The biggest challenge is the lack of an organic policy for the domestic market and imports. In the absence of regulation on labelling standard for organic production and logo, it is not possible to distinguish an organic product from a conventional product.
The Indian government has been undertaking measures to promote organic farming with the aim to improve soil fertility and help to double the farmers’ incomes by the year 2022. The Prime Minister had visited Sikkim—which is India’s first organic state—and encouraged other states to replicate the “Sikkim model”. Some of the policy initiatives to promote organic farming and exports include development of an organic regulation for exports by the Agricultural and Processed Food Products Export Development Authority (APEDA), removal of quantitative restriction on organic food exports, providing subsidies to farmers under the Paramparagat Krishi Vikas Yojana (PKVY) in partnership with the state governments, and other schemes such as the Mission Organic Value Chain Development for North Eastern Region. Despite these initiatives, a recent survey-based study covering 418 organic farmers across different states of India suggests that a move to organic farming methods may not be that easy and organic farmers are not getting the expected premium price for their produce. The study highlights five key issues faced by organic farmers that are affecting their livelihood and income.
• First, the supply chain is underdeveloped and small and mid-sized farmers located in hilly regions and tribal belts find it extremely difficult to access the market. There is a shortage of pack houses and refrigerated vehicles, which leads to spoilage. Organic products have to be stored separately from conventional products to avoid cross-contamination and the existing supply chain does not often provide that facility. In addition, the survey found that companies mostly source from farmers in regions with a well-developed supply chain and only a few of them are sourcing from the Northeastern states and tribal belts, despite their high potential in organic farming. While the government is supporting organic product marketing through fairs and exhibitions, it does not give farmers a steady market. In a number of cases, the middlemen take away most of the profits and farmers are not able to earn a premium price. Direct linkages to processors and retailers could have helped farmers to get a better price, but farmers lack the right linkages and hence have to depend on middlemen and mandis.
• Second, while the government is subsidising farmers under the Participatory Guarantee System (PGS) for India, which is a self-certification process supported through the PKVY scheme, these farmers are not allowed to export. In fact, the APEDA has made it mandatory to have a third-party certification for exports. This is despite the fact that globally more than 100 countries, mostly developing countries, recognise the PGS. Unless farmers under PGS India are allowed to export, they cannot earn the premium price. Therefore, ideally, farmers should have the right to decide where they want to sell the product—domestic market and/or export market—and the government policy should support the same.
• Third, as a farmer converts his/her land from conventional chemical-based farming to organic farming, there is a risk of loss in yield due to the withdrawal of chemical inputs and high-yielding varieties of seeds. A number of countries, such as the United Kingdom, have carefully designed subsidies to compensate for the yield loss during the conversion period. However, in India, there is no such subsidy. Further, a majority of the government budget and subsidies are targeted towards chemical-based inputs and, in many states, less than 2% of the budget is allocated to organic farming. Given India’s low rank is Sustainable Developmental Goals Index (India has been ranked 116 out of 157 nations on the Sustainable Developmental Goals Index for the year 2017, even behind other developing countries such as Nepal, Iran, Sri Lanka, Bhutan and China), it is important for the government to allocate more funding to organic farming and sustainable agriculture practices. In the case of organic, the cost of laboratory testing and third-party certification is high and subsidy can definitely help. A number of states, such as Gujarat, Karnataka and Sikkim, have already set up their third-party certification bodies. Other states may also do the same.
• Fourth, there is a serious shortage of good quality organic inputs, which increases the risk of loss of yield. The available organic fertilisers are much below the required quantity, and there are a number of spurious players in the market too. Similarly, there is a shortage of good quality organic seeds. Some inputs companies have taken initiatives to go for third-party certification. However, there is need for a policy on input standardisation. Further, different varieties of crops are grown in different regions of the country, and they are faced with different issues related to pest infestation and soil quality. Hence, there is a need for more crop-specific and region-specific research and development (R&D) on organic inputs. In addition, the survey found that farmers need access to equipment such as netting and poly houses to protect their crops against insects. Fruit flies have led to destruction of crops such as oranges in the state of Sikkim. Here, we can learn from the government of Bhutan, which provides equipment at subsidised rates—and the same can be replicated by Indian government as well.
• The fifth and the biggest challenge faced by organic farmers is the lack of an organic policy for the domestic market and imports. In the absence of regulation on labelling standard for organic production and logo, it is not possible to distinguish an organic product from a conventional product. This has led to fraudulent practices and genuine players are not getting the premium, which the consumers of organic products are willing to pay. While the absence of a policy makes it difficult to punish fraudulent players, the government cannot enforce punishment on the basis of a voluntary certification process. Therefore, over 79% of the farmers opined that the certification process should be mandatory and the government should help farmers under PGS India to get the mandatory certification once their land is converted to organic. In fact, over 91% of survey participants pointed out that there should be a uniform logo for organic, which will help in product identification. The study further highlighted that if the right policy measures are taken, then organic farming is expected to grow at 20% in the next five years and the farmers will see a rise in their income.
Professor, Indian Council for Research on International Economic Relations (ICRIER)