The Hindu Business Line : Taking root

Organic agriculture is more labour-intensive. Also, organic farms don't benefit from the economies of scale. There are no Government subsidiesfor those farmers.

G. R. N. Somashekar

The organic foods section at a Fabindia store in Bangalore.

The back-to-the-roots movement is quietly but strongly making its way into the retail sector today. Whether it's the jhola bag with the trendy twist,herbal cosmetics, environment-friendly home decor or apparel, it's all got to be natural - fresh, untreated and organic! And riding high on this new wave is the organic food industry that is spearheading a rural initiative and at the same time also spurring a retail revolution of sorts.

It would perhaps be more appropriate to call it a retail transformation that hopes tocash in on a larger wellness trend combined with the need to shun all things synthetic that is gripping the Indian consumer today. Organic foods are primarily targeted at this segment of buyers - educated, discerning and health-conscious. Add to this the alarming levels of pesticides found in food products today. (A study showed that farmers in some belts in the country have more than 80 per cent pesticides in their blood!)

Says Jashwant Purohit, Senior Partner PSC - Organic Food & Body Care, Fabindia Overseas: "There are today concerns across the board about chemical residues found in conventionally produced food. In India, it is particularly high due to indiscriminate and ill-informed use of pesticides and chemicals in agriculture. Today, there is a general public trend towards eating healthy food and being more health-conscious." (Fabindia Organics is present across all 61 Fabindia garment outlets in the country.)

The common product categories in organicfoods encompass just about "everything that is used in an Indian kitchen" from fruits, vegetables, pulses, cereals, bread, sweeteners such as honey, jaggery, golden sugar and raw sugar to all cereals, pulses, flours and spices, bakery and dairy products, typically sourced from farmers practising organic farming, free from "conventional chemical systems" of farming using artificial fertilisersand pesticides.

The major players are Era rganic, Khandige, Association for the Promotion of Organic Agriculture (APOF), Adi Naturals, Sahaja Samrudha and Janodaya(all are from Bangalore), Nesara (Mysore), Navdanya, Dobden Greens, Panchavati (Delhi), Fabindia, 24-Lettered Mantra (Hyderabad, started in more cities), Parak Vitaran (Ahmedabad), Nature Food (Namakkal), Eco Nut (Kodaikanal and Chennai), Green World (Coimbatore), Ecofarms (Mumbai), Sevashram, and Organic Kerala (Kerala).

There are no reliable figures on the size of the branded organic foods market with estimates varying greatly. Nevertheless, the numbers are not staggering by any stretch. "It's a very scattered market in India. Globally organic food retailing is rocking. About 30-35 per cent of total food sales come from organically grown food. Here, we have a limited range of stock keeping units. Globally, retail chains store more than a thousand products. Most of them like Al Natura and Whole Foods are 2,000-plus store chains.

Here, sustainability is the problem. It's not about investing money, it's about commitment and patience," says Ramakrishna Kompella, Marketing Manager, Sresta Foods, which markets the brand `24 Lettered Mantra.' Sresta Foods, which was started in 2004 by S. Rajsekhar Reddy, an IIM-A alumnus, has four stores in India - two in Bangalore and one each in Hyderabad and Pune. It sources from over 300 farmer groups across he country practising organic farming in about 7,000 acres of land.

According to Suresh K.T., Manager, Organic Conversion, ICCOA (International Competence Centre for Organic Agriculture), an NGO that provides services like advice and market linkage to all the stakeholders in the organic farming community: "Many players sell organic products on whole meal (all the cereals and pulses that go into a meal) basis. There are 50-plus organic shops all over India and their turnover ranges from Rs 1,000 to Rs 20,000 per day."

The market is no doubt in its infancy but there have been some efforts by the government, ays Purohit of Fabindia Organics, through its agencies such as APEDA (Agricultural and Processed Food Products Export evelopment Authority), ICCOA (International Competence Centre for Organic Agriculture) and certain NGOs to get all stakeholders in this segment together. As far as certification is concerned, there are some certifying agencies accredited with APEDA hich certify farms after "stringent procedures."

Although awareness about the benefits of organic foods over the conventional foods is slowly growing, the response has not beenoverwhelming. Globally, the organic food business has been growing at over 20-30 per cent annually for many years due to consumer demand, says Purohit of Fabindia. While it might take a few years to witness that trend here, price is still a deterrent for now. Organic foods are 30-50 per cent more expensive than conventional foods. But the reasons for this are not hard to understand given that organic agriculture is "more labour- intensive."

Also "organic farms are normally small and therefore do not benefit from the economies of scale that larger growers get. There are no Government subsidies for farmers growing organic food andlastly, the price of non-organic food does not take into account the cost of environmentaldamage," says Sanjeev K. Azad, Director, Conscious Foods, started by Dr Kavita Mukhi, an eco-nutritionist. Conscious Foods' products are retailed through outlets such as ood Bazaar, Spencer's and Nature's Basket. Kompella from Sresta Foods explains the rationale behind the price disparity: "Therere no incentives for organic farming, like subsidies, there is no instant market for our products, meaning that if the product is grown in Maharashtra, it has to be transported to a bigger city or town. This involves cost of transport, at least Rs 4-5 per kg. Then there are no economies of scale yet in the ountry. And we (retailers) buy it at a 15 per cent premium from the farmers."

Eco-Nut opened 13 years ago in Kodaikanal and set up a store in Chennai over three years ago. Initially, there were very few customers. "Earlier, only affluent people used to visit our store. But we pack products in small quantities and price them for as little as Rs 5and Rs 10, so now we have even middle-class ustomers," says Sandhya Shrikant, who owns the store. She acknowledges it is difficultto do business in organic stuff. "However, e are able to sustain ourselves profitably as we have farmland in Kodai to fall back upon. It's entirely organic. We also talk to f armers and try to convince them to turnorganic - we buy and give them organic seeds and then buy back the produce," she adds. Obviously, this is not a mere retail model. eneath it are other issues of rural-urban partnership, employment, sustainability and health aspects. What it needs now is some strong patronage.

Reporter Associate: Sravanthi Challapalli

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