REPORT NO. 150

PARLIAMENT OF

DEPARTMENT RELATED PARLIAMENTARY STANDING COMMITTEE ON COMMERCE

ONE HUNDRED AND FIFTIETH REPORT

Export of Organic Products: Challenges and Opportunities

(Presented to the Rajya Sabha on 11th December, 2019) (Laid on the Table of on 11th December, 2019)

Rajya Sabha Secretariat, New Delhi December, 2019/ Agrahayana, 1941 (Saka)

Website : http://rajyasabha.nic.in E-mail : [email protected]

PARLIAMENT OF INDIA RAJYA SABHA

DEPARTMENT RELATED PARLIAMENTARY STANDING COMMITTEE ON COMMERCE

ONE HUNDRED AND FIFTIETH REPORT

Export of Organic Products: Challenges and Opportunities

(Presented to the Rajya Sabha on 11th December, 2019) (Laid on the Table of the Lok Sabha on 11th December, 2019)

स配यमेव जयते

Rajya Sabha Secretariat, New Delhi December, 2019/ Agrahayana, 1941 (Saka)

CONTENTS

PAGES

1. COMPOSITION OF THE COMMITTEE (i)-(iii)

2. INTRODUCTION (iv)

3. ACRONYMS (v)-(vii)

4. REPORT 1-36

5. RECOMMENDATIONS/OBSERVATIONS  AT A GLANCE 37-51

*6. MINUTES --

7. ANNEXURES/APPENDICES 52-58

______* To be appended at printing stage

COMPOSITION OF THE COMMITTEE (Constituted w.e.f. 1st September, 2017)

1. Shri Naresh Gujral  Chairman

RAJYA SABHA &2. Shri Joy Abraham 3. Shrimati Roopa Ganguly 4. Shri Ram Kumar Kashyap 5. Shrimati Thota Seetharama Lakshmi @6. Shri Kiranmay Nanda 7. Shri Vayalar Ravi 8. Shri Kapil Sibal 9. Dr. Kanwar Deep Singh #10. Dr. Abhishek Manu Singhvi $11. Shri Sushil Kumar Gupta %12. Shri M.P. Veerendra Kumar

LOK SABHA 13. Shri Dibyendu Adhikari 14. Shri Subhash Chandra Baheria 15. Shri Abhishek Banerjee 16. Shri Bodhsingh Bhagat 17. Shrimati 18. Shri 19. Shri Dushyant Chautala 20. Shri 21. Dr. Kambhampati Haribabu 22. Shrimati Kavitha Kalvakuntla 23. Shri Saumitra Khan 24. Shri Dhananjay Mahadik 25. Shri Thota Narasimham 26. Shri Kamal Nath 27. Shri Kamlesh 28. Shri K.R.P. Prabhakaran 29. Shri T. Radhakrishnan 30. Shri Janak Ram 31. Shri D. S. Rathod 32. Adv. Narendra Keshav Sawaikar 33. Shri Vinod Kumar Sonkar ______@ Retirement w.e.f. 2nd April, 2018. # Retirement w.e.f. 3rd April, 2018. $ Nominated w.e.f. 2nd June, 2018. % Nominated w.e.f. 2nd June, 2018. & Retirement w.e.f. 1st July, 2018.

(i) COMPOSITION OF THE COMMITTEE (Constituted w.e.f. 1st September, 2018)

1. Shri Naresh Gujral  Chairman

RAJYA SABHA

2. Shrimati Roopa Ganguly 3. Shri Sushil Kumar Gupta 4. Shri Ram Kumar Kashyap 5. Shri M.P. Veerendra Kumar #6. Shrimati Thota Seetharama Lakshmi 7. Shri Vayalar Ravi 8. Shri Kapil Sibal 9. Dr. Kanwar Deep Singh 10. Shri Rakesh Sinha $11. Shri Y. S. Chowdary

LOK SABHA

12. Shri Dibyendu Adhikari 13. Shri Subhash Chandra Baheria 14. Shri Abhishek Banerjee 15. Shrimati Bijoya Chakravarty 16. Shri Jitendra Chaudhury 17. Shri Dushyant Chautala 18. Shrimati Kavitha Kalvakuntla 19. Dr. Hari Babu Kambhampati 20. Shri Nityanand Rai 21. Shri Dhananjay Bhimrao Mahadik 22. Shri Kamal Nath 23. Shri 24. Shri K.R.P. Prabakaran 25. Shri T. Radhakrishnan 26. Shri Dipsinh Shankarsinh Rathod 27. Shri Khan Saumitra 28. Advocate (Shri) Narendra Keshav Sawaikar 29. Shri 30. Shri Vinod Kumar Sonkar 31. Shri Narasimham Thota @32. Dr. Farooq Abdullah

# Retired w.e.f. 3rd December, 2018 $ Nominated w.e.f. 3rd December, 2018 @ Nominated w.e.f. 19 th September, 2018.

(ii) COMPOSITION OF THE COMMITTEE (Constituted w.e.f. 13th September, 2019) 1. Shri V. Vijayasai Reddy  Chairman

RAJYA SABHA 2. Shrimati Roopa Ganguly 3. Shri Sushil Kumar Gupta 4. Shri M.P. Veerendra Kumar 5. Shrimati Thota Seetharama Lakshmi 6. Shri Jugalsinh Mathurji Lokhandwala 7. Shri Om Prakash Mathur 8. Dr. K.V.P. Ramachandra Rao 9. Shri Vayalar Ravi 10. Dr. Kanwar Deep Singh

LOK SABHA 11. Shri D. M. Kathir Anand 12. Shri Sukhbir Singh Badal 13. Shri Prasun Banerjee 14. Shri 15. Shri Arvind Dharmapuri 16. Shri Chandra Prakash Joshi 17. Shri Srinivas Kesineni 18. Shri Manoj Kishorbhai Kotak 19. Shri Ajay Kumar Mandal 20. Shrimati Manjulata Mandal 21. Shri Nakul K. Nath 22. Shri Hemant Patil 23. Shri Nama Nageshwar Rao 24. Shri 25. Shri Magunta Sreenivasulu Reddy 26. Shri K. Shanmuga Sundaram 27. Shri Gowdar Mallikarjunappa Siddeshwara 28. Dr. Amar Singh 29. Shri Atul Kumar Singh alias 30. Shri Shantanu Thakur 31. Shri Mansukhbhai Dhanjibhai Vasava

SECRETARIAT Dr. P. P. K. Ramacharyulu, Secretary Shri Sunil Dutt Nautiyal, Joint Secretary Shri S. Jason, Director Shri S.C. Dixit, Additional Director Shri Kuldip Singh, Under Secretary Ms. Saraswati Saraf, Assistant Committee Officer

( iii ) INTRODUCTION I, the Chairman of the Department Related Parliamentary Standing Committee on Commerce, having been authorised by the Committee, present this One Hundred and Fiftieth Report on 'Export of Organic Products: Challenges and Opportunities'. 2. The Committee took up the subject for detailed examination on 2nd August, 2018 and the same was notified vide Parliamentary Bulletin Part-II dated 14th August, 2018. As a part of examination of the subject, the Committee considered the subject in detail in its seven meetings. The Committee heard the views of Secretaries of Department of Commerce (Ministry of Commerce and Industry), Department of Agriculture, Cooperation & Farmers' Welfare (Ministry of Agriculture & Farmers' Welfare), Ministry of Food Processing Industries and Ministry of Textiles. The Committee also had interaction with the representatives of National Centre of Organic Farming (NCOF), Federation of Indian Export Organisations (FIEO), Associated Chambers of Commerce and Industry of India (ASSOCHAM), Federation of Indian Chambers of Commerce and Industry (FICCI), Confederation of Indian Industry (CII), All India Food Processors' Association (AIFPA), Cotton Textiles Export Promotion Council (TEXPROCIL), Confederation of Indian Textile Industry (CITI), Central Institute for Cotton Research (CICR), Cotton Corporation of India (CCI) and Cotton Advisory Board (CAB). 3. The Committee undertook one study visit to Gangtok and from 19th to 23rd November, 2018 on the subject. During the study visit, the Committee had meetings with various stakeholders and representatives of State Governments of , , , , , and . 4. The Committee considered the draft Report and adopted the same at its meeting held on 9th December, 2019. 5. The Committee expresses its sincere gratitude to the representatives of the Ministries/ Departments and the representatives of various organizations for placing before it the valuable suggestions, materials and information required in connection with the examination of the subject.

NEW DELHI; V. VIJAYASAI REDDY 09 December, 2019 Chairman, Agrahayana 18, 1941 (Saka) Department Related Parliamentary Standing Committee on Commerce Rajya Sabha.

(iv)

ACRONYMS AEZ Agri Export Zones APEDA Agricultural and Processed Food Products Export Development Authority AROS Asia Regional Organic Standard ASEAN The Association of Southeast Asian Nations BCI Better Cotton Initiative Bt-Cotton Bacillus thuringiensis-Cotton CCI Cotton Corporation of India CISS Capital Investment Subsidy Scheme COF Certified Organic Fiber DGFT Directorate General of Foreign Trade EU European Union FCO Fertilizer Control Order FCT Fair Cotton Trade FIGs Farmers' Interest Groups FPCs Farmers' Producers Companies FPOs Farmers' Producers Organisations FSSAI Food Safety and Standards Authority of India FTDR Foreign Trade Development & Regulation Act GM Genetically Modified GMO Genetically Modified Organisms GOTS Global Organic Textile Standard GST Goods and Services Tax HS Harmonised System

(v) ICAR Indian Council of Agricultural Research IFOAM International Federation of Organic Agricultural Movement IGNOU Indira Gandhi National Open University MIDH Mission for Integrated Development of Horticulture MoT Ministry of Textile MOVCDNER Mission Organic Value Chain Development for North Eastern Region MSP Minimum Support Price MT Metric Tonnes NAB National Accreditation Body NABARD National Bank of Agriculture and Rural Development NABL National Accreditation Board for Testing and Calibration Laboratories NCDC National Cooperative Development Corporation NCOF National Centre of Organic Farming NCOP National Council of Organic Programme NePOF Network Project on Organic Farming NGOs Non Governmental Organisations NHM National Horticulture Mission NMSA National Mission for Sustainable Agriculture NOFRI National Organic Farming Research NOP National Organic Program NPOF National Project on Organic Farming NPOP National Programme for Organic Production NSC National Steering Committee OCAB Organic Cotton Advisory Board

(vi) OCS Organic Content Standard OPZ Organic Processing Zones PGS Participatory Guarantee System PKVY Paramparagat Krishi Vikas Yojana PSI Public Sector Institutions RCs Regional Councils RKVY Rastriya Krishi Vikas Yojana SAARC The South Asian Association for Regional Cooperation SHM Soil Health Management SSOCA State Organic Certification Agency USc US cent USD US Dollar USDA United States Department of Agriculture WTO World Trade Organisation

(vii) REPORT

INTRODUCTION 1.1 Organic Farming involves cultivation of plants, crops and rearing livestock in natural ways. It is a farming technique that makes the use of biological materials for growing and nurturing crops without utilizing synthetic based fertilizers and pesticides. It is primarily aimed to cultivate the land in such a way so as to retain the soil in good health by using organic wastes and other biological materials along with beneficial microbes (biofertilizers). Also, no genetically modified organisms are permitted in the farming practices. This helps in releasing nutrients to crops thereby ensuring sustainable agricultural and livestock production in an eco- friendly as well as pollution free environment. 1.2 Indian civilization thrived on organic farming since time immemorial and traditionally the entire industry of agriculture was practiced using organic techniques where the fertilizers and pesticides were obtained from plant and animal products. However, the ever-increasing population of India, along with several natural calamities, led to a severe food scarcity in the country. As a result, the import of food grains from foreign countries increased. In order to attain food security, the government had to drastically increase food production in India. This led to extensive dependence on chemical fertilizers and pesticides which gave way to total reliance upon chemical farming. Gradually, the practice of chemical intensive conventional farming started showing its darker side and the fertility of land deteriorated on account of massive use of chemical fertilizers and pesticides which not only contaminated air, soil and water but resulted into high costs of farming. In the wake of diminishing returns of chemical intensive conventional farming, it has become necessary to devise alternative techniques of farming. 1.3 Organic farming practices consider the medium as well as long term effect of agricultural interventions on the agro-ecosystem. It helps in establishing an ecological balance and is fully consistent with sustainable development approach. It combines tradition, innovation and science to benefit environment and promote a good quality of life for all. GLOBAL SCENARIO

2.1 The Department of Commerce, Ministry of Commerce and Industry informed the Committee that as per a survey on certified organic agriculture carried out by FiBL-IFOAM (Research Institute of Organic Agriculture- International Federation of Organic Agricultural Movement), around 69.8 million hectares of land in 181 countries have been certified as organic. The survey, namely, “The World of Organic Agriculture – Statistics and Emerging Trends 2019” had stated that around 1.4 percent of the total agricultural land of the

1 countries under study is organic with Oceania having the largest area of organic agricultural land followed by Europe, Latin America, Asia, North America and Africa. Apart from agricultural land, more than 42.4 million hectares in the world have been certified for wild harvest collection. The country with the largest agricultural land is Australia followed by Argentina and China. Also, as per the survey, till 2017 the total number of organic producers in the world was around 2.9 million. 2.2 The survey also highlighted that India ranks ninth in the area under organic certification. India also have the largest number of organic producers in the world followed by Uganda and Mexico. ORGANIC AGRICULTURE IN INDIA 3.1 The Department of Commerce informed the Committee that as on March, 2019, the total area under organic certification in India is more than 3.43 million hectares which includes 1.94 million hectares under cultivable area and the rest under wild harvest collection. Amongst all states, Madhya Pradesh has the largest area under organic certification followed by Rajasthan, Maharashtra and . In 2016, Sikkim achieved a remarkable distinction of becoming the first fully organic state of India converting its entire cultivable land (more than 76,000 hectares) under organic certification. 3.2 India, in 2017-18, produced around 1.70 million metric tonnes of certified organic products comprising of all varieties of food products, namely, oilseeds, sugarcane, cereals and millets, cotton, pulses, medicinal plants, tea, fruits, spices, dry fruits, vegetables, coffee, etc. 3.3 The following figure provides details of commodities being grown under organic cultivation:

(Source: Department of Commerce, Ministry of Commerce and Industry)

2 3.4 The details of state-wise area and production of organic products under cultivated area as well as wild collection/harvest and their category wise production are appended at Annexure I (A to D). 3.5 The Committee was apprised by the Department of Commerce that in spite of having the largest number of organic producers, the area under organic cultivation in the country is only 3 percent. On being enquired about this discrepancy, the Department informed that the farmers are reluctant to follow organic farming practices due to small land holdings. The Department submitted that this constraint of land fragmentation to a large extent had been overcome by certifying groups of organic farmers under the Growers' Group System of Certification wherein a group comprising of 25 to 500 farmers are taken as one single unit for certification. Nevertheless, the absence of production technologies and quality inputs are hindrances that resist farmers for taking up organic cultivation. It was further apprised that the reason for low exports from sectors such as dairy, poultry, horticulture, etc. is on account of limited production. Also, the producers with small and medium land holdings find difficulties in accessing available marketing channels. Although India has organic clusters in tribal and hilly areas, very few steps have been taken by the government to isolate those clusters from conventional farms and demarcate them as „organic clusters‟. 3.6 The Committee is convinced that mobilization of organic farmers into clusters is advantageous for them in strengthening their bargaining power and providing them with better returns. It is of the considered view that the organic clusters should include farmers practicing cultivation in areas where usage of chemical fertilizers/ pesticides is to a minimum. The Committee therefore recommends the Government to take all efforts to organize the remotely located farmers predominantly from the regions of rain-fed, tribal and hilly tracts into organic clusters. It also recommends that the farmers agonized by ill effects of chemical farming, increasing costs of production, toxicity of soil and diminishing returns, may also be encouraged to form organic clusters. 3.7 The Committee notes that land ownership in India is fragmented and farmers of small land holdings are under severe agricultural distress. The Committee in this regard recommends that such farmers should be supported with special incentives for engaging them in organic cultivation practices. The Committee also recommends the Department for making special provisions to provide organic certification to individual farmers having a minimum land ownership of 20 acres. 3.8 The Committee notes that organic farming is being promoted in the country through various schemes/ programmes, viz. the National Mission for Sustainable Agriculture (NMSA), Mission for Integrated Development of Horticulture

3 (MIDH), National Horticulture Mission (NHM), Rastriya Krishi Vikas Yojana (RKVY), Network Project on Organic Farming (NePOF), National Project on Organic Farming (NPOF) and National Programme for Organic Production (NPOP). 3.9 The Committee strongly recommends the Government to follow a coordinated approach for efficacious implementation of organic export promotion schemes in the country. The Committee is of the opinion that the integration of various schemes meant for facilitating organic farming may be beneficial for their smooth execution. Also, a comprehensive policy with uniform standards for the whole organic sector would be beneficial for its development. The Committee recommends that the Government should frame an all-inclusive holistic framework for the overall organic sector encompassing the aspects of production, marketing and trade. ORGANIC EXPORTS FROM INDIA 4.1 India is the second largest exporter of organic products in Asia after China. India‟s export accounts for 0.55% of total global organic trade. During 2018-19, the total volume of agricultural exports in the organic sector was 614089 Metric Tonnes with a value realization of ₹ 5150 crore (i.e. 757 Million USD). Major commodities exported during the year 2018-19 and major export destinations are given in the following figures:-

(Metric Tonnes)

(Source: Department of Commerce, Ministry of Commerce and Industry)

4

(Source: Department of Commerce, Ministry of Commerce and Industry)

4.2 The details of the export data of organic agricultural products in the last four years are as follows:- Year Export(Quantity) (MT)Export (Value) in croreExport(Value) ₹ million USD 2018-19 614089 5150 757 2017-18 458339 3453 515 2016-17 309767 2478 370 2015-16 263687 1975 298 2014-15 285663 2099 327 (Source: Department of Commerce, Ministry of Commerce and Industry) 4.3 Exports of organic food products are continuously growing. Major category wise export, export to different countries in terms of quantity and value are appended at Annexure II (A to B). Oilcake/ meal comprised almost half of India‟s overall organic food export, followed by oil seeds. 4.4 India achieved 24 per cent growth in exports of organic products during 2016-17, 39 per cent during 2017-18 and 47 per cent during 2018-19 as compared to corresponding previous years. The increasing export market coupled with the Government‟s support is making organic cultivation in India highly successful. The major export destinations were US, European Union, Canada and Switzerland. 4.5 The Department has further apprised the Committee that the global sale of organic food and beverages over the last two decades has increased from less than 15 billion USD to almost 97 billion USD. With the slackening of growth in Europe and America, these countries are looking forward to developing countries for their supplies, which would lead to creation of demands in developing countries. India is

5 trying to make its presence felt in such growing markets through networking of producers and by encouraging exporters to trade in such countries. 4.6 The Committee was apprised that in order to ensure consistent increase in exports, there is a need to explore the processed food segments which, at present, is very small. With introduction of domestic regulation in place, APEDA is taking up reciprocal equivalence issues with Canada, Japan, Korea, Taiwan and other countries. Financial assistance scheme has also been launched by APEDA to assist the setting up of handling, storage and processing infrastructure exclusively for the export of organic products. 4.7 The Committee appreciates the significant growing trend in the Indian export of organic products both in terms of value as well as volume. In order to continue this growth trajectory, the opportunities arising due to the expansion of global organic markets along with increasing market demands must be leveraged for making a mark in international organic industry. The Committee recommends the Department to offer special incentives to the organic exporters and the existing scheme of Merchandise Exports from India Scheme (MEIS) may be modified accordingly for increasing our export competitiveness of organic products in the world. TRACENET 4.8 TRACENET is an internet based electronic service offered by APEDA for facilitating process certification for export of organic products from India. It is the first initiative of on-line traceability for organic production and their exports enabling the tracking of processes and product movement across the organic value chain. TRACENET has ensured creation of robust database for organic products wherein the details/ information pertaining to organic area under production, quantities produced, number of operators, organic farmers, etc. could be accessed. The products supplied can be tracked from port till the last operator. However, database of TRACENET is not available in public domain thereby deterring organic traders and consumers from having access to information of domestic as well as international organic market. 4.9 The Committee observes that TRACENET has proved to be an efficient monitoring and functional tool in providing real time database of organic products along with their traceability across the value chain. The Committee, however, notes that the database of TRACENET could not be retrieved in public domain thereby limiting its access only to the registered users. The Committee is of the opinion that public access to TRACENET is vital for the organic consumers and exporters within the country or from outside to have an insight into the details of India‟s organic sector. The Committee, therefore, recommends that the web traceability system of TRACENET should be made flexible, user friendly and open

6 to public access which would help in making it streamlined with the requirements of organic exporters and consumers. NATIONAL PROGRAMME FOR ORGANIC PRODUCTION (NPOP) 5.1 National Programme on Organic Production (NPOP) was launched in the year 2000 and was notified in October, 2001 under the Foreign Trade (Development & Regulation) Act, 1992 (FTDR Act). As per DGFT notification issued under the FTDR Act, all organic products meant for exports have to be certified compulsorily under NPOP. Thus, it provides an institutional mechanism for accreditation of certification bodies and certification of organic products. It is a widely acclaimed certification system and has acquired equivalence with major importing countries. It has laid the foundation for the systematic growth of organic production and export. With a spurt in demand in domestic market, Food Safety and Standards Authority of India (FSSAI) has also notified certification standards of NPOP to be followed as a pre-requisite for selling organic food in the domestic market. 5.2 NPOP is being operated under the overall guidance and directions of the Department of Commerce, Ministry of Commerce and Industry, . The Department acts as the apex body of the NPOP. National Steering Committee (NSC) is responsible for implementing and administering NPOP. The role of National Accreditation Body (NAB) is mainly to formulate standards and procedures to be followed by Certification Bodies for certifying organic products for exports. APEDA has been designated as the secretariat for implementation of NPOP and to service NSC. Also, the accreditation of Certification Bodies and all other related activities of NPOP for promotion of organic exports are carried out by APEDA. International equivalence agreements for organic products are negotiated by the Department of Commerce through APEDA. 5.3 The Committee further enquired about the financial assistance schemes that are being run to boost the exports of organic products. The Department stated that APEDA provides assistance to exporters under the Scheme of 'Agricultural & Processed Food Products Export Promotion Scheme'. It was also informed that provisions have been made under Export Infrastructure Development and Market Development wherein financial assistance upto 40 percent of the total cost with the upward ceiling of Rs. 1 crore is granted for the creation of requisite infrastructure needed for organic production and exports. This includes integrated pack houses, single or multiple products processing facilities, cold store/warehouses, carbon dioxide generators and logistics including assistance for procuring insulated refrigerated transport vehicles, mobile pre-cooling unit, etc. However, the assistance is available only for the export of products covered under TRACENET traceability system. Also, Certification Bodies accredited under NPOP as well as

7 recognized laboratories under APEDA are eligible for assistance of 40 percent of the total cost of equipments subject to a ceiling of Rs. 4 lakh per beneficiary. 5.4 The Committee was informed that despite the high potential of farmers of hilly regions, tribal belts, etc., organic exports from such regions is minimal due to poorly developed supply chain mainly on account of inadequate infrastructure. 5.5 The Committee recommends that necessary measures be taken for increasing awareness amongst organic exporters located in far-flung remote areas about the financial assistance being provided by APEDA for creating capital assets and requisite infrastructure. The Committee further recommends that APEDA, in coordination with State Governments, should evolve specific organic export schemes for strengthening financial assistance and local infrastructure in hilly regions, border areas and tribal belts where the potential of organic production is quite high.

CERTIFICATION 6.1 Certification is being done under: (i) National Programme on Organic Production (NPOP) or Third Party Certification; and (ii) Participatory Guarantee System (PGS-India). The standards prescribed by NPOP are mandatory for exports. NPOP or THIRD PARTY CERTIFICATION SYSTEM OF APEDA 7.1 The Third Party Certification of organic production processes was initiated by Government of India in 2001 under NPOP. A group of organic farmers (minimum of 25 and maximum of 500 farmers who possess land in the same geographical area) may apply for certification of their organic produce under the Third Party Certification. The certification process is carried out by bodies accredited by NPOP. The certification bodies are presently 29 in number including 11 State Certification bodies with 7388 operators. 7.2 The Committee was informed that these Certification Bodies have been authorized to operate on a pan India basis. It is, however, noted that the number of certification bodies operating in India is considerably low. It was also informed that inadequate certifying agencies and supporting infrastructure facilities for verification are posing hurdles in the establishment of quality assurance system in organic production and exports. On being enquired about the lack of adequate certification bodies and related infrastructure facilities, the Department submitted that with the introduction of domestic regulation resulting into expansion of role and functions of certification bodies, the need will arise for additional number of such bodies along with extra manpower. It was apprised that capacity building programmes are being undertaken by APEDA for enhancing the efficiency of

8 existing bodies to increase their certification base. Also, the State Governments are being encouraged to take up the certification work by creating new certification bodies under them. It was further stated that private Certification Bodies are having multi state operations in the country whereas the majority of the State certification bodies are carrying out certification within the states. APEDA is also imparting trainings to the officials of State Governments for expanding their certification activities. 7.3 The Committee notes that maintaining quality assurance in the export of organic products is a crucial aspect which cannot be ignored. In this regard, the Committee feels that the number of accredited certification bodies for certifying organic products for exports is too low to cope with the rising volume of exports of organic produce from the country. The Committee is of the view that in order to become a major global player in organic exports, it is essential that India must have adequate number of certification bodies and related infrastructure for ensuring quality assurance. The Committee, therefore, desires that the Department must take steps to augment the number of Certification Bodies under APEDA. 7.4 While interacting with farmers/ producers as well as various stakeholders, the Committee learnt that the Third Party Certification system involves inherent expenses and extensive paperwork with cumbersome procedures discouraging small and marginal organic producers for getting their produce certified. High costs in Third Party Certification is a severe constraint faced by the organic producers/ exporters in certifying their products. Even the expenses incurred on on-farm inspections in the annual surveillance done by the Certification Bodies are to be paid by the growers. In its deliberations with local farmers of North East Region, the Committee was briefed that the certification granted by State owned Organic Certification agencies would assist tremendously in minimizing the high costs of certification. 7.5 The Committee expresses its concern over the high cost of certification adversely affecting the relatively small farmers and producers discouraging them to sustain organic farming practices in the long run which may cause detrimental effect on our exports. It is observed that the high costs of certification is not only on account of inadequate certification agencies and lack of associated infrastructure facilities but is also due to costs involved in documentation and internal audits. The Committee recommends that the Department should undertake policy initiatives to bring down the overall cost of certification. Also, the expenses incurred on audits and inspections for certifying organic products should be subsidized for small and marginal farmers. The Committee further recommends that the prolonged complex procedures should also be made simpler and less time consuming.

9 7.6 The Committee appreciates the efforts of APEDA in enhancing the capacity of the existing certification bodies. It, however, recommends that APEDA should coordinate with State Governments for establishing state owned Certification Bodies to make it easier for the local producers/ exporters in getting their produce certified. 7.7 The Department of Commerce further stated that for meeting the growing export demands from the global market, new categories of product such as Animal Feed Processing & Handling, Mushroom, Aquatic plants, Seaweed, Greenhouse production have been included under NPOP in addition to Livestock, Poultry, Apiculture & Aquaculture products. A Certification Body has also been granted accreditation in the year 2018 for certifying such organic produce. However, it was informed that the exports of such new categories are yet to take place. The Department also submitted that so far 3 to 4 Certification Bodies have been accredited for certifying organic products under the categories of livestock and apiculture products along with one Certification Body for aquaculture. However, the number of operators certified under them is very less. 7.8 The Committee recommends that steps needs to be taken for assessing the export potential of the new categories of products eligible for certification under NPOP. The Department should make an analysis of the exporting destinations and marketing prospects of such products for tapping their demands. The Committee further recommends that the Department should make efforts in obtaining equivalence from importing countries at the earliest for augmenting exports of the new categories of products. 7.9 It was highlighted that competition from other exporting countries inhibits our growth in exports of organic products in international organic food market. The major setback faced by exporters of Indian organic produce is lack of consistency between international quality standards and the organic standards followed by India. The perception about quality of organic foods exported from India is a concern in top international markets. It was apprised that spurious exports from India labeled as 'certified' has been severely impacting our overall credibility. 7.10 The Committee is of the view that international organic market is competitive at both the levels - cost as well as quality and for achieving export competitiveness of Indian organic products, quality control is a must. The Committee recommends that for building up overall credibility, the Department should strive for creating awareness of NPOP prescribed organic standards and accreditation requirements amongst Indian exporters and importing nations. The Committee also stresses upon brand creation to prevent brand dilution of certified Indian organic products in the international market by a few fly-by-night or spurious exporters.

10 PARTICIPATORY GUARANTEE SYSTEM (PGS-INDIA) 8.1 Participatory Guarantee System - India (PGS-India) is a decentralized organic farming certification system implemented by the Department of Agriculture, Cooperation and Farmers‟ Welfare, Ministry of Agriculture, Government of India through National Centre of Organic Farming (NCOF). PGS-India certification system involves certification of organic produce by the farmers‟ groups themselves enabling the small and marginal farmers in the country to have easy access to organic certification. This certification system promotes domestic organic market growth and is cost effective, farmer-friendly and hassle-free. It was initiated in 2015-16 for promoting domestic organic market growth and acts as a preparatory stage for organic farmers opting for exports in the long run. After three years of practicing in organic cultivation, the farmers/ farms will be eligible for the PGS-India Organic symbol. An online portal of this certification has also been created that provides a database of organic producers and organic area falling under PGS certification. Third Party Certification and PGS-India Scheme 8.2 The Committee noted the existence of dual certification system in India, i.e., Third Party Certification and PGS-India for certification of organic products. On being enquired about the adverse effect on the market of organic products and on its exports owing to the existence of dual certification system, the Department informed the Committee that both the certification systems are complementary and supplements to the market demands. It was further apprised that both the certification systems follow the same production standards and whereas the Third Party Certification is a prerequisite for exporting organic products, PGS-India Scheme promotes domestic market of organic products. The Department also apprised that only Third Party Certification of organic products are acceptable in international markets. It was, however, submitted by various stakeholders that the two certification systems need to be harmonized so that the standards required in PGS-India Scheme may have equivalence with those of NPOP in order to enable exports of organic products certified under PGS-India Scheme. 8.3 The Department further informed the Committee of the efforts for linking the two certification systems wherein a relaxation of 12 months of transition period is extended to farmers during the phase of shifting from PGS-India to NPOP certification. The Department, however, felt that further relaxation in standards or the transition period may dilute the terms of equivalence and recognition agreements with E.U. and USDA. This may also affect the on-going equivalence negotiations with those countries that do not recognize PGS. It was submitted by the Department that the seamless transition of the two certification systems may be considered over a period of time with the acceptance of PGS by more and more countries.

11 8.4 The Committee is of the considered opinion that with the dual certification system existing in the country, uncertainty amongst traders as well as consumers is inevitable. The Committee also notes that PGS-India Scheme is more attuned to Indian farming conditions and being a cost effective and farmer friendly certification system, it is more acceptable to small and marginal farmers practicing organic cultivation. In this context, the Committee recommends the Department to make concerted efforts with Ministry of Agriculture and Farmers' Welfare for harmonizing the two certification systems which would enable the PGS certified farmers to export their produce. 8.5 National Centre of Organic Farming, in its deliberations with the Committee, informed that the volume of exports of organic products certified under NPOP standards is considerably low with less than 30 per cent of certified organic produce being exported. Also, with no exports of organic products in the first two years of NPOP or Third Party Certification, the products are consumed in the domestic market. Therefore, it was suggested that the farmers may be allowed to opt for PGS-India in the first two years of organic production and in the third year they may switch over to NPOP certification for export purpose. 8.6 The Committee is of the view that on account of low volume of trade with no exports during the first two years of the NPOP certification period, India is losing competitiveness in the global organic trade market. The Committee fears that this may have a negative impact on our exports of organic products leading to discouragement of organic farmers and exporters. In order to maintain comparative advantage of Indian organic exports in the global organic market, the Committee recommends the Department to take steps to examine the feasibility of adopting PGS India Scheme in the first two years of NPOP or Third Party Certification in order to achieve the twin benefits of promoting organic exports and a better return to farmers in

exporting their produce. EQUIVALENCE ARRANGEMENTS FOR ORGANIC TRADE 9.1 An equivalence arrangement implies terms and conditions between two or more trading partners wherein technical domestic regulations are recognized as equivalent for the purpose of trade. The Department of Commerce informed the Committee that as per the prevailing practice, major markets of organic products recognize only Third Party Certification. It was stated that recognition to NPOP standards had already been granted by major importing countries such as USA, EU and Switzerland. Also, efforts are being made by NPOP for obtaining equivalences from countries such as Canada, Japan, Korea, Taiwan, etc. 9.2 The Committee has also learnt that the absence of any equivalence arrangements for our processed food products results into additional certification

12 recognized when entering the foreign markets. It was apprised that due to withdrawal of unilateral equivalence by E.U., the product undergoes certification in both the importing and exporting countries causing obstacles to trade. It was further apprised that unambiguous attempts by APEDA in raising the issue of organic equivalence at multilateral forums such as WTO is causing as a major constraint in obtaining equivalence arrangements from the EU. On enquiring, the Department informed the Committee that negotiations for obtaining equivalence on processed food products with EU are under way. The Department also stated that since the domestic regulations in organic sector were initiated in the year 2018, the existing arrangements are unilateral. On account of no domestic regulations till 2018, bilateral equivalence were not obtained as majority of countries were in favour of equivalence arrangements on reciprocal basis. 9.3 The Committee recommends that the complications coming in the way of APEDA in raising the issue of withdrawal of unilateral equivalence for the imports of organic processed food products by E.U. at WTO forums must be resolved at the earliest. The Committee also recommends the Department for engaging in bilateral talks with EU for restoring equivalence. It further desires that a status report may be furnished by the Department to the Committee on discussions held between APEDA and WTO forums for sorting out the issue. 9.4 The Committee enquired about the steps taken by the Department in facilitating exports of organic products to the countries that are willing to trade in PGS certified organic products. In response, the Department stated that the major trading partners in organic sector recognize the Third Party Certification system. The trade under PGS certification would be considered only if acceptable to the importing countries. The Department also stressed that PGS certification has been recently adopted by a handful of countries (e.g. Brazil and India) for promoting their domestic organic market. The Department informed that as per the survey of IFOAM-PGS conducted worldwide in 2017, at least 241 PGS initiatives were globally launched out of which 127 initiatives were fully operational with India having a major share. 9.5 The Committee is of the considered opinion that upsurge in the number of PGS initiatives in the world, signifies a rising trend of acceptance of organic PGS certification products. In this scenario, the Committee recommends that the Department should take measures to leverage this opportunity to promote organic trade to the countries willing to trade in PGS certified organic products. This would also ensure the PGS certified farmers to engage in exports of their products thus fetching them better returns. The Committee, therefore, recommends that Government should devise a policy framework for encouraging PGS certified farmers to export their products to countries accepting PGS certification for trade. The

13 Committee further recommends the Department to make efforts to negotiate with such countries in order to obtain equivalence for the trade of PGS certified organic produce. 9.6 The Committee is of the view that the Department should make efforts to promote organic trade through regional agreements like ASEAN, SAARC, etc. Also, the markets of countries having regional proximity should be explored for encouraging our organic exports. The Committee believes that taking into consideration the Regional Organic Standards (For e.g. Asia Regional Organic Standards) in the equivalence agreements with regional trade partners would facilitate cooperation on organic labeling and trade. This would further ensure harmonization of existing standards and development of new standards which would foster inter-regional market access of organic products. The Committee therefore recommends that India may take into account the Regional Organic Standards while obtaining equivalence from regional trading blocs/ Members.

FURTHER CHALLENGES CAPACITY BUILDING 10.1 India has the highest number of organic producers in the world. However, inadequate trained manpower and extension network for training on organic farming is a major challenge in absence of which organic farmers are not able to practice organic cultivation in a sustainable manner. The Committee enquired the Department of Commerce about the measures undertaken to educate the farmers for improving their organic farming, to make it more viable and increase its yield. In response, the Department informed about the extension services being offered to farmers in the form of Package of Practices and inputs. It was apprised that specific network project on Organic Farming Research in Agriculture and Horticulture has been launched by the Indian Council of Agricultural Research (ICAR) along with publishing of Package of Practices for certain cropping system. The Package of Practices had also been made available to organic farmers in the country. Also, ICAR has established a centre in Sikkim, namely, National Organic Farming Research Institute (NOFRI), for research work on organic farming. The Department however submitted that much more is still required to be done to enhance the capacity of growers/ producers to increase their self-sufficiency. 10.2 On a query on details of programmes pursued by Government in collaboration with agricultural universities regarding organic certification, the Department apprised that APEDA, in collaboration with IGNOU, has launched a certificate programme not only on certification procedures and processes but also on overall aspects of organic cultivation and marketing of organic agri-produces. Although certain private universities are running courses with certification on

14 organic farming, no such programmes on organic certification are being taken by agricultural universities in the country. 10.3 The Committee notes that organic farming is a scientific area demanding specific skills and expertise for carrying out cultivation practices distinct from those of conventional farming. The Committee is of the view that experts should be deployed for conducting capacity building programmes for trainers as well as for trainees on different aspects of organic farming including know-how on soil sample collection, quality control, certification, packaging, labelling and branding. The Committee, therefore, recommends that experts from various agricultural universities, institutes, organizations, etc. should be engaged to provide specific skills to trainers, trainees and farmers on organic farming practices. The Committee also recommends to take coordinated efforts by Department of Commerce, Ministry of Agriculture and Farmers' Welfare and Ministry of Skill Development to initiate programmes on skill development for farmers and trainers to enhance their capacities in the field of organic cultivation, certification and other scientific aspects of organic farming. 10.4 The Committee further gained insight on capacity building programmes undertaken by the National Centre of Organic Farming in the form of short term certificate courses, on-farm resource management along with field demonstrations. It was also apprised that the farmers are being trained to utilize low cost management techniques to administer organic inputs with the help of waste decomposers culture developed by the NCOF. The farmers are also being trained on quality control activities under the Fertilizer (Control) Order (FCO). The Committee was informed of the endeavours of the NCOF in developing and successfully disseminating various techniques to farmers such as Potash Mobilizing Bacteria, Liquid Biofertilizer Consortia and technology of Liquid Biofertilizer and Biopesticides, the first of its kind in India. The NCOF has also made a major breakthrough by developing a Waste Decomposer, an in-situ multipotent low cost organic input, which had reached to nearly one crore of farmers in the country. The NCOF is also imparting trainings to the Central and State Governments Officials, NGOs and to extension officers. 10.5 It was claimed that the trainings conducted under NCOF are not specific in nature covering only the general aspects of organic farming. The Committee enquired about the reasons of inadequate and generic nature of trainings for augmenting skills of organic farmers/ trainers. In response, the NCOF stated that due to insufficient funds, desirable skill development courses on specific subjects such as soil health management, input management, pest management, etc., could not be conducted. The total budget allocated to the NCOF was 17 crore against the proposed amount of 84 crore, out of which a paltry sum of 1.5 crore had been

15 allocated for training purpose. It was further submitted that the allocated amount is being optimally utilized. 10.6 The Committee appreciates the endeavours of the National Centre of Organic Farming (NCOF) in developing and propagating efficient technologies which are innovative and cost effective for the management and optimal application of biological or organic inputs essential for organic farming. The Committee also notes that the training programmes conducted by the NCOF would tremendously benefit the organic sector. However, the Committee is disappointed to know about the meager budget allocation to the NCOF and therefore opines that insufficient budget allocation would act as counterproductive to the determined efforts being taken for boosting organic production thereby impacting exports. The Committee recommends the Government to enhance the budgetary allocation of NCOF for its proper functioning. MARKET LINKAGES AND PRICE PREMIUM TO FARMERS

11.1 Indian organic market is highly unorganized offering no proper marketing linkages to organic farmers. The lack of a steady and sustainable market along with poor linkages is a major challenge to organic farmers for getting a fair and remunerative price of their produce. In the absence of direct linkages to processors, retailers and exporters, the farmers are dependent on middlemen for marketing their products thereby losing remunerative price on their products. It was informed that the marketing of organic products involves both the social and ecological aspects of the products with efforts needed for capacity building, production related issues, quality parameters and the logistics of procuring products, especially from the remote and inaccessible areas. 11.2 Premium Pricing of organic products in comparison with conventional products is often a marketing challenge. It was informed that there is a significant variation in prices of organic products which differs across the categories of products and varies with different companies and retail formats. This poses difficulties to the farmers in organic sector in getting a fair price for their produce. Also, thin distribution of organic farmers over a large area and non-availability of produce in volumes is also a major reason for the failure of ensuring a fair price premium to farmers. 11.3 The Committee learnt that the limited information available in the country on production and exports restricts formulation of any business or policy decisions leading to abstract mechanism of organic pricing and premiums. In the absence of appropriate data and adequate information, price determination of different organic commodities in varied farming cultures of India becomes difficult, discouraging farmers to pursue organic farming.

16 11.4 The Committee is of the considered opinion that the lack of dedicated marketing channels in the country is a major lacuna in the growth of organic sector due to which farmers are unable to get a remunerative price for their produce. The Committee, therefore, recommends that new avenues for providing market linkages to organic farmers may be explored. Also, it recommends to take all out measures for collaborating FPOs/ FPCs with food retail chains/ e-commerce companies as well as cooperatives for providing market at the doorstep to farmers in order to ensure them a better price premium. 11.5 The Committee recommends the launching and implementation of e-organic bazar portal at the earliest which would prove as a boon to the organic farmers in providing them an assured market for their produce. The Committee further recommends that efforts may be made for building up marketing intelligence which would help in removal of impediments faced by the companies/ exporters in procurement of organic products from the organic farmers and processors. INFRASTRUCTURE AND PROCESSING

12.1 India lacks specific infrastructure related to organic production from farm gate to the processing stage. It was informed that the supply chain in organic sector is fraught with challenges which include poor collection channels with limited logistics facilities and lack of proper processing facilities in line with the global organic standards. The absence of dedicated post-harvest technologies and logistics adversely impacts the export prospects of organic sector and with inadequate package houses, lack of refrigerated vehicles and other requisite storage infrastructure, quality control remains a difficult area. The dearth of storage infrastructure in the existing supply chain in organic sector inhibits quality warehousing of the organic products which are to be stored separately from conventional products for avoiding their cross-contamination. 12.2 The Committee recommends that the Department should make efforts for the creation of organic related infrastructure facilities in the country including dedicated warehousing/ cold chain and logistics needed for production, marketing and exports of organic products. The Committee also recommends that incentives may be extended to individual companies meeting criteria for organic infrastructure support for taking initiatives in building organic infrastructure in the country. 12.3 As regards organic processed foods, lack of end to end cold chain, limited warehousing with no facilities of cold storages for individual processed products, unawareness on stock management practices in an eco-friendly or organic way and absence of logistics with high level of wastages from the source to the processing

17 plants is severely hindering our export potential in the sector. Also, primary as well as secondary processing facilities at farmers‟ level are a prerequisite for proper marketing and export of organic products. 12.4 Ministry of Food Processing Industries apprised the Committee of the assistance being provided to private entrepreneurs, State Governments as well as Universities in the country for setting up food testing laboratories for processed products in the country through the Schemes of Mega Food Park and Food Safety and Quality Assurance Infrastructure. It was informed that the organic clusters, if provided assistance under the two schemes, could set up food testing laboratories which would have a significant bearing on organic exports due to increase in exportable quality and quantity of processed food products. 12.5 The Committee is of the opinion that the exports of value added organic products would fetch a higher premium in global market. In this regard, the Committee, therefore, recommends the Department to undertake measures such as establishing primary and secondary processing units for farmers, creation of appropriate infrastructure, processing technologies, etc. for facilitating processing of organic products in the country. The Committee is of the considered view that the Department along with Ministry of Food Processing Industries should take initiatives for demarcating Organic Processing Zones (OPZ) in the country and thereafter linking them up with farmers' clusters certified under NPOP. This would tremendously boost our production of value-added organic products increasing our exports exponentially. 12.6 The Committee further learnt that organic produce could be processed and sold as PGS certified produce only if it is processed under the supervision of cluster members or by a „duly authorized federation‟. However, organic clusters in most of the districts in India do not have any processing units of their own without which the products could not be marketed as PGS certified. 12.7 The Committee notes that lack of processing units in organic clusters formed under PGS-India Scheme is a biggest challenge faced by organic farmers in the country. In this regard, the Committee recommends that Department of Commerce in coordination with Ministry of Agriculture and Farmer's Welfare should establish NPOP approved processing units in PGS certified organic clusters. 12.8 Food testing infrastructure and technology as well as credible testing mechanism acceptable to international buyers are major bottlenecks in organic export sector. It is further noted that non-existence of NABL accredited world class food testing laboratory for testing and analysis of organic products is a major problem persisting in organic food exports sector. The Committee was apprised that due to multiple agencies/ bodies in the country requiring various testing

18 requirements, an exporter has to pay an exorbitant price on testing, for example testing a mixed container of organic products would cost around Rs. 80,000/-. 12.9 The Committee recommends the Department for taking measures for harmonization of the requirements of different testing parameters of various agencies/ bodies which would result in reducing of the exorbitant price charged on testing of mixed containers of exportable organic products. The Committee also desires that NABL accredited testing labs for testing organic produce may be established to minimize global rejections of supplies of organic products which hampers our export competitiveness of organic products. PARAMPARAGAT KRISHI VIKAS YOJANA (PKVY) 13.1 The Paramparagat Krishi Vikas Yojana (PKVY), launched in 2015-16 as a Centrally Sponsored Programme, is an extended component of Soil Health Management under the Scheme of National Mission on Sustainable Agriculture. The objective of the Scheme is to produce agricultural products free from chemicals and pesticides residues by adopting eco-friendly and low-cost technologies. With this objective, the Scheme aims to achieve improvement in soil health of agricultural lands by promoting sustainable organic farming in the country. The Scheme is executed in a time frame of three years in line with the PGS-India's prescribed conversion period of 36 months from conventional farm to the organic farming land. The Committee was informed that the implementation of the scheme has been extended to three more years, i.e. from 2017-18 to 2019-20. 13.2 Funding pattern under the scheme is in the ratio of 60:40 by Central and State Governments respectively. In case of North Eastern and Himalayan States, Central Assistance is provided in the ratio of 90:10 and for Union Territories, the assistance is 100 percent. 13.3 The Scheme promotes organic farming through a cluster approach wherein each cluster shall be of 20 hectares or 50 acres in extent and in as contiguous form as possible. Under the Scheme, farmers within a group can avail benefit for a maximum of 2 hectares. The limit of assistance is Rs.50,000 per hectares out of which 62 percent (i.e. Rs. 31,000) of the total amount is given as incentives to the farmers during the conversion period of three years on Direct Benefit Transfer (DBT) basis. 13.4 Department of Agriculture Cooperation and Farmers Welfare informed that the total amount allocated for the scheme for its implementation in three years is Rs 1307.00 crore out of which Rs 757.74 crore to 11891 organic clusters have been released till date. The Scheme, so far, has benefitted 3,94,550 farmers and as of now 237820 hectares of land in the country has been converted into organic farming land.

19 13.5 Regional Councils (RCs) set up under the PKVY are responsible for imparting training to the farmers in organic clusters for efficient implementation of the Scheme. However, it was noted that the RCs are not adequately equipped, lacking expertise and proper training due to which they are not able to provide effective assistance and guidance to farmers. The Committee enquired about the reasons for lack of assistance and expertise to the RCs in absence of which the farmers are not able to make progress in organic farming. In response, it was informed that the officials of State Agriculture Departments are nominated in RCs having minimum or no expertise in the field of organic sector and very few personnel in RCs are from private organizations. Further, due to non-existence of any provision of allotment of funds for organizing trainings to the persons nominated in RCs, the personnel in RCs are not being upskilled or trained. 13.6 The Committee is disappointed to note that Regional Councils (RCs) meant for implementing PKVY Scheme lacks expertise in the field of organics for imparting constructive training to farmers engaged in organic farming. It is also a matter of concern that State Government officials with limited skills in organic sector are being appointed in RCs to train farmers. The Committee strongly recommends Ministry of Agriculture and Farmers Welfare to take remedial measures in this regard. The Committee also desires allocation of adequate funds under a separate head specifically meant for capacity building of RCs. 13.7 The Committee notes that the scheme of Paramparagat Krishi Vikas Yojana (PKVY) is an extension of Soil Health Management (SHM) component under the National Mission on Sustainable Agriculture (NMSA). Therefore, the Scheme, not being an independent programme, may lack necessary administrative and accountability mechanisms thereby hindering its effective execution. The Committee desires that the Ministry of Agriculture and Farmers' Welfare may examine the prospects of making the Scheme as an independent scheme for its better outcome. ORGANIC INPUTS 14.1 The Committee was informed that due to inaccessibility of standardized organic agricultural inputs to farmers at a reasonable cost, they are reluctant to go for conversion from conventional to organic farming. High costs of organic manures and other biological inputs along with low yields make the farmers skeptical to adopt organic farming. In the absence of subsidies on agricultural inputs, especially biofertilizers and biopesticides, the farmers are unable to meet the input expenses making organic farming unsustainable for them. It was further informed that commercially available bio-manure products may not be completely organic causing disqualification of products at the certification stage itself, posing extreme difficulties to farmers to continue with organic farming.

20 14.2 The Committee was informed that most of the countries in the world have carefully designed subsidies to compensate for the yield loss incurred during the transition period from conventional to organic farming. However, no such subsidy scheme exists in India. 14.3 The Committee realizes that the farmers already suffer yield loss during the transition period from conventional to organic cultivation practices. The high costs of organic inputs would, therefore, be an additional cost burden on them. Hence, it is felt that subsidies to farmers for procuring organic inputs such as biofertilizers, biopesticides, organic manures, etc. are necessary in view of the high production costs. The Committee also recommends that regulatory mechanisms should be strengthened in the country for ensuring availability of standardized organic inputs to the farmers. 14.4 The Committee also notes the absence of any pan-India support or uniformity across States in the country in the subsidy policy of organic products. The Committee, therefore, recommends that the Government should frame a comprehensive subsidy policy scheme for organic farming in the country on a priority basis, to enable the farmers to sustain organic practices in the long run. Capital Investment Subsidy Scheme for organic inputs 14.5 Capital Investment Subsidy Scheme (CISS) aims to create a robust infrastructure for the production of quality organic and biological inputs by providing financial assistance. The Scheme extends subsidies for establishing Commercial Production Units for bulk production of biological units including establishment of fruit/vegetable market/agro waste compost production unit and biofertilizer/ biopesticides production units. The scheme is being implemented by the Department of Agriculture, Cooperation & Farmers‟ Welfare through National Centre of Organic Farming (NCOF) in collaboration with NABARD or National Cooperative Development Corporation (NCDC) since 2004-05. Under the scheme, 100 per cent central assistance is provided to state government agencies subject to maximum of Rs.63 lakh for fruit/vegetable market/agro waste compost production units and Rs.40 lakh for biofertilizer/ biopesticides production units. 14.6 The details of fruit/ vegetable market/ agro waste compost and biofertilizer/ bio pesticides production units established under CISS are as follows: Fruit Veg Subsidy Subsidy Sl. Waste released Biofertilizer released State No. Comp. Unit (Rs. Lakh) (Rs. Lakh) Number Number 1. Andhra Pradesh 0 0.00 4 70.662 2. Arunchal Pradesh 0 0.00 0 0.00 3. Assam 2 42.945 3 53.12

21 4. Bihar 0 0.00 0 0.00 5. Chattisgarh 0 0.00 0 0.00 6. Delhi 1 20.00 0 0.00 7. Goa 1 11.60 1 20.00 8. Gujarat 1 4.773 6 140.834 9. Haryana 1 63.00 1 17.075 10. Himachal Pradesh 0 0.00 2 45.536 11. J & K 0 0.00 0 0.00 12. Jharkhand 0 0.00 0 0.00 13. Karnataka 8 339.677 6 145.572 14. Kerala 2 21.287 3 40.690 15. Madhya Pradesh 0 0.00 1 40.00 16. Maharashtra 0 0.00 10 149.8965 17. 0 0.00 0 0 18. Meghalaya 0 0.00 1 5.668 19. Mizoram 0 0.00 0 0.00 20. Nagaland 0 0.00 0 0.00 21. Orissa 0 0.00 0 0.00 22. Punjab 0 0.00 5 43.07 23. Rajasthan 0 0.00 1 8.250 24. Sikkim 0 0.00 0 0.00 25. Tamil Nadu 3 182.70 5 93.8201 26. Telangana 0 0.00 5 87.515 27. Tripura 0 0.00 1 20.00 28. Uttar Pradesh 1 19.187 2 80.00 29. Uttarakhand 0 0.00 2 27.005 30. West Bengal 1 15.125 2 13.90 Total 21 720.294 61 1102.6136 (Source: National Centre of Organic Farming)

14.7 The Committee notes the reluctance shown by most of the states in the country in availing subsidies under CISS Scheme for establishing compost/ biological units. The Committee is of the considered opinion that the Scheme should be properly implemented in the states since it plays a major role in bulk production of bio manures, compost and bio fertilizers in a cost efficient way and would be catering to the needs of organic farmers for having an easy access to organic inputs. The Committee recommends that the Department should make all attempts to convince the State Governments for taking concerted efforts for its effective implementation. 14.8 It was apprised that the main reason of acute shortage of standardized biological units is due to less research and extension activities on organic farming. Moreover, the research and extension on organic farming is considerably lesser than that undertaken on conventional farming. Also, non-accessibility of organic

22 farmers to cost-efficient, organically certified seeds is a significant issue which needs to be addressed through intensive research activities. 14.9 The Committee recommends the Government to invest in organic research and extension activities for producing standardized, organic, non-GMO seeds for organic cultivation. The Committee further stresses upon the Government to take coordinative steps with State Governments for ensuring prompt availability of cost-efficient, organically certified seeds to organic farmers. 14.10 The Committee was apprised that since organic crops are more susceptible to pest attacks than conventional crops, adequate scientific training to farmers in methods of pest control is extremely crucial. Further, due to the close proximity of conventional and organic farms, pesticide exposure from nearby farms can lead to product contamination. This spoils the organic farmer's produce through no fault of the farmer. It was further informed that mono-cropping leads to higher pest and disease problems which many times results in pests becoming resistant towards biopesticides. It is therefore essential to adopt diversified cropping systems. Also, advisories for organic pest and disease control measures to organic farmers must be provided on a timely basis. 14.11 The Committee desires that organic farmers in the country should be made aware of the benefits of adopting diversified cropping systems for pest control. In this regard, the Committee recommends that capacity building programmes as well as implementation of Package of Practices for Integrated Pest Management should be extensively carried out in the country. This would assist the farmers to follow holistic management practices for pest control management. MISSION ORGANIC VALUE CHAIN DEVELOPMENT FOR NORTH EASTERN REGION (MOVCDNER) 15.1 The Ministry of Agriculture and Farmers Welfare has launched the Scheme of Mission Organic Value Chain Development for North Eastern Region (MOVCDNER) with an aim to develop a robust organic value chain in the North East Region. The Scheme is being executed to ensure certified organic production in a value chain mode in the region to link growers with consumers. The Scheme is being executed for the development of entire organic chain starting from inputs, seeds, certification and creation of facilities for collection, aggregation, processing, marketing and brand building. Initially the scheme was approved for three years with an outlay of Rs. 400 crore. Presently, it has been extended for another three years. Under this scheme, 50,000 hectares would be covered during the period of three years, i.e. from 2015-16 to 2017-18. The scheme aims to cover another 50,000 hectares of area during the period between 2017-18 to 2019-2020.

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15.2 The Committee was informed that during 2015 to 2018, an amount of Rs. 225.96 crore was released and almost around 45,918 hectares of area has been covered against the target of 50,000 hectares. It was further apprised that for the financial year of 2018-19, Rs. 99.25 crore has been released. The target of forming 100 Farmers' Producers Companies (FPCs) has been achieved. As a result, 2464 Farmers' Interest Groups (FIGs) have been formed against the target of 2500 FIGs and 48948 farmers have been mobilized till now. NORTH EAST REGION Sikkim 16.1 Sikkim, India‟s first organic state, achieved the status of becoming the first organic state in the world. The Committee, during its study visit to Gangtok, was apprised of the policies and support measures of the State Government of Sikkim contributing towards the state‟s transition to become a 100 percent organic state. It was informed that organic farming in the state has led to sustainable agriculture production that has provided benefits to over 60,000 farmers in the state. 16.2 Initiatives and efforts of the State Government of Sikkim such as launching of Sikkim Organic Mission, stringent implementation of Sikkim Agricultural, Horticultural Input and Livestock Feed Regulatory Act, 2014 for regulating organic production and its marketing as well as publishing of Handbook of Organic Crop Production in Sikkim had given a thrust in making the state as 100% organic. It was apprised that establishment of State Certification Agency of Sikkim and free distribution of bio-inputs as well as extensive training to farmers and other relevant efforts have tremendously benefitted the state in becoming a fully organic state. 16.3 The Committee lauds the efforts of Government of Sikkim as well as farmers of the State in achieving the feat of becoming a full organic state in the world. The Committee notes that Sikkim organic model has set an example to other states in India for encouraging them to embrace organic agriculture. The Committee hopes that the State would continue its efforts in implementing organic agricultural practices with Sikkim Organic Model becoming an inspiration to all other states in the country. 16.4 The Committee, during its visit to organic farms and plantations of Budang village, was pleased to observe small terrace plots on the slopes of hills sown with herbs, peas, ginger, turmeric, radish, buck wheat, cherry pepper, etc. The farmers apprised the Committee of the risk associated with organic farming on account of unpredictable weather and climatic conditions and soil erosion. 16.5 The farmers of Sikkim highlighted the constraints of high costs of bio-fertilizers/ organic inputs for which subsidies may be provided to them. Also, financial assistance may be given to them for processing of bio-inputs. The

24 issue of low credit available to farmers in the state is also a major concern. It was further submitted that post-harvest infrastructure facilities such as primary processing units, advanced food testing labs, cold storages, packaging houses etc, must be developed in the state for value addition of organic products (especially the perishable commodities) for promoting their exports. Issues in customs clearances and rejection of imports due to non-compliance of exporters to phytosanitary requirements of the importing countries are posing a problem to the exporters of the Sikkim. 16.6 The Committee is of the view that the bulk production of bio inputs through the Capital Investment Subsidy Scheme (CISS) would ensure abundant supply of bio or organic fertilizers to the farmers in the state. It, therefore, recommends that the Government of Sikkim in association with NABARD should proactively implement CISS Scheme for installing bio fertilizers/ organic input units in the state. It is further recommended that Cooperative Banks in the state may be engaged for scaling up financial credit to the agriculture sector. 16.7 The Committee desires that the State Government of Sikkim, in equity with private entrepreneurs, should establish organic processing parks in various parts of the state for strengthening infrastructural facilities required for processing organic produce. This would certainly bolster the exports from the state which is considerably low in spite of being a hub of organic production. 16.8 The Committee notes that the subsidy on chemical fertilizers and urea disbursed by the Central Government to farmers in the country are not being availed by the organic farmers of the State of Sikkim owing to the organic cultivation methods. The Committee, therefore, recommends to devise a mechanism so that the amount saved on the subsidies offered on chemical fertilizers must be compensated to farmers of the State of Sikkim by way of subsidies on bio-fertilizers or organic manures. 16.9 The National Centre of Organic Farming (NCOF) informed the Committee that only Third Party Certification is prevalent in the State of Sikkim under which the farmers are barred for exporting their produce in the first two years of their cultivation. It was informed that the PGS-India Scheme is not being properly executed in the State of Sikkim as well as in North East Region on account of which majority of farmers are losing their market potential in spite of following the organic cultivation practices. In absence of effective implementation of PGS-India certification system, the farmers are certified solely by Third Party Certification which involves higher costs and cumbersome certification procedures. 16.10 The Committee feels that efficacious implementation of PGS-India Scheme in the state would immensely benefit the small and marginal farmers

25 since it would result in curtailing of high certification costs along with reduction of cumbersome procedures prevailing in Third Party Certification. The Committee, therefore, recommends that PGS-India Scheme may be properly implemented in the states of North East Region including the State of Sikkim which would tremendously increase their domestic market share in the country. The Committee further recommends the State Governments of North East Region to demarcate areas that have potential for domestic farming so that the farmers in such areas may switch over to PGS certification. 16.11 The Committee was apprised of the difficulties being faced by entrepreneurs/ new exporters in the State for availing financial assistance for undertaking direct organic exports. It was apprised that lack of handholding of new exporters/ young entrepreneurs is also a concern which adversely impacts the emerging entrepreneurship culture in exports in the country. It was apprised that assistance in post-harvest management, value addition, loan credit and exposure to international markets is a prerequisite for entrepreneurs/ new exporters for encouraging them to go for organic exports. 16.12 The Committee recommends that a culture of global trade entrepreneurship should be propagated in the country which would inspire the entrepreneurs in becoming a driving force of exports. It notes that entrepreneurs in the country possess required skills, experience and knowledge to become global traders and, therefore, they should be encouraged by the Government by ensuring them all the support. The Committee, therefore, recommends the Department of Commerce to devise specific schemes for entrepreneurs and aspiring exporters in the organic sector. The Committee also recommends that handholding may be given to new or inexperienced organic exporters to overcome the difficulties they face while embarking on exports. 16.13 The Committee was informed that the Service Providers appointed for implementation of organic farming prefer private agencies to Government body for certifying the organic products. Therefore, the State Organic Certification Agency (SSOCA) are not selected as a certification agency by the Service Providers. It was further highlighted that exports from the state to major global organic markets of US are being affected due to non-granting of National Organic Program (NOP) Certificate to SSOCA which is mandatory for exporting organic produce to the country. 16.14 The Committee is perturbed to note the treatment meted out to Sikkim State Organic Certification Agency (SSOCA) by Service Providers responsible for implementation of organic farming in the state. The Committee recommends that the State Government of Sikkim should

26 take remedial steps for the selection of certification bodies. The Committee further recommends the Department to take proactive measures so that NOP Certificates are granted to SSOCA for furthering the exports of organic products to US. Other North Eastern States 16.15 The Committee was apprised that organic farmers/ growers of North East Region lack adequate training and capacity building in scientific aspects of organic cultivation. As a result, organic farmers are bound to follow their own indigenous practices and methods in areas of soil management, pest control management, processing of bio-inputs and in other processes. The issue of fragmentation of lands in the states of North East is a major constraint in enhancing the productivity in organic sector. 16.16 The farmers further submitted that high rates of GST imposed on organic certification on tea exports is acting as a major constraint for promotion of trade in tea sector. Also, imposition of GST on import of machineries meant for small farmers in organic tea production is posing additional financial burden on them. Further, issues such as low awareness amongst farmers about the potential of organic farming, lack of organized markets, absence of remunerative prices to farmers for their produce, limitations of irrigation facilities in the region and inaccessibility to certified organic seeds are the problems marring the organic production and its marketing. 16.17 The Committee was informed that in order to minimize the high costs of organic certification and related cumbersome procedures faced by organic farmers involved in organic production, the respective State Governments of North East Region should establish their own Organic Certification Agencies. It was apprised that region lacks vital infrastructural facilities like world class quality control laboratories for testing and analysis of organic products, primary processing units mainly for perishable products, cold storages, facilities for grading, labeling, packaging etc. needed for augmenting organic production, marketing and exports. Absence of organized markets and mandis for organic products restricts farmers in getting fair remunerative price for their products. 16.18 The Committee recommends that the Scheme of MOVCDNER should earnestly be implemented for building up a robust value chain in the North East region. It notes that the region has all the potential to become an organic hub in the country which would be accomplished only by strengthening processing, marketing and export infrastructure in the region. The Committee also stresses that Capacity Building Programmes in the region should be undertaken for which coordinated efforts are required between State Governments, NCOF and Agricultural Universities in the states. The Committee further felt that Training Centers with adequate personnel in collaboration with State Agricultural

27 Universities may be established in the states of North East Region. The Committee further recommends to establish State owned Certification agencies which would provide farmers with facilities of organic certification in proximity to their location. 16.19 The Committee desires that the State Governments should take all efforts in establishing organic processing parks in their respective states in collaboration with private players. Further, the banking facilities to organic farmers/ exporters/ entrepreneurs may be made more robust. In this direction, the role of NABARD, public sector banks as well as regional and cooperative banks is of utmost importance. Also, a moratorium on loans extended to farmers for the gestation period of conversion of conventional lands to organic farms may be granted by banks. The Committee also recommends that for financing organic processes in North East Region, other avenues of funding (e.g. North East Development Fund) may be explored in order to lessen the financial burden on State Governments. 16.20 The farmers requested for interventions of the Government of India in promoting buyers-sellers meet in the form of trade fairs/ seminars at both national and international level for providing them a marketing platform. Also, road freight subsidies to exporters from North East Region for exports and to participate in international exhibitions/ fairs may be granted. The accommodation and lodging charges may also be reimbursed to exporters for taking part in such international events. 16.21 The Committee recommends that APEDA should provide the facilities for free stalls, boarding, lodging and transportation to small farmers and exporters for encouraging them to participate in international organic trade exhibitions/fairs. ORGANIC COTTON 17.1 Ministry of Textiles, Government of India apprised the Committee that as per the latest data available, the global organic cotton production in the year 2016-17 was 117,525 metric tonnes aggregating only to a miniscule 1 per cent of the total cotton production in the world. India remains the major contributor with 51 per cent of the global share. Other countries that contribute significantly include China, Turkey, Kyrgyzstan, Tajikistan, USA and Tanzania. USA remains the biggest organic cotton consumer. 17.2 The details of trends in the production of organic cotton are given hereunder:- (Thousand metric Tonnes) Year World India Contribution of India (%) 2007-08 141.56 73.70 52.1 2008-09 175.11 107.51 61.4 2009-10 241.70 195.76 81.0 2010-11 151.08 102.89 68.1

28 2011-12 138.13 103.00 74.6 2012-13 109.83 80.79 73.6 2013-14 117.03 86.85 74.2 2014-15 112.49 75.25 66.9 2015-16 107.89 60.18 55.8 2016-17 117.53 59.47 50.6 (Source: Organic exchange/Textile exchange-farm and fibre reports)

17.3 It was further informed by the Ministry that the global production of organic cotton grew rapidly to a peak of 241,700 metric tonnes in 2009-10 and thereafter declined rapidly to stabilize around 110,000 to 120,000 metric tonnes in 2016-17. A major reason for this decline was a slump in the contribution of India from 196,000 metric tonnes in 2009-10 to the current level of around 60,000 metric tonnes. 17.4 The Committee appreciates the fact that India is making its presence felt in the world by becoming a major global player of organic cotton export. However, it is a matter of concern that the world production of organic cotton between 2009-10 and 2012-13 experienced a continuous downfall owing to the decline in production of organic cotton in India. The downslide in world production is in consistent with the slump in growth in India's production of organic cotton. The Committee is further distressed to note the absence of any preventive step or considerate measures on the part of the Government to spur the growth in organic cotton sector in spite of the skewed production of organic cotton in the country that stretched for more than three years. The deterioration if not checked would have an adverse consequence on other related sectors including their exports. The Committee is of the opinion that any slight distortion in the production of a commodity or a crop must be counteracted with adequate support measures and schemes. The Committee, therefore, recommends the Government to analyse the reasons for such a downfall and take corrective measures in this regard. 17.5 The details of Organic Cotton production in India in comparison to the world production are as follows:- Description India Rest of the world Organic Farmers 1,92,060 28,418 Organic Certified Land (ha) 3,86,464 86,535 Organic Cotton Fibre (MT) 59,470 58,054 Organic In-Conversion Land (ha) 1,72,180 42,936 Share of Global Organic Cotton Production (%) 51% 49% (Source: Organic Cotton Market Report, 2018)

India is the largest producer of organic cotton in the world in spite of the fact that only 1 per cent of its total cotton production is organic. Around 3% of

29 126 lakh hectares of total cotton producing area is under organic cotton cultivation in India. It has the largest number of organic producers in the world. The State of Madhya Pradesh accounts for 24 per cent of the world‟s organic cotton production. 17.6 The Committee was informed that the majority of organic cotton produced in India is processed in the country and exported only as textile. The export of textiles takes place at different processing stages from saw bales to yarn, fabric and garment. 17.7 The Committee was apprised that during the period between 2012-13 and 2016-17, organic cotton production in India experienced an overall decline which was due to a shift in production to other organic crops as well as adoption of sustainable cultivation practices such as Better Cotton Initiative, Fair Cotton Trade etc. This downslide in organic cotton production was also due to demotion of a significant number of certified organic farmers to in-transition status on account of contamination issues. It was pointed out that the decline in production is also attributed to mandatory implementation of TRACENET and other quality control initiatives in the country which further resulted into additional price burden on growers. 17.8 The Committee was surprised to note that the strict implementation of quality standards in the country led to a fall in production of organic cotton. This further resulted into demotion of organic cotton farmers to non-organic category thereby adversely affecting their livelihood; consequently impacting the organic cotton growth in the country and its export. Ensuring strict quality standards in production and export of organic cotton is an essential aspect; however the farmers must be made acquainted with scientific knowhow of organic practices. The Committee, therefore, recommends that concerted efforts should be made by the Government in the form of training courses, Packages of Practices etc. so that the farmers are familiarized with the quality standards requirement of organic farming. 17.9 The Committee is convinced that without any significant promotion of organic cotton production in the country, the farmers are finding other sustainable methods of cultivation lucrative. The Committee firmly believes that it is an arduous task for a farmer to switch over to other cultivation practices particularly in the absence of substantial support from the Government at the time of agrarian distress. The Committee recommends the Government to take prompt action to avert any shift in production base on account of hardships faced by farmers in organic cotton production. The Committee also desires that the Government should properly analyse the reasons for the reluctance on the part of the farmers to continue with organic farming practices and take appropriate remedial measures in this regard.

30 17.10 The Committee, during its interactions with different stakeholders, noted various contradictions in the information furnished by the organizations on organic cotton production and exports. Further, on enquiring about specific exports data on organic cotton, Ministry of Textiles apprised that since no separate Harmonised System (HS) line for Organic Cotton exists in the country, the statistics on exports of organic cotton is not available. 17.11 The Committee expresses its disappointment on the contradictory information received from different organizations concerning organic cotton production and exports. Lack of availability of accurate data and facts on organic cotton sector with no specific figures on organic cotton trade in the country manifests an indifferent approach towards promoting this sector in which India is a major contributor in the world. The Committee is of the considered opinion that accessibility of sound and precise data on a regular basis on organic cotton is fundamentally required for development of any national organic cotton policy or strategy. The Committee recommends that immediate steps should be taken to devise measures for compiling data/ statistics and processing of information on Indian organic cotton sector for its easy availability to ensure advancement of the sector on the whole. The Committee also recommends Department of Commerce, Ministry of Commerce and Industry to bring out a specific HS code for the organic cotton sector which would provide authentic information/ data on the organic cotton trade originating from the country. 17.12 The Committee, during its interactions with various stakeholders, was apprised of the following challenges faced by organic cotton textiles in production as well as exports. Price Premium/ Market Linkages 17.12.1 One of the major reasons for the reluctance on the part of cotton farmers in taking up organic cotton farming is the uncertain and unattractive price premiums on their produce. It was learnt that organic cotton cultivation practices require more skill and labour than the conventional cotton production. Also, one hectare of organic cotton farming in India requires around 170 days of labour per year in comparison to 90 days per year for conventional cotton discouraging the cotton farmers to pursue organic production on a sustainable basis. Therefore, in order to sustain the production, a price premium of 20 per cent is desirable. However, the premiums paid for organic cotton is at a minimal of around 5 per cent discouraging farmers to continue with organic cultivation practices thereby leading to a shift in producer base to other cultivation practices such as Bt cotton, BCI and Fair Trade Cotton. It was submitted that the premiums offered on organic cotton had also fallen considerably over the last decade following with an increase in production costs. It was also apprised that the costs of manufacturing

31 organic apparel is around 5 per cent higher than that of normal product on account of high costs of procurement and certifications which is also due to the presence of intermediaries in the organic cotton supply chain. 17.12.2 In response to the query of the Committee about the measures being taken to reduce the high manufacturing costs for producing organic apparels, it was suggested that procuring organic cotton directly from farmers and selling them to organic cotton industries would help in easing the procurement process and thereby reducing the related costs. 17.12.3 The Committee notes that uncertainty in assuring an optimal price premium to organic cotton farmers is one of the major discouraging factor leading to diversion to other cultivation practices resulting into fall in organic cotton production. Moreover, the declining price premium in recent decades along with an increase in production costs is a matter of concern that may lead to adverse consequences on the organic cotton production on the whole. The Committee notes that as the country have the maximum number of organic cotton producers in the world contributing significantly to the global production of organic cotton, it necessitates guaranteeing of an assured price premium to them. The Committee therefore recommends that the Government should set up a Minimum Support Price for organic cotton produce in the country at the earliest. The Committee further recommends that a procurement mechanism may be institutionalized by the Government wherein Cotton Corporation of India would act as a procuring agency for acquiring organic cotton directly from farmers and selling them to industries or textile mills. 17.12.4 Various stakeholders apprised the Committee that organic cotton farmers often suffer on account of lack of organized organic cotton market in the country in getting fair remunerative price for their produce. In the absence of a systematized market, the farmers are unenthusiastic in taking up organic cultivation. In response to the query on creating an organized market linkage for the benefit of organic cotton farmers, the Committee was apprised that forging a collaboration of organic cotton farmers with textile mills or with retailers/ brands or exporting houses would assure a fair price to them. 17.12.5 It was further highlighted that there are not enough number of brands and retailers in the country willing to enter into contracts with organic producers during the three years of transition period from conventional to organic cotton production which would offset the additional costs incurred during the conversion period on account of increase in labour requirements, variability in yields and lower fibre quality of the produce. As a result, the farmers, especially the small growers, are demotivated to pursue organic farming in the long run.

32 17.12.6 The Committee recommends that concept of contract farming and agriculture start ups should be explored for providing systematized market to organic cotton growers. Collaboration through contracts or start ups would ensure transformation of growers to viable commercial producers or enterprising farmers thereby encouraging organic cotton cultivation sector towards exports. Also, cooperatives through contract farming should be encouraged, especially during the first three years of transition period from conventional to organic cultivation, which would help in strengthening bank and credit linkages to the growers along with an assured market. The Committee also recommends the Government to formulate requisite strategies with appropriate steps for establishing remunerative marketing links for the organic cotton farmers in the form of e-marketplace, e-auction portals and e-commerce platforms. 17.12.7 The Committee recommends the Department of Commerce to demarcate Agri Export Zones (AEZ) for organic cotton in the country which would strengthen the entire chain of organic cotton sector right from the stage of production till it reaches the market. In addition to this, development of AEZ would boost the processing of organic cotton in the country leading to an increase in the production of value added organic cotton thereby enhancing our export competitiveness in such products. It would also help in reducing the price differences between the items of organic cotton and conventional products significantly. (i) Contamination with GMO or Bt-cotton 17.12.8 The Committee, during its interactions with various stakeholders, noted that despite having better quality parameters, Indian cotton is globally considered as the most contaminated cotton and is discounted by 6 to 7 US Cents (USc) per pound over the other least contaminated growths from countries of USA, Australia and Brazil. This causes a loss of more than 1 billion USD every year in value terms against the least contaminated growths. It was also apprised that the contamination of organic cotton with Bt or Genetically Modified (GM) cotton is occurring at all stages of production including the stages of plantation, pollination, harvest management and processing. 17.12.9 The Committee was further apprised that the contamination of premium organic cotton textiles with GM cotton in the exports consignments from India had led to a setback to our flourishing exports of organic cotton textiles. Also, stray cases of false documentation have further undermined the credibility of Indian organic cotton in the recent past thereby eroding the integrity and authenticity of our produce. 17.12.10 The Committee expresses its concern on the contamination of our export assignments of organic cotton with GM cotton which has led to

33 tarnishing our image as a global market player. The Committee recommends that the Government should take strict preventive measures to check the spurious exports of organic cotton products from the country. It is further of the view that setting up of an Organic Cotton Advisory Board in the country would help devise strategies for overall governance of organic cotton sector. 17.12.11 The Committee was informed that introduction of long-linted organic cotton, namely, G. arboretum is considered ideal for organic cotton business since it would eliminate natural contamination with GMO cotton. The Committee recommends the Government to take steps for its commercialization in the organic cotton seed market. (ii) Access to Organic Cotton Seeds 17.12.12 Inaccessibility to good quality non-Bt cotton seeds due to ineffective supply chain management is also one of the major challenges faced by organic cotton farmers in the country. This is mainly due to low awareness amongst the farmers about the availability of non-GMO seeds. Also, with the mainstream cotton sector in India becoming saturated with Bt hybrids, the demand and production of non-GMO seeds had taken a backseat. Moreover, the seed breeders from public sector are finding it difficult to commercialize their varieties without any effective public chain distribution system. It was further submitted that the State Governments should evolve a mechanism for indenting the organic variety of seeds produced by Research Institutes in an advance period of two years before its distribution to farmers. 17.12.13 The Committee recommends that concerted efforts should be made by the Government for institutionalizing an efficient public chain distribution mechanism to ensure dissemination of sufficient quantities of good quality non-GMO cotton seeds amongst the farmers. (iii) Research and Development in cotton seeds 17.12.14 It was highlighted that the research undertaken by the public institutions in the country for developing suitable organic cotton seeds has mostly been biased in favour of American hybrids thereby ignoring the research on indigenous cultivars. Moreover, the private seed companies are focused upon the production of Bt cotton seeds due to their growing demand. It was further informed that the cotton breeders of public sector institutions have developed some excellent cotton varieties in both the species of G. hirsutum and G. arboreum non-GM cotton possessing biotic and abiotic stress tolerant traits and are of premium fibre quality parameters which are desired by leading organic cotton brands in the market. The Committee recommends the Government to foster linkages between organic seed research projects and public sector institutions for commercializing such indigenous varieties of organic seeds for their adequacy in the organic seed market.

34 Certification of Organic Cotton 17.13 The Committee was apprised that in the absence of a Government-backed regulatory system, the organic cotton in India is exported as per the provisions of the following private standards: (i) Global Organic Textile Standard (GOTS): Applicable to products having more than 70 percent organic composition; and (ii) Organic Content Standard (OCS): Applicable to any textile containing at least 5 percent organic cotton. 17.14 It was further informed that without any regulatory mechanism for certification, it is extremely difficult to assure the quality and integrity of organic cotton products being exported. Also, in the absence of a governance mechanism, ascertaining the traceability of such products moving across the value chain becomes a tough challenge. 17.15 The Committee was apprised that although National Programme for Organic Production (NPOP) under APEDA provides for certification of organic production system in the country; however it is only upto the harvesting stage of organic cotton. The certification for subsequent stages of organic cotton production including its processing and exports are not covered under NPOP. Therefore, for meeting international demand, NPOP certified natural fibers are being processed under various private standards and labels which include Global Organic Textile Standards (GOTS) and Organic Content Standards (OCS). Due to involvement of multiple agencies, tracing organic cotton products becomes difficult leaving the scope for duplication of NPOP certified produce. 17.16 Ministry of Textiles, during its interaction with the Committee, had apprised that APEDA proposes to launch the certification system in two following phases:- a. In the first phase, the processing of organic fibres, i.e. from the ginning stage till the stage of apparel formation, shall be covered under the certification system with end-to-end traceability. Under this system, the natural organic, fiber component will be certified and the products shall be labelled as “MADE WITH CERTIFIED ORGANIC FIBER” if a minimum of 95% of the fiber is from certified organic source; or “MADE WITH CERTIFIED ORGANIC FIBER x%” if fiber component from certified organic source is less than 95% but more than 70%. b. The second phase would cover the certification of entire textile processing. This would be very much similar to private labels such as GOTS covering the stages of dyes and processing.

35 17.17 On enquiring about the status of implementation of the Certification System by APEDA, the Committee was informed that the draft Natural Fibre traceability standards have been defined and the finalized standards are to be submitted to the National Accreditation Body (NAB) of NPOP for approval. It was further apprised that in one or two years from now, the standards and certification system for the entire textile value chain would be launched. 17.18 The Committee notes that Indian cotton mills continue to rely on the private standards and labels for certification of their products while most of the countries in the world have developed their own organic standards. It believes that the absence of an institutional certification mechanism in the country for establishing national standards is acting as a disincentive to our exporters. In this regard, the Committee recommends that the certification system proposed to be launch by APEDA should be implemented at the earliest. It further desires that the standards to be prescribed by the certification system should be in consonance with the globally acceptable standards ensuring higher recognition and valuation of Indian organic textile products across the world.

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36 RECOMMENDATIONS/ OBSERVATIONS - AT A GLANCE

ORGANIC AGRICULTURE IN INDIA 1. The Committee is convinced that mobilization of organic farmers into clusters is advantageous for them in strengthening their bargaining power and providing them with better returns. It is of the considered view that the organic clusters should include farmers practicing cultivation in areas where usage of chemical fertilizers/ pesticides is to a minimum. The Committee therefore recommends the Government to take all efforts to organize the remotely located farmers predominantly from the regions of rain-fed, tribal and hilly tracts into organic clusters. It also recommends that the farmers agonized by ill effects of chemical farming, increasing costs of production, toxicity of soil and diminishing returns, may also be encouraged to form organic clusters. (Para 3.6) 2. The Committee notes that land ownership in India is fragmented and farmers of small land holdings are under severe agricultural distress. The Committee in this regard recommends that such farmers should be supported with special incentives for engaging them in organic cultivation practices. The Committee also recommends the Department for making special provisions to provide organic certification to individual farmers having a minimum land ownership of 20 acres. (Para 3.7) 3. The Committee strongly recommends the Government to follow a coordinated approach for efficacious implementation of organic export promotion schemes in the country. The Committee is of the opinion that the integration of various schemes meant for facilitating organic farming may be beneficial for their smooth execution. Also, a comprehensive policy with uniform standards for the whole organic sector would be beneficial for its development. The Committee recommends that the Government should frame an all-inclusive holistic framework for the overall organic sector encompassing the aspects of production, marketing and trade. (Para 3.9)

ORGANIC EXPORTS FROM INDIA

4. The Committee appreciates the significant growing trend in the Indian export of organic products both in terms of value as well as volume. In order to continue this growth trajectory, the opportunities arising due to the expansion of global organic markets along with increasing market demands must be leveraged for making a mark in international organic industry. The Committee recommends the Department to offer special

37 incentives to the organic exporters and the existing scheme of Merchandise Exports from India Scheme (MEIS) may be modified accordingly for increasing our export competitiveness of organic products in the world. (Para 4.7)

TRACENET 5. The Committee observes that TRACENET has proved to be an efficient monitoring and functional tool in providing real time database of organic products along with their traceability across the value chain. The Committee, however, notes that the database of TRACENET could not be retrieved in public domain thereby limiting its access only to the registered users. The Committee is of the opinion that public access to TRACENET is vital for the organic consumers and exporters within the country or from outside to have an insight into the details of India’s organic sector. The Committee, therefore, recommends that the web traceability system of TRACENET should be made flexible, user friendly and open to public access which would help in making it streamlined with the requirements of organic exporters and consumers. (Para 4.9)

NATIONAL PROGRAMME FOR ORGANIC PRODUCTION (NPOP)

6. The Committee recommends that necessary measures be taken for increasing awareness amongst organic exporters located in far-flung remote areas about the financial assistance being provided by APEDA for creating capital assets and requisite infrastructure. The Committee further recommends that APEDA, in coordination with State Governments, should evolve specific organic export schemes for strengthening financial assistance and local infrastructure in hilly regions, border areas and tribal belts where the potential of organic production is quite high. (Para 5.5)

CERTIFICATION NPOP or THIRD PARTY CERTIFICATION SYSTEM OF APEDA

7. The Committee notes that maintaining quality assurance in the export of organic products is a crucial aspect which cannot be ignored. In this regard, the Committee feels that the number of accredited certification bodies for certifying organic products for exports is too low to cope with the rising volume of exports of organic produce from the country. The Committee is of the view that in order to become a major global player in organic exports, it is essential that India must have adequate number

38 of certification bodies and related infrastructure for ensuring quality assurance. The Committee, therefore, desires that the Department must take steps to augment the number of Certification Bodies under APEDA. (Para 7.3) 8. The Committee expresses its concern over the high cost of certification adversely affecting the relatively small farmers and producers discouraging them to sustain organic farming practices in the long run which may cause detrimental effect on our exports. It is observed that the high costs of certification is not only on account of inadequate certification agencies and lack of associated infrastructure facilities but is also due to costs involved in documentation and internal audits. The Committee recommends that the Department should undertake policy initiatives to bring down the overall cost of certification. Also, the expenses incurred on audits and inspections for certifying organic products should be subsidized for small and marginal farmers. The Committee further recommends that the prolonged complex procedures should also be made simpler and less time consuming. (Para 7.5) 9. The Committee appreciates the efforts of APEDA in enhancing the capacity of the existing certification bodies. It, however, recommends that APEDA should coordinate with State Governments for establishing state owned Certification Bodies to make it easier for the local producers/ exporters in getting their produce certified. (Para 7.6) 10. The Committee recommends that steps needs to be taken for assessing the export potential of the new categories of products eligible for certification under NPOP. The Department should make an analysis of the exporting destinations and marketing prospects of such products for tapping their demands. The Committee further recommends that the Department should make efforts in obtaining equivalence from importing countries at the earliest for augmenting exports of the new categories of products. (Para 7.8) 11. The Committee is of the view that international organic market is competitive at both the levels - cost as well as quality and for achieving export competitiveness of Indian organic products, quality control is a must. The Committee recommends that for building up overall credibility, the Department should strive for creating awareness of NPOP prescribed organic standards and accreditation requirements amongst Indian exporters and importing nations. The Committee also stresses upon brand creation to prevent brand dilution of certified Indian organic products in the international market by a few fly-by- night or spurious exporters. (Para 7.10)

39 PARTICIPATORY GUARANTEE SYSTEM (PGS-INDIA) Third Party Certification and PGS-India Scheme 12. The Committee is of the considered opinion that with the dual certification system existing in the country, uncertainty amongst traders as well as consumers is inevitable. The Committee also notes that PGS- India Scheme is more attuned to Indian farming conditions and being a cost effective and farmer friendly certification system, it is more acceptable to small and marginal farmers practicing organic cultivation. In this context, the Committee recommends that the Department to make concerted efforts with Ministry of Agriculture and Farmers' Welfare for harmonizing the two certification systems which would enable the PGS certified farmers to export their produce. (Para 8.4) 13. The Committee is of the view that on account of low volume of trade with no exports during the first two years of the NPOP certification period, India is losing competitiveness in the global organic trade market. The Committee fears that this may have a negative impact on our exports of organic products leading to discouragement of organic farmers and exporters. In order to maintain comparative advantage of Indian organic exports in the global organic market, the Committee recommends the Department to take steps to examine the feasibility of adopting PGS India Scheme in the first two years of NPOP or Third Party Certification in order to achieve the twin benefits of promoting organic exports and a better return to farmers in exporting their produce. (Para 8.6) EQUIVALENCE ARRANGEMENTS FOR ORGANIC TRADE 14. The Committee recommends that the complications coming in the way of APEDA in raising the issue of withdrawal of unilateral equivalence for the imports of organic processed food products by E.U. at WTO forums must be resolved at the earliest. The Committee also recommends the Department for engaging in bilateral talks with EU for restoring equivalence. It further desires that a status report may be furnished by the Department to the Committee on discussions held between APEDA and WTO forums for sorting out the issue. (Para 9.3) 15. The Committee is of the considered opinion that upsurge in the number of PGS initiatives in the world, signifies a rising trend of acceptance of organic PGS certification products. In this scenario, the Committee recommends that the Department should take measures to leverage this opportunity to promote organic trade to the countries willing to trade in

40 PGS certified organic products. This would also ensure the PGS certified farmers to engage in exports of their products thus fetching them better returns. The Committee, therefore, recommends that Government should devise a policy framework for encouraging PGS certified farmers to export their products to countries accepting PGS certification for trade. The Committee further recommends the Department to make efforts to negotiate with such countries in order to obtain equivalence for the trade of PGS certified organic produce. (Para 9.5) 16. The Committee is of the view that the Department should make efforts to promote organic trade through regional agreements like ASEAN, SAARC, etc. Also, the markets of countries having regional proximity should be explored for encouraging our organic exports. The Committee believes that taking into consideration the Regional Organic Standards (For e.g. Asia Regional Organic Standards) in the equivalence agreements with regional trade partners would facilitate cooperation on organic labeling and trade. This would further ensure harmonization of existing standards and development of new standards which would foster inter-regional market access of organic products. The Committee therefore recommends that India may take into account the Regional Organic Standards while obtaining equivalence from regional trading blocs/ Members. (Para 9.6) FURTHER CHALLENGES Capacity Building 17. The Committee notes that organic farming is a scientific area demanding specific skills and expertise for carrying out cultivation practices distinct from those of conventional farming. The Committee is of the view that experts should be deployed for conducting capacity building programmes for trainers as well as for trainees on different aspects of organic farming including know-how on soil sample collection, quality control, certification, packaging, labelling and branding. The Committee, therefore, recommends that experts from various agricultural universities, institutes, organizations, etc. should be engaged to provide specific skills to trainers, trainees and farmers on organic farming practices. The Committee also recommends to take coordinated efforts by Department of Commerce, Ministry of Agriculture and Farmers' Welfare and Ministry of Skill Development to initiate programmes on skill development for farmers and trainers to enhance their capacities in the field of organic cultivation, certification and other scientific aspects of organic farming. (Para 10.3)

41 18. The Committee appreciates the endeavours of the National Centre of Organic Farming (NCOF) in developing and propagating efficient technologies which are innovative and cost effective for the management and optimal application of biological or organic inputs essential for organic farming. The Committee also notes that the training programmes conducted by the NCOF would tremendously benefit the organic sector. However, the Committee is disappointed to know about the meager budget allocation to the NCOF and therefore opines that insufficient budget allocation would act as counterproductive to the determined efforts being taken for boosting organic production thereby impacting exports. The Committee recommends the Government to enhance the budgetary allocation of NCOF for its proper functioning. (Para 10.6) MARKET LINKAGES AND PRICE PREMIUM TO FARMERS 19. The Committee is of the considered opinion that the lack of dedicated marketing channels in the country is a major lacuna in the growth of organic sector due to which farmers are unable to get a remunerative price for their produce. The Committee, therefore, recommends that new avenues for providing market linkages to organic farmers may be explored. Also, it recommends to take all out measures for collaborating FPOs/ FPCs with food retail chains/ e-commerce companies as well as cooperatives for providing market at the doorstep to farmers in order to ensure them a better price premium. (Para 11.4) 20. The Committee recommends the launching and implementation of e-organic bazar portal at the earliest which would prove as a boon to the organic farmers in providing them an assured market for their produce. The Committee further recommends that efforts may be made for building up marketing intelligence which would help in removal of impediments faced by the companies/ exporters in procurement of organic products from the organic farmers and processors. (Para 11.5)

INFRASTRUCTURE AND PROCESSING 21. The Committee recommends that the Department should make efforts for the creation of organic related infrastructure facilities in the country including dedicated warehousing/ cold chain and logistics needed for production, marketing and exports of organic products. The Committee also recommends that incentives may be extended to individual companies meeting criteria for organic infrastructure support for taking initiatives in building organic infrastructure in the country. (Para 12.2)

42 22. The Committee is of the opinion that the exports of value added organic products would fetch a higher premium in global market. In this regard, the Committee, therefore, recommends the Department to undertake measures such as establishing primary and secondary processing units for farmers, creation of appropriate infrastructure, processing technologies, etc. for facilitating processing of organic products in the country. The Committee is of the considered view that the Department along with Ministry of Food Processing Industries should take initiatives for demarcating Organic Processing Zones (OPZ) in the country and thereafter linking them up with farmers' clusters certified under NPOP. This would tremendously boost our production of value-added organic products increasing our exports exponentially. (Para 12.5) 23. The Committee notes that lack of processing units in organic clusters formed under PGS-India Scheme is a biggest challenge faced by organic farmers in the country. In this regard, the Committee recommends that Department of Commerce in coordination with Ministry of Agriculture and Farmer's Welfare should establish NPOP approved processing units in PGS certified organic clusters. (Para 12.7) 24. The Committee recommends the Department for taking measures for harmonization of the requirements of different testing parameters of various agencies/ bodies which would result in reducing of the exorbitant price charged on testing of mixed containers of exportable organic products. The Committee also desires that NABL accredited testing labs for testing organic produce may be established to minimize global rejections of supplies of organic products which hampers our export competitiveness of organic products. (Para 12.9)

PARAMPARAGAT KRISHI VIKAS YOJANA (PKVY) 25. The Committee is disappointed to note that Regional Councils (RCs) meant for implementing PKVY Scheme lacks expertise in the field of organics for imparting constructive training to farmers engaged in organic farming. It is also a matter of concern that State Government officials with limited skills in organic sector are being appointed in RCs to train farmers. The Committee strongly recommends Ministry of Agriculture and Farmers Welfare to take remedial measures in this regard. The Committee also desires allocation of adequate funds under a separate head specifically meant for capacity building of RCs. (Para 13.6) 26. The Committee notes that the scheme of Paramparagat Krishi Vikas Yojana (PKVY) is an extension of Soil Health Management (SHM)

43 component under the National Mission on Sustainable Agriculture (NMSA). Therefore, the Scheme, not being an independent programme, may lack necessary administrative and accountability mechanisms thereby hindering its effective execution. The Committee desires that the Ministry of Agriculture and Farmers' Welfare may examine the prospects of making the Scheme as an independent scheme for its better outcome. (Para 13.7)

ORGANIC INPUTS

27. The Committee realizes that the farmers already suffer yield loss during the transition period from conventional to organic cultivation practices. The high costs of organic inputs would, therefore, be an additional cost burden on them. Hence, it is felt that subsidies to farmers for procuring organic inputs such as biofertilizers, biopesticides, organic manures, etc. are necessary in view of the high production costs. The Committee also recommends that regulatory mechanisms should be strengthened in the country for ensuring availability of standardized organic inputs to the farmers. (Para 14.3) 28. The Committee also notes the absence of any pan-India support or uniformity across States in the country in the subsidy policy of organic products. The Committee, therefore, recommends that the Government should frame a comprehensive subsidy policy scheme for organic farming in the country on a priority basis, to enable the farmers to sustain organic practices in the long run. (Para 14.4)

Capital Investment Subsidy Scheme for organic inputs 29. The Committee notes the reluctance shown by most of the states in the country in availing subsidies under CISS Scheme for establishing compost/ biological units. The Committee is of the considered opinion that the Scheme should be properly implemented in the states since it plays a major role in bulk production of bio manures, compost and bio fertilizers in a cost efficient way and would be catering to the needs of organic farmers for having an easy access to organic inputs. The Committee recommends that the Department should make all attempts to convince the State Governments for taking concerted efforts for its effective implementation. (Para 14.7) 30. The Committee recommends the Government to invest in organic research and extension activities for producing standardized, organic, non-GMO seeds for organic cultivation. The Committee further stresses upon the Government to take coordinative steps with State

44 Governments for ensuring prompt availability of cost-efficient, organically certified seeds to organic farmers. (Para 14.9) 31. The Committee desires that organic farmers in the country should be made aware of the benefits of adopting diversified cropping systems for pest control. In this regard, the Committee recommends that capacity building programmes as well as implementation of Package of Practices for Integrated Pest Management should be extensively carried out in the country. This would assist the farmers to follow holistic management practices for pest control management. (Para 14.11)

NORTH EAST REGION Sikkim

32. The Committee lauds the efforts of Government of Sikkim as well as farmers of the State in achieving the feat of becoming a full organic state in the world. The Committee notes that Sikkim organic model has set an example to other states in India for encouraging them to embrace organic agriculture. The Committee hopes that the State would continue its efforts in implementing organic agricultural practices with Sikkim Organic Model becoming an inspiration to all other states in the country. (Para 16.3) 33. The Committee is of the view that the bulk production of bio inputs through the Capital Investment Subsidy Scheme (CISS) would ensure abundant supply of bio or organic fertilizers to the farmers in the state. It, therefore, recommends that the Government of Sikkim in association with NABARD should proactively implement CISS Scheme for installing bio fertilizers/ organic input units in the state. It is further recommended that Cooperative Banks in the state may be engaged for scaling up financial credit to the agriculture sector. (Para 16.6) 34. The Committee desires that the State Government of Sikkim, in equity with private entrepreneurs, should establish organic processing parks in various parts of the state for strengthening infrastructural facilities required for processing organic produce. This would certainly bolster the exports from the state which is considerably low in spite of being a hub of organic production. (Para 16.7) 35. The Committee notes that the subsidy on chemical fertilizers and urea disbursed by the Central Government to farmers in the country are not being availed by the organic farmers of the State of Sikkim owing to the organic cultivation methods. The Committee, therefore, recommends to devise a mechanism so that the amount saved on the subsidies offered on chemical fertilizers must be compensated to farmers of the State of

45 Sikkim by way of subsidies on bio-fertilizers or organic manures. (Para 16.8)

36. The Committee feels that efficacious implementation of PGS-India Scheme in the state would immensely benefit the small and marginal farmers since it would result in curtailing of high certification costs along with reduction of cumbersome procedures prevailing in Third Party Certification. The Committee, therefore, recommends that PGS- India Scheme may be properly implemented in the states of North East Region including the State of Sikkim which would tremendously increase their domestic market share in the country. The Committee further recommends the State Governments of North East Region to demarcate areas that have potential for domestic farming so that the farmers in such areas may switch over to PGS certification. (Para 16.10) 37. The Committee recommends that a culture of global trade entrepreneurship should be propagated in the country which would inspire the entrepreneurs in becoming a driving force of exports. It notes that entrepreneurs in the country possess required skills, experience and knowledge to become global traders and, therefore, they should be encouraged by the Government by ensuring them all the support. The Committee, therefore, recommends the Department of Commerce to devise specific schemes for entrepreneurs and aspiring exporters in the organic sector. The Committee also recommends that handholding may be given to new or inexperienced organic exporters to overcome the difficulties they face while embarking on exports. (Para 16.12) 38. The Committee is perturbed to note the treatment meted out to Sikkim State Organic Certification Agency (SSOCA) by Service Providers responsible for implementation of organic farming in the state. The Committee recommends that the State Government of Sikkim should take remedial steps for the selection of certification bodies. The Committee further recommends the Department to take proactive measures so that NOP Certificates are granted to SSOCA for furthering the exports of organic products to US. (Para 16.14) Other North Eastern States 39. The Committee recommends that the Scheme of MOVCDNER should earnestly be implemented for building up a robust value chain in the North East region. It notes that the region has all the potential to become an organic hub in the country which would be accomplished only by strengthening processing, marketing and export infrastructure in the

46 region. The Committee also stresses that Capacity Building Programmes in the region should be undertaken for which coordinated efforts are required between State Governments, NCOF and Agricultural Universities in the states. The Committee further felt that Training Centers with adequate personnel in collaboration with State Agricultural Universities may be established in the states of North East Region. The Committee further recommends to establish State owned Certification agencies which would provide farmers with facilities of organic certification in proximity to their location. (Para 16.18) 40. The Committee desires that the State Governments should take all efforts in establishing organic processing parks in their respective states in collaboration with private players. Further, the banking facilities to organic farmers/ exporters/ entrepreneurs may be made more robust. In this direction, the role of NABARD, public sector banks as well as regional and cooperative banks is of utmost importance. Also, a moratorium on loans extended to farmers for the gestation period of conversion of conventional lands to organic farms may be granted by banks. The Committee also recommends that for financing organic processes in North East Region, other avenues of funding (e.g. North East Development Fund) may be explored in order to lessen the financial burden on State Governments. (Para 16.19) 41. The Committee recommends that APEDA should provide the facilities for free stalls, boarding, lodging and transportation to small farmers and exporters for encouraging them to participate in international organic trade exhibitions/fairs. (Para 16.21) ORGANIC COTTON 42. The Committee appreciates the fact that India is making its presence felt in the world by becoming a major global player of organic cotton export. However, it is a matter of concern that the world production of organic cotton between 2009-10 and 2012-13 experienced a continuous downfall owing to the decline in production of organic cotton in India. The downslide in world production is in consistent with the slump in growth in India's production of organic cotton. The Committee is further distressed to note the absence of any preventive step or considerate measures on the part of the Government to spur the growth in organic cotton sector in spite of the skewed production of organic cotton in the country that stretched for more than three years. The deterioration if not checked would have an adverse consequence on other related sectors including their exports. The Committee is of the opinion that any slight distortion in the production of a commodity or a

47 crop must be counteracted with adequate support measures and schemes. The Committee, therefore, recommends the Government to analyse the reasons for such a downfall and take corrective measures in this regard. (Para 17.4) 43. The Committee was surprised to note that the strict implementation of quality standards in the country led to a fall in production of organic cotton. This further resulted into demotion of organic cotton farmers to non-organic category thereby adversely affecting their livelihood; consequently impacting the organic cotton growth in the country and its export. Ensuring strict quality standards in production and export of organic cotton is an essential aspect; however the farmers must be made acquainted with scientific knowhow of organic practices. The Committee, therefore, recommends that concerted efforts should be made by the Government in the form of training courses, Packages of Practices etc. so that the farmers are familiarized with the quality standards requirement of organic farming. (Para 17.8) 44. The Committee is convinced that without any significant promotion of organic cotton production in the country, the farmers are finding other sustainable methods of cultivation lucrative. The Committee firmly believes that it is an arduous task for a farmer to switch over to other cultivation practices particularly in the absence of substantial support from the Government at the time of agrarian distress. The Committee recommends the Government to take prompt action to avert any shift in production base on account of hardships faced by farmers in organic cotton production. The Committee also desires that the Government should properly analyse the reasons for the reluctance on the part of the farmers to continue with organic farming practices and take appropriate remedial measures in this regard. (Para 17.9) 45. The Committee expresses its disappointment on the contradictory information received from different organizations concerning organic cotton production and exports. Lack of availability of accurate data and facts on organic cotton sector with no specific figures on organic cotton trade in the country manifests an indifferent approach towards promoting this sector in which India is a major contributor in the world. The Committee is of the considered opinion that accessibility of sound and precise data on a regular basis on organic cotton is fundamentally required for development of any national organic cotton policy or strategy. The Committee recommends that immediate steps should be taken to devise measures for compiling data/ statistics and processing of information on Indian organic cotton sector for its easy availability to ensure advancement of the sector on the whole. The

48 Committee also recommends Department of Commerce, Ministry of Commerce and Industry to bring out a specific HS code for the organic cotton sector which would provide authentic information/ data on the organic cotton trade originating from the country. (Para 17.11) Price Premium/ Market Linkages 46. The Committee notes that uncertainty in assuring an optimal price premium to organic cotton farmers is one of the major discouraging factor leading to diversion to other cultivation practices resulting into fall in organic cotton production. Moreover, the declining price premium in recent decades along with an increase in production costs is a matter of concern that may lead to adverse consequences on the organic cotton production on the whole. The Committee notes that as the country have the maximum number of organic cotton producers in the world contributing significantly to the global production of organic cotton, it necessitates guaranteeing of an assured price premium to them. The Committee therefore recommends that the Government should set up a Minimum Support Price for organic cotton produce in the country at the earliest. The Committee further recommends that a procurement mechanism may be institutionalized by the Government wherein Cotton Corporation of India would act as a procuring agency for acquiring organic cotton directly from farmers and selling them to industries or textile mills. (Para 17.12.3) 47. The Committee recommends that concept of contract farming and agriculture start ups should be explored for providing systematized market to organic cotton growers. Collaboration through contracts or start ups would ensure transformation of growers to viable commercial producers or enterprising farmers thereby encouraging organic cotton cultivation sector towards exports. Also, cooperatives through contract farming should be encouraged, especially during the first three years of transition period from conventional to organic cultivation, which would help in strengthening bank and credit linkages to the growers along with an assured market. The Committee also recommends the Government to formulate requisite strategies with appropriate steps for establishing remunerative marketing links for the organic cotton farmers in the form of e-marketplace, e-auction portals and e-commerce platforms. (Para 17.12.6) 48. The Committee recommends the Department of Commerce to demarcate Agri Export Zones (AEZ) for organic cotton in the country which would strengthen the entire chain of organic cotton sector right from the stage of production till it reaches the market. In addition to

49 this, development of AEZ would boost the processing of organic cotton in the country leading to an increase in the production of value added organic cotton thereby enhancing our export competitiveness in such products. It would also help in reducing the price differences between the items of organic cotton and conventional products significantly. (Para 17.12.7)

Contamination with GMO or Bt-cotton

49. The Committee expresses its concern on the contamination of our export assignments of organic cotton with GM cotton which has led to tarnishing our image as a global market player. The Committee recommends that the Government should take strict preventive measures to check the spurious exports of organic cotton products from the country. It is further of the view that setting up of an Organic Cotton Advisory Board in the country would help devise strategies for overall governance of organic cotton sector. (Para 17.12.10) 50. The Committee recommends the Government to take steps for its commercialization in the organic cotton seed market. (Para 17.12.11) Access to Organic Cotton Seeds 51. The Committee recommends that concerted efforts should be made by the Government for institutionalizing an efficient public chain distribution mechanism to ensure dissemination of sufficient quantities of good quality non-GMO cotton seeds amongst the farmers. (Para 17.12.13) Research and Development in cotton seeds 52. The Committee recommends the Government to foster linkages between organic seed research projects and public sector institutions for commercializing such indigenous varieties of organic seeds for their adequacy in the organic seed market. (Para 17.12.14) Certification of Organic Cotton 53. The Committee notes that Indian cotton mills continue to rely on the private standards and labels for certification of their products while most of the countries in the world have developed their own organic standards. It believes that the absence of an institutional certification mechanism in the country for establishing national standards is acting as a disincentive to our exporters. In this regard, the Committee recommends that the certification system proposed to be launch by APEDA should be implemented at the earliest. It further desires that the standards to be prescribed by the certification system should be in

50 consonance with the globally acceptable standards ensuring higher recognition and valuation of Indian organic textile products across the world. (Para 17.18)

*****

51

ANNEXURE

52 ANNEXURE-I A

State wise cultivated farm area for the Year 2018-19 Sl. State/ UTs Organic Area In Conversion area Total No. (In Hectares) (In Hectares) 1 Madhya Pradesh 379997 294055 674052 2 Maharashtra 158097 92837 250934 3 Rajasthan 110240 113751 223991 4 Odisha 73124 22616 95740 5 Gujarat 60185 33656 93841 6 Karnataka 57018 26081 83099 7 Sikkim 73655 2144 75799 8 Uttar Pradesh 44802 18036 62838 9 Meghalaya 1613 46797 48410 10 Kerala 19233 19171 38404 11 Uttarakhand 20052 16606 36659 12 Andhra Pradesh 13763 18747 32511 13 Assam 15223 12951 28175 14 Jammu & Kashmir 17559 7444 25003 15 Jharkhand 2977 21340 24317 16 Tamil Nadu 4315 18145 22460 17 Chhattisgarh 7357 13869 21226 18 Goa 10696 2612 13309 19 Himachal Pradesh 8527 4538 13065 20 Arunachal Pradesh 627 8620 9247 21 Punjab 318 8591 8909 22 Telangana 6323 2437 8760 23 Nagaland 2751 5517 8269 24 Andaman & Nicobar Islands 0 7484 7484 25 Mizoram 0 7040 7040 26 West Bengal 4984 1305 6290 27 Haryana 2292 3687 5978 28 Manipur 241 5219 5461 29 Bihar 1 3518 3520 30 Tripura 204 2331 2535 31 Lakshadweep 896 0 896 32 Pondicherry 3 0 3 33 New Delhi 1 0 1 Total 1097074 841146 1938221 (Source: Data provided by the accredited Certification Bodies under NPOP on TraceNet)

53 ANNEXURE-I B

State wise Total Production from Cultivated area for the Year 2018-19 Sl. State/ UTs Organic Production In Conversion Production No. (In Metric Tonnes) (In Metric Tonnes) 1 Maharashtra 858735 2241 2 Madhya Pradesh 738878 8 3 Karnataka 365848 4729 4 Uttar Pradesh 142512 0 5 Rajasthan 134611 2 6 Odisha 88948 1 7 Jammu & Kashmir 33879 0 8 Gujarat 66106 0 9 Assam 38457 19 10 Uttarakhand 29602 0 11 Kerala 25435 0 12 West Bengal 19792 81 13 Tamil Nadu 14803 937 14 Chhattisgarh 14365 0 15 Andhra Pradesh 11400 103 16 Himachal Pradesh 6958 0 17 Goa 2455 0 18 Telangana 2109 30 19 Haryana 1215 147 20 Punjab 744 0 21 Meghalaya 699 0 22 Arunachal Pradesh 591 0 23 Sikkim 424 0 24 Tripura 326 0 25 Nagaland 190 0 26 Bihar 6 0 27 Pondicherry 3 0 28 Jharkhand 1 0 Total 2599089 8296 (Source: Data provided by the accredited Certification Bodies under NPOP on TraceNet)

54

ANNEXURE-I C

State wise area of Wild collection and Wild harvest Produce for the Year 2018-19

Sl. State Area (In Hectares) Production (In Tonnes) No. 1 Rajasthan 408710 2602 2 Madhya Pradesh 244251 9395 3 Himachal Pradesh 190782 132 4 Chhattisgarh 184955 6071 5 Jammu & Kashmir 162000 4883 6 Uttar Pradesh 143143 433 7 Jharkhand 33800 0 8 Odisha 32112 6091 9 Karnataka 21864 931 10 Punjab 16616 958 11 West Bengal 14700 0 12 Maharashtra 10637 21 13 Goa 7656 5685 14 Andhra Pradesh 4899 54 15 Uttarakhand 4751 51 16 Tamil Nadu 4087 362 17 Kerala 2507 0 18 Manipur 2000 260 19 Gujarat 867 0 20 Assam 60 0 21 Haryana 20 0 Total 1490418 37931 (Source: Data provided by the accredited Certification Bodies under NPOP on TraceNet)

55 ANNEXURE-I D

Category Wise Production Sl. No. Category Production (in Tons)

Organic In-Conversion Total

1 Sugar crop 984730 6910 991640 2 Oil Seeds 727148 8 727156 3 Fibre Crops 312945 888 313833 4 Cereals & Millets 269547 187 269734 5 Pulses 71875 0 71875 6 Plantation Crops (tea/coffee/coconut) 61321 224 61544 7 Spices and Condiments 56208 45 56253 8 Medicinal/Herbal/Aromatic Plants 48424 1 48425 9 Fruits 35813 2 35815 10 Flowers 11016 0 11016 11 Dry fruits 8834 30 8864 12 Vegetables 7134 1 7135 13 Miscellaneous 1964 0 1964 14 Fodder seeds/Crops 1851 0 1851 15 Tuber crop 289 0 289 Total Certified production 2599099 8297 2607396 (Source: Data provided by the accredited Certification Bodies under NPOP on TraceNet)

Total production under Organic Certification Process (in Metric Tonnes)

1 Total Certified production 2599098 2 Total In-conversion Production 8297 3 Total Wild harvest production 37931 4 Grand total (production) 2645326 Or say 2.645 million tons (Source: Data provided by the accredited Certification Bodies under NPOP on TraceNet)

56 ANNEXURE-II A Category wise Export 2018-19

Sl. Category Value of No. Quantity Value of export in % in Item/Com exported Export in US$ Quantity modity (MT) INR crore million terms 1 Oil cake/ meal 273786 1203 177 45 23 2 Oil seeds 170745 845 124 28 16 3 Processed food 2430 835 123 0 16 4 Cereals and Millets 67847 432 64 11 8 5 Plantation crops 8969 409 60 1 8 6 Spices and Condiments 6784 294 43 1 6 7 Dry Fruits 3805 275 40 1 5 8 Sugar/ sugar crop products 41126 203 30 7 4 9 Medicinal/ Herbal/Aromatic 2759 138 20 0 3 10 Fruits/ juices/pulps and concentrates 12196 133 20 2 3 11 Essential oils/ oils/ other oils 5619 116 17 1 2 12 Vegetables and Products 2251 82 12 0 2 13 Others 8249 76 11 1 1 14 Pulses 5158 59 9 1 1 15 Flowers 551 37 5 0 1 16 Fodder crops 1570 9 1 0 0 17 Tuber crops 205 4 1 0 0 18 Seeds 24 2 0 0 0 19 Aromatic oils 2 1 0 0 0 20 Ornamental plant/ products 7 1 0 0 0 21 Miscellaneous 6 0 0 0 0 22 Honey 0 0 0 0 0 Total 614090 5151 757 99 99 (Source: Data provided by the accredited Certification Bodies under NPOP on TraceNet)

Total exports quantity 614090 Tonnes

Total Export Value (INR) 5150 crore

Total Export Value (US$) 757 million $

57 ANNEXURE-II B

Country Wise Export during 2018-19 Sl. Exported Total Value In INR Total Value Total Value No. Country Name Qty ( MT) (In Crores) (USD) (million USD) 1 U.S.A. 334113 2922 429705431 430 2 European Union 155255 1517 223117746 223 3 CANADA 101943 467 68602269 69 4 SWITZERLAND 6199 67 9888236 10 5 AUSTRALIA 2131 51 7468131 7 6 JAPAN 751 16 2397739 2 7 NEWZEALAND 1978 14 2125926 2 8 ISRAEL 3070 13 1865451 2 9 VIETNAM 3186 11 1679401 2 10 LEBANON 681 11 1633756 2 11 U.A.E. 492 11 1551083 2 12 KOREA REPUBLIC 1110 11 1546113 2 13 CHINA 685 7 997397 1 14 SRI LANKA 225 5 731531 1 15 TURKEY 355 4 625094 1 16 SINGAPORE 268 4 606693 1 17 CHILE 403 3 391520 0 18 MEXICO 205 3 387846 0 19 MALAYSIA 137 2 291220 0 20 SAUDI ARABIA 80 1 176904 0 21 MAURITIUS 63 1 160413 0 22 THAILAND 82 1 155396 0 23 QATAR 117 1 151983 0 24 TAIWAN 12 1 130927 0 25 HONG KONG 50 1 122426 0 26 OMAN 82 1 108356 0 27 KUWAIT 61 1 101689 0 28 SOUTH AFRICA 14 1 101301 0 29 RUSSIA 87 1 90562 0 30 MOROCCO 8 1 86613 0 31 ZAMBIA 15 1 75844 0 32 BAHRAIN 35 0 58507 0 33 EGYPT 7 0 53100 0 34 BOLIVIA 44 0 48236 0 35 NEPAL 19 0 40993 0 36 CAMEROON 14 0 39568 0 37 BRAZIL 18 0 36428 0 38 INDONESIA 19 0 34696 0 39 URUGUAY 1 0 29929 0 40 PHILLIPPINES 22 0 26918 0 41 DOMINICAN REPUBLIC 23 0 17605 0 42 GHANA 23 0 12894 0 43 JORDAN 0 0 10011 0 44 BOSNIA AND HERZEGOVINA 3 0 7039 0 45 SWAJILAND 2 0 3912 0 46 MADAGASCAR 0 0 1309 0 47 TRINIDAD AND TOBAGO 0 0 1862 0 48 MALDIVES 0 0 669 0 Total 614090 5151 757498669 757 (Source: Data provided by the accredited Certification Bodies under NPOP on TraceNet)

58