Why organic food is still expensive

Strolling at any organic food market in India, one would have most likely seen that all things organic are priced way higher than their regular variants. The cost of organic foods is one of the major reasons behind their low adoption rate among the masses. Why are they so expensive? And is it feasible to bring down their cost anytime soon?

Similarly, at any supermarket or organic restaurant, the organic sections are almost always thinly populated compared to the general sections. It's obvious that for the large majority of people price concerns get the better of the stated benefits of organic foods such as purity and wholesomeness. But what makes organic foods so expensive? If it is so necessary for a fit body, why it is feasible to only a fraction of the population. Organic products typically cost 20 percent to 100 percent more than their conventionally produced equivalents.

The high cost analysis

Organic foods are difficult to grow as they need high involvement and more time to grow. Not only are organic farms typically smaller than conventional ones, but they also, on average, take more time to produce crops because they refrain from using the chemicals and growth hormones used by conventional farmers.

Moreover, lower yields of such crops and poor supply (still developing) chain further increase the production cost. Post-harvest processing and handling of organic food is a costly affair since the risk of contamination by chemical fertilisers, pesticides, etc. from water and neighbouring farms is high. One of the biggest hurdles to the adoption of organic farming is the high fee for registration, accreditation and certification to become organic farmers.

Nowadays, organic foods may appear to be a lucrative market for many, but there weren't many organised players in the early 2000s. One of them, 24 Mantra Organic, claims to be the market leader in the organic food category across India with almost two-thirds of the market share. Today, the decade-and-a-half-old company works with 40,000 farmers on 245,000 hectares of land across the country on a contract basis. But it hasn’t been easy for the company to get farmers on board to do organic farming. Sunil Poovaiyah, Business Head for Exclusive Stores in Karnataka, says, “One of our key objectives is to provide sustainable livelihood to farmers. We take care of the education of the children of our dedicated farmers, and also organise their health checkups.”

The demand-supply gap

Most of the organic produce from India is intended for sale in foreign markets. More than 60 percent of the organic products from the country were exported to the European Union in 2019, a further 20 percent exported to the US. India is targeting almost US$1 billion worth of organic food exports in the years to come. The global markets and the prices that such products command abroad are a great influence on the domestic pricing as well.

Anju Kalhan, Founder of Bliss box foods is on her journey to advocate the importance of bringing organic in daily lifestyle. Her brand makes a wider range of gluten-free Indian sweets such as laddoo, biscuits and savouries, using organic produces sourced directly from the farmers.

She believed that the high price quotient is just the question of supply and demand. “More demand for organic food and natural products is bound to bring the pricing lower,” she said.

She further added that as people become aware and start mindful eating and purchasing from organic stores, there will be more such stores and products and competition will bring the rates down. “For the time being the production and availability is limited so the pricing seems high. Farmers need to be educated too and there should be more awareness on the technical understanding,” she added.

Poor awareness levels among consumers about the health benefits of organic food products, especially in the non-metro cities together with their limited availability in the market are posing grave challenges to the growth of the Indian organic food industry.

Way Ahead

Zama Organics, a homegrown startup that is a one-stop shop for locally sourced organic produce has plans to expand its supply chain. Apart from direct consumers, the company supplies its organic produce to restaurants/cafes in Mumbai whereas the pantry items can be delivered anywhere in India either by road or rail. 

“With over 2500 customers, our ‘Direct to Consumer’ and restaurant supply business is Mumbai based as that is where our office and warehouses are currently. Starting this year, we have also increased our presence in other cities like Delhi, Bangalore, Hyderabad, Goa, Surat, Pune and Bhopal through our retail and eCommerce business partners,” Shriya Naheta, Founder, Zama Organics said. 

According to a study jointly conducted by industry lobby Assocham and private research firm TechSci Research in 2016, pegged at $0.50 billion, the organic food market in India was estimated to jump to $1.36 billion by 2020. This will still account for less than 0.5 percent of the total agriculture market size of India. There are numerous bodies across the country working to reduce (if not remove completely) the hurdles in adopting organic farming.

With more research and favourable policies, it's hoped that the demand for organic food will not be driven by metros only. After all, we were practising only organic farming before the 70s. And given its sustainable nature, a step towards organic food (and farming) is a step towards a sustainable future. Till the price of all things organic comes closer to their non-organic counterparts, let’s bridge this gap with the awareness about the organic way of living.