Organic Food Marketing in Urban Centres of India
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Organic Food Marketing in Urban Centres of India Nina Osswald Manoj Kumar Menon Nina Osswald and Manoj Kumar Menon (2013): Organic Food Marketing in Urban Centres of India. Bangalore: ICCOA. Research funded by Federal Ministry of Education and Research (BMBF), Germany, as part of the programme “Research for the Sustainable Development of the Megacities of Tomorrow - Energy and Climate efficient Structures in Urban Growth Centres”, and supported by ICCOA Research directed by Nina Osswald, Research Associate at Humboldt University Berlin, Department of Agricultural Economics and Social Sciences, as part of the project “Hyderabad as a Megacity of Tomorrow” (www.sustainable-hyderabad.de) First published in March 2013 ISBN 978-81-925226-5-4 (PDF e-Book Edition) This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-sa/3.0/ Cover designed by Vivek S., Abhinav Gupta Published by International Competence Centre for Organic Agriculture (ICCOA) 951 C, 15th Cross, 8th Main, Ideal Homes Township, Rajarajeshwarinagar, Bangalore - 560 098, Karnataka, India Tel: +91 (0)80 2860 1183, Fax: +91 (0)80 2860 0935 Email: [email protected] Web: www.iccoa.org Contents Foreword iii About This Book ix About the Authors xi Acknowledgements xii Tables, Figures and Case Studies v Glossary and List of Acronyms vii 1 Introduction 1 1.1 Context: The Booming Indian Organic Market? 1 1.2 Objectives of the Study 4 2 Analytical Approach and Methodology 7 2.1 Scope of the Study 7 2.2 Study Design and Research Methodology 8 2.3 Limitations and Need for Further Research 9 3 The Organic Sector in India 11 3.1 Sustainable Agriculture: Definitions 11 3.2 Organic Production and Domestic Market Size 16 3.3 Institutional Context and Regulations 22 4 Organic Food Distribution Systems 29 4.1 Domestic Market Structures and Classification Framework 29 4.2 Overview: Organic Retail in Mumbai, Bangalore and Hyderabad 36 4.3 Organic Specialty Stores, Markets and Health Food Stores 39 4.4 Direct Marketing and Community-Supported Agriculture 48 4.5 Restaurants and Catering 60 iii 4.6 Online Retail and Home Delivery Services 61 4.7 General Trade and Organized Retail 63 5 Challenges and Success Stories in Organic Marketing 67 5.1 Product Availability and Working with Suppliers 67 5.2 Organizational Models and Legal Context 72 5.3 Building Efficient Supply Chains and Retail Channels 79 5.4 Sustainability along the Supply Chain 86 5.5 Certification: Opportunity or Obstacle? 89 5.6 Building Awareness and Meeting Consumer Needs 93 6 Conclusion 103 6.1 Summary of Findings 103 6.2 Recommendations 108 Appendix 1 115 Appendix 2 120 References 123 iv Tables, Figures and Case Studies List of Tables Table 2-1: Sample size of outlet surveys and interviews with organic stakeholders 9 Table 3-1: Organic production and marketing data overview 19 Table 4-1: Ownership and support structures in the organic production sector 34 Table 4-2: Organic market coverage in terms of stakeholders and outlets per city 37 Table 4-3: Bangalore: Estimated sales per distribution channel and total market size projection 38 Table 4-4: Organic stores per city by opening year 40 Table 4-5: Ownership and support structures in organic retail 44 Table 5-1: Empirical studies on consumer perceptions and willingness to pay 98 List of Figures Figure 2-1: Overview map of the three cities covered by this study 8 Figure 3-1: Growth of export and domestic market shares since 2005 20 Figure 3-2: Official India Organic label for products certified according to NSOP (National Standards for Organic Production) 23 Figure 3-3: PGS (Participatory Guarantee System) Organic label awarded by the PGS Organic India Council 24 Figure 3-4: PGS-India labels for in-conversion and fully organic products developed by NCOF 25 Figure 4-1: Classification criteria for stakeholders in the organic food sector 30 Figure 4-2: Organic retail models in urban centres 32 Figure 5-1: Label developed by ICCOA for marketing organically grown vegetables from farmers in Karnataka 82 v List of Case Studies Case Study 1: 24 Mantra: Sresta Bioproducts Pvt. Ltd. 40 Case Study 2: Fabindia Pvt. Ltd. 45 Case Study 3: “No Bargaining”: The Farmers’ Market in Mumbai 50 Case Study 4: „Organic Veggies in my Inbox“: GORUS in Pune 57 Case Study 5: Farmer-Owned Success Story: Timbaktu Organic 74 Case Study 6: Sahaja Aharam Organic Consumer and Producer Cooperative 77 Case Study 7: A Regional Label for Organically Grown Vegetables by ICCOA 82 Case Study 8: “Greens in a Box”: MOFCA’s Hari Bhari Tokri 100 vi Glossary and List of Acronyms AP Andhra Pradesh APEDA Agricultural & Processed Food Products Export Development Authority APMC Agricultural Produce Marketing Committee APGMC Agricultural Produce Grading, Marking and Certification Act ASHA Alliance for Sustainable and Holistic Agriculture ASSOCHAM Associated Chambers of Commerce and Industry of India CROPS Centre for Rural Operation Programmes Society CSA Centre for Sustainable Agriculture (Hyderabad), or Community-Supported Agriculture (to avoid confusion, the acronym is not used only for Community-Supported Agriculture throughout this publication) CWS Centre for World Solidarity DDS Deccan Development Society DRDA-IKP District Rural Development Agency, Ranga Reddy District, a Government Agency for Rural Development, in charge of the state-wide rural poverty reduction project “Indira Kranthi Patham” which is implemented by SERP FPO Farmer producer organization FPO Fruit Products Order FSSAI Food Safety and Standards Authority of India GHG Greenhouse gases GMOs Genetically modified organisms HACA Hyderabad Agricultural Cooperative Association ICCOA International Competence Centre for Organic Agriculture ICS Internal control system vii IFOAM International Federation of Organic Agriculture Movements INR Indian Rupees INM Integrated Nutrient Management IPDM Integrated Pest and Disease Management ISCOP Indian Society for Certification of Organic Production IWM Integrated Weed Management jaggery Traditional unrefined non-centrifugal sugar made from cane juice KA Karnataka kirana store Small neighbourhood stores that sell groceries and other daily needs, approximately equivalent to “mom- and-pop stores” in the US MACCS Mutually-Aided Consumer Cooperative Society MH Maharashtra NCOF National Centre of Organic Farming, Department of Agriculture and Cooperation, Ministry of Agriculture, Government of India NPM Non-pesticide management, a method of sustainable agriculture that eliminates the use of synthetic pesticides NSSO National Sample Survey Office OFAI Organic Farming Association of India PGS Participatory Guarantee System RKVY Rashtriya Krishi Vikas Yojana (National Agriculture Development Plan), a government programme for agricultural development Sahaja Aharam “Natural Food” in Telugu; farmer-owned organic brand developed by Centre for Sustainable Agriculture (Hyderabad) and short name for the Sahaja Aharam Mutually Aided Cooperative Federation SERP Society for Elimination of Rural Poverty SHG Self-help group viii About This Book This study was undertaken as a collaborative effort between the International Competence Centre for Organic Agriculture (ICCOA) in Bangalore and the Humboldt University Berlin, Germany, as part of the project “Hyderabad as a Megacity of Tomorrow: Climate and Energy in a Complex Transition towards Sustainable Hyderabad – Mitigation and Adaptation Strategies by Changing Institutions, Governance Structures, Lifestyles and Consumption Patterns”, or Sustainable Hyderabad Project. ICCOA was founded as a knowledge and learning centre for organic agriculture in India. It is a non-profit organization registered under the Karnataka Societies Registration Act. ICCOA’s mission is to serve all stakeholders of organic agriculture in the South Asian region, helping them build their competence and thereby contribute to building organic agriculture practices and businesses that are ecologically, economically and socially sustainable. Its activities comprise advocating organic agriculture; collecting, documenting and disseminating knowledge and information; training and capacity building for individuals and institutions; networking of stakeholders in the organic sector; and providing consultancy services. ICCOA puts great emphasis on facilitating market linkages between producers, processors, retailers and consumers of organic products, and on developing domestic markets in India. To date, very few studies have been published on the Indian domestic market for organic food. Stakeholders working in the organic sector need more in-depth information about the structure of supply chains and urban markets in order to make organic food available to more people and access the large potential of urban markets. The present study gives an insight into the current market scenario in urban India, availability of organic products and market structures. It aims to categorize the broad variety of different models of organic food distribution and marketing that exist at present; to identify obstacles to market growth; and to determine the conditions for successful and sustainable market development. This study analyzes the dynamic developments taking place in urban markets and the challenges various stakeholders face in bringing organic food to consumers. It documents emerging strategies and best-practice examples that could help in addressing these challenges, examines how organic supply chains can be