Switch to organic food may hike monthly expenses by Rs 1,500 per family

A joint study conducted by EY and Assocham pointed out that purchase of organic food is restricted to affluent customers due to the high cost

Consumers may have to bear an additional expense of Rs 1,200-1,500 per month for a family if they want to switch to organic food products, which are sold at high prices, the latest study said, while suggesting that the government should take steps to bring down the cost.

According to a joint study by Assocham and Ernst & Young LLP, the purchase of organic food products is restricted to affluent class of consumers due to the high cost.

The organic food products are costlier because of low volumes and high expenses involved in processing and inventory holding, packaging, logistics and distribution besides training of farmers, the study observed.

 

High certification charges and growing demand and lower supply - are key reasons for organic products to have higher price mark-ups than conventional products, it added.

According to the study, there exist several challenges for all stakeholders involved at every stage of the value chain despite organic farming being promoted by both Centre, states and even private sector.
 

"...owing to gaps in the regulatory framework for organic products in India, producers of organic products are continually struggling to optimize the scale of their operations while maintaining profitability," it said.

Lack of standardised organic agriculture inputs and subsidy on organic inputs, supply chain issues, global competitiveness, absence of proper branding and packaging are other challenges being faced by the sector.

To bring down the cost of organic cultivation, the study suggested the government to discourage use of fertilisers and pesticides by incentivising and promoting use of bio-fertilizers and bio-pesticides.

The processors of organic food products on the other hand, face significant resistance in the form of lack of adequate post-harvest facilities.

"Thus several measures need to be taken in order to avoid contamination and cross-contamination of produce as infrastructural capabilities of the country often prove to be inadequate," the study said.

The study suggested the government to develop a public-private partnership model that aids the organic sector in reaching its full potential.

"A greater emphasis should be placed on the capacity building of stakeholders, easing access to finance, monitoring and evaluation (M&E) of all assets and processes as well as research and development (R&D) to help keep abreast with global progress in the sector," it added.