Food Company
Investor
Quantum
Additional details
1
Maharishi Organic Agriculture
ICO N Private Equity
2
Pronatura ( Organic distribution)
Activa Ca C apital
Euro 10 million
France
3
Abel & Cole (distribution)
Phoeni Phoenix x Equity Equity Partners
Euro 40 million
UK
4
Adina For Life
Bradmer Foods LLC
Beverages company from Senegal ( Fruit juices)
5
Whole Foods
Has made 15 Appro Approx. x. 300 acquisitions in Organic stores and USD space 12 billion sales
USA
Ukraine
Indian Organic Market
Total Organic area: Total certified production: Total exports: Value of export:
4.43 million ha 17.11 lakh tonnes 6 9 8 3 7 MT INR 700 Crores States/UTs Madhya Pradesh Himachal Pradesh Rajasthan Maharashtra Uttar Pradesh Uttarakhand Karnataka Gujarat Tamil Nadu Orissa Jharkhand Haryana Andhra Pradesh Goa Mizoram Chhattisgarh Kerala West Bengal Total
Area in Ha 2866572 631902 217712 177345 111645 105466 88729 48519 34878 24418 24300 14764 14351 13304 12544 8449 6598 6126 4427519
Organicc FoodOrgani Food- Domes Domestic tic Sales Sales and Export Exportss Product Tea
Domestic SalesMT 150 0
Coffee
75 0
Spices
50 0
Rice
500 0
Jaggery, sugar
6000
Wheat & flour
3000
Pulses
250 0
Fruits and vegetables
5000
Millets flour
200 0
Oils & ghee
200 0
Squashes, Jams
5 00
Snacks
5 00
Honey
20 00
Others(essential seeds, see ds, etc)
5000
Product
Exports - MT
Oil Crops (except Sesame)
1 796 6
Cotton & Textiles
1 736 3
Processed Food
875 2
Basmati Rice
524 3
Te a
292 8
Sesame
240 9
Honey
240 9
Rice
163 4
Dry Fruits
147 2
Cereals
134 8
Spices-Condiments Medicinal & Herbal Plants/Products
1 174 627
Coffee
320
Vegetables
167
The India Domestic market is around INR 1000 Crores; growing at 30-40%
Indian India n Organic Organic Food- Marke Markett Size Size Brands Conscious Foods
Turnover in Crores 120
24 letter mantra
65
Ecofarms
85
Delhi/NCR
Morarka “Down To Earth” Organic India
75
Bengaluru
90
175
Pune
20
Navdanya
25
Gurgaon
25
Fab india
20
Others
435
Total
1000
State
Turnover in Crores
Mumbai
200
Chennai
90
Others Total
125
450 1000
SWOTSWO T- Org Organi anicc Sec Sector tor Strengths
Wide variety of fruits and vegetables and other commodities can be grown organically
Very
less consumption of chemicals in India as compared to developed nations. These areas can be turned into organic
Organic
pockets existing in different parts of the country
Differentiation can be
easily created Rising
interest of farmers as well as Government interests in Organic farming
Various
niches in fruits & vegetables can be created
Increasing
investments by Indian corporate firms in agribusiness and specially in Organic farming
Weaknesses
Short shelf life varieties
Opportunities
Favorable Government vision
Competition Competition
WTO offering global opportunities
Threat
Price –premiums in different markets
Export opportunities in new product/market (section )
USA, Europe and Japan are rising markets
Branding offers new opportunities for differentiation
Rising demand for Organic products
Big retail stores/chains comi coming ng up
New developments in post harvest technologies
Private sector keen to join Organic value chain
Lack of farmer awareness about agricultural practices, products and technologies for Organic farming
Price
competitiveness
Lack
of market information and intelligence
Lack of Global market
research Inadequate
post harvest management and related specialized infrastructure to support Organic food production
Lack
of R & D in Organic Organic food production
Unavailability
of inputs used in the system
Certification and labeling
Less access to international market
Threats from from domestic domestic
industry from imported products
Non-tariff barriers may be imposed by developed nations
Issues in Organic Value Chain
Roadmap Road map to Organic Organic FarmingFarming- Recom Recommendat mendations ions
Vegetable Initiatives for Urban Clusters-This is being championed by Depa Depart rtme ment nt of Agri Agricu cult ltur uree & Co Coop oper erat atio ion n unde underr Mini Minist stry ry of Agri Agricu cult ltur ure. e. Aims Aims at encouraging farmers to grow organic produce and provide enhanced funding to them.
organi nicc Statee gov Stat over ernm nmen entts to ta take ke lea ead d fo forr su sub bsi sidi disi sing ng gr grou oup p ce cerrtif ific icat atio ion n of orga products, so as to reduce the overheads for farmers wishing to take up organic farming
Encour Enco urag agee se setttin ing g up “C “Com omm mun unit ity y Ba Base sed d Or Org gan aniisa sati tio ons ns”” (C (CBO BO)) fo forr organ ganic farm armin ing g in vill villag ages es.. Stat Statee gover overn nment ent to provi rovide de subs subsid idy y sch schemes emes for capa capaci city ty building.
Statee government support to Organic farming producer groups by forming Stat “Organic farmer markets” in urban centres for direct sales to consumers by produc producer er groups groups..
Majo Ma jorr Bran Brands ds - In Indi diaa
Majo Ma jorr Bra Brand ndss - In Indi diaa
Majo Ma jorr Bra Brand ndss - In Indi diaa
Organic Farming/Food-Investments in India S.N .No o
Nam amee of Org rgan anic ic Fo Food od Company
Investor
Quantum
Additional details
1
24 letter Mantra (Sresta Natural Bio-products)
Peepul Capital
USD 15 million (2011)
Domestic Sales in 20112011- INR 65 Crores
2
Biotechnology Venture USD 1.14 million Fund, a fund managed by (2004) Ventureast Fund Advisors India Ltd.
3
Suminter India Organics
Nexus India Capital
USD 3 million (2008)
4
Natural Mantra
Freemont Capital
Unknown
Domestic Sales in 20102010- INR 20 Crores
About YES Bank
8 Years of YES Bank
Food
and Agribusiness Strategic Advisory and Research (FASAR) group
Giri Gi rish sh Ai Aiva vall llii Group Executiv Executivee Vice President President & Country Country Head – Food and Agribusiness Strategic Advisory and Research, YES Bank Girish Aivalli leads the Food Food and Agribusiness Knowledge Banking initiative for YES YES BANK, working as the key relationship stakeholder stakeholder responsible for origination, advisory & execution oversight of the food and agribusiness agribu siness consultancy and research mandates in the th e sector. sector.
Prior to joining joining YES BANK, BANK, Girish worked worked with Dabur India Limited, Limited, Olam Internationa Internationall Limited Limited and Cargill India Private Limited in various capacities, over a span of 16 years. In his previous role at Cargill, he was heading their procurement and operations for the grains and oilseeds business for India. He also set up stand alone agri-retail chains, collaborative farming projects, stock financing models, besides taking up policy issues with the various government departments to create a better business environment for Cargill. He also worked on major assignments in Indonesia and the Ivory Coast in West Africa with Olam International. He has an excellent understanding of the global commodity trade flow and has h as undertaken significant agri-projects in Nigeria, Ghana and India. Girish is a well-recognized well-recognized thought leader in the food and agri-business industry with an excellent mix of operational experience experience and knowledge of challenges and policy p olicy issues in the industry. industr y. He is also a member of the CII’s National Council on Agriculture, and is a member of various sub-committees. Girish has a MBA with specialization in marketing and finance.
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